If the state Public Service Commission PSC approves the proposal as is, it would add about $1.50 a month to the average residential customer's electric bill, raising it from the current $91.17 a month to $92.67.
For the average residential natural gas customer who pays about $624.42 a year, it would cost about $20.45 more, for a total of $644.87 a year, MGE spokesman Steve Schultz said.
The higher charges will help finance continuing improvements to the transmission grid that carries electricity around the area as well as to the natural gas distribution system, MGE said.
"The primary reason for the rate request is continued reliability," the utility said in a news release.
Fixed charges for residential and small business electric customers would not change in 2017 under the plan, but the kilowatt-hour charges -- that rise or fall depending on a customer's use of power -- would increase.
Fixed rates for larger commercial and industrial customers have not yet been determined and will be considered as part of the rate design process, Schultz said.
"We're happy to see that they're not proposing any increase to the fixed charge. We're still evaluating the remainder of the proposal," said Kurt Runzler, acting executive director of the Wisconsin Citizens Utility Board CUB.
Another citizens group, RePower Madison, also said it was glad to see the fixed rate would not rise for residential customers.
"RePower Madison would really like to see MGE actually reduce the fixed fee as many customers asked during the community energy conversations," spokesman Mitch Brey said.
Two years ago, MGE proposed a dramatic change in its rate structure that would have hiked the fixed rate from $10.50 a month to $67 a month by 2017. It involved shifting costs for generating power and sending it to a customer's home from the kilowatt-hour portion of the bill to the fixed monthly charge.
But a storm of opposition from citizens, local governments and interest groups resulted in a modified plan, under an agreement between MGE and CUB. It raised fixed charges to $19 a month, as of 2015, and froze the fixed charges for 2016, while inching down the kilowatt-hour rate. MGE also began a yearlong effort to communicate with local residents through a series of meetings it called "community conversations." The PSC will take written comments on MGE's request and a public hearing is likely to be held in the fall, Schultz said.
The three-member commission is expected to act on the proposal in late 2016.