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:  SEPTEMBER 30, 1996

                              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               (IRS Employer 
of incorporation or organization)      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)


 Common Stock Outstanding at November 13, 1996: 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, Except Per-Share Amounts)
                                  (Unaudited)
<CAPTION>
                                      Three Months Ended   Nine Months Ended
                                         September 30,       September 30,
                                       1996       1995     1996       1995
<S>                                   <C>        <C>      <C>        <C>
          STATEMENTS OF INCOME                                    

Operating Revenues:                                               
   Electric . . . . . . . . . . . . . $44,547    $47,316  $116,621   $117,908
   Gas  . . . . . . . . . . . . . . .   8,345      7,407    66,700     59,787
     Total Operating Revenues . . . .  52,892     54,723   183,321    177,695

Operating Expenses:                                               
   Fuel for electric generation . . .   7,246      8,509    20,047     21,549
   Purchased power  . . . . . . . . .   3,203      2,526     7,601      6,169
   Natural gas purchased  . . . . . .   3,823      3,220    41,158     35,716
   Other operations . . . . . . . . .  13,902     14,764    41,934     44,725
   Maintenance  . . . . . . . . . . .   2,898      2,402     7,793      8,919
   Depreciation and amortization  . .   6,514      6,206    19,039     18,656
   Other general taxes  . . . . . . .   2,148      2,149     6,596      6,495
   Income tax items . . . . . . . . .   4,117      4,933    12,051     10,554
     Total Operating Expenses . . . .  43,851     44,709   156,219    152,783
Net Operating Income  . . . . . . . .   9,041     10,014    27,102     24,912
AFUDC - equity funds  . . . . . . . .       3         10        29         46
Gas marketing subsidiaries             
(loss)/income . . . . . . . . . . . .  (1,382)        (5)   (4,321)     1,277
Other income, net . . . . . . . . . .     419        302       938      1,246
Income before interest expense  . . .   8,081     10,321    23,748     27,481
Interest expense:                                                 
   Interest on long-term debt . . . .   2,411      2,593     7,407      7,774
   Other interest . . . . . . . . . .     190        208       465        797
   AFUDC - borrowed funds . . . . . .      (2)        (5)      (15)       (24)
     Net Interest Expense . . . . . .   2,599      2,796     7,857      8,547
Net Income  . . . . . . . . . . . . .   5,482      7,525    15,891     18,934
Preferred stock dividends . . . . . .       -          -         -         64
Earnings on common stock  . . . . . .  $5,482     $7,525   $15,891    $18,870
Earnings per share of common stock
(Note 3)  . . . . . . . . . . . . . .   $0.34      $0.47     $0.99      $1.17
                                                                  
     STATEMENTS OF RETAINED INCOME                                

Balance - beginning of period . . . . $64,722    $62,121   $64,499    $60,851
Earnings on common stock  . . . . . .   5,482      7,525    15,891     18,870
Cash dividends on common stock
(Note 3)  . . . . . . . . . . . . . .  (5,144)    (5,093)  (15,330)   (15,168)
Balance - end of period . . . . . . . $65,060    $64,553   $65,060    $64,553
<FN>
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 FLOW
                            (Thousands of Dollars)
                                  (Unaudited)
<CAPTION>
                                                       Three Months Ended    Nine Months Ended
                                                          September 30,        September 30,
                                                        1996      1995       1996      1995
<S>                                                    <C>       <C>        <C>       <C>
 Operating Activities:                                            
   Net income  . . . . . . . . . . . . . . . . . . . . $ 5,482   $ 7,525    $15,891   $18,934
   Items not affecting cash:
     Depreciation and amortization   . . . . . . . . .   6,514     6,206     19,039    18,656
     Deferred income taxes . . . . . . . . . . . . . .      22      (323)    (1,677)     (563)
     Amortization of nuclear fuel  . . . . . . . . . .     620       797      2,098     1,927
     Amortization of investment tax credits  . . . . .    (200)     (192)      (592)     (581)
     AFUDC - equity funds  . . . . . . . . . . . . . .      (3)      (10)       (29)      (46)
     Other   . . . . . . . . . . . . . . . . . . . . .     168       157     (2,625)    1,061
      Net funds provided from Operations . . . . . . .  12,603    14,160     32,105    39,388
   Changes in working capital, excluding
   cash equivalents, sinking funds,
   maturities, and interim loans:
     Decrease/(increase) in current assets . . . . . .    (626)   (4,667)    13,240     9,985
     (Decrease)/increase in current liabilities  . . .  (3,176)    1,428     (7,734)   (1,610)
   Other noncurrent items, net . . . . . . . . . . . .  (1,372)   (2,092)     8,447    (2,073)
     Cash provided by Operating Activities . . . . . .   7,429     8,829     46,058    45,690

 Financing Activities:
   Cash dividends on common and preferred stock  . . .  (5,144)   (5,093)   (15,330)  (15,232)
   Maturities/redemptions of First Mortgage Bonds  . .       -         -     (7,840)        -
   Other increase/(decrease) in First Mortgage Bonds .       9         9         29      (233)
   Decrease in preferred stock . . . . . . . . . . . .       -         -          -    (5,300)
   Decrease in bond construction funds, net  . . . . .       -     1,976          -     5,469
   (Decrease)/increase in interim loans    . . . . . .   9,000    (1,250)     2,500   (17,350)
     Cash provided by/(used for) Financing Activities.   3,865    (4,358)   (20,641)  (32,646)

 Investing Activities:
   Acquisition of nonregulated subsidiary  . . . . . .       -         -          -    (8,036)
   Sale of Superior Lamp, Inc. . . . . . . . . . . . .       -         -        201         -
   Additions to utility plant and nuclear fuel . . . .  (7,037)   (4,997)   (18,380)  (13,083)
   AFUDC - borrowed funds  . . . . . . . . . . . . . .      (2)       (5)       (15)      (24)
   Increase in nuclear decommissioning fund  . . . . .  (1,264)   (1,135)    (3,516)   (3,117)
     Cash used for Investing Activities   . . . .  . .  (8,303)   (6,137)   (21,710)  (24,260)

 Change in Cash and Cash Equivalents (Note 5) . .  . .   2,991    (1,666)     3,707   (11,216)
   Cash and cash equivalents at beginning of period. .   3,560     1,984      2,844    11,534
   Cash and cash equivalents at end of period. . . . .  $6,551      $318     $6,551      $318
<FN>
 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>
                                                       Sept. 30,  Dec. 31,
                                                        1996       1995
<S>                                                    <C>        <C>
                         ASSETS

 Utility Plant, at original cost, in service:
   Electric  . . . . . . . . . . . . . . . . . . . . . $497,777   $489,399
   Gas   . . . . . . . . . . . . . . . . . . . . . . .  177,213    173,890
     Gross plant in service  . . . . . . . . . . . . .  674,990    663,289
   Less accumulated provision for depreciation . . . . (366,986)  (348,254)
     Net plant in service  . . . . . . . . . . . . . .  308,004    315,035
   Construction work in progress   . . . . . . . . . .    8,585      9,061
   Nuclear decommissioning fund (Note 2)   . . . . . .   41,707     36,965
   Nuclear fuel, net   . . . . . . . . . . . . . . . .    8,378      6,172
     Total Utility Plant . . . . . . . . . . . . . . .  366,674    367,233
 Other property and investments  . . . . . . . . . . .   15,234     17,176
 Current Assets:
   Cash and cash equivalents   . . . . . . . . . . . .    6,551      2,844
   Accounts receivable, less reserves of $1,136 and      
   $1,379, respectively  . . . . . . . . . . . . . . .   29,303     36,817
   Unbilled revenue  . . . . . . . . . . . . . . . . .    6,211     13,529
   Materials and supplies, at average cost . . . . . .    5,637      5,987
   Fossil fuel, at average cost  . . . . . . . . . . .    2,991      2,986
   Stored natural gas, at average cost   . . . . . . .   10,032      6,203
   Prepaid taxes   . . . . . . . . . . . . . . . . . .    4,387      5,846
   Other prepayments . . . . . . . . . . . . . . . . .    1,174      1,608
     Total Current Assets  . . . . . . . . . . . . . .   66,286     75,820
 Deferred charges  . . . . . . . . . . . . . . . . . .   31,931     33,647
      Total Assets   . . . . . . . . . . . . . . . . . $480,125   $493,876

             CAPITALIZATION AND LIABILITIES

 Capitalization (see statement)  . . . . . . . . . . . $322,774   $322,185
 Current Liabilities:
   Long-term debt sinking fund requirements  . . . . .      200        200
   Maturity of 5.45%, 1996 series  . . . . . . . . . .        -      7,840
   Interim loans - commercial paper outstanding  . . .   23,000     20,500
   Accounts payable  . . . . . . . . . . . . . . . . .   21,094     25,928
   Accrued taxes   . . . . . . . . . . . . . . . . . .      255      1,500
   Accrued interest  . . . . . . . . . . . . . . . . .    3,604      2,359
   Other . . . . . . . . . . . . . . . . . . . . . . .    5,003      7,903
     Total Current Liabilities . . . . . . . . . . . .   53,156     66,230
 Other Credits:
   Accumulated deferred income taxes   . . . . . . . .   53,544     54,153
   Regulatory liability  . . . . . . . . . . . . . . .   24,109     25,177
   Investment tax credit - deferred  . . . . . . . . .   11,639     12,231
   Other   . . . . . . . . . . . . . . . . . . . . . .   14,903     13,900
     Total Other Credits . . . . . . . . . . . . . . .  104,195    105,461
 Commitments . . . . . . . . . . . . . . . . . . . . .        -          -
      Total Capitalization and Liabilities   . . . . . $480,125   $493,876
<FN>
The accompanying notes are an integral part of the above balance sheets.
/TABLE
<PAGE>
<TABLE>
               Madison Gas and Electric Company and Subsidiaries
                   CONSOLIDATED STATEMENTS OF CAPITALIZATION
                            (Thousands of Dollars)
                                (Unaudited)
<CAPTION>
                                                        Sept. 30,  Dec. 31,
                                                          1996      1995
<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   . . . . . . . . . . . . . . . . .   65,060     64,499
     Total Common Shareholders' Equity . . . . . . . .  193,698    193,137
                                                               
 Redeemable Preferred Stock cumulative, $25 par value,         
  authorized 1,175,000 shares, 0 shares outstanding. .        -          -
 
 First Mortgage Bonds:

   5.45%, 1996 series  . . . . . . . . . . . . . . . .        -      7,840
   6 1/2%, 2006 series:                                        
     Pollution Control Revenue Bonds . . . . . . . . .    7,075      7,075
   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  . . . . . . . .  119,375    127,215
   Unamortized discount and premium on bonds, net  . .   (1,099)    (1,127)
   Long-term debt sinking fund requirements  . . . . .     (200)      (200)
   Maturity of 5.45%, 1996 series  . . . . . . . . . .        -     (7,840)
     Total First Mortgage Bonds  . . . . . . . . . . .  118,076    118,048

 Other Long-Term Debt:

   6.01%, interest rate SWAP agreement   . . . . . . .   11,000     11,000
      Total Capitalization   . . . . . . . . . . . . . $322,774   $322,185
<FN>
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
            Notes to Consolidated Financial Statements (Unaudited)
                              September 30, 1996

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 20 through 25 of the Company's 1995 Annual Report to Shareholders and in
the Company's 1995 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 1995 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: common stock - stock split, redeemable
       preferred stock, other long-term debt, notes payable to banks,
       commercial paper, and lines of credit
   k.  Commitments
   l.  Segments of business
   m.  Regulatory assets and liabilities

2. Nuclear Decommissioning

   Nuclear decommissioning costs relative to the Kewaunee Nuclear Power Plant
   (Kewaunee) are currently accrued over the plant's license term, which
   expires in the year 2013. These costs are currently recovered from
   customers in rates and are deposited in external trusts. For 1996, the
   decommissioning costs recovered in rates will be $3.1 million. These
   trusts are shown on the balance sheet in the Utility Plant section, and as
   of September 30, 1996, these trusts totaled $41.7 million (fair market
   value).
<PAGE>
   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. As of September 30, 1996, the accumulated
   provision for depreciation included accumulated provisions for
   decommissioning totaling $41.7 million.

   The Company has applied to the Public Service Commission of Wisconsin
   (PSCW) for acceleration of decommissioning collections relative to
   Kewaunee such that by mid-year 2003 there would be funding adequate to
   fully fund currently forecasted decommissioning expenditures. The request
   for this acceleration reflects the condition of the present steam
   generators (see Part II, Item 5 for additional information).

   The Company's share of Kewaunee decommissioning costs is estimated to be
   $70 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.

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 and for the nine months ended September 30, 1996 and 1995, there
   were 16,079,718 shares.

   Dividends declared and paid per share of common stock for the periods
   ended September 30, 1996 and 1995, were, respectively, for the three
   months $0.32 and $0.317; for the nine months $0.953 and $0.943.

   Both the shares outstanding and the dividends per-share amounts reflect
   the Company's 3-for-2 stock split which was effective in the first quarter
   of 1996.

4. Capitalization Matters

   a.  First Mortgage Bonds.

       The annual sinking fund requirements of the outstanding First Mortgage
       Bonds are $200,000 in 1996. As of September 30, 1996, $200,000 is still
       needed to satisfy the 1996 requirements.

       The 5.45%, 1996 series, First Mortgage Bonds matured on June 1, 1996,
       requiring funding of $7.8 million in short-term debt to retire this
       bond series.

5. Supplemental Cash Flow Information

   For purposes of the Consolidated Statements of Cash Flow, the Company
   considers cash equivalents to be those investments that are highly liquid
   with maturity dates of less than three months.
<PAGE>
   Cash payments for interest, net of amounts capitalized, and income taxes
   were as follows:

                                Three Months          Nine Months
                                   Ended                 Ended
                                September 30,        September 30,

   (Thousands of dollars)      1996       1995        1996       1995

   Interest, net of amounts   
     capitalized              $1,420     $1,601      $6,642     $7,481

   Income taxes paid          $3,702     $4,515     $13,274    $13,495

6. Sale of Nonregulated Subsidiary

   In May 1996 the Company sold its 50 percent share in Superior Lamp
   Recycling, Inc., a jointly owned subsidiary of the Company and Superior
   Services, Inc., purchased during 1993. Superior Lamp recycles fluorescent
   lamps that are banned from landfills. The sale resulted in a modest gain
   on the Company's investment.

7. Rate Matters

   On September 3, 1996, the Company announced its intention to increase
   electric rates for the test period beginning July 1, 1997, by
   approximately $7.7 million, or 5.1 percent, and increase natural gas rates
   by $3.7 million, or 3.8 percent, 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. Also, the Company continues its efforts to lower costs but
   is experiencing increases in operating costs and construction costs due
   primarily to inflation.

   Hearings will take place on the Company's recent rate filing in the first
   quarter of 1997. A decision is expected sometime in the second quarter of
   1997.

   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.
<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 for the nine-month period ended
September 30, 1996. The Company experienced increased additions to utility
plant and nuclear fuel expenditures during the first nine months of 1996
compared to 1995. It is anticipated that 1996 construction and nuclear fuel
expenditures will be approximately $25 million.

Cash provided by operating activities increased $0.4 million during the first
nine months of 1996 compared to 1995 due to an increase in working capital
somewhat offset by a decrease in net income. Cash provided by operating
activities during the third quarter of 1996 decreased $1.4 million, or
15.9 percent, compared to last year's third quarter. This is mainly
attributable to the decrease in current assets, liabilities, and net income.

Cash used for financing activities decreased $12 million, or 36.8 percent, for
the nine months ended September 30, 1996, primarily due to an increase in
interim loans caused by the maturity of the 5.45%, 1996 series, First Mortgage
Bonds, higher levels of construction, and advances by the parent company to
its subsidiaries. The third quarter 1996 cash provided for financing
activities increased $8.2 million also due to the increase in interim loans.

Bank lines of credit available to the Company as of September 30, 1996, were
$45 million, which includes $10 million for Great Lakes Energy Corp. (GLENCO),
a wholly owned subsidiary of the Company, and American Energy Management Inc.,
a subsidiary of GLENCO.

The Company's capitalization ratios were as follows:

                                    Sept. 30, 1996   Dec. 31, 1995

   Common shareholders' equity          56.0%           55.1%
   Long-term debt*                      37.4            39.1
   Short-term debt                       6.6             5.8

   *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.
<PAGE>
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, creating the tenth largest
utility company in the United States. The merger has been approved by the
shareholders of both companies. Various regulatory agency approval is required
including the SEC, the Nuclear Regulatory Commission (NRC), the Federal Energy
Regulatory Commission (FERC), and state regulatory agencies.

The Company is 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. Hearings on the proposed merger have
been concluded before the FERC. Hearings on the proposed merger are currently
scheduled before the Wisconsin and Minnesota Public Service Commissions. The
Company believes the proposed merger would have a detrimental impact on the
Wisconsin economy.

Regulatory Environment

The PSCW voted in December 1995 to carefully pursue the restructuring of the
electric utility industry in Wisconsin. This approach is largely consistent
with a plan developed and supported by the Company. The process included a
report by the Commissioners to the legislature, a draft work plan, and a
series of dockets and proceedings over the next three to seven years to
implement the whole plan. It is unknown at this time what impact (if any) this
plan will have on the Company.

An order is expected some time this year regarding a docket that was opened to
examine what changes are needed in the cost recovery mechanism for purchasing
gas costs. Hearings have been concluded on this matter. No material changes
are expected at this time.

Results of Operations

Electric Sales and Revenues

The cooler weather experienced this summer contributed to the decreased
electric sales for the three and nine months ended September 30, 1996,
compared to the same periods last year (see table below). Electric retail
sales decreased 5.1 percent for the three months ended September 30, 1996,
compared to the same period in 1995.

Cooling degree days (measured by the number of degrees the mean daily
temperature is above 65 degrees Fahrenheit) for the third quarter of 1996
decreased approximately 64 percent from last year's third quarter and were
40 percent below normal.
<PAGE>
<TABLE>
                                       Electric Sales in Megawatt-Hours
<CAPTION>
                     Three Months Ended September 30,   Nine Months Ended September 30,
                      1996      1995     % Change       1996        1995       % Change
<S>                  <C>       <C>       <C>         <C>         <C>           <C> 
Residential          194,608   227,414   (14.43)%      544,853     561,923     (3.04)%

Large commercial     
and industrial       259,585   258,855     0.28        716,855     712,285      0.64

Small commercial     
and industrial       196,611   192,348     2.22        540,584     528,405      2.30

Other                 81,943    93,779   (12.62)       237,900     245,047     (2.92)

  Total retail       732,746   772,396    (5.13)     2,040,192   2,047,660     (0.36)

Sales for resale       8,393     2,859   193.56         23,256      16,768     38.69

  Total sales        741,139   775,255    (4.40)     2,063,448   2,064,428     (0.05)
</TABLE>

The decrease in electric sales for both the three- and nine-month periods
contributed to the decrease in electric operating revenues of $2.8 million, or
5.9 percent, for this year's third quarter and $1.3 million, or 1.1 percent,
for the nine months ended September 30, 1996, as compared to the same periods
the previous year.

Gas Sales and Revenues

For the three months ended September 30, 1996, gas revenues increased
$0.9 million, or 12.7 percent, compared to last year, despite a 7.3 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 (PGA) clause, thus
increasing natural gas revenues on a one-for-one basis.

For the nine months ended September 30, 1996, gas operating revenues increased
$6.9 million, or 11.6 percent, compared to the same period in 1995. This
increase in revenues is due to colder weather experienced in the first half of
the year and higher gas costs collected from customers through the PGA clause.
<PAGE>
The following table illustrates gas deliveries as compared to the previous
year:

<TABLE>
                              Gas Deliveries in Thousands of Therms
<CAPTION>
                  Three Months Ended September 30,    Nine Months Ended September 30,
                     1996      1995    % Change       1996      1995    % Change
<S>                 <C>       <C>      <C>          <C>       <C>       <C>
Residential          5,702     5,702    0.00%        64,705    56,419   14.69%

Commercial and
Industrial           9,117    10,099   (9.72)        61,593    61,437    0.25

 Total retail       14,819    15,801   (6.21)       126,298   117,856    7.16

Transport            9,142    10,036   (8.91)        28,578    26,677    7.13

 Total deliveries   23,961    25,837   (7.26)       154,876   144,533    7.16
</TABLE>

Electric Fuel and Natural Gas Costs

Fuel for electric generation decreased $1.3 million, or 14.8 percent, for the
third quarter of 1996 compared to last year's third quarter. This was mainly
attributable to decreased power demands due to the mild weather experienced
during this time. Purchased power increased $0.7 million, or 26.8 percent, for
the three months ended September 30, 1996, compared to the same period last
year. This is primarily due to an increase in the cost of capacity purchases.

Fuel for electric generation decreased $1.5 million, or 7.0 percent, for the
nine-month period ended September 30, 1996, when compared to the same period
last year. This was mainly attributable to decreased power demands due to the
cool summer. Purchased power increased $1.4 million, or 23.2 percent, for the
nine months ended September 30, 1996, compared to the same period last year.
This is mainly due to an increase in the cost of capacity purchases.

Natural gas costs for the nine-month period ended September 30, 1996,
increased $5.4 million, or 15.2 percent, compared to the same period a year
ago. This is mainly due to the increase in gas deliveries during the first
half of 1996 because of the cold weather. An increase in the cost per therm
of $.04, or 14.5 percent, also contributed to increased natural gas costs.

Natural gas costs for the three months ended September 30, 1996, versus the
comparative period in 1995 increased $0.6 million, or 18.7 percent. This is
due mainly to a cost per therm increase of $.29.
<PAGE>
Other Operating Expenses

Income taxes for the nine-month period ended September 30, 1996, increased
$1.5 million, or 14.2 percent, compared to last year. The increase is due to
the increase in pretax operating income.

Operations and maintenance costs decreased $0.4 million, or 2.1 percent, for
the third quarter of 1996 and decreased $3.9 million, or 7.3 percent, for the
nine months of the year compared to the same periods a year ago. The primary
reasons for the decrease are continued cost-control efforts throughout the
Company and the conversion from a 12-month to an 18-month fuel cycle at
Kewaunee. During 1995, Kewaunee was on a 12-month fuel cycle with the outage
occurring in the second quarter, increasing operations and maintenance
expenses. Due to the conversion, these operations and maintenance expenses
will shift from the second quarter to the fourth quarter of this year. This
will reduce the 1996 fourth-quarter earnings compared to the fourth quarter
of 1995.

Other Items

Interest expense decreased in both the three- and nine-month periods ended
September 30, 1996, when compared to the same periods a year ago. This is due
to lower interest rates during the 1996 periods compared to 1995.

The Company's unregulated gas marketing subsidiaries continued to incur losses
through the third quarter of this year due to pressure on natural gas profit
margins. Losses of $4.3 million for the nine-month period ended September 30,
1996, were realized on the Company's unregulated gas marketing subsidiaries.
In the first quarter of 1996, extremely cold weather caused natural gas supply
prices to substantially rise. Because of this demand for natural gas,
unregulated gas marketing companies were forced to pay premium prices to fill
customer orders. The Company's gas supply capacity that was used by its
unregulated gas subsidiaries from 1993 to 1995 generated approximately
$2.5 million of revenue to be returned to the Company's customers. Whether
this revenue was properly returned is currently under review. This may have a
negative impact on fourth-quarter earnings in 1996.
<PAGE>
PART II. OTHER INFORMATION

Item 5      Other Information

            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.

            The steam generator tubes at Kewaunee are susceptible to corrosion
            characteristics seen throughout the nuclear industry. During the
            scheduled refueling and maintenance outage, which began
            September 21, 1996, electronic inspection of previously sleeved
            steam generator tubes disclosed that the growth rate of corrosion
            in all tubes was much higher than expected. The owners of Kewaunee
            have submitted a request to the NRC, approval of which is still
            pending, for a technical specification change that would allow the
            laser weld repair of these sleeve joints, thereby allowing the
            steam generator tubes with the additional indications to remain in
            service. It is estimated that the total cost of repairing corroded
            sleeved tubes utilizing laser welding repair technology will be
            $3 million to $5 million, the Company's estimated share being
            $0.5 million to $0.9 million. It is estimated the repair of the
            steam generators could extend the outage several weeks beyond the
            original planned period. There will be an additional cost for
            replacement purchased power due to the extended outage. Based on
            current estimates, Kewaunee is expected to be returned to service
            before the end of the year.

            The owners of Kewaunee are continuing to evaluate various economic
            alternatives to deal with the potential future loss of capacity
            resulting from the continuing degradation of the steam generator
            tubes. These alternatives range from repairing/replacing the
            existing steam generators to early plant closure with replacement
            power options. Replacement of steam generators is estimated to
            cost $89 million (the Company's share would be 17.8 percent),
            excluding additional purchased power costs associated with an
            extended shutdown.
 
            The Company is seeking PSCW approval of accelerated depreciation
            rates and decommissioning funding for inclusion in future rate
            cases based on a possible Kewaunee closure date by the end of the
            year 2002, which is consistent with the current condition of steam
            generators and the laser welded repairs mentioned above. Steam
            generator replacement is necessary for cost-effective operation of
            Kewaunee beyond 2002. The Company is investigating ownership
            changes which may allow steam generators to be replaced without
            its participation.

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 1995 Annual Report on Form 10-K
            (Commission File No. 0-1125).

Exhibit 12  Ratio of Earnings to Fixed Charges
<PAGE>
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:  November 13, 1996    /s/ David C. Mebane
                            David C. Mebane
                            Chairman, President and Chief Executive
                            Officer
                            (Duly Authorized Officer)


Date:  November 13, 1996    /s/ Joseph T. Krzos
                            Joseph T. Krzos
                            Vice President - Finance
                            (Chief Financial and Accounting Officer)