10-K

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2023 or

☐    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-53713 

OTTER TAIL CORPORATION

(Exact name of registrant as specified in its charter) 

Minnesota (State or other jurisdiction of incorporation or organization)	27-0383995 (I.R.S. Employer Identification No.)
215 South Cascade Street, Box 496, Fergus Falls, Minnesota (Address of principal executive offices)	56538-0496 (Zip Code)

Registrant's telephone number, including area code: 866-410-8780

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $5.00 per share	OTTR	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑    No ☐ 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐    No ☑ 

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☑    No  ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☑     No  ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): 

Large Accelerated Filer ☑	Accelerated Filer ☐
Non-Accelerated Filer ☐	Smaller Reporting Company ☐	Emerging Growth Company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ 

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑  

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.   ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☑ 

As of June 30, 2023, the aggregate market value of common stock held by non-affiliates was $3,646,181,401. 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 41,710,521 Common Shares ($5 par value) as of January 31, 2024. 

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant's definitive Proxy Statement for its 2024 Annual Meeting of Shareholders is incorporated by reference into Part III of this Form 10-K.

Table of Contents

TABLE OF CONTENTS

	Description	Page
	Definitions	2
	Where to Find More Information	3
	Forward-Looking Information	3
PART I
ITEM 1.	Business	4
ITEM 1A.	Risk Factors	16
ITEM 1B.	Unresolved Staff Comments	23
ITEM 1C.	Cybersecurity	23
ITEM 2.	Properties	24
ITEM 3.	Legal Proceedings	25
ITEM 3A.	Information About Our Executive Officers (as of February 14, 2024)	25
ITEM 4.	Mine Safety Disclosures	26
PART II
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases of Equity Securities	27
ITEM 6.	[Reserved]	27
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	39
ITEM 8.	Financial Statements:
	Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)	40
	Consolidated Balance Sheets	42
	Consolidated Statements of Income	43
	Consolidated Statements of Comprehensive Income	44
	Consolidated Statements of Shareholders’ Equity	45
	Consolidated Statements of Cash Flows	46
	Notes to Consolidated Financial Statements	47
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	73
ITEM 9A.	Controls and Procedures	73
ITEM 9B.	Other Information	73
ITEM 9C.	Disclosure Regarding Foreign Jurisdictions That Prevent Inspections	73
PART III
ITEM 10.	Directors, Executive Officers and Corporate Governance	74
ITEM 11.	Executive Compensation	74
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	74
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	74
ITEM 14.	Principal Accountant Fees and Services	74
PART IV
ITEM 15.	Exhibits and Financial Statement Schedules	75
ITEM 16.	Form 10-K Summary	83
Signatures		84

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DEFINITIONS

The following abbreviations or acronyms are used in the text.

AFUDC	Allowance for Funds Used During Construction	kwh	kilowatt-hour
AME	Available Maximum Energy	LSA	Lignite Sales Agreement
ARO	Asset Retirement Obligation	MDT	Metering and Distribution Technology
ARP	Alternative Revenue Program	MISO	Midcontinent Independent System Operator
ASC	Accounting Standards Codification	MW	Megawatt
BTD	BTD Manufacturing, Inc.	MPUC	Minnesota Public Utilities Commission
CCMC	Coyote Creek Mining Company, L.L.C.	NAV	Net Asset Value
CCS	Carbon Capture and Sequestration	NDDEQ	North Dakota Department of Environmental Quality
CDD	Cooling Degree Day	NDPSC	North Dakota Public Service Commission
CIS	Critical Security Controls	NERC	North American Electric Reliability Corporation
CO2	Carbon dioxide	Northern Pipe	Northern Pipe Products, Inc.
COSO	Committee of Sponsoring Organizations of the Treadway Commission	OTC	Otter Tail Corporation
ECO	Energy Conservation and Optimization Rider	OTP	Otter Tail Power Company
EEI	Edison Electric Institute	Paris Agreement	United Nations Framework Convention on Climate Change
EEP	Energy Efficiency Plan	PFAS	Polyfluoroalkyl substances
EGU	Electric Generating Unit	PIR	Phase-in Rider
EPA	Environmental Protection Agency	PSLRA	Private Securities Litigation Reform Act of 1995
ERISA	Employee Retirement Income Security Act of 1974	PTCs	Production tax credits
ESSRP	Executive Survivor and Supplemental Retirement Plan	PVC	Polyvinyl chloride
EUIC	Electric Utility Infrastructure Costs Rider	RHR	Regional Haze Rule
FASB	Financial Accounting Standards Board	ROE	Return on equity
FCA	Fuel Clause Adjustment	REC	Renewable Energy Certificate
FERC	Federal Energy Regulatory Commission	RRR	Renewable Resource Rider
FOB	Free on Board	SDPUC	South Dakota Public Utilities Commission
GCR	Generation Cost Recovery Rider	SEC	Securities and Exchange Commission
GHG	Greenhouse Gas	SIP	State implementation plan
HDD	Heating Degree Day	SOFR	Secured Overnight Financing Rate
ICSP	Information and Cybersecurity Program	T.O. Plastics	T.O. Plastics, Inc.
IRP	Integrated Resource Plan	TCR	Transmission Cost Recovery Rider
ITCs	Investment Tax Credits	TSR	Total Shareholder Return
kV	kiloVolt	VIE	Variable Interest Entity
kW	kiloWatt	Vinyltech	Vinyltech Corporation

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WHERE TO FIND MORE INFORMATION

We make available free of charge at our website (www.ottertail.com) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements, Forms 3, 4 and 5 filed on behalf of directors and executive officers and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC). These reports are also available on the SEC's website (www.sec.gov). Information on our and the SEC's websites is not deemed to be incorporated by reference into this report on Form 10-K.

FORWARD-LOOKING INFORMATION

This report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the PSLRA). When used in this Form 10-K and in future filings by the Company with the SEC, in the Company’s press releases and in oral statements, words such as “anticipate,” “believe,” "can,"“could,” “estimate,” “expect,” "future," "goal," “intend,” "likely," “may,” “outlook,” “plan,” “possible,” “potential,” "predict," "probable," "projected ," “should,” "target," “will,” “would” or similar expressions are intended to identify forward-looking statements within the meaning of the PSLRA. Such statements are based on current expectations and assumptions and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Such risks and uncertainties include the various factors set forth in Item 1A. Risk Factors of this report on Form 10-K and in our other SEC filings.

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PART I

ITEM 1. BUSINESS

Otter Tail Corporation (OTC) has interests in diversified operations that include an electric utility and manufacturing and plastic pipe businesses with corporate offices located in Fergus Falls, Minnesota and Fargo, North Dakota.

We classify our five operating companies into three reportable segments consistent with our business strategy and management structure. The following table depicts our three segments and the subsidiary entities included within each segment:

ELECTRIC SEGMENT	MANUFACTURING SEGMENT	PLASTICS SEGMENT
Otter Tail Power Company (OTP)	BTD Manufacturing, Inc. (BTD)	Northern Pipe Products, Inc. (Northern Pipe)
	T.O. Plastics, Inc. (T.O. Plastics)	Vinyltech Corporation (Vinyltech)

Electric includes the generation, purchase, transmission, distribution and sale of electric energy in western Minnesota, eastern North Dakota and northeastern South Dakota. Otter Tail Power (OTP), our largest operating subsidiary and primary business since 1907, serves more than 133,000 customers in more than 400 communities across a predominantly rural and agricultural service territory.

Manufacturing consists of businesses engaged in the following manufacturing activities: contract machining; metal parts stamping; fabrication and painting; and production of plastic thermoformed horticultural containers, life science and industrial packaging, material handling components and extruded raw material stock. These businesses have manufacturing facilities in Georgia, Illinois and Minnesota and sell products primarily in the United States.

Plastics consists of businesses producing polyvinyl chloride (PVC) pipe at plants in North Dakota and Arizona. The PVC pipe is sold primarily in the western half of the United States and Canada.

Throughout the remainder of this report, we use the terms "Company", "us", "our", or "we" to refer to OTC and its subsidiaries collectively. We will also refer to our Electric, Manufacturing and Plastics segments and our individual subsidiaries as indicated above.

INVESTMENT AND GROWTH STRATEGY

We maintain a moderate risk profile by investing in rate base growth opportunities in our Electric segment and organic growth opportunities in our Manufacturing and Plastics segments (collectively, our manufacturing platform). This strategy and risk profile are designed to provide a more predictable and growing earnings stream, support quality credit ratings, and provide for dividend payments.

Our long-term focus remains on executing our strategy to grow our business and achieving operational, commercial and talent excellence to strengthen our position in the markets we serve. Our long-term financial objectives include achieving a compounded annual growth rate in earnings per share in the range of 5 - 7%, with a long-term earnings mix of approximately 65% from our Electric segment and 35% from our manufacturing platform. We also are targeting an annual increase in our dividend to be in the range of 5 - 7%. We expect our earnings growth and cash flow generation to be driven by rate base investments in our Electric segment and from existing capacities and planned investments within our Manufacturing and Plastics segments.

Over the past three years, we delivered earnings growth well in excess of our 5 - 7% target due to unique industry conditions within the PVC pipe industry, which led to extraordinary revenue, earnings and cash flow growth in our Plastics Segment. We expect these industry conditions to gradually normalize over the course of 2024 and into 2025. As they do, we expect earnings and cash flow generation within our Plastics segment to moderate from current levels. Once these industry conditions have normalized, we expect to achieve our long-term financial objectives as outlined above.

We will continue to review our business portfolio to identify additional opportunities to improve our risk profile, enhance our credit metrics and generate additional sources of cash to support the organic growth opportunities in our Electric, Manufacturing, and Plastics segments. We will also evaluate opportunities to allocate capital to potential acquisitions. We are a committed long-term owner and do not acquire companies in pursuit of short-term gains. However, we will divest of businesses which no longer fit into our strategy and risk profile over the long term.

We maintain a set of criteria used in evaluating the strategic fit of our operating businesses. The operating company should:

•Maintain a minimum level of net earnings and a return on invested capital in excess of the Company’s weighted-average cost of capital,

•Have a strategic differentiation from competitors and a sustainable cost advantage,

•Operate within a stable and growing industry and be able to quickly adapt to changing economic cycles, and

•Have a strong management team committed to operational and commercial excellence.

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Our actual mix of earnings for the years ended December 31, 2023, 2022 and 2021 was as follows:

HUMAN CAPITAL

Our employees are a critical resource and an integral part of our success. We strive to provide an environment of opportunity and accountability where people are valued and empowered to do their best work. We are focused on the health and safety of our employees and creating a culture of inclusion, excellence and learning, and our executive annual incentive plan reflects those commitments. We monitor various metrics and objectives associated with i) employee safety, ii) workforce stability, iii) management and workforce demographics, including gender, racial and ethnic diversity, iv) leadership development and succession planning and v) productivity. We have established the following in furtherance of these efforts:

Safety - Safety is one of our core values. In managing our business, we focus on the safety of our employees and have implemented safety programs and management practices to promote a culture of safety. Safety is also a metric used and evaluated in determining annual incentive compensation. We continually monitor the Occupational Safety and Health Administration Total Recordable Incident Rate (number of work-related injuries per 100 employees for a one-year period) and Lost Time Incident Rate (number of employees who lost time due to work-related injuries per 100 employees for a one-year period). New cases are reported and evaluated for corrective action during monthly safety meetings attended by safety professionals at all locations. Our 2023 Total Recordable Incident Rate was 1.70, compared to 2.08 in 2022 and our Lost Time Incident Rate was 0.53 in 2023, compared to 0.49 in 2022.

Employee and Leadership Development, Succession Planning and Training Programs - We invest in training and professional development for various levels of employees, management and leaders throughout the Company to ensure all have the necessary training and skills to perform their work well, and to build enterprise-wide understanding of our culture, strategy and processes. Annual succession planning, individual development planning, mentoring, and supervisory and leadership development programs all play a role in ensuring a capable leadership team now and in the future. Our skill progression and technical training programs help to retain a stable and skilled workforce.

Workforce Stability - Recruiting, retaining and developing employees is an important factor in our continued success and growth. We regularly evaluate our recruiting programs, employee retention and turnover rates.

Employee Engagement - To enhance the effectiveness of our workforce and to help our companies continue to be places where our employees choose to work and thrive, we have undertaken a multi-year series of employee engagement surveys. We use the feedback to help shape the employee programs of our organization.

Human Rights - We are committed to the protection of our employee’s freedom of expression and freedom of organization and assembly.

Diversity, Equity, and Inclusion - We expect, and are committed to, diversity, equity and inclusion as part of who we are, what we value, and how we achieve individual, business and community success. We hold every employee accountable for their behavior in maintaining a workplace free of discrimination and harassment. We have implemented education initiatives for all employees, aimed at inclusive leadership and a respectful workplace, focused on identities and culture, unconscious bias, the power of diverse teams and culturally sensitive conversations. We have implemented initiatives to improve upon our demographic profile, including revised hiring processes and a commitment to diverse slates of interview candidates.

Code of Business Ethics - We require employees to complete training on several topics associated with our code of business ethics to reinforce our commitment to compliance with laws, regulations and values that guide who we are and how we do business.

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As of December 31, 2023, we employed 2,655 full-time employees as shown in the table below:

Segment/Organization	Employees
Electric Segment
OTP (1)	790
Manufacturing Segment
BTD	1,458
T.O. Plastics	192
Segment Total	1,650
Plastics Segment
Northern Pipe	98
Vinyltech	80
Segment Total	178
Corporate	37
Total	2,655
(1) Includes all full-time employees of Otter Tail Power Company, including employees working at jointly owned facilities. Labor costs associated with employees working at jointly owned facilities are allocated to each of the co-owners based on their ownership interest.

At December 31, 2023, 378 employees of OTP were represented by local unions of the International Brotherhood of Electrical Workers under two separate collective bargaining agreements expiring on August 31, 2026 and October 31, 2026. OTP has not experienced any strike, work stoppage or strike vote, and considers its present relations with employees to be good. None of the employees of our other operating companies are represented by local unions.

The demographics of our workforce, including our Board of Directors, as of December 31, 2023 was as follows:

	% Female		% Racially and Ethnically Diverse
Board of Directors	36	%	9	%
CEO Direct Reports	33	%	—	%
Management	21	%	4	%
Non-Management Employees	15	%	15	%

ELECTRIC Contribution to Operating Revenues: 39% (2023), 38% (2022), 40% (2021)

OTP, headquartered in Fergus Falls, Minnesota, is a vertically integrated, regulated utility with generation, transmission and distribution facilities to serve its more than 133,000 residential, commercial and industrial customers in a service area encompassing approximately 70,000 square miles of western Minnesota, eastern North Dakota and northeastern South Dakota.

CUSTOMERS

Our service territory is predominantly rural and agricultural and includes over 400 communities, most of which have populations of less than 10,000. While our customer base includes relatively few large customers, sales to commercial and industrial customers are significant, with two customers accounting for 21% of segment operating revenues for the year ended December 31, 2023 and 16% for the year ended December 31, 2022.

The following charts summarize our retail electric revenues by state and by customer segment for the years ended December 31, 2023 and 2022:

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In addition to retail revenue, our Electric segment also generates operating revenues from the transmission of electricity for others over the transmission assets we wholly or jointly own with other transmission service providers, and from the sale of electricity we generate and sell into the wholesale electricity market.

COMPETITIVE CONDITIONS

Retail electric sales are made to customers in assigned service territories. As a result, most retail customers do not have the ability to choose their electric supplier. Competition is present in some areas from municipally owned systems, rural electric cooperatives and, in certain respects, from on-site generators and co-generators. Electricity also competes with other forms of energy.

Competition also arises from customers supplying their own power through distributed generation, which is the generation of electricity on-site or close to where it is needed in small facilities designed to meet local needs. Distributed energy resources can include combined heat and power, solar photovoltaic, wind, battery storage, thermal storage and demand-response technologies.

The degree of competition may vary from time to time depending on relative costs and supplies of other forms of energy and advances in technology. Irrespective of the competitive environment, we are focused on providing value to our customers and ensuring our retail rates remain among the lowest in the region and in the nation.

The following table presents our average retail rate per kilowatt-hour (kwh) by customer class and in total for the years ended December 31, 2023 and 2022:

Revenue per kwh	2023		2022
Residential	10.82	¢	10.99	¢
Commercial & Industrial	7.02	¢	7.54	¢
Total Retail	7.90	¢	8.41	¢

Wholesale electricity markets are competitive under the Federal Energy Regulatory Commission (FERC) open access transmission tariffs, which require utilities to provide nondiscriminatory access to all wholesale users. In addition, the FERC has established a competitive process for the construction and operation of certain new electric transmission facilities under federal regulation. Certain states have laws which provide the incumbent transmission owner the right of first refusal to construct and own new transmission facilities.

OTP has franchises to operate as an electric utility in substantially all of the incorporated municipalities it serves. Franchise rights generally require periodic renewal. No franchises are required to serve unincorporated communities in any of the three states OTP serves.

GENERATION AND PURCHASED POWER

OTP primarily relies on company-owned generation, supplemented by power purchase agreements, to supply the energy to meet our customer needs. Wholesale market purchases and sales of electricity are used as necessary to balance supply and demand. Our mix of owned generation and wholesale market energy purchases to meet customer demand are impacted by wholesale energy prices and the relative cost of each energy source.

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As of December 31, 2023, OTP’s wholly or jointly owned plants and facilities, as well as in place power purchase agreements, and their dependable kilowatt (kW) capacity were:

	Capacity / Purchased Power in kW
Owned Generation:
Baseload Plants
Big Stone Plant(1)	256,900
Coyote Station(2)	148,400
Total Baseload Plants	405,300
Combustion Turbine and Small Diesel Units
Astoria Station	249,700
All Other	102,800
Total Combustion Turbine and Small Diesel Units	352,500
Owned Wind Facilities (rated at nameplate)
Merricourt	150,000
Ashtabula III	62,400
Luverne	49,500
Ashtabula	48,000
Langdon	40,500
Total Owned Wind Facilities	350,400
Hoot Lake Solar	49,900
Hydroelectric Facilities	2,600
Total Owned Generation Capacity	1,160,700
Power Purchase Agreements:
Purchased Wind Power (rated at nameplate and greater than 2,000 kW)
Edgeley	21,000
Langdon	19,500
Total Purchased Wind	40,500
Total Generating Capacity	1,201,200
(1) Reflects OTP's 53.9% ownership percentage of jointly owned facility.
(2) Reflects OTP's 35.0% ownership percentage of jointly owned facility.

The following charts summarize the percentage of our generating capacity by source, including owned and jointly owned facilities and through power purchase arrangements, as of December 31, 2023 and 2022:

    

Under Midcontinent Independent System Operator (MISO) requirements, OTP is required to provide sufficient capacity through wholly or jointly owned generating capacity or power purchase agreements to meet its monthly weather-normalized forecast demand, plus a reserve obligation. MISO operates under a seasonal resource adequacy construct in which generation resources are accredited and planning reserve margin requirements are implemented on a seasonal basis. Current planning reserve margin requirements range between 7.4% and 25.5%, depending on the season.

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The following charts summarize the percentage of retail kwh sold by source during the years ended December 31, 2023 and 2022:

                    

Capacity Additions

As part of our investment plan to meet our future energy needs, the following projects have been recently undertaken, completed, or acquired:

Ashtabula III Wind Farm is a 62-megawatt (MW) wind farm located in eastern North Dakota. The facility was purchased for approximately $50 million in January 2023. Prior to the purchase of the wind farm assets, we were purchasing the wind-generated electricity from the wind farm pursuant to a power purchase agreement.

Hoot Lake Solar is a 49-MW solar farm constructed on and around our Hoot Lake Plant property in Fergus Falls, Minnesota, with a total cost of approximately $60 million. The facility was placed into commercial operation in August 2023.

Wind Energy Facility Upgrades consisting of the replacement and upgrade of hubs, gearboxes, blades, generators and other components of our Ashtabula, Ashtabula III, Langdon and Luverne wind facilities at a total cost of approximately $230 million. Once complete, we expect the increased energy production from these facilities will be equivalent to an additional 40-MW of generation. We anticipate the repowering of our Langdon facility will be completed in 2024 and the remaining facilities to be completed in 2025. Once complete, the energy production from each of these facilities is eligible for production tax credits (PTCs) over a ten-year period. We expect these projects will lower customer costs through a combination of fuel savings and the tax credit benefits afforded to our customers.

ENERGY TRANSITION

OTP is committed to transitioning to a lower-carbon and increasingly clean energy future, while maintaining affordable and reliable electricity to serve our customers. We have developed the following goals in furtherance of our efforts to support the energy transition:

Own or purchase energy generation that is 55% renewable by 2030.

Reduce carbon emissions from owned generation resources 50% by 2030 from 2005 levels.

Reduce carbon emissions from owned generation resources 97% by 2050 from 2005 levels.

We have based these goals on our December 2023 supplemental Integrated Resource Plan (IRP) filing in Minnesota. While modified from our previously published goals, they reflect current market conditions, including the impact of higher natural gas prices, and higher than originally forecasted dispatch levels of our co-owned, coal-fired power plants.

We have undertaken numerous initiatives to reduce our carbon footprint and mitigate greenhouse gas (GHG) emissions in the process of generating electricity for our customers. Our recent initiatives include retiring the 140-MW coal-fired Hoot Lake Plant, adding the 150-MW Merricourt Wind Energy Center and the 49-MW Hoot Lake Solar facility to our resource mix and sponsoring energy conservation programs. We anticipate our Minnesota retail sales will be 80% carbon free by 2030, in compliance with Minnesota clean energy requirements.

From 2005 through 2023, we have reduced our carbon dioxide (CO2) emissions approximately 39% and increased the amount of renewable generation resources we own or purchase through power purchase agreements by approximately 420-MW. We currently own or contract energy generation that is 37% renewable.

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The following chart depicts our energy resource mix, which is the electricity we used to serve our customers in 2005 and 2023, and the projected mix in 2030 and 2050. The amounts include energy generated from owned resources, procured through power purchase agreements and energy purchased in the wholesale market:

RESOURCE MATERIALS

Coal is the principal fuel burned at our jointly owned Big Stone and Coyote Station generating plants. Coyote Station, a mine-mouth facility, burns North Dakota lignite coal. Big Stone Plant burns western subbituminous coal transported by rail. We source coal for our coal-fired power plants through requirements contracts which do not include minimum purchase requirements but do require all coal necessary for the operation of the respective plant to be purchased from the counterparty. Our coal supply contracts for our Big Stone Plant and Coyote Station have expiration dates in 2024 and 2040, respectively.

The supply agreement between the Coyote Station owners, including OTP, and the coal supplier includes provisions requiring the Coyote Station owners to purchase the membership interests and pay off or assume loan and lease obligations of the coal supplier, as well as complete mine closing and post-mining reclamation, in the event of certain early termination events and at the expiration of the coal supply agreement in 2040. See below and Note 1 to our consolidated financial statements included in this report on Form 10-K for additional information.

Coal is transported to Big Stone Plant by rail and is provided under a common carrier rate which includes a mileage-based fuel surcharge.

We purchase natural gas for use at our combustion turbine facilities based on anticipated short-term resource needs. We procure natural gas from multiple vendors at spot prices in a liquid market primarily under firm delivery contracts.

TRANSMISSION AND DISTRIBUTION

Our transmission and distribution assets deliver energy from energy generation sources to our customers. In addition, we earn revenue from the transmission of electricity over our wholly or jointly owned transmission assets for others under approved rate tariffs. As of December 31, 2023, we were the sole or joint owner of approximately 14,000 miles of transmission and distribution lines.

Midcontinent Independent System Operator

MISO is an independent, non-profit organization that operates the transmission facilities owned by other entities, including OTP, within its regional jurisdiction and administers energy and generation capacity markets. MISO has operational control of our transmission facilities above 100 kilovolts (kV). MISO seeks to optimize the efficiency of the interconnected system, provide solutions to regional planning needs and minimize risk to reliability through its security coordination, long-term regional planning, market monitoring, scheduling and tariff administration functions.

Transmission Additions

In 2022, MISO approved several projects within the first tranche of its long-range transmission plan, which includes two new 345 kV transmission projects. OTP will have a varying level of ownership interest in these projects, which will be completed over several years and are at various stages of planning and development:

Jamestown-Ellendale includes the construction of a new 345 kV transmission line in southeastern North Dakota spanning approximately 95 miles from Jamestown, North Dakota to Ellendale, North Dakota. This project is in the initial stages of planning and development. This jointly owned project is expected to be completed in 2028 and our capital investment is estimated to be approximately $230 million.

Big Stone South-Alexandria-Big Oaks includes the construction of a new 345 kV transmission line in eastern South Dakota and western Minnesota and the addition of a second circuit to an existing 345 kV line in central Minnesota. The new transmission line will span approximately 100 miles between Big Stone, South Dakota and Alexandria, Minnesota. A second circuit will be added to the existing transmission line spanning from Alexandria, Minnesota to Big Oaks, Minnesota. This project is in the initial stages of planning and development. This jointly owned project is expected to be completed in 2031 and our capital investment is estimated to be approximately $190 million.

SEASONALITY

Electricity demand is affected by seasonal weather differences, with peak demand occurring in the summer and winter months. As a result, our Electric segment operating results regularly fluctuate on a seasonal basis. In addition, fluctuations in electricity demand within the same season but

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between years can impact our operating results. We monitor the level of heating and cooling degree days in a period to assess the impact of weather-related effects on our operating results between periods.

PUBLIC UTILITY REGULATION

OTP is subject to regulation of rates and other matters in each of the three states in which it operates and by the federal government for, among other matters, the interstate transmission of electricity. OTP operates under approved retail electric tariff rates in all three states it serves. Tariff rates are designed to recover plant investments, a return on those investments, and operating costs. In addition to determining rate tariffs, state regulatory commissions also authorize return on equity (ROE), capital structure, and depreciation rates of our plant investments. Decisions by our regulators significantly impact our operating results, financial position, and cash flows.

Below is a summary of the regulatory agencies with jurisdiction of electric rates over OTP covered by each regulatory agency:

Regulatory
Agency	Areas of Regulation
Minnesota Public Utilities Commission (MPUC)	Retail rates, issuance of securities, depreciation rates, capital structure, public utility services, construction of major facilities, establishment of exclusive assigned service areas, contracts with subsidiaries and other affiliated interests and other matters. Selection or designation of sites for new generating plants (50,000 kW or more) and routes for transmission lines (100 kV or more). Review and approval of fifteen-year Integrated Resource Plan.
North Dakota Public Service Commission (NDPSC)	Retail rates, certain issuances of securities, construction of major utility facilities and other matters. Approval of site and routes for new electric generating facilities (>500 kW for wind generating facilities; >50,000 kW for non-wind generating facilities) and high voltage transmission lines (>115 kV). Review of fifteen-year Integrated Resource Plan.
South Dakota Public Utilities Commission (SDPUC)	Retail rates, public utility services, construction of major facilities, establishment of assigned service areas and other matters. Approval of sites and routes for new electric generating facilities (100,000 kW or more) and most transmission lines (115 kV or more).
Federal Energy Regulatory Commission (FERC)	Wholesale electricity sales, transmission and sale of electric energy in interstate commerce, interconnection of facilities, hydroelectric licensing and accounting policies and practices. Compliance with North American Electric Reliability Corporation (NERC) reliability standards, including standards on cybersecurity and protection of critical infrastructure.

In addition to base rates, which are established through periodic rate case proceedings within each state jurisdiction, there are other mechanisms for recovery of our capital investments and operating expenses between rate cases. The following table summarizes these recovery mechanisms:

Recovery Mechanism	Jurisdiction(s)	Additional Information
Fuel Clause Adjustment (FCA)	MN, ND, SD	Provides for periodic billing adjustments for changes in prudently incurred costs of fuel and purchased power. In North and South Dakota, fuel and purchased power costs are generally adjusted on a monthly basis. In Minnesota, fuel and purchased power costs are estimated on an annual basis and the accumulated difference between actual and estimated cost per kwh is refunded or recovered, subject to regulatory approval, in subsequent periods.
Transmission Cost Recovery Rider (TCR)	MN, ND, SD	Provides for the recovery of costs outside of a general rate case for investments in new or modified electric transmission assets and certain MISO transmission service and related costs.
Renewable Resource Rider (RRR)	MN, ND	Provides for the recovery of costs outside of a general rate case for investments in certain new renewable energy projects.
Energy Conservation and Optimization Rider (ECO)	MN	Under Minnesota law, OTP is required to save 1.75% of its gross retail energy revenues through the energy conservation and optimization program. Recovery of these costs outside of a general rate case occurs through the ECO rider.
Electric Utility Infrastructure Costs Rider (EUIC)	MN	Provides for the recovery of costs for investments made to replace or modify existing infrastructure if the replacement or modification conserves energy or uses energy more efficiently.
Metering and Distribution Technology Cost Recovery Rider (MDT)	ND	Provides for the recovery of costs for advanced metering infrastructure, outage management systems and demand response projects.
Generation Cost Recovery Rider (GCR)	ND	Provides for the recovery of costs outside of a general rate case for investments in new generation facilities.
Energy Efficiency Plan (EEP)	SD	Provides for the recovery of costs from energy efficiency investments.
Phase-In Rider (PIR)	SD	Provides for the recovery of costs outside of a general rate case for investments in new generation facilities and advanced grid infrastructure.

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Resource Planning

Under Minnesota law, utilities are required to submit for approval by the Minnesota Public Utilities Commission (MPUC) a 15-year advance Integrated Resource Plan (IRP). An IRP is a set of resource options a utility could use to meet the service needs of its customers over the forecast period, including an explanation of the utility’s supply and demand circumstances, and the extent to which each resource option would be used to meet those service needs. The MPUC’s findings of fact and conclusions regarding IRPs are considered to be prima facie evidence, subject to rebuttal, in future rate reviews and other proceedings.

In 2021, the North Dakota Legislative Assembly enacted a provision requiring investor-owned electric utilities to submit an IRP to the North Dakota Public Service Commission (NDPSC) and granted the NDPSC the authority to adopt rules and regulations for the preparation and submission of IRPs. The NDPSC's rules and regulations were finalized and became effective on January 1, 2023. Under the finalized regulation, utilities are required to submit a 15-year advance IRP every three years.

Capital Structure Petition

Minnesota law requires an annual filing of a capital structure petition with the MPUC. In this filing the MPUC reviews and approves OTP's capital structure. Once approved, OTP may issue securities without further petition or approval, provided the issuance is consistent with the purposes and amounts set forth in the approved petition. OTP’s current capital structure approved by the MPUC on August 29, 2023, allows for an equity-to-total-capitalization ratio between 48.3% and 59.1%, with total capitalization not to exceed $1.958 billion.

Renewable Energy Standard

Minnesota has a renewable energy standard requiring utilities to generate or procure sufficient renewable generation such that the following percentages of total retail electric sales to Minnesota customers come from qualifying renewable sources: 25% by 2025 and 55% by 2035. Qualifying renewable sources are classified as wind, hydropower, hydrogen, and certain biomass generation. We met the current renewable sources requirements with a combination of owned renewable generation and purchases from renewable generation sources. Minnesota law also requires 1.5% of total Minnesota retail electric sales by public utilities to be supplied by solar energy. For a public utility with between 50,000 and 200,000 retail electric customers, such as OTP, at least 10% of the 1.5% requirement must be met by solar energy generated by or procured from solar photovoltaic devices with a nameplate capacity of 40 kW or less. We met the current solar requirement with a combination of owned solar generation and solar renewable energy certificate (REC) purchases. We plan to comply with the requirements of this standard in the future through a combination of our existing and projected renewable generation fleet and the purchase of RECs.

Minnesota Clean Energy Bill

In February 2023, Minnesota enacted the Clean Energy Bill, which requires electric utilities to generate or procure sufficient electricity from carbon-free resources, to provide retail customers in Minnesota with at least the following percentages of carbon-free electric energy: 80% by 2030, 90% by 2035, and 100% by 2040. Carbon-free resources include wind, solar, hydropower, and nuclear generation. To provide flexibility, the law allows electric utilities to use RECs to offset carbon emissions and for the MPUC to consider whether a regulated utility's requirement to meet established standards should be delayed due to affordability or reliability impacts. We expect to meet these requirements based on our existing and projected renewable generation fleet and the purchase of RECs.

ENVIRONMENTAL REGULATION

OTP is subject to stringent federal and state environmental standards and regulations regarding, among other things, air, water and solid waste pollution. OTP's facilities have been designed, constructed and, as necessary, updated to operate in compliance with applicable environmental regulations. However, new or amended laws and regulations or changes in interpretations of current laws and regulations may require additional pollution control equipment or emission reduction measures, and there can be no assurance that our facilities will remain economic to operate. Prudent expenditures incurred to comply with environmental regulations are eligible to be recovered in rates authorized by regulators in jurisdictions in which we operate; however, there can be no assurance that future costs will be authorized for recovery. Alternatively, additional pollution control equipment or other emission reduction measures may prove to be uneconomic, potentially leading to the exiting of a facility earlier than originally planned. As it relates to our jointly owned facilities, we may determine it is necessary to transfer, sell or otherwise divest of our ownership, or the ownership group may determine the early closure or repurposing of a facility is necessary.

Financial Impacts

For the five-year period ended December 31, 2023, OTP invested approximately $6.6 million in environmental control facilities, including $1.4 million in 2023. Our construction budget for the next five years includes approximately $7.5 million of capital investments in environmental control equipment. The timing and amount of our expenditures may change as the regulatory environment changes.

Emerging Regulation

The Environmental Protection Agency (EPA) adopted the Regional Haze Rule (RHR) in 1999 as an effort to improve visibility in national parks and wilderness areas. The RHR requires states, in coordination with the EPA and other governmental agencies, to develop and implement state implementation plans (SIPs) that work towards achieving natural visibility conditions by the year 2064; to set goals to ensure reasonable progress is being made; and periodically evaluate whether those goals and progress are on track or whether additional emission reductions are appropriate. The second RHR implementation period covers the years 2018-2028.

Coyote Station is subject to assessment in the second implementation period under the North Dakota SIP for the RHR. The North Dakota Department of Environmental Quality (NDDEQ) submitted its proposed RHR SIP to the EPA for approval in August 2022. In its plan, the NDDEQ concluded it is not reasonable to require additional emission controls during this planning period. The EPA submitted comments during the development of the SIP requesting NDDEQ to reassess its determination for Coyote Station. See Note 13 to our consolidated financial statements for additional information. At this time we are unable to predict the ultimate impact, however, there could be a cost of compliance which could have a material impact on our operating results, financial condition and liquidity.

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In April 2023, the EPA released a proposal to tighten aspects of the Mercury and Air Toxics Standards, including the reduction of emissions limits for filterable particulate matter, and requiring the use of continuous emissions monitoring systems to demonstrate compliance. Until the EPA takes final action on this rulemaking, we are unable to predict the ultimate impact, however, there could be a cost of compliance which could have a material impact on our operating results, financial condition and liquidity.

Climate Change and Greenhouse Gas Regulation

Global climate change presents a significant energy and environmental policy challenge. Combustion of fossil fuels for the generation of electricity is a considerable source of CO2 emissions, which is the primary GHG emitted by our utility operations. The federal government and many states are pursuing climate policies to regulate GHG emissions as part of a broad-based effort to limit global warming.

In February 2021, the U.S. rejoined the United Nations Framework Convention on Climate Change (the Paris Agreement), which is a legally binding international treaty on climate change adopted by over 190 countries. The goal of the Paris Agreement is to limit the global temperature increase to well below 2° Celsius compared to pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5° Celsius. The Biden Administration set goals of reducing GHG emissions by 50% to 52% from 2005 levels in 2030 and reaching 100% carbon pollution-free electricity by 2035 as part of the U.S. plan to achieve the goals under the Paris Agreement.

In February 2023, Minnesota enacted the Clean Energy Bill, which requires electric utilities to generate or procure sufficient electricity from carbon-free resources to provide retail customers in Minnesota with at least the following percentages of carbon-free electric energy: 80% by 2030, 90% by 2035, and 100% by 2040.

The implementation of climate change programs, such as the Paris Agreement, the Minnesota Clean Energy Bill, and other federal or state regulations targeting GHG emissions may have a significant impact on our utility business. Specific regulatory measures to address climate change continue to evolve.

In May 2023, the EPA proposed new regulations under Section 111 of the Clean Air Act to regulate GHG emissions from existing and new fossil fuel-based electric generating units (EGU). The proposal provides requirements for different types of fossil fuel-based EGUs with various compliance dates.

•For existing coal-fired steam generating units that were in operation before January 8, 2014 and that plan to operate past December 31, 2039, the proposal would (subject to certain exceptions) set emissions standards that reflect the use of carbon capture and sequestration (CCS) with 90% capture of CO2 emissions beginning in 2030.

•For existing coal-fired steam generating units that are scheduled to be retired between January 1, 2032 and December 31, 2039, the proposed rule would, in general, set emissions standards that reflect the use of co-firing 40% natural gas with coal beginning in 2030.

•For existing coal-fired steam generating units that will either (a) retire by January 1, 2032, or (b) retire between 2032 and December 21, 2034 and will operate at a 20% annual capacity factor limit in the meantime, the proposed rule would simply require routine maintenance and no increase in emission rate.

The proposal also includes emission standards for existing large (greater than 300 mega-watt), frequently used (those that operate at a capacity factor over 50%) natural gas combustion turbines, including which emission standard would reflect the use of CCS by 2035 or co-firing with low-GHG hydrogen at incremental portions in 2032 (30% of volume) and 2038 (96% of volume). Under the proposed rule, each state must submit a plan to the EPA to implement standards that are at least as stringent as the EPA’s emission guidelines, unless states demonstrate that due to remaining useful life and other factors, a facility cannot reasonably achieve the standards. The EPA is proposing to require states to submit their plans within 24 months of the effective date of the final regulation. This proposed rule has the potential to impact the emissions controls needed at OTP’s coal-fired power plants, which could have an impact on our operating results, financial condition and liquidity.

While the future financial impact of any current, proposed, or pending litigation or regulation of GHG or other emissions is unknown at this time, any capital or operating costs incurred for additional pollution control equipment or emission reduction measures could materially adversely impact our future operating results, financial position, and liquidity unless such costs could be recovered through related rates and/or future market prices for energy.

MANUFACTURING Contribution to Operating Revenues: 30% (2023), 27% (2022), 28% (2021)

Manufacturing consists of businesses engaged in the following activities: contract machining, metal parts stamping, fabrication and painting, and production of plastic thermoformed horticultural containers, life science and industrial packaging, and material handling components and extruded raw material stock. The following is a brief description of each of these businesses:

BTD Manufacturing, Inc. (BTD), with facilities in Detroit Lakes and Lakeville, Minnesota, Washington, Illinois and Dawsonville, Georgia, provides metal fabrication services for custom machine parts and metal components through metal stamping, tool and die, machining, tube bending, welding and assembly.

T.O. Plastics, Inc. (T.O. Plastics), with facilities in Otsego and Clearwater, Minnesota, manufactures thermoformed plastics products, including its own line of horticulture containers and custom packaging products for the medical and industrial product markets.

CUSTOMERS

Our metal fabrication business primarily serves Midwestern and Southeastern U.S. manufacturers in the recreational vehicle, lawn and garden, agricultural, construction, and industrial and energy equipment end markets. Our plastic products business serves primarily U.S. customers in the

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horticulture, medical and life sciences, industrial, recreational and electronics industries. The principal method of production distribution is by direct shipment to our customers through direct customer pick-up or common carrier ground transportation.

No single customer or product of our Manufacturing segment businesses accounted for 10% or more of our consolidated operating revenues in 2023. However, two customers combined to account for 30% of segment operating revenues for the year ended December 31, 2023 and 40% for the year ended December 31, 2022.

COMPETITIVE CONDITIONS

We compete in a highly fragmented market with competition from both domestic and international entities. Our competitors vary in size, ranging from small companies focused on certain end markets or geographical area, to large companies with broad manufacturing capabilities and geographical reach. Competition can be geographically regionalized as customers procure products locally to manage cost and minimize logistical complexities. Certain competitors may have broader product lines, more manufacturing capacity, and greater distribution capabilities than we do.

We believe the principal competitive factors in our Manufacturing segment are product performance, quality, price, technical innovation, cost effectiveness, customer service and breadth of product line. We intend to continue to compete based on high quality products, innovative production technologies, cost-effective manufacturing techniques, close customer relations and support, and increasing product offerings. 

RESOURCE MATERIALS

We use raw materials in the products we manufacture, including, among others, steel, aluminum, and polystyrene and other plastics resins. Managing price volatility and ensuring raw material availability are important aspects of our business. We attempt to pass increases in the costs of these raw materials through to our customers. Increases in the costs of raw materials that cannot be passed on to customers could have a negative effect on profit margins. Additionally, a certain amount of residual material (scrap) is a by-product of the manufacturing and production processes. Declines in commodity prices for these scrap materials due to weakened demand or excess supply can negatively impact the profitability of our Manufacturing segment as it reduces their ability to mitigate the costs associated with excess material.

ENVIRONMENTAL REGULATION

Our manufacturing businesses are subject to environmental, health and safety laws and regulations, including those governing discharges to air and water, the management and disposal of hazardous substances, the cleanup of contaminated sites and health and safety matters.

PLASTICS Contribution to Operating Revenues: 31% (2023), 35% (2022), 32% (2021)

Plastics consists of businesses producing PVC pipe at plants in North Dakota and Arizona. The following is a brief description of these businesses:

Northern Pipe Products, Inc. (Northern Pipe), located in Fargo, North Dakota, manufactures and sells PVC pipe for municipal water, rural water, wastewater, storm drainage systems and other uses in the northern, midwestern, south-central and western regions of the United States as well as central and western Canada.

Vinyltech Corporation (Vinyltech), located in Phoenix, Arizona, manufactures and sells PVC pipe for municipal water, wastewater, water reclamation systems and other uses in the western, northwest and south-central regions of the United States.

PVC pipe is manufactured through an extrusion process, during which PVC compound (a dry powder-like substance) is introduced into an extrusion machine, where it is heated to a molten state and then forced through a sizing apparatus to produce the pipe. The newly extruded pipe is pulled through a series of water-cooling tanks, marked to identify the type of pipe and cut to finished lengths.

CUSTOMERS

PVC pipe products are marketed through a combination of independent sales representatives, company salespersons and customer service representatives. Customers for our PVC pipe products consist primarily of wholesalers and distributors, and the principal method for distribution of our products is by common carrier ground transportation. No single customer of the PVC pipe companies accounted for 10% or more of our consolidated operating revenues in 2023. However, two customers, both of which are distributors of PVC pipe, combined to account for 36% of segment operating revenues for the year ended December 31, 2023 and 46% for the year ended December 31, 2022.

COMPETITIVE CONDITIONS

The plastic pipe industry is fragmented and competitive due to the number of producers, the small number of raw material suppliers and the fungible nature of the product. Due to shipping costs, competition is usually regional instead of national in scope. The principal factors of competition are price, customer service and product performance. We compete not only against other plastic pipe manufacturers, but also ductile iron, high-density polyethylene, steel and concrete pipe producers. Pricing pressure will continue to affect our operating margins in the future.

We will continue to compete based on our high-quality products, cost-effective production techniques and close customer relations and support, including our responsiveness and reliability.

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RESOURCE MATERIALS

PVC resins are acquired in bulk and shipped to our facilities by rail. There are four vendors from which we can source our PVC resin requirements. In 2023 we sourced all of our PVC resin from three vendors. Our contractual arrangements to acquire resin generally include estimated annual order quantities with no required minimum purchases, and include variable pricing based on market prices for resin. The supply of PVC resin may also be limited primarily due to manufacturing capacity and the limited availability of raw material components. Most U.S. resin production plants are located in the Gulf Coast region. These plants are subject to the risk of damage and production shutdowns because of exposure to hurricanes or other extreme weather events that occur in this part of the United States. The loss of a key vendor, or any interruption or delay in the supply of PVC resin could disrupt the ability of our Plastics segment businesses to manufacture products, cause customers to cancel orders or result in increased expenses for obtaining PVC resin from alternative sources, if such sources were available. We believe we have good relationships with our key raw material vendors.

Due to the commodity nature of PVC resin and PVC pipe and the dynamic supply and demand factors worldwide, historically the markets for both PVC resin and PVC pipe have been very cyclical with significant fluctuations in prices and gross margins.

In addition to PVC resin, we use certain other materials, such as stabilizers, gaskets and lumber, in the process of manufacturing and shipping our PVC pipe products. We generally source these materials from a limited number of suppliers, and supply chain constraints or disruptions related to these materials could disrupt our ability to manufacture or ship products and could result in increased costs.

SEASONALITY

Demand for our PVC pipe products can be impacted by seasonal weather differences, with generally lower sales volumes realized in the first quarter of the year when cold temperatures and frozen ground across the northern portion of our footprint can delay or prevent construction activity and consequently delay or prevent customer orders of PVC pipe.

ENVIRONMENTAL REGULATION

Our plastics businesses are subject to environmental, health and safety laws and regulations, including those governing discharges to air and water, the management and disposal of hazardous substances, the cleanup of contaminated sites and health and safety matters.

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ITEM 1A. RISK FACTORS

RISK FACTORS AND CAUTIONARY STATEMENTS

Our businesses are subject to various risks and uncertainties. Any of the risks described below or elsewhere in this report on Form 10-K or in our other SEC filings could materially adversely affect our business, operating results, financial condition and liquidity. Additional risks and uncertainties we are not presently aware of or that we currently consider immaterial may also affect our business, operating results, financial condition and liquidity.

OPERATIONAL RISKS

Our strategy includes large capital investments, which are subject to risks.

Our business strategy includes major capital investments at our operating companies. These capital projects are planned years in advance of their in-service dates and are subject to various risks including: adverse changes in regulatory treatment or public policy; changes in commodity pricing or construction costs; delivery of critical materials; obtaining necessary permits and licenses; and other adverse conditions. Capital investments in our Electric segment require regulatory approval and are subject to the risks of not being granted timely approval or allowed to be fully recovered. In addition, our ability to construct and own utility assets may be impacted by regulatory requirements to competitively bid such investments, which could impact the amount and timing of our capital investments. A lack of direct ownership, or the inability to complete capital projects on budget and in a timely manner could impact our ability to achieve our strategic financial goals and could adversely impact our operating results and financial condition.

Weather impacts, including seasonal fluctuations, could adversely affect our operating results.

Our Electric segment business is seasonal and weather patterns have had an impact on our financial performance in the past and may again in the future. Demand for electricity is normally greater in the winter and summer months. Unusually mild summers and winters could have an adverse effect on our financial condition and results of operations. Our Plastics segment businesses can be affected by seasonal weather prohibiting or delaying construction projects at any time of the year in any geography, but specifically times of the year when frozen ground and cold temperatures in many parts of the country can delay construction projects, all of which can result in reduced customer demand and could have an adverse effect on our financial condition, operating results and liquidity.

We are subject to physical and transition risks associated with climate change and extreme weather events.

Longer term shifts in climate patterns may impact our customers' demand for electricity, interrupt our business operations and damage our facilities; reduce the availability of natural resources, such as water; and cause disruptions in our supply chains.

Climate change may increase the frequency and severity of extreme weather events, such as prolonged periods of extreme cold or heat, and natural disasters, such as severe snow and ice storms, tornadoes, flooding and wildfires. These acute events could result in the interruption of our business operations and damage to our facilities. An extreme weather event within our utility service area could directly affect our capital assets, causing disruption in service to customers, and result in reduced operating revenues and repair or replacement costs, due to downed wires and poles or damage to other operating equipment.

In the past, severe weather events in the Gulf Coast region of the U.S. have disrupted the supply of PVC resin, the primary material input of our Plastics segment businesses. As most U.S. PVC resin production plants are located in the Gulf Coast region, an area prone to seasonal hurricane activity and other extreme weather events, our access to PVC resin may be impacted by the volume and magnitude of hurricane and storm activity in this region, which could impact our Plastics segment businesses.

Increased risk of natural disasters, such as wildfires, could have financial consequences, including limiting our ability to secure sufficient insurance coverage, or lead to increased insurance cost. While we carry liability insurance, given an extreme event, if we were found to be liable for damages, amounts that exceed our coverage limit could negatively impact our financial condition, operating results and liquidity.

These risks may also negatively impact our credit ratings, which may limit our access to capital markets and increase our borrowing costs. In addition, to the extent investors view climate change, fossil fuel combustion and GHG emissions as a financial risk, our stock price or our ability to access capital markets on favorable terms and conditions could be adversely impacted.

We may experience transition risks in moving towards low carbon generation and manufacturing. For example, we may face challenges with the adoption of new technologies, meeting changing customer expectations and committing to voluntary GHG emissions reduction goals, as well as complying with evolving local, state or federal regulatory requirements intended to reduce GHG emissions.

The loss of, or significant reduction in revenue from, any of our key customers could have an adverse effect on our operating results.

While no single customer provided more than 10% of our consolidated operating revenues, each of our segments have customers which accounted for over 10% of the segment’s operating revenues. In 2023, two customers accounted for 21% of Electric segment revenues, two customers combined to account for 30% of Manufacturing segment operating revenues and two customers combined to account for 36% of Plastics segment operating revenues. The loss of any one of these customers or a significant decline in sales to these customers, would have a significant negative impact on the segment's financial condition and operating results, and could have a significant negative impact on the Company’s consolidated financial condition, operating results and liquidity.

We are subject to counterparty credit risk.

We extend credit to our customers in the ordinary course of business in each of our operating segments. Our customers' ability to pay depends on a variety of factors including macroeconomic conditions, local economic conditions including unemployment rates, and industry conditions in which our customers operate. Increased customer delinquencies and bad debts could adversely impact our operating results and liquidity.

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Our operations are subject to environmental, health and safety laws and regulations. 

We are subject to numerous federal, state, and local environmental, health and safety laws and regulations governing, among other things, discharges to air and water, natural resources, hazardous waste and toxic substances, the cleanup of contaminated sites, and health and safety matters. Our failure to comply with applicable laws and regulations could result in civil or criminal fines or penalties, enforcement actions, and regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, which could materially and adversely affect our business. Compliance with these laws and regulations is a significant factor in our business. We have incurred and expect to continue to incur capital expenditures and operating costs to comply with applicable current and future laws and regulations.

Our businesses continue to be subject to additional and changing environmental, health and safety laws and regulations, and we could incur additional costs complying with requirements that are promulgated in the future. New laws or regulations or changes to existing laws and regulations in the future may result in disruptions to our business, changes in customer preferences, or changes in customer demand, which could adversely impact our financial condition, operating results and liquidity.

Recently, various federal and state agencies have heightened their scrutiny of per- and polyfluoroalkyl substances (PFAS), which are manufactured chemicals used in a variety of consumer and industrial products. Regulators have recently proposed additional chemicals be designated as hazardous substances, including a proposal to designate perfluorooctanesulfonic acid and perfluorooctanoic acid, two of the most common PFAS chemicals, as hazardous substances, which could have wide-ranging impacts on companies across various industries, including ours. We are investigating whether PFAS compounds are used in our manufacturing or operating processes that occur in our various businesses. At this time, we cannot predict the outcome or the severity of the impact, if any, of future laws or regulations enacted to address PFAS.

A cyber incident, security breach or system failure could adversely affect our business and operating results.

The operation of our business is dependent on the secure functioning of our computer hardware and software systems, as well as that of third-party service providers and vendors we use to electronically process certain of our business transactions. Information systems, both ours and those of third parties, are vulnerable to security breaches by computer hackers and cyber terrorists, and the negligent or intentional breach of established controls and procedures, or mismanagement of confidential information by employees. Cyber-attacks or other security breaches may also be perpetrated through the use of artificial intelligence, which could introduce additional complexity to such an attack or breach. While we employ a defense-in-depth strategy and regularly conduct cybersecurity assessments, we cannot be certain our information security systems and protocols and those of our vendors and other third parties are sufficient to withstand a cyber-attack or other security breach.

A major cyber incident could result in significant expenses to investigate and repair security breaches or system damage, and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and damage to our reputation. For example, we may be subject to liability under various federal, state and international disclosure laws and data protection laws. These laws are subject to change and expansion and may require additional operational changes and costs to comply. 

The misappropriation, corruption or loss of personally identifiable information and other confidential data could lead to significant monetary damages, regulatory enforcement actions and breach notification and mitigation expenses, such as credit monitoring, and result in reputational damage affecting relations with shareholders, customers, regulators and others. In addition to property and casualty insurance, which may cover restoration of data, certain physical damage or third-party injuries, we have cybersecurity insurance related to a breach event. However, damage and claims arising from such incidents may not be covered or may exceed the amount of any available insurance.

The inability to attract and retain a qualified workforce could have an adverse effect on our operations.

The success of our business is heavily dependent on the leadership of our executive officers and key employees for implementation of our strategy. In addition, all of our businesses rely on a qualified workforce, including technical employees who possess certain specialized knowledge and skills. The inability to attract and retain a skilled and stable workforce at necessary staffing levels, whether due to decreases in hiring rates, increases in employee retirements, increases in terminations, or any combination thereof, may negatively affect our ability to service our customers, manufacture products or successfully manage our business and achieve our objectives.

Our acquisition or divestiture strategies are subject to risk and could adversely impact our financial position and operating results.

As part of our business strategy, we continually assess our mix of businesses and potential strategic acquisitions or divestitures. This investment strategy is subject to various risks, including the ability to identify appropriate acquisition candidates, or successfully negotiate and finance any acquisitions. In addition, difficulties in integrating the operations, services, products and personnel of the acquired business, and the potential loss of key employees, customers and suppliers of the acquired business could adversely impact our financial condition and operating results.

FINANCIAL RISKS

We are subject to capital market and interest rate risks.

We rely on access to debt and equity capital markets as a source of liquidity to fund our investment initiatives, including rate base growth investments in our Electric segment and opportunities for investment, including acquisitions, in our Manufacturing and Plastics segments. Capital markets are impacted by global and domestic economic conditions, monetary policy, commodity prices, geopolitical events and other factors. If we are unable to access capital on acceptable terms and at reasonable costs, our ability to implement our business plans may be adversely affected. In addition, higher market interest rates on outstanding variable-rate, short-term indebtedness could also impact our operating results. In 2023, rising market interest rates caused the applicable rate of interest on our short-term indebtedness to increase significantly. However, the impact to our operating results was not significant due to our low level of outstanding borrowings on our short-term indebtedness. Our operating results could be

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impacted if we significantly increase our short-term borrowings or issue new long-term debt, and interest rates remain elevated or continue to increase.

A decrease in our credit ratings could increase our borrowing costs and result in additional contractual costs.

We rely on our investment grade credit ratings to provide acceptable costs for accessing the capital markets. A downgrade of our credit ratings could result in higher borrowing costs thereby negatively impacting our operating results and limiting our ability to access capital markets, which may negatively impact our ability to implement our business plans. In addition, OTP is a party to contracts that require the posting of collateral or settlement of applicable contracts if credit ratings fall below certain levels.

Our pension and other postretirement benefit plans are subject to investment and interest rate risks.

The financial obligations and related costs of our pension and other postretirement benefit plans are affected by numerous factors. Assumptions related to future costs, investment returns, actuarial estimates and interest rates have a significant effect on our funding obligations and the cost recognized related to these plans. If our pension plan assets do not achieve our estimated long-term rate of return or if our other estimates prove to be inaccurate, our operating results, financial condition and liquidity may be adversely impacted. In addition, our funding requirements could be impacted by changes to the Pension Protection Act.

We rely on our subsidiaries to provide sufficient earnings and cash flows to allow us to meet our financial obligations and pay dividends to our shareholders. 

Otter Tail Corporation is a holding company with no significant operations of its own. The primary source of funds for payment of our financial obligations and dividends to our shareholders is from cash provided by our subsidiary companies. Our ability to meet our financial obligations and pay dividends on our common stock principally depends on the earnings, cash flows, capital requirements and general financial positions of our subsidiary companies. In addition, OTP is subject to federal and state regulations which may restrict its ability to pay dividends. Finally, we are also reliant on our subsidiary companies to maintain compliance with financial covenants under our various short- and long-term debt agreements. Our debt agreements include restrictions on the payment of cash dividends upon an event of default. 

Changes in tax laws could materially affect our financial condition and operating results.

Our provision for income taxes and tax obligations are impacted by various tax laws and regulations, including the availability of various tax credits, IRS tax policies such as tax normalization and, at times, the ability to carryforward net operating losses and tax credits. Changes in tax laws, regulations and interpretations could have an adverse effect on our financial condition and operating results. Tax law changes that reduce or eliminate production or investment tax credits (ITCs), or the ability to transfer or sell these credits, may impact the economics of constructing certain electric generation resources, which may impact our planned investments, and could adversely affect our financial condition and operating results.

ELECTRIC SEGMENT RISKS

General economic and industry conditions impact our business.

Several factors, many of which are beyond our control, may contribute to reduced demand for energy from our customers or increase the cost of providing energy to our customers. These risks include economic growth or decline in our service areas, demographic changes in our customer base and changes in customer demand or load growth due to, among other items, proliferation of distributed generation, energy efficiency initiatives and technological advancements. In addition, customer demand could be impacted by increased competition in our service territories or the loss of a service territory or franchise. Other risks include increased transmission or interconnection costs, generation curtailment and changes in the manner in which wholesale power is purchased and sold. A decrease in revenues or an increase in expenses related to our electric operations could negatively impact our financial condition, operating results and liquidity.

Our utility business is significantly impacted by government legislation and regulation.

OTP is subject to federal and state legislation and comprehensive regulation by federal and state regulatory agencies, including the public utility commissions in each of the three states in which OTP operates, and by the FERC. State utility commissions regulate, among other matters, the establishment of assigned service areas, the siting and construction of major facilities, the capital structure of the utility business, and the allowed rates to charge customers for providing energy and utility service. Each state utility commission operates independent of one another; therefore, OTP is subject to and must adhere to the decisions of each independent state commission. The FERC regulates, among other matters, wholesale energy transactions, hydroelectric licensing, transmission and sale of electric energy in interstate commerce, and the interconnection of electric facilities.

Our financial condition, operating results and liquidity are significantly impacted by, and dependent upon, our ability to recover the costs associated with providing utility service and earn a return on our utility capital investments. There is no assurance that each state utility commission will judge our utility costs to have been prudently incurred or that rates will produce full recovery of such costs. In addition, changes in the federal or state regulatory framework could impair our ability to recover utility costs historically collected from our customers. Diverging public policy priorities across the jurisdictions we serve, and a lack of inter-jurisdictional consensus, may impact our ability to recover the cost of, and return on, our capital investments and our operating costs; it may impact our future capital investment opportunities; and may result in inefficiencies which could negatively impact our financial position, operating results and liquidity.

In addition to the recovery of our utility costs, our profitability is impacted by our authorized ROE, which can be impacted by macroeconomic factors such as interest rates. There can be no assurance that each state utility commission or the FERC will authorize a rate of return which allows us to achieve our financial goals. An adverse decision by one or more regulatory authorities or any prolonged delay in rendering a decision in a rate or other proceeding could adversely impact our financial condition, operating results and liquidity.

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Inflationary cost pressures have increased the cost of constructing our utility assets and operating our utility business. There can be no assurance that our state regulatory commissions will authorize recovery of rising costs. Regulatory commissions may also limit future capital investments or the rate of return allowed on such investments in response to inflationary cost pressures and customer bill impacts. Such limitations could negatively impact our financial position, operating results and liquidity.

Our generating facilities are subject to risks that could result in early closure or the sale of our ownership interest.

Changes in operational or economic factors, environmental regulation or risks of litigation could result in the early closure or the sale of our interest in a generating facility. In the event of an early closure, a significant asset impairment charge could be required, and we would be obligated to pay for our share of the costs of closure of the generating facility, including costs associated with decommissioning, remediation, reclamation and restoration of the property, and any costs of terminating contracts associated with the generating facility, such as coal supply arrangements. In the event of a sale of our interest in a generating facility, we may not be able to negotiate the sale on favorable terms, which could result in the recognition of a loss on the sale and other potential liabilities. There can be no assurance that we would be authorized by any of our state utility commissions to recover any costs or losses associated with the early closure of or sale of our interest in a generating facility.

The loss of a major generating facility would require OTP to identify and obtain approval for other sources of generation for its customers, if available, and potentially expose us to higher purchased power costs. In addition, OTP may not be able to obtain timely regulatory approval for new generation resources to replace closed or sold facilities.

Our IRP, as revised in two supplemental filings in 2023, outlined our plan to withdraw from our 35% ownership interest in Coyote Station, a jointly owned coal-fired generation plant, in the event we are required to make a major, non-routine capital investment in the plant. In the event we were to withdraw from our ownership, we will seek to recover all costs related to the withdrawal from Coyote Station; however, there is a risk we may not be granted recovery of such costs. A full or partial denial of recovery of the costs of withdrawal could significantly impact our operating results, financial condition and liquidity.

Joint ownership of coal-fired generation facilities could impact our ability to manage changing regulations and economic conditions.

We own our coal-fired generation facilities jointly with other co-owners with varying ownership interests in such facilities. Our ability to make determinations on our IRP in order to best navigate changing environmental regulations and economic conditions may be impacted by our rights and obligations under the co-ownership agreements and related agreements, and our ability to reconcile a divergence in the interests of OTP and the co-owners of these generation facilities. Such a divergence could impair our ability to effectively manage these changing conditions to meet our strategic objectives and could adversely impact our financial condition, operating results and liquidity.

Federal and state environmental regulation could require us to incur substantial capital expenditures, increased operating costs or make it no longer economically viable to operate some of our facilities.

We are subject to federal, state and local environmental laws and regulations relating to air quality, water quality, waste management, natural resources and health safety. These laws and regulations regulate the modification and operation of existing facilities, the construction and operation of new facilities and the proper storage, handling, cleanup and disposal of hazardous waste and toxic substances. Compliance with these legal requirements may require us to commit significant resources and funds toward environmental monitoring, installation and operation of pollution control equipment, payment of emission fees and securing environmental permits. Obtaining environmental permits can entail significant expense and cause substantial construction delays. Failure to comply with environmental laws and regulations, even if caused by factors beyond our control, may result in civil or criminal liabilities, penalties and fines.

Coyote Station, one of OTP's jointly owned coal-fired power plants, is subject to assessment under the second implementation period of RHR as part of the state of North Dakota's RHR SIP. We cannot predict with certainty the impact the SIP may have on our business until the plan has been approved or otherwise acted on by the EPA, including its potential implementation of an alternative federal implementation plan. However, significant emission control investments could be required. Alternatively, investments in emission control equipment may prove to be uneconomic and result in the early closure or the sale of, or withdrawal from, our interest in Coyote Station.

Existing environmental laws or regulations may be revised and new laws or regulations may be adopted or become applicable to us. The multiple jurisdictions that govern our electric utility business may not agree as to the appropriate resource mix, which may lead to costs incurred to comply with one jurisdiction that are not recoverable across all jurisdictions served by the same assets. Revised or additional regulations which result in increased compliance costs or additional operating restrictions, particularly if those costs are not fully recoverable from customers, could have a material effect on our financial condition, operating results and liquidity, making the operation of some of our facilities no longer economically viable.

Legislation, regulation, litigation or other actions related to climate change and greenhouse gas emissions could materially impact us.

Current and future federal, state, regional and international regulations to address global climate change and reduce GHG emissions, including measures such as mandated levels of renewable generation, mandatory reductions in CO2 emission levels, taxes on CO2 emissions, or cap-and-trade regimes, could require us to incur significant costs which could negatively impact our financial condition, operating results and liquidity if such costs cannot be recovered through rates granted by rate-making authorities or through increased market prices for electricity.

In 2021, the Biden Administration introduced new targets aimed at reducing economy-wide net GHG emissions by 50% to 52% from 2005 levels by 2030. In addition, the Administration set a goal to reach 100% carbon pollution-free electricity by 2035. As a part of achieving these targets, the EPA proposed new regulations in May 2023 under Section 111 of the Clean Air Act to regulate GHG emissions from existing and new fossil fuel-based EGUs. As detailed above, this proposal would require states to implement stringent emissions standards for most coal-fired steam generating units and certain larger natural gas combustion plants. Until the EPA takes final action on this rulemaking, we are unable to evaluate the precise impacts; however, the proposed rule has the potential to impact the emissions controls needed at OTP’s coal-fired power plants, which could have an impact on our operating results, financial condition and liquidity. The EPA may implement additional new regulations targeting power plants to

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support its aforementioned economy-wide GHG reduction goals, which could impose substantial costs on and impact the operations of our utility business, which may materially impact our financial condition, operating results and liquidity.

In addition to complying with legislation and regulation, we could be subject to litigation related to climate change. In recent years, there has been an increase in litigation against electric utilities and fossil fuel producers. If OTP were subjected to such litigation, the costs of such litigation could be significant and an adverse outcome could require substantial capital expenditures, changes in operations and possible payment of penalties or damages which could affect our financial condition, operating results and liquidity if the costs are not recoverable in rates or covered by insurance.

Violations of extensive legal and regulatory compliance requirements could have a negative impact on our business and results of operations.

We are subject to an extensive legal and regulatory framework imposed under federal and state laws and regulatory agencies, including the FERC and the North American Electric Reliability Corporation (NERC). We could be subject to potential financial penalties for compliance violations. Our transmission systems and electric generation facilities are subject to the NERC mandatory reliability standards, including cybersecurity standards. If a serious reliability incident were to occur, it could have a material effect on our operations or financial results. Some states have the authority to impose substantial penalties in the event of non-compliance. We attempt to mitigate the risk of regulatory penalties through formal training. However, there is no guarantee our compliance program will be sufficient to ensure against violations.

In addition, energy policy initiatives at the state or federal level could increase incentives for distributed generation, or authorize municipal utility formation or acquisition of service territory, or local initiatives could introduce generation or distribution requirements that could change the current integrated utility model.

These laws and regulations significantly influence our operations and may affect our ability to recover costs from our customers. We are required to have numerous permits, licenses, approvals and certificates from the agencies and other organizations that regulate our business. We believe we have obtained the necessary approvals for our existing operations and that our business is conducted in accordance with applicable laws and regulatory requirements; however, we are unable to predict the impact on our operating results from the future regulatory activities of any of these agencies and other organizations. Changes in regulations or the imposition of additional regulations could have a material adverse impact on our financial condition, operating results and liquidity.

Our transmission and generation facilities could be vulnerable to cyber and physical attack.

OTP owns electric transmission and generation facilities subject to mandatory and enforceable standards advanced by the NERC. These bulk electric system facilities provide the framework for the electrical infrastructure of OTP’s service territory and interconnected systems, the operation of which is dependent on information technology systems. Further, the information systems that operate OTP’s electric system are interconnected to external networks. Parties that wish to disrupt the U.S. bulk power system or OTP’s operations could view OTP’s computer systems, software or networks as attractive targets for cyber-attack.

In addition, OTP’s generation and transmission facilities are spread throughout a large service territory. These facilities could be subject to physical attack or vandalism that could disrupt OTP’s operations or conceivably the regional or U.S. bulk power system.

OTP is subject to mandatory cybersecurity and physical security regulatory requirements. OTP implements the NERC standards for operating its transmission and generation assets and remains abreast of best practices within the business and the utility industry to protect its computers and computer-controlled systems from outside attack. We rely on industry-accepted security measures and technology to securely maintain confidential and proprietary information necessary for the operation of our systems. In an effort to reduce the likelihood and severity of cyber intrusions, we have cybersecurity processes and controls and disaster recovery plans designed to protect and preserve the confidentiality, integrity and availability of data and systems. We also take prudent and reasonable steps to protect the physical security of our generation and transmission facilities. However, all these measures and technology may not adequately prevent security breaches, ransomware attacks or other cyber-attacks, or enable us to recover effectively from such a breach or attack. Any significant interruption or failure of our information systems or any significant breach of security due to cyber-attacks, hacking or internal security breaches or physical attack of our generation or transmission facilities could adversely affect our business and our financial condition, operating results and liquidity.

Our generation, transmission, and distribution facilities are subject to operational risks which include circumstances that could result in injuries, loss of life, property damage, and fires.

The operation of our generation, transmission, and distribution facilities involves many risks including equipment failures, accidents and workforce safety matters, environmental damage, property damage, operator error, and the occurrence of catastrophic events such as fires, explosions and floods. Diminished availability or performance of those facilities could result in facility shutdowns, reduced customer satisfaction, reputational harm, and regulatory inquiries and fines.

Accidents, fires, explosions, catastrophic failures, general system damage or dysfunction, intentional acts of destruction, and other unplanned events related to our infrastructure would increase repair costs and may expose us to liability for personal injury, loss of life, and property damage. Fires alleged to have been caused by our transmission, distribution, or generation infrastructure, or that allegedly result from our contractors’ operating or maintenance practices, could also expose us to claims for fire suppression and clean-up costs, evacuation costs, fines and penalties, and liability for economic damages, personal injury, loss of life, property damage, and environmental pollution, whether based on claims of negligence, trespass, or otherwise. We maintain insurance coverage for such operating and event risks, but insurance coverage is subject to the terms and limitations of the available policies and may not be sufficient in amount to cover our ultimate liability. We may be unable to fully recover costs in excess of insurance through customer rates or regulatory mechanisms. If the amount of insurance is insufficient or otherwise unavailable, and if we are unable to fully recover in rates the costs of uninsured losses, our financial condition, operating results and liquidity could be materially affected.

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We are subject to risks associated with the procurement and transportation of fuel to our coal and natural gas powered generation facilities.

We rely on a limited number of suppliers to provide coal and a limited number of service providers to transport coal and natural gas to our facilities. A counterparty's failure to perform their obligations may arise due to liquidity challenges or insolvency, operational deficiencies or other circumstances such as severe weather or natural disasters, which could impact our ability to provide service to our customers or require us to seek alternative sources for these products and services, if available. A prolonged failure to perform by one or more of our current suppliers or service providers could lead to increased costs or other consequences which could negatively impact our financial condition, operating results and liquidity.

We are subject to risks associated with energy markets.

Our electric business is subject to the risks associated with energy markets, including market supply and changing energy prices. If we are faced with shortages in market supply, we may be unable to fulfill our contractual obligations to our retail, wholesale and other customers at previously anticipated costs. This could force us to obtain alternative energy or fuel supplies at higher costs, or suffer increased liabilities for unfulfilled contractual obligations. Any significantly higher than expected energy or fuel costs could negatively affect our financial condition, operating results and liquidity.

MANUFACTURING SEGMENT RISKS

The price and availability of raw materials could adversely impact our operating results.

The companies in our Manufacturing segment use a variety of raw materials in the products they manufacture including, among others, steel, aluminum, and polystyrene and other plastics resins. The price and availability of the raw materials used in our manufacturing processes are based on global supply and demand conditions, which can create volatile pricing and supply disruptions as conditions change. Federal trade policies, including imposed tariffs, can also impact prices for these raw materials. If we are unable to pass cost increases through to our customers or are unable to procure adequate or timely raw material inputs for use in our manufacturing processes, our financial condition, operating results and liquidity could be negatively impacted.

Additionally, a certain amount of residual material (scrap) is a by-product of the manufacturing and production processes used by our manufacturing companies. Declines in commodity prices for these scrap materials due to weakened demand or excess supply can negatively impact the profitability of our manufacturing companies as it reduces their ability to mitigate the cost associated with excess material.

Competition from domestic and foreign manufacturers could affect the revenues and earnings of our manufacturing businesses.

Our manufacturing businesses are subject to intense competition from domestic and foreign manufacturers, many of whom have broader product lines, greater distribution capabilities, greater capital resources, larger marketing, research and development personnel and facilities, and other capabilities. Our ability to compete on product performance, competitive pricing, technological innovation and customer service is critical to our ongoing success. If we are unable to compete in these and potentially other areas, our business and financial condition, operating results and liquidity could be adversely impacted.

Economic conditions in the end markets in which our customers operate could have an adverse impact on our operating results and liquidity.

Our manufacturing businesses derive a large amount of their revenues from customers in the following industry sectors: recreational vehicle/powersports, lawn and garden, construction, agriculture, energy and horticulture. Factors affecting any of these industries in general could adversely affect our operating results as growth in our operating revenues is largely dependent on the growth of our customers’ businesses in their respective industries. These factors include:

•seasonality of demand for our customers’ products which may cause our manufacturing capacity to be underutilized for periods of time;

•our customers’ failure to successfully market their products, gain or retain widespread commercial acceptance of their products or compete effectively in their industries;

•loss of market share for our customers’ products which may lead our customers to reduce or discontinue purchasing our products and components and to reduce prices, thereby exerting pricing pressure on us;

•economic conditions in the markets in which our customers operate, the United States in particular, including recessionary periods such as a global economic downturn;

•our customers’ decisions to bring the production of components in-house that have traditionally been outsourced to us; and

•product design changes or manufacturing process changes that may reduce or eliminate demand for the components we supply.

We expect future sales will continue to depend on the success of our customers. If economic conditions or demand for our customers’ products deteriorates, we may experience a material adverse effect on our financial condition, operating results and liquidity.

Our business may be adversely affected if we are not able to maintain our manufacturing, engineering and technological expertise.

The markets for our manufacturing businesses are characterized by changing technology and evolving process development. The continued success of our businesses will depend on our ability to:

•maintain technological leadership in our industry;

•implement new and expand on current robotics, automation and tooling technologies; and

•anticipate or respond to changes in manufacturing processes in a cost-effective and timely manner.

We may be unable to develop the capabilities required by our customers in the future. The emergence of new technologies, industry standards or customer requirements may render our equipment, inventory or processes obsolete or noncompetitive. We may be required to acquire new technologies and equipment to remain competitive. The acquisition and implementation of new technologies and equipment may require us to incur significant expense and capital investment, which could reduce our margins and affect our operating results. When we establish or acquire new facilities, we may not be able to maintain or develop our manufacturing, engineering and technological expertise due to a lack of trained

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personnel, ineffective training of new staff or technical difficulties with machinery. Failure to anticipate and adapt to customers’ changing technological needs and requirements and to maintain manufacturing, engineering and technological expertise may have material adverse effects on our financial condition, operating results and liquidity.

PLASTICS SEGMENT RISKS

External factors beyond our control could cause fluctuations in demand for our PVC pipe products and changes in our prices and margins, which could adversely impact our operating results.

Our PVC pipe products, sold through distributors and wholesalers, are primarily used in municipal and rural water projects, wastewater projects, storm drainage systems and reclamation systems. External factors beyond our control can cause volatility in demand for our products and sales prices impacting our operating margins. These factors can magnify the impact of economic cycles on our business and results of operations. Examples of external factors include:

•general economic conditions including housing and construction markets which can be cyclical;

•increases in interest rates;

•severe weather and natural disasters;

•governmental regulation in the United States; and

•funding shortages for municipal water and wastewater projects.

Extraordinary industry supply and demand dynamics beginning in 2021 and continuing through 2023 led to a rapid and significant increase in sales prices for PVC pipe and led to a significant expansion in our operating margins. As industry conditions normalize, sales prices for PVC pipe are expected to moderate from current levels resulting in decreased operating margins prospectively. The pace and magnitude of the decline in product pricing could materially impact our operating results.

Changes in PVC resin prices could negatively affect our plastics business.

The PVC pipe industry is highly sensitive to commodity raw material pricing volatility. Historically, when resin prices were rising or stable, margins and sales volumes were higher and when resin prices were falling, sales volumes and margins were lower. Changes in PVC resin prices can negatively affect PVC pipe prices, profit margins on PVC pipe sales and the value of our finished goods inventory.

Our plastics operations are highly dependent on a limited number of vendors and a limited supply of PVC resin and other materials.

We rely on a limited number of vendors to supply the PVC resin used in our plastics businesses. In 2023, we sourced all of our PVC resin needs from three vendors. In addition, the supply of PVC resin may be limited primarily due to manufacturing capacity and the limited availability of raw material components. Most U.S. resin production plants are located in the Gulf Coast region. This could increase the risk of a shortage of resin in the event of a hurricane, other extreme weather events and other natural disasters in that region. The loss of a key vendor or any interruption or delay in the availability or supply of PVC resin could disrupt our ability to deliver our plastic products, cause customers to cancel orders or require us to incur additional expenses to obtain PVC resin from alternative sources, if such sources were available.

Although PVC resin is the most significant raw material input in our PVC pipe manufacturing process, we also use certain other materials, such as stabilizers, gaskets, lumber, banding and others in the process of manufacturing and shipping our PVC pipe products. We generally source these materials from a limited number of suppliers and any significant supply chain constraints or disruptions related to these materials could also disrupt our ability to manufacture or ship products and could result in increased costs.

We compete against many other manufacturers of PVC pipe and manufacturers of alternative products. Customers may not distinguish our products from those of our competitors.

The plastic pipe industry is fragmented and competitive due to the number of producers and the fungible nature of the product. We compete not only against other plastic pipe manufacturers, but also against ductile iron, steel and concrete pipe manufacturers. Due to shipping costs, competition is usually regional instead of national in scope and the principal areas of competition are a combination of price, service, warranty and product performance. Our inability to compete effectively in each of these areas and to distinguish our plastic pipe products from competing products may adversely affect the financial performance of our plastics businesses.

GENERAL RISK FACTORS

Economic conditions could negatively impact our businesses.

Our businesses are affected by local, national and worldwide economic conditions, including the impact of inflation, tightening of credit in financial markets, economic recessions or other changes in economic conditions. Our businesses may be adversely affected by decreases in the general level of economic activity, such as decreases in business and consumer spending. A decline in the level of economic activity and uncertainty regarding energy and commodity prices could adversely affect our results of operations and our future growth. Inflationary pressures may lead to rising material and commodity costs and increased labor costs. Our operating results and liquidity would be adversely impacted if we were unable to recover these increased costs from our customers. Tightening of credit in financial markets could adversely affect the ability of customers to finance purchases of our goods and services, resulting in decreased orders, cancelled or deferred orders, slower payment cycles, and increased bad debt and customer bankruptcies.

If we are unable to achieve the organic growth we expect, our financial performance may be adversely affected.

We expect much of our growth in the next few years will come from major capital investments at existing companies. To achieve the organic growth we expect, we must have access to the capital markets, be successful with capital expansion programs related to organic growth, develop new products and services, expand our markets and increase efficiencies in our businesses. Competitive and economic factors could adversely

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affect our ability to do this. If we are unable to achieve and sustain consistent organic growth, we will be less likely to meet our earnings growth targets, which may adversely affect the market price of our common shares.

The effects of a major public health crisis, such as an epidemic or pandemic, and measures taken to reduce and slow the spread of the disease could adversely impact our business.

A future widespread outbreak of an infectious disease, which affects a large percentage of the population regionally, nationally, or globally could impact our business operations, including our employees, customers, construction contractors, suppliers and vendors, and could impact our operating results, financial condition and liquidity.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

CYBERSECURITY RISK

The operation of our businesses is dependent on the secure functioning of our computer infrastructure and digital information systems. Furthermore, all our businesses require us to collect and maintain sensitive customer data, as well as confidential employee and shareholder information, which is subject to electronic theft or loss. We also use third-party service providers to electronically process certain of our business transactions and perform certain cyber-related functions, such as system monitoring and critical infrastructure protection and maintenance. The confidentiality, integrity, and availability of information systems, both ours and those of our third-party service providers, are vulnerable to security breaches by computer hackers and cyber terrorists and the negligent or intentional breach of established controls and procedures or mismanagement of confidential information by employees. We may also be impacted by attacks and data security breaches of financial institutions, merchants or other business partners. As part of our utility operations, we own electric generation, transmission and distribution facilities that are part of an interconnected regional grid, the operation of which is dependent on information technology systems. Parties who wish to disrupt the U.S. bulk power system or our utility operations could view our computer systems, software or networks as attractive targets for cyber-attack. Although we have not historically experienced material cyber incidents, we and other utilities are subject to cyber-attacks of increasing frequency and sophistication, and any significant interruption or failure of our information systems or any significant breach of security due to cyber-attacks, hacking or internal security breaches, could adversely affect our business and our financial condition, operating results and liquidity.

RISK MANAGEMENT AND STRATEGY

Our cybersecurity policies and practices, which are based on the Center for Information Security (CIS) Critical Security Controls, are governed by our information and cybersecurity governance program. The CIS Critical Security Controls are a set of 18 cybersecurity-related controls which aid companies in designing an effective control environment and are viewed as best practices by organizations worldwide. A significant number of our cybersecurity policies and practices associated with our electric utility operations are also subject to regulation by multiple governmental and other agencies.

Our information and cybersecurity governance program is the foundation of our cybersecurity risk management strategy. The program includes policies which authorize and guide the development of procedures, standards, and guidelines for personnel activities, incident prevention and reporting, and compliance monitoring. Cybersecurity policies, procedures and controls are reviewed and approved by our Information and Cybersecurity Program (ICSP) group annually, with amendments made as deemed necessary for any updates for regulatory compliance and best practices, legal privacy protection and information protection, or to reflect current technology or new methods for ensuring secure business procedures.

We perform a corporate risk assessment annually, which includes specific consideration and assessment of cybersecurity risk. As part of our risk assessment process, we incorporate results from procedures performed by third-party consultants. We utilize third-party consultants to complete risk quantification analysis and perform penetration and vulnerability testing and monitoring, as well as overall cybersecurity control testing. Potential risks associated with the use of third-party service providers are monitored and managed through an established service provider management policy. Service providers must meet certain security requirements such as security incident or data breach notification and response protocols, data encryption requirements, and data disposal commitments.

In managing cybersecurity risk, we employ a defense-in-depth strategy and regularly monitor our cyber environment for potential new threats. Our strategy includes employee training and awareness on cybersecurity risks and related best practices, required password complexity, the use of multi-factor authentication, information security protocols, anti-virus and anti-ransomware software, a patch management program, the execution of tabletop exercises on a periodic basis, established policies and protocols for cyber incident response planning and reporting, and ongoing internal cybersecurity testing.

GOVERNANCE

At the management level, our cyber program is managed by our ICSP group. The ICSP group consists of Information Technology (IT) managers, IT security subject matter experts, and internal audit personnel and is led by our Vice President of IT who has more than 25 years of experience in IT, enterprise security, and cyber risk management, a Bachelor's degree of Science, CIS, Information Technology and Master's of Business, Information Systems, and holds Certified Information Systems Security Professional, Certified Information Security Manager, and Certified Data Privacy Solution Engineer designations. The ICSP group is in charge of developing, maintaining, and measuring compliance with the information and cybersecurity governance program, as well as monitoring cyber incidents and implementing mitigation measures as part of an evolving, dynamic external environment. Our approach to cybersecurity incident reporting and response planning is governed by our incident response plans established for

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each of our business units. The plans outline the processes related to detecting, assessing, investigating, mitigating, and remediating cyber incidents, as well the communication and reporting plan and the required personnel to be included in the process and communications.

Our cybersecurity risk management is integrated into our overall risk management system through our internal business risk management process. Our business risk management group works closely with our ICSP group to regularly assess and identify possible material risks from cybersecurity threats, including, but not limited to, financial, operations, reputational and regulatory impact to the Company, as well as impacts on our employees and customers. Their risk assessment results are reported to the Executive Risk Committee on a quarterly basis. The Executive Risk Committee, which is comprised of our executive officers, meets quarterly to identify and assess short-, medium- and long-term risks, and to ensure adequate mitigation strategies are implemented. During these meetings, the Executive Risk Committee reviews significant and emerging risks, including cybersecurity risks, and assesses the Company’s plans to mitigate or otherwise manage and monitor those risks.

Our Board of Directors provides oversight of our cybersecurity program through quarterly and annual risk review and cybersecurity reporting. On a quarterly basis, cybersecurity risk and mitigation strategies are reviewed as part of our business risk management group's reporting to the Board of Directors, which includes the reporting of significant business risks, including cybersecurity mitigation strategies employed to manage these risks, and a review of any emerging risks. Annually, our Vice President of IT provides an overview of our cybersecurity program to the Board of Directors, including a review of key strategies, emerging risks and a summary of key performance indicators. In addition, annually the Board of Directors reviews the results of our penetration and vulnerability testing.

ITEM 2. PROPERTIES

The following provides a summary of our properties which are material to our operations, by segment, as of December 31, 2023.

ELECTRIC SEGMENT

The following reflects our wholly or jointly owned material electric generation facilities as of December 31, 2023:

Description	Location	Year Placed in Service	Fuel Type	Capacity - kW (Nameplate Rating)
Big Stone Plant(1)	Big Stone City, SD	1975	Subbituminous Coal	223,146
Coyote Station(2)	Beulah, ND	1981	Lignite Coal	144,900
Jamestown Combustion Turbines	Jamestown, ND	1975	Fuel Oil	48,108
Lake Preston Combustion Turbine	Lake Preston, SD	1978	Fuel Oil	24,100
Solway Combustion Turbine	Solway, MN	2003	Natural Gas/Fuel Oil	44,500
Astoria Station	Astoria, SD	2021	Natural Gas	245,000
Langdon Wind Energy Center	Cavalier County, ND	2007	Wind	40,500
Ashtabula Wind Energy Center	Barnes County, ND	2008	Wind	48,000
Luverne Wind Energy Center	Griggs and Steele Counties, ND	2009	Wind	49,500
Merricourt Wind Energy Center	McIntosh and Dickey Counties, ND	2020	Wind	150,000
Ashtabula III Wind Energy Center	Barnes County, ND	2023(3)	Wind	62,400
Hoot Lake Solar	Otter Tail County, MN	2023	Solar	49,900
(1) OTP holds a 53.9% joint ownership interest in this jointly owned facility. The nameplate capacity indicated reflects OTP's ownership percentage.
(2) OTP holds a 35.0% joint ownership interest in this jointly owned facility. The nameplate capacity indicated reflects OTP's ownership percentage.
(3) Originally placed in service in 2010 and owned by an unrelated third party. OTP acquired this facility in 2023.

In addition to our generation facilities, we wholly or jointly own transmission and distribution lines as of December 31, 2023 as follows:

	Miles
Transmission
345 kV(3)	891
230 kV(4)	496
115 kV	961
Less than 115 kV	4,005
Distribution
Less than 115 kV	7,998
(3) As of December 31, 2023, OTP held a 14.2% ownership interest of 242 miles, a 4.8% ownership interest of 250 miles, and a 50.0% ownership interest of 234 miles of the 345 kV transmission lines, with the remaining miles being wholly owned.
(4) As of December 31, 2023, OTP held a 14.8% ownership interest of 70 miles of the 230 kV transmission lines, with the remaining miles being wholly owned.

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MANUFACTURING AND PLASTICS SEGMENTS

The following reflects the material properties of our Manufacturing and Plastic segments as of December 31, 2023:

Segment/Location	Owned/Leased	Facility Type/Use	Approximate Square Feet
Manufacturing Segment
Washington, IL	Leased	Office/Manufacturing/Warehouse	217,508
Detroit Lakes, MN	Owned	Office/Manufacturing/Warehouse	353,812
Lakeville, MN	Leased	Office/Manufacturing/Warehouse	413,000
Dawsonville, GA	Owned	Office/Manufacturing/Warehouse	172,000
Buford, GA	Leased	Warehouse	71,357
Clearwater, MN	Owned	Office/Manufacturing/Warehouse	203,840
Otsego, MN	Leased	Manufacturing/Warehouse	86,400
Plastics Segment
Fargo, ND	Owned	Office/Manufacturing/Warehouse	122,441
Phoenix, AZ	Owned	Office/Manufacturing/Warehouse	87,336

We are currently undertaking an expansion project at our Georgia location which will add approximately 162,000 square feet of manufacturing and warehouse space, and will replace the warehouse facility that is currently being leased. We anticipate the project will be completed in 2025. We are also undertaking an expansion project at our Arizona location which will add approximately 65,000 square feet of manufacturing, warehouse, and office space. We anticipate the project will be completed in 2024.

We believe the facilities described above, along with the planned expansions, are adequate for our present business.

ITEM 3. LEGAL PROCEEDINGS

We are the subject of various legal and regulatory proceedings in the ordinary course of our business. See Note 13, Commitments and Contingencies, to the consolidated financial statements, and Management's Discussion and Analysis of Financial Condition and Results of Operations, Regulatory Matters, which information is incorporated herein by reference, for discussion of certain legal, environmental and other regulatory proceedings to which we are a party.

ITEM 3A. INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Set forth below is a summary of the principal occupations and business experience during the past five years of the executive officers as defined by rules of the SEC. Each of the executive officers has been employed by the Company for more than five years in an executive or management position either with the Company or its wholly owned subsidiary, Otter Tail Power Company.

Name and Age	Date Elected to Office	Current Position
Charles S. MacFarlane (59)	04/13/15	President and Chief Executive Officer
Todd R. Wahlund (53)	01/01/24	Vice President, Chief Financial Officer
Timothy J. Rogelstad (57)	04/14/14	Senior Vice President, Electric Platform
John S. Abbott (65)	02/11/15	Senior Vice President, Manufacturing Platform
Jennifer O. Smestad (53)	01/01/18	Vice President, General Counsel and Corporate Secretary

Chuck MacFarlane has served as the Company’s President and Chief Executive Officer and as a member of the Company’s Board of Directors since April 13, 2015.

Todd Wahlund was appointed to succeed Kevin Moug, Chief Financial Officer and Senior Vice President, subsequent to Mr. Moug's retirement on December 31, 2023. Mr. Wahlund has served as Chief Financial Officer and Vice President since January 1, 2024, and previously served as Chief Financial Officer and Vice President, Finance for OTP from May 1, 2018 to December 31, 2023.

Timothy Rogelstad has served as President of OTP and Senior Vice President, Electric Platform of the Company since April 14, 2014.

John Abbott has served as Senior Vice President, Manufacturing Platform, since February 11, 2015.

Jennifer Smestad has served as Vice President, General Counsel and Corporate Secretary of the Company, since January 1, 2018. Ms. Smestad has also served as General Counsel for OTP since March 1, 2013.

The term of office for each of the executive officers is one year and any executive officer elected may be removed by the vote of the board of directors at any time during the term. There are no family relationships between any of the executive officers or directors.

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ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the Nasdaq Global Select Market under the Nasdaq symbol “OTTR”. As of December 31, 2023, there were 10,650 holders of record of our common stock.

We do not have a publicly announced stock repurchase program and we did not repurchase any equity securities during the quarter ended December 31, 2023. 

PERFORMANCE GRAPH COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN

This graph compares the cumulative total shareholder return on our common shares for the last five years with the cumulative return of the Nasdaq Stock Market Index and the Edison Electric Institute (EEI) Index over the same period (assuming the investment of $100 in each vehicle on December 31, 2018, and reinvestment of all dividends).

	2018		2019		2020		2021		2022		2023
OTTR	$	100.00	$	105.64	$	90.88	$	156.27	$	133.22	$	197.24
EEI	$	100.00	$	125.79	$	124.33	$	145.61	$	147.29	$	134.47
Nasdaq	$	100.00	$	131.17	$	159.07	$	200.26	$	160.75	$	203.23

ITEM 6. [RESERVED]

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing under Item 8 of this Form 10-K.

OVERVIEW

Otter Tail Corporation and its subsidiaries form a diverse group of businesses with operations classified into three segments: Electric, Manufacturing and Plastics. Our Electric business is a vertically integrated, regulated utility with generation, transmission and distribution facilities to serve our customers in western Minnesota, eastern North Dakota and northeastern South Dakota. Our Manufacturing segment provides metal fabrication for custom machine parts and metal components, and manufactures extruded and thermoformed plastic products. Our Plastics segment manufactures PVC pipe for use in, among other applications, municipal and rural water, wastewater and water reclamation projects.

Our strategy includes investing in rate base growth opportunities in our Electric segment and capitalizing on organic growth opportunities in our Manufacturing and Plastics segments. Investments in our Electric segment are expected to produce increased earnings and cash flows, lower our overall risk, create a more predictable earnings stream, improve our credit quality and preserve our ability to fund our dividend. Our Electric segment is complemented by our Manufacturing and Plastics segment businesses, which we expect to contribute to earnings growth by capitalizing

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on market expansion opportunities and increasing utilization of existing capacities, along with planned investments to create additional capacity and increased efficiencies. Collectively, our mix of businesses is expected to contribute to the achievement of our long-term targeted annual growth in earnings per share of 5 - 7%.

2023 FINANCIAL RESULTS

In 2023, our diversified business model generated record financial results, producing net income of $294.2 million, or $7.00 per diluted share, an increase of 4% from $284.2 million, or $6.78 per diluted share, in 2022. Our financial results for the year were driven by earnings growth in our Electric and Manufacturing segments, as well as lower corporate costs, as we benefited from returns on our short-term investments funded by the significant cash flows our businesses have generated over the last three years. Our Plastics segment again produced extraordinary financial results as we continued to capitalize on favorable industry dynamics; however, earnings in this segment did decline modestly from the record level achieved in 2022. In 2023, we paid an annual dividend of $1.75 per share, or $73.1 million, completing our 85th consecutive year of dividend payments to our shareholders.

Our Electric segment produced earnings growth of 6% in 2023, from $80.0 million in 2022 to $84.4 million in 2023, primarily due to increased rider revenue, increased commercial and industrial sales, and lower pension and other postretirement benefit costs, partially offset by increased operating and maintenance expenses and the impact of unfavorable weather.

Our Manufacturing segment produced earnings growth of 2% in 2023, from $21.0 million in 2022 to $21.5 million in 2023, primarily due to increased sales volumes at our metal fabrication business driven by strong end market demand across several markets we serve, and incremental volumes from additional work with existing customers. Increased sales volumes at our metal fabrication business were partially offset by increased labor and overhead costs, as well as decreased horticulture product sales volumes at our plastic thermoforming business.

Our Plastics segment earnings declined 4%, from $195.4 million in 2022 to $187.7 million in 2023. We experienced an unprecedented level of earnings in 2022, resulting from extraordinary industry supply and demand dynamics. Industry dynamics have begun to moderate, but at a modest pace, as further described below. Our Plastics segment businesses continued to capitalize on these industry conditions in 2023, producing earnings significantly in excess of pre-2021 levels.

Our earnings mix in 2023 was 29% from our Electric segment and 71% from the combination of our Manufacturing and Plastics segments excluding unallocated corporate costs. Electric segment earnings as a percentage of our total earnings were less than our long-term target of 65% due to the unique market conditions occurring in the plastics industry.

PVC PIPE SUPPLY AND DEMAND CONDITIONS

Extraordinary supply and demand conditions in the PVC industry beginning in 2021 have led to a significant expansion in operating margins and elevated earnings in our Plastics segment over the past three years. Periodic disruptions in the supply of resin, the primary material input used in the manufacturing of PVC pipe, coupled with robust demand for resin, led to a significant increase in the cost of resin beginning in 2021. Low industry volumes of PVC pipe and robust end market demand for the product led to a rapid and significant increase in sales prices for PVC pipe, significantly outpacing the increase in resin input costs, leading to increased operating margins within our Plastics segment.

Demand for PVC pipe began to soften in the second half of 2022, as distributors and contractors reduced purchase volumes in response to uncertain and competitive market conditions. Softening demand continued through the first half of 2023, but sales volumes in the second half of the year exceeded those in the previous year. Resin prices have declined from the previous year and although sales prices for PVC pipe have also declined, they have declined at a slower pace than resin prices, continuing to produce expanded operating margins from those experienced in 2022.

The unique market dynamics impacting our Plastics segment resulted in a significant increase in earnings in the last three years compared to historical levels. We expect these market conditions to gradually normalize over the course of 2024 and into 2025. The marketplace dynamics impacting our Plastics segments are fluid and subject to change and may impact our operating results prospectively.

FINANCIAL AND OTHER METRICS

Heating Degree Days (HDDs) is a measure of how much (in degrees), and for how long (in days), the outside air temperature was below a certain normalized level. Normal weather conditions are defined as the 20-year average of actual historical weather conditions. This measure is commonly used in calculations relating to the energy consumption required to heat buildings.

Cooling Degree Days (CDDs) is a measure of how much (in degrees), and for how long (in days), the outside air temperature was above a certain normalized level. This measure is commonly used in calculations relating to the energy consumption required to cool buildings.

OTP generally bases its forecasted kwh sales and rates on expected consumption under a normal level of HDDs and CDDs over a given period of time in its service territory. Increased or decreased levels of consumption for certain customer classifications are attributed to deviation from the norms and are a significant factor influencing consumption of electricity across our service territory. We present HDDs and CDDs to provide an indication of the impact of weather on kwh sales, revenues and earnings relative to forecast, and on period-to-period results.

Utility Rate Base is the value of property on which a public utility is permitted to earn a specified rate of return in accordance with rules set by a regulatory agency. In general, rate base consists of the value of property used by the utility in providing service. Rate base can also include cash, working capital, materials and supplies, construction work in progress, deductions for accumulated provisions for depreciation, contributions in aid of construction, customer advances for construction, accumulated deferred income taxes, and, in some cases, accumulated deferred ITCs. We present actual and forecasted levels of utility rate base to provide an indication of expected investments on which we expect to earn future returns.

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RESULTS OF OPERATIONS

For a comparison of fiscal year 2022 to 2021, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 15, 2023.

Provided below is a summary and discussion of our operating results on a consolidated basis followed by a discussion of the operating results of each of our segments, Electric, Manufacturing and Plastics. In addition to the segment results, we provide an overview of our Corporate costs. Our Corporate costs do not constitute a reportable segment, but rather consist of unallocated general corporate expenses, such as corporate staff and overhead costs, the results of our captive insurance company and other items excluded from the measurement of segment performance. Corporate costs are added to operating segment totals to reconcile to totals on our consolidated statements of income.

CONSOLIDATED RESULTS

The following table summarizes our consolidated results of operations for the years ended December 31, 2023 and 2022:

(in thousands)	2023		2022		$ change		% change
Operating Revenues	$	1,349,166	$	1,460,209	$	(111,043)	(7.6)	%
Operating Expenses	971,247		1,069,770		(98,523)		(9.2)
Operating Income	377,919		390,439		(12,520)		(3.2)
Interest Expense	(37,677)		(36,016)		(1,661)		4.6
Nonservice Components of Postretirement Benefits	10,597		1,075		9,522		n/m
Other Income	12,650		2,037		10,613		n/m
Income Before Income Taxes	363,489		357,535		5,954		1.7
Income Tax Expense	69,298		73,351		(4,053)		(5.5)
Net Income	$	294,191	$	284,184	$	10,007	3.5	%

Operating Revenues decreased $111.0 million on a consolidated basis in 2023. Electric segment operating revenues decreased 4% primarily due to decreased fuel recovery and wholesale revenues and the impact of unfavorable weather, partially offset by increased rider revenues and increased commercial and industrial sales. Manufacturing segment operating revenues increased 1% primarily due to higher sales volumes in our metal fabrication business. Plastics segment operating revenues decreased 18% due to a combination of decreased sales volumes and sales prices. See our segment disclosures below for additional discussion of items impacting operating revenues.

Operating Expenses decreased $98.5 million in 2023. Electric segment operating expenses decreased primarily due to decreased purchased power costs resulting from lower market energy prices and lower fuel costs due to decreased natural gas prices. Operating expenses in our Manufacturing segment increased primarily due to increased sales volumes in our metal fabrication business and an increase in certain variable compensation costs. Operating expenses in our Plastics segment decreased primarily due to lower sales volumes and decreased PVC resin costs. See our segment disclosures below for additional discussion of items impacting operating expenses.

Interest Expense increased $1.7 million in 2023 due to an increase in our average short-term borrowings, primarily used to fund capital investments in our Electric segment, and increased interest rates on our short-term borrowings.

Nonservice Components of Postretirement Benefits improved by $9.5 million in 2023, having a positive impact on net income, primarily due to a change in actuarial assumptions used to measure our pension benefit and postretirement benefit obligations, including an increase in the discount rate applied and an increase in the expected return on assets assumption.

Other Income increased $10.6 million in 2023 primarily due to an increase in investment income earned on our short-term cash equivalent investments and investment gains from our corporate-owned life insurance policies compared to investment losses in the previous year.

Income Tax Expense decreased $4.1 million in 2023 primarily due to an increase in PTCs produced by our wind and solar generation assets. Our effective tax rate was 19.1% in 2023 and 20.5% in 2022. See Note 12 to our consolidated financial statements included in this report on Form 10-K for additional information regarding factors impacting our effective tax rate.

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ELECTRIC SEGMENT RESULTS

The following table summarizes the operating results of our Electric segment for the years ended December 31, 2023 and 2022:

(in thousands)	2023		2022		$ change		% change
Retail Sales Revenue	$	455,840	$	470,300	$	(14,460)	(3.1)	%
Transmission Services Revenues	52,555		52,213		342		0.7
Wholesale Revenues	12,459		18,539		(6,080)		(32.8)
Other Electric Revenues	7,505		8,647		(1,142)		(13.2)
Total Operating Revenue	528,359		549,699		(21,340)		(3.9)
Production Fuel	60,339		65,110		(4,771)		(7.3)
Purchased Power	78,292		100,281		(21,989)		(21.9)
Operating and Maintenance Expenses	191,263		181,378		9,885		5.4
Depreciation and Amortization	75,330		72,050		3,280		4.6
Property Taxes	16,614		17,742		(1,128)		(6.4)
Operating Income	$	106,521	$	113,138	$	(6,617)	(5.8)	%
Electric kwh Sales (in thousands)
Retail kwh Sales	5,772,215		5,592,368		179,847		3.2	%
Wholesale kwh Sales	351,729		267,184		84,545		31.6
Heating Degree Days	6,259		7,122		(863)		(12.1)
Cooling Degree Days	590		531		59		11.1

Our Electric segment operating results are impacted by fluctuations in weather conditions and the resulting demand for electricity for heating and cooling. The following table presents heating and cooling degree days as a percent of normal for the years ended December 31, 2023 and 2022:

	2023		2022
Heating Degree Days	98.4	%	112.5	%
Cooling Degree Days	127.2	%	113.5	%

The following table summarizes the estimated effect on diluted earnings per share of the difference in retail sales under actual weather conditions and expected retail sales under normal weather conditions for the years ended December 31, 2023 and 2022, and between years:

	2023 vs Normal		2023 vs 2022		2022 vs Normal
Effect on Diluted Earnings Per Share	$	0.02	$	(0.09)	$	0.11

Retail Revenues decreased $14.5 million primarily due to the following:

•A $26.2 million decrease in fuel recovery revenues, primarily due to lower purchased power and fuel costs arising from decreased market energy costs and natural gas prices, as described below.

•A $5.2 million decrease in revenues from the unfavorable impact of weather compared to last year.

•Our Minnesota rate case, which was finalized in 2022, included a determination of the final interim rate refund and resulted in an additional $4.1 million of retail revenue last year.

The decreases in retail revenues described above were partially offset by the following:

•    A $10.5 million increase in retail revenues from increased sales volumes from commercial and industrial customers, including the impact of a new commercial customer load in North Dakota added during 2022.

•    A $9.6 million increase in rider revenues, including recovery of our investment in the Ashtabula III wind farm, which we acquired in January 2023, and the recovery of our investment in Hoot Lake Solar, which was completed during the year, as well as operating costs associated with these facilities.

Wholesale Revenues decreased $6.1 million primarily due to a 49% decrease in wholesale electric prices driven by decreased fuel costs.

Production Fuel costs decreased $4.8 million due to a 17% decrease in fuel cost per kwh resulting from decreases in natural gas prices, partially offset by an increase in kwhs generated from our natural gas-burning plants.

Purchased Power costs to serve retail customers decreased $22.0 million due to a 14% decrease in the price of purchased power per kwh, primarily due to decreased market energy costs, as well as decreased purchase volumes due to the acquisition of the Ashtabula III wind farm and completion of our Hoot Lake Solar project in the current year. Prior to the acquisition of Ashtabula III, OTP purchased the wind generated electricity from the facility under the terms of a power purchase agreement.

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Operating and Maintenance Expense increased $9.9 million primarily due to:

•A $3.9 million increase in labor and benefit costs partially due to increased health insurance costs, wage increases, and increased headcount.

•A $2.2 million increase in vegetative maintenance costs.

•A $1.9 million increase in insurance expense due in part to the addition of Ashtabula III and Hoot Lake Solar to our generation fleet during the year.

•A $1.3 million increase in maintenance related to the addition and operation of Ashtabula III.

These expense increases were partially offset by, among other items, decreased outage-related costs and travel costs compared to the previous year.

Depreciation and Amortization expense increased $3.3 million primarily due to the acquisition of Ashtabula III and continued investment in distribution facilities during the year.

MANUFACTURING SEGMENT RESULTS

The following table summarizes the operating results of our Manufacturing segment for the years ended December 31, 2023 and 2022:

(in thousands)	2023		2022		$ change		% change
Operating Revenues	$	402,781	$	397,983	$	4,798	1.2	%
Cost of Products Sold (excluding depreciation)	310,601		315,375		(4,774)		(1.5)
Selling, General, and Administrative Expenses	44,545		37,341		7,204		19.3
Depreciation and Amortization	18,495		16,202		2,293		14.2
Operating Income	$	29,140	$	29,065	$	75	0.3	%

Operating Revenues increased $4.8 million primarily due to the combination of the following:

•At BTD, operating revenues increased $12.5 million primarily due to a combination of higher sales volumes and increased pricing. Sales volumes increased 12% compared to the previous year due to strong end market demand in several segments, including the construction, industrial, and agricultural segments, and incremental volumes from additional work with existing customers. Sales price increases were implemented during the year in response to labor and non-steel material cost inflation. Sales price increases and sales volume growth were partially offset by decreased steel prices, resulting in an 11% decrease in material costs, which are passed through to customers.

•At T.O. Plastics, operating revenues decreased $7.7 million primarily due to lower sales volumes. Sales volumes decreased 19% primarily due to decreased sales of horticulture products, as order and delivery lead times for these products have normalized after volatility experienced in the previous year, and customers reduced their inventory levels and are beginning to return to normal seasonal buying patterns.

Cost of Products Sold decreased $4.8 million primarily due to the combination of the following:

•Cost of products sold at BTD increased $0.8 million primarily due to higher sales volumes, as discussed above. Cost of products sold also increased due to lower productivity and inflationary cost pressures which resulted in higher non-steel material, labor and overhead costs. The increase in labor costs and lower level of productivity was partially attributable to increased shift incentives and overtime wages combined with increased staffing levels to meet higher production volumes and the time required for new employees to achieve peak productivity. The impacts of higher sales volumes and increased labor and overhead costs were largely offset by decreased material costs, as discussed above.

•Cost of products sold at T.O. Plastics decreased $5.6 million primarily due to lower sales volumes of horticulture products, as discussed above.

Selling, General, and Administrative Expenses increased $7.2 million primarily due to increased employee compensation from an increase in headcount, inflationary cost pressure and variable compensation driven by current year financial performance.

Depreciation and Amortization increased $2.3 million due to capital expenditures during the year, which included investments in facility improvements and purchases of equipment.

PLASTICS SEGMENT RESULTS

The following table summarizes the operating results for our Plastics segment for the years ended December 31, 2023 and 2022:

(in thousands)	2023		2022		$ change		% change
Operating Revenues	$	418,026	$	512,527	$	(94,501)	(18.4)	%
Cost of Products Sold (excluding depreciation)	143,521		227,569		(84,048)		(36.9)
Selling, General, and Administrative Expenses	16,076		16,175		(99)		(0.6)
Depreciation and Amortization	4,027		4,205		(178)		(4.2)
Operating Income	$	254,402	$	264,578	$	(10,176)	(3.8)	%

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Operating Revenues decreased $94.5 million primarily due to a 14% decrease in sales volumes. Sales volume decreases were attributable to softer end market demand coupled with distributor inventory management, as these customers reduced their inventory levels during the first half of the year after previously building higher inventory levels in response to market uncertainty and supply chain challenges. Operating revenue decreases were also the result of a 5% decrease in sales prices, as prices in 2023 decreased from record highs in 2022.

Cost of Products Sold decreased $84.0 million due to a 26% decrease in the cost per pound of PVC pipe sold, primarily due to lower resin costs, as well as the 14% decrease in sales volumes discussed above.

CORPORATE

The following table summarizes Corporate results of operations for the years ended December 31, 2023 and 2022:

(in thousands)	2023		2022		$ change		% change
Selling, General, and Administrative Expenses	$	12,042	$	16,202	$	(4,160)	(25.7)	%
Depreciation and Amortization	102		140		(38)		(27.1)
Operating Loss	$	12,144	$	16,342	$	(4,198)	(25.7)	%

Selling, General, and Administrative Expenses decreased $4.2 million primarily due to lower health care costs related to our self-funded health insurance program in 2023 compared to higher claim costs in 2022.

REGULATORY MATTERS

The following provides a summary of OTP's current and recent rate case filings, rate rider filings, and other regulatory filings that have or are expected to have a material impact on our operating results, financial position, or cash flows.

RATE CASES

The following includes a summary of electric rate cases as determined in OTP's most recent general rate case in each state:

		Revenue				Allowed
	Implementation	Requirement		Return on		Return		Equity
Jurisdiction	Date	(in millions)		Rate Base		on Equity		Ratio
Minnesota	07/01/22	$	209.0	7.18	%	9.48	%	52.50	%
North Dakota	02/01/19	153.1		7.64		9.77		52.50
South Dakota(1)	08/01/19	35.5		7.09		8.75		52.92
(1) Includes an earnings sharing mechanism to share with South Dakota customers any weather-normalized earnings above the authorized ROE of 8.75%. The mechanism requires 50% of any weather-normalized revenue creating annual earnings in excess of the authorized ROE up to a maximum of 9.50% be returned to customers and 100% returns of revenue creating annual earnings above 9.50%.

North Dakota Rate Case: On November 2, 2023, OTP filed a request with the NDPSC for an increase in revenue recoverable under general rates in North Dakota. In its filing, OTP requested a net increase in annual revenue of $17.4 million, or 8.4%, based on an allowed rate of return on rate base of 7.85% and an allowed rate of return on equity of 10.6% on an equity ratio of 53.5% of total capital. Through this proceeding, OTP has proposed changes to the mechanism of cost and investment recovery, with recovery moving from riders into base rates. The filing also includes a proposal to implement a sales adjustment mechanism to address potential significant load additions or losses. The filing included an interim rate request of a net increase in annual revenue of $12.4 million, or 6.0%, which was approved by the NDPSC on December 13, 2023, and interim rates went into effect on January 1, 2024. These interim rate revenues, when collected, are subject to potential refund until the finalization of the rate case.

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RATE RIDERS

The following table includes a summary of substantial pending and recently concluded rate rider proceedings:

Recovery			Filing	Amount	Effective
Mechanism	Jurisdiction	Status	Date	(in millions)	Date	Notes
RRR - 2023	MN	Approved	11/01/22	$17.5	07/01/23	Recovery of Hoot Lake Solar costs, Ashtabula III costs, and true up for PTCs from Merricourt.
ECO - 2023	MN	Approved	04/03/23	9.7	10/01/23	Recovery of energy conservation improvement costs as well as a demand side management financial incentive.
RRR - 2024	MN	Requested	12/04/23	8.0	07/01/24	Recovery of Hoot Lake Solar costs, Ashtabula III costs, wind upgrade project costs at our four owned wind facilities, and true up of PTCs for Merricourt.
RRR - 2023	ND	Approved	12/30/22	12.2	05/01/23	Recovery of Merricourt, Ashtabula III and other costs.
RRR - 2022	ND	Approved	01/05/22	7.8	04/01/22	Recovery of Merricourt costs, Ashtabula III costs, and deferred taxes and PTCs.
TCR - 2023	ND	Approved	09/15/22	7.5	01/01/23	Recovery of transmission project costs.
TCR - 2024	ND	Approved	11/02/23	4.5	01/01/24	Recovery of transmission project costs.
GCR - 2022	ND	Approved	03/01/22	3.3	07/01/22	Annual update to generation cost recovery rider.
MDT - 2023	ND	Approved	07/08/22	3.1	01/01/23	Recovery of advanced metering infrastructure, outage management system and demand response projects.
PIR - 2022	SD	Approved	06/01/22	3.0	09/01/22	Recovery of Ashtabula III, Merricourt, Astoria Station, Advanced Grid Infrastructure project costs, and impact of load growth credits.
TCR - 2023	SD	Approved	11/01/22	3.0	03/01/23	Recovery of transmission project costs.

RESOURCE PLANNING

On March 31, 2023, OTP submitted a supplemental resource plan filing to the MPUC, the NDPSC, and the South Dakota Public Utilities Commission (SDPUC). The supplemental filing updated OTP’s original 2022 Integrated Resource Plan (2022 IRP), which was filed on September 1, 2021. In the supplemental filing, OTP outlined its updated plan for meeting all customers’ anticipated capacity and energy needs while maintaining system reliability and low electric service rates in light of several changes that had occurred since the original filing, including significant winter and spring reserve planning margins adopted by MISO, tax credits made available for renewable energy projects under the Inflation Reduction Act, the enactment of the Clean Energy Bill in Minnesota, and volatility experienced in energy and capacity markets.

On December 15, 2023, OTP submitted a second supplemental resource plan filing to the MPUC outlining an updated plan specifically for meeting Minnesota customers’ anticipated capacity and energy needs while maintaining system reliability and low electric service rates. Based on feedback received on the preferred plan outlined in the March 31, 2023 supplemental filing and the inability to reach a consensus on certain aspects of the plan, the second supplemental filing includes a proposal to bifurcate OTP's resource planning by jurisdiction.

Under bifurcated resource planning, it is anticipated that OTP would develop two separate resource plans, one plan developed for Minnesota and a second developed for North Dakota and South Dakota. Each plan would be developed incorporating the assumption that all existing generation resources, except Hoot Lake Solar, would continue to be allocated to all jurisdictions using established jurisdictional allocators. Hoot Lake Solar is currently directly allocated to only Minnesota. As new generation resources are needed for each plan, those generation resources would be allocated to the jurisdiction that is needing the resource. To the extent a common generation resource is needed for both plans, that resource would be allocated using established jurisdictional allocators. This method of resource planning would diverge from OTP’s historical practice of planning on an integrated basis for all jurisdictions served.

With the proposal of bifurcated resource planning, the supplemental filing outlines OTP’s preferred plan for Minnesota only. The preferred plan in this supplemental filing includes:

•repowering four of our existing wind facilities in 2025;

•the addition of approximately 200 megawatts of solar generation in 2025;

•the addition of approximately 100 megawatts of wind generation in 2026;

•the addition of on-site liquefied natural gas fuel storage at our Astoria Station natural gas plant in 2027;

•the designation of Coyote Station, a jointly owned coal-fired generation plant, as an Available Maximum Emergency (AME) Resource beginning in 2029 and annually thereafter;

•a withdrawal from our 35 percent ownership interest in Coyote Station in the event we are required to make a major, non-routine capital investment in the plant; and

•the addition of approximately 50 megawatts of wind generation in 2032.

The preferred plan requests the MPUC issue an order requiring the Minnesota’s jurisdictionally allocated share of the generation from Coyote Station be designated as an AME Resource beginning March 1, 2029, subject to additional analysis to be performed by OTP. AME Resources are

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resources called on only in the event of a maximum generation event, such as in the cases of extreme heat, cold, or other extreme events. Designating Coyote Station as an AME Resource would allow us to retain Coyote Station’s capacity, thereby providing an important reliability benefit. This also helps ensure we remain compliant with market monitoring regulations and our contractual obligations to the co-owners of Coyote Station while advancing our compliance with Minnesota's carbon-free standard. The supplemental filing requests Minnesota customer rates continue to include the recovery of an allocated share of OTP’s costs associated with owning the plant, and a return on those costs, as well as the fixed costs of operating the plant. The variable cost of operating the plant, which consists primarily of variable fuel costs, would not be attributed to Minnesota customers, except when the plant is called upon to serve Minnesota customers in emergency situations.

The supplemental IRP filing made December 15, 2023 outlines our proposed resource plan for Minnesota. We anticipate filing future resource plans on a bifurcated basis in North Dakota and South Dakota.

LIQUIDITY

LIQUIDITY OVERVIEW

We believe our financial condition is strong and our cash, other liquid assets, operating cash flows, existing lines of credit, access to capital markets, and borrowing ability, because of investment-grade credit ratings, when taken together, provide us ample liquidity to conduct business operations and fund our capital expenditure program. Our liquidity, including our operating cash flows and access to capital markets, could be impacted by macroeconomic factors outside of our control. In addition, our liquidity could be impacted by non-compliance with covenants under our various debt instruments. As of December 31, 2023, we were in compliance with all debt covenants (see the Financial Covenant section under Capital Resources below).

The following table presents the status of our lines of credit as of December 31, 2023 and 2022:

			2023						2022
(in thousands)	Line Limit		Amount Outstanding		Letters of Credit		Amount Available		Amount Available
OTC Credit Agreement	$	170,000	$	—	$	—	$	170,000	$	170,000
OTP Credit Agreement	170,000		81,422		9,132		79,446		152,223
Total	$	340,000	$	81,422	$	9,132	$	249,446	$	322,223

OTC and OTP are each party to separate credit agreements (the OTC Credit Agreement and OTP Credit Agreement, respectively) which provide for unsecured revolving lines of credit. Should additional liquidity be needed, the OTC Credit Agreement includes an accordion feature allowing us to increase the amount available to $290 million, subject to certain terms and conditions. The OTP Credit Agreement also includes an accordion feature allowing OTP to increase that facility to $250 million, subject to certain terms and conditions.

As of December 31, 2023, we had $249.4 million of available liquidity under our credit facilities and $230.4 million of available cash and cash equivalents, resulting in total available liquidity of $479.8 million, compared to total available liquidity of $441.2 million as of December 31, 2022.

CASH FLOWS

The following is a discussion of our cash flows for the years ended December 31, 2023 and 2022:

(in thousands)	2023		2022
Net Cash Provided by Operating Activities	$	404,499	$	389,309

Net Cash Provided by Operating Activities increased $15.2 million primarily due to an increase in net income, the absence of any pension contribution in 2023 due to the plan's funded status, and the timing of customer collections of forecasted fuel costs, partially offset by increased working capital. Working capital increased primarily due to an increase in receivables in our Plastics segment, due to increased sales volumes in the fourth quarter of the current year, and a decrease in payables due to the timing of capital investment spending in our Electric segment and inventory purchases in our Plastics segment compared to last year.

Unique market dynamics experienced by our Plastics segment businesses in 2023 and 2022 resulted in a significant increase in our overall cash from operations compared to prior periods, and we do not expect cash from operations at these levels to continue in future years.

(in thousands)	2023		2022
Net Cash Used in Investing Activities	$	289,287	$	175,071

Net Cash Used in Investment Activities increased $114.2 million primarily due to a higher amount of Electric segment capital investment compared to last year, including the purchase of the Ashtabula III wind farm, investments in our Hoot Lake Solar facility and several wind repowering projects, transmission and distribution asset investments, and investments in new technology. Capital expenditures in our Manufacturing and Plastics segments increased $23.1 million as a result of investments in additional equipment and facility expansion projects at our Plastics segment facility in Arizona and our Manufacturing segment facility in Georgia.

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(in thousands)	2023		2022
Net Cash Used in Financing Activities	$	3,835	$	96,779

Net Cash Used in Financing Activities decreased $92.9 million primarily due to increased short-term borrowings on our OTP credit facility, which were primarily used to fund capital expenditures in our Electric segment, including the acquisition of the Ashtabula III wind farm. Our financing activities in 2023 included net short-term borrowings of $73.2 million compared to net short-term repayments of $83.0 million in 2022. There was no change in our long-term debt in 2023. In 2022, OTP issued $60.0 million of long-term debt, net of retirements, which was primarily used to fund the repayment of short-term credit facility borrowings and fund capital expenditures. In 2023, we made dividend payments of $73.1 million compared to $68.8 million in 2022.

CAPITAL REQUIREMENTS

CAPITAL EXPENDITURES

Our capital expenditure plan includes investments in electric generation facilities, transmission and distribution lines, manufacturing facilities and upgrades, equipment used in the manufacturing process, and computer hardware and information systems. Our capital expenditure plan is subject to review and is revised in light of changes in demands for energy, technology, environmental laws, regulatory changes, business expansion opportunities, the costs of labor, materials and equipment and our financial condition.

The following provides a summary of capital expenditures for the years ended December 31, 2023 and 2022 for our Electric segment and non-electric businesses and anticipated capital expenditures for the five year period 2024 through 2028:

(in millions)	2022		2023		2024		2025		2026		2027		2028		Total
Electric Segment:
Renewables					$	118	$	93	$	33	$	113	$	129	$	486
Transmission					51		85		111		98		100		445
Distribution					38		39		36		38		39		190
Other					67		37		30		27		25		186
Total Electric Segment	148		241		274		254		210		276		293		1,307
Manufacturing and Plastics Segments	23		46		79		35		27		25		26		192
Total Capital Expenditures	$	171	$	287	$	353	$	289	$	237	$	301	$	319	$	1,499

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations at December 31, 2023 and the effect these obligations are expected to have on our liquidity and cash flow in future periods.

(in millions)	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Debt Obligations	$	908	$	81	$	80	$	42	$	705
Interest on Debt Obligations	602		35		70		62		435
Coal Contracts	485		24		49		52		360
Capacity and Energy Requirements	4		—		—		—		4
Postretirement Benefit Obligations	66		5		11		11		39
Other Purchase Obligations (including land easements)	79		6		9		5		59
Operating Lease Obligations	17		6		8		3		—
Total Contractual Cash Obligations	$	2,161	$	157	$	227	$	175	$	1,602

Coal contract obligations are based on estimated coal consumption and costs for the delivery of coal to Coyote Station from Coyote Creek Mining Company (CCMC) under the Lignite Sales Agreement (LSA) that ends in 2040. Postretirement benefit obligations include estimated cash expenditures for the payment of retiree medical and life insurance benefits and supplemental pension benefits under our unfunded Executive Survivor and Supplemental Retirement Plan (ESSRP), but do not include amounts to fund our noncontributory funded pension plan, as we are not currently required to make any contributions to that plan.

COMMON STOCK DIVIDENDS

We paid dividends to our shareholders totaling $73.1 million, or $1.75 per share, in 2023. The determination of the amount of future cash dividends to be paid will depend on, among other things, our financial condition, level of earnings and cash flows from operations, our capital expenditure plan and our future business prospects. As a result of certain statutory limitations or regulatory or financing agreements, restrictions could occur on the amount of distributions allowed to be made by OTC subsidiaries to OTC. These intercompany distributions serve as the primary source of funding for dividends paid to our shareholders. See Note 14 to our consolidated financial statements included in this report on Form 10-K for additional information. The decision to declare a dividend is reviewed quarterly by our Board of Directors. On February 5, 2024, our Board of Directors increased the quarterly dividend from $0.4375 to $0.4675 per common share.

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CAPITAL RESOURCES

Financial flexibility is provided by operating cash flows, borrowing capacity under our lines of credit, strong financial coverages, investment grade credit ratings and alternative financing arrangements such as leasing. Debt financing will be required in the five-year period from 2024 through 2028 to refinance maturing debt and to finance our capital investments within our Electric segment. Our financing plans are subject to change and are impacted by our planned level of capital investments, a decision to reduce borrowings under our lines of credit, to refund or retire early any of our presently outstanding debt, to complete acquisitions or for other corporate purposes.

REGISTRATION STATEMENTS

On May 3, 2021, we filed a shelf registration statement with the SEC under which we may offer for sale, from time to time, either separately or together in any combination, equity, debt or other securities described in the shelf registration statement. The registration statement expires in May 2024, at which time we anticipate filing a new shelf registration statement. No shares were issued pursuant to the registration statement in 2023.

On May 3, 2021, we filed a second registration statement with the SEC for the issuance of up to 1,500,000 common shares under an Automatic Dividend Reinvestment and Share Purchase Plan, which provides shareholders, retail customers of OTP and other interested investors a method of purchasing our common shares by reinvesting their dividends or making optional cash investments. Shares purchased under the plan may be new issue common shares or common shares purchased on the open market. The registration statement expires in May 2024, at which time we plan to file a new registration statement. In 2023, we issued 105,663 shares under the plan. All shares issued under the plan to date have been open market purchases and there have been no new issue shares, resulting in no proceeds received by the Company. As of December 31, 2023, 1,145,330 shares remained available for purchase or issuance under the plan.

SHORT-TERM DEBT

The OTC Credit Agreement and OTP Credit Agreement provide for unsecured revolving lines of credit. The agreements generally bear interest at the Secured Overnight Financing Rate (SOFR) plus an applicable credit spread, which is subject to adjustment based on the credit ratings of the issuer. The weighted-average interest rate on all outstanding borrowings as of December 31, 2023 and 2022 was 6.70% and 5.61%.

The following is a summary of key provisions and borrowing information as of and for the year ended December 31, 2023:

(in thousands, except interest rates)	OTC Credit Agreement			OTP Credit Agreement
Borrowing Limit	$	170,000		$	170,000
Borrowing Limit if Accordion Exercised1	290,000			250,000
Amount Restricted Due to Outstanding Letters of Credit at Year-End	—			9,132
Amount Outstanding at Year-End	—			81,422
Average Amount Outstanding During Year	—			50,883
Maximum Amount Outstanding During the Year	—			87,788
Interest Rate at Year-End	6.85		%	6.70		%
Expiration Date	October 29, 2027			October 29, 2027
1Each facility includes an accordion feature allowing the borrower to increase the borrowing limit if certain terms and conditions are met.

LONG-TERM DEBT

At December 31, 2023, we had $827.0 million of principal outstanding under long-term debt arrangements. Note 9 to our consolidated financial statements included in this report on Form 10-K includes information regarding these instruments. The agreements generally provide for unsecured borrowings at fixed rates of interest with maturities ranging from 2026 to 2052.

Financial Covenants

Certain of our short- and long-term debt agreements require OTC and OTP to maintain certain financial covenants. As of December 31, 2023, we were in compliance with these financial covenants as further described below:

OTC, under its financial covenants, may not permit its ratio of Interest-Bearing Debt to Total Capitalization to exceed 0.60 to 1.00, may not permit its Interest and Dividend Coverage Ratio to be less than 1.50 to 1.00, and may not permit its Priority Indebtedness to exceed 10% of our Total Capitalization. As of December 31, 2023, our Interest-Bearing Debt to Total Capitalization was 0.39 to 1.00, our Interest and Dividend Coverage Ratio was 10.85 to 1.00 and we had no Priority Indebtedness outstanding.

OTP, under its financial covenants, may not permit its ratio of Debt to Total Capitalization to exceed 0.60 to 1.00, may not permit its Interest and Dividend Coverage Ratio to be less than 1.50 to 1.00, and may not permit its Priority Debt to exceed 20% of its Total Capitalization. As of December 31, 2023, OTP's Interest-Bearing Debt to Total Capitalization was 0.46 to 1.00, its Interest and Dividend Coverage Ratio was 3.54 to 1.00 and it had no Priority Indebtedness outstanding.

None of our debt agreements include any provisions that would trigger an acceleration of the related debt as a result of changes in the credit rating levels assigned to the related obligor by rating agencies.

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Credit Ratings

The credit ratings of OTC and OTP as of December 31, 2023 are summarized below:

	Otter Tail Corporation			Otter Tail Power Company
	Moody's	Fitch	S&P	Moody's	Fitch	S&P
Corporate Credit/Long-Term Issuer Default Rating	Baa2	BBB	BBB	A3	BBB+	BBB+
Senior Unsecured Debt	n/a	BBB	n/a	n/a	A-	n/a
Outlook	Stable	Stable	Stable	Stable	Stable	Stable

CRITICAL ACCOUNTING ESTIMATES

Preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and the Company’s discussion and analysis of its financial condition and operating results requires management to make assumptions, estimates and judgments that affect the reported amounts. While we believe the estimates, assumptions, and judgments we use in preparing our consolidated financial statements are appropriate and are based on the best available information, they are subject to future events and uncertainties regarding their outcome and therefore actual results may materially differ from these estimates. Management has discussed the application of these critical accounting policies and the development of these estimates with the Audit Committee of our Board of Directors. The following critical accounting policies affect the most significant judgments and estimates used in the preparation of our consolidated financial statements.

REGULATORY ACCOUNTING

Our utility business is subject to regulation of rates and other matters by state utility commissions in Minnesota, North Dakota and South Dakota and by the FERC for certain interstate operations. Accordingly, our utility business must adhere to the accounting requirements of regulated operations, which requires the recognition of regulatory assets and regulatory liabilities for amounts that otherwise would impact the statement of income or comprehensive income when it is probable that such amounts will be collected from customers or credited to customers through the rate-making process. This guidance also provides recognition criteria for adjustments to rates outside of a general rate case proceeding which are provided to encourage or incentivize investments in certain areas such as conservation, renewable energy, pollution reduction or control, improved infrastructure of the transmission grid or other programs that provide benefits to the general public under public policy, laws or regulations. Regulatory assets generally represent costs that have been incurred but have been deferred because future recovery from customers, as established through the rate-making process, is probable. Regulatory liabilities generally represent amounts to be refunded to customers or amounts currently collected from customers for future costs.

We assess the probability of recovery of regulatory assets and the obligations arising from regulatory liabilities on a quarterly basis. Our probability estimates incorporate numerous factors, including recent rate making decisions, historical precedents for similar matters, the regulatory environments in which we operate and the impact these incurred costs may have on our customers. Changes in our assessments regarding the likelihood of recovery or settlement of our regulatory assets and liabilities may have a material impact on our operating results and financial position. Further, if we determine that all or a portion of our utility business no longer meets the criteria for continued application of regulatory accounting, or our regulators disallow recovery of a previously incurred cost or eliminate a regulatory liability, we would be required to remove the associated regulatory assets and liabilities from our consolidated balance sheets and recognize those amounts in the consolidated statement of income as an expense or income item, or in the consolidated statement of comprehensive income as a loss or gain item, in the period in which this accounting treatment is no longer applicable.

As of December 31, 2023 and 2022, we had regulatory assets of $111.8 million and $119.7 million and regulatory liabilities of $302.0 million and $261.8 million. If future recovery of amounts recorded as regulatory assets was no longer probable we would be required to recognize an expense or loss in the period in which recovery was deemed to no longer be probable.

PENSION AND OTHER POSTRETIREMENT BENEFITS OBLIGATIONS AND COSTS

Pension and postretirement benefit liabilities and expenses are determined by actuaries using assumptions about the discount rate, expected return on plan assets, rate of compensation increase and healthcare cost-trend rates. See Note 10 to our consolidated financial statements included in this report on Form 10-K for additional information on our pension and postretirement benefit plans and related assumptions.

These benefits, for any individual employee, can be earned and related expenses can be recognized and a liability accrued over periods of up to 30 or more years. These benefits can be paid out for up to 40 or more years after an employee retires. Estimates of liabilities and expenses related to these benefits are among our most critical accounting estimates. Although deferral and amortization of fluctuations in actuarially determined benefit obligations and expenses are provided for when actual results on a year-to-year basis deviate from long-range assumptions, compensation increases and healthcare cost increases or a reduction in the discount rate applied from one year to the next can significantly increase our benefit expenses in the year of the change. Likewise, compensation decreases and healthcare cost decreases or an increase in the discount rate applied from one year to the next can significantly decrease our benefit expenses in the year of the change. Also, a change in the expected rate of return on pension plan assets in our funded pension plan or realized rates of return on plan assets that are well above or below assumed rates of return or a change in the anticipated life expectancy of plan participants could result in significant increases or decreases in recognized pension benefit expenses in the year of the change or for many years thereafter because actuarial losses can be amortized over the average remaining service lives of active employees.

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We estimate the discount rate through the use of a hypothetical bond portfolio method, which incorporates yields on a collection of high credit quality bonds that produce cash flows similar to our anticipated future benefit payments.

We estimate the assumed long-term rate of return on plan assets based on asset category studies using historical market returns achieved by our asset portfolio allocation over long-term periods, as well as long-term projected return levels.

Pension plan assets are invested in a portfolio according to our return, liquidity and diversification objectives to provide a source of funding for plan obligations and manage contributions to the plan. The principal process for achieving these objectives is the asset allocation given the long-term risk, return, correlation and liquidity characteristics of each particular asset class.

At December 31, 2023, we set the discount rate used to measure our pension plan obligations at 5.57% and at 5.53% to measure postretirement healthcare obligations, a six and one basis point increase, respectively, from the estimates used at December 31, 2022. Our estimates used to determine benefit cost for 2023 included a discount rate of 5.51% for pension benefits and 5.52% for postretirement healthcare costs, a 248 and 251 basis point increase, respectively, from 2022 estimates. The 5.52% discount rate for postretirement healthcare costs was adjusted to 6.06% effective September 30, 2023, in connection with a remeasurement of our plan liability due to an amendment to the plan. The adjustment to 6.06% was a 305 basis point increase from the 2022 estimate. In addition, we estimated our assumed rate of return on pension assets to be 7.00% for 2023, a 70 basis point increase from our 2022 estimate.

The following table summarizes the impact on 2023 pension and postretirement costs for a 25 basis point increase or decrease, holding all other variables constant, on certain key assumptions:

(in thousands)	+0.25		-0.25
Pension Plan:
Discount Rate	$	65	$	(72)
Rate of Increase in Future Compensation	259		245
Long-Term Return on Plan Assets	(926)		926
Other Postretirement Benefits:
Discount Rate	13		3

For 2024, we expect pension and other postretirement benefit income to be $8.5 million compared to $9.5 million of income in 2023, due to the impacts of updated actuarial assumptions. See additional information at footnote 10 of the consolidated financial statements.

Subsequent increases or decreases in actual rates of return on plan assets over assumed rates, increases or decreases in the discount rate, increases in future compensation levels, and increases in retiree healthcare cost inflation rates could significantly change projected costs.

We believe the estimates made for our pension and other postretirement benefits are reasonable based on the information that is known at the point in time the estimates are made. These estimates and assumptions are subject to a number of variables and are subject to change.

GOODWILL IMPAIRMENT

Goodwill is required to be evaluated annually for impairment and more frequently as events or circumstances require. Goodwill is tested for impairment at the reporting unit level. We have identified two reporting units which carry a material amount of goodwill.

The goodwill impairment test is a single-step quantitative assessment which compares the estimated fair value of the reporting unit to its carrying value. An impairment charge is recognized if the carrying amount exceeds the estimated fair value in an amount that is equal to the excess but limited to the amount of recorded goodwill of the reporting unit. An optional qualitative impairment assessment may be performed prior to and may eliminate the need to perform the quantitative assessment.

Estimating the fair value of a reporting unit under the quantitative impairment method requires significant judgments and estimates. We estimate the fair value of our reporting units primarily using an income approach, which includes a discounted cash flow methodology to arrive at a fair value estimate by determining the present value of projected future cash flows over a specified period plus a terminal value to reflect cash flows beyond the projection period. The discount rate applied to the estimated future cash flows reflects our estimate of the weighted-average cost of capital of comparable entities. To supplement our income approach, we reference various market indications of fair value, where available, and include fair value estimates using multiples derived from comparable enterprise values to earnings before interest, taxes, depreciation, and amortization (EBITDA), and, if available, comparable sales transactions for comparative peer companies.

Our discounted cash flow methodology incorporates significant estimates, which include assumptions of future operating results and cash flows, which are impacted by economic and industry conditions, the amount and timing of estimated capital expenditures, an estimated terminal growth rate and the selection of an appropriate weighted-average cost of capital, among others.

Our goodwill impairment testing performed in the fourth quarter of 2023 indicated no impairment was present for either reporting unit and the estimated fair value of each reporting unit substantially exceeded the respective carrying value. As part of our testing, we perform various sensitivity analyses to understand if our conclusions are sensitive to changes in certain assumptions. A 1% decrease in projected operating revenues, a one hundred basis point decrease in projected gross profit margins and a twenty five basis point increase in the discount rate would not lead to a goodwill impairment charge for either reporting unit.

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We believe the estimates and assumptions used in our impairment assessments are reasonable and based on the best information available. However, these estimates and assumptions include an inherent degree of uncertainty. Significant adverse changes in our expectations for any of these estimates could result in an impairment charge in a future period which may materially impact our operating results and financial position.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential loss arising from adverse changes in market rates and prices. We are primarily exposed to interest rate and commodity price risk.

Commodity Price Risk

Our Electric segment business is exposed to market risk arising from changes in commodity prices for wholesale energy and natural gas. OTP purchases energy in the wholesale market to supplement its own electricity generation and to respond to changes in demand and variability in generating plant output. In addition, OTP procures natural gas as a fuel source for its combustion turbine peaking facilities. OTP's exposure to price risk for these commodities is largely mitigated by the current ratemaking process and regulatory framework, which generally allows recovery of purchased power and fuel costs from our electric customers.

OTP, where prudent, seeks to further manage its exposure to commodity price variability and reduce volatility in prices for its retail customers through the use of derivative instruments, primarily financial swap agreements. OTP does not engage in derivative and hedging activities for trading purposes. As of December 31, 2023, OTP was party to financial swap agreements with an aggregate notional amount of 187,400 megawatt-hours of electricity with various settlement dates throughout 2024. As of December 31, 2023, the aggregate fair value of these instruments was $4.2 million, reflected as a liability on our consolidated balance sheets. Holding other variables constant, a ten percent change in energy prices would have had an approximate $0.7 million impact on the fair value of these instruments.

Our Manufacturing segment businesses are exposed to market risk arising from changes in commodity prices for certain raw material inputs, including steel, aluminum, and polystyrene and other plastics resins. We manage commodity price risk by passing changes in the cost of these input materials through to our customers. If our efforts to manage commodity price risk are unsuccessful, the operating revenues and earnings of our Manufacturing segment could be impacted.

Our Plastics segment businesses are exposed to market risk arising from changes in prices for PVC resin, the primary raw material commodity used to manufacture PVC pipe. The PVC pipe industry as a whole is highly sensitive to volatility in PVC resin prices, with frequent adjustments to PVC pipe sale prices to reflect volatility in PVC resin costs. Historically, when resin prices are rising or stable, sales volumes have been higher. In contrast, when resin prices are falling, sales volumes have been lower. Due to the commodity nature of PVC resin and dynamic supply and demand factors worldwide, gross profit margins can fluctuate significantly from period to period.

We do not engage in any hedging activities within our Manufacturing and Plastics segments to manage our commodity price risk.

Interest Rate Risk

Our exposure to interest rate risk arises from our outstanding short-term debt which is subject to variable rates of interest based on benchmark interest rates, primarily SOFR, and our cash equivalent investments, which earn income at a rate that fluctuates daily, based on changes in U.S. treasury rates. As of December 31, 2023 and 2022, we had $81.4 million and $8.2 million of short-term debt outstanding. Holding other variables constant, a 100 basis point change in interest rates during 2023 would have had an approximate $0.5 million impact to interest expense in 2023 based on our average outstanding short-term debt during the year. As of December 31, 2023 and 2022, we had $219.7 million and $105.8 million invested in cash equivalent investments. Holding other variables constant, a 100 basis point change in the average interest rates during 2023 would have had an approximate $1.5 million impact to our investment income in 2023 based on our average outstanding investment balance during the year.

All of our outstanding long-term debt obligations as of December 31, 2023 and 2022 had fixed interest rates and were not subject to material interest rate risk. We manage our interest rate risk through the issuance of fixed-rate debt with varying maturities, by limiting the amount of variable interest rate debt and the utilization of short-term borrowings to allow flexibility in the timing and placement of long-term debt.

We have not used hedging instruments to manage interest risk arising from our portfolio of borrowings. We maintain a ratio of fixed-rate debt to total debt within a certain range. It is our policy to enter into interest rate transactions and other financial instruments only to the extent considered necessary to meet our stated objectives. We do not enter into interest rate transactions for speculative or trading purposes.

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ITEM 8. FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Otter Tail Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Otter Tail Corporation and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report Regarding Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Regulatory Matters—Impact of Rate Regulation on the Financial Statements—Refer to Notes 1 and 5 to the financial statements.

Critical Audit Matter Description

The Company’s regulated Electric segment accounts for the financial effects of regulation in accordance with ASC 980, Regulated Operations. This guidance allows for the recording of a regulatory asset or liability for certain costs or credits which otherwise would be recognized in the statement of income or comprehensive income based on an expectation that the cost will be recovered or returned in future rates. This guidance also provides for adjustments to rates outside of a general rate case proceeding to encourage or incentivize investments in certain areas such as conservation, renewable energy, pollution reduction or control, improved infrastructure of the transmission grid or other programs that provide benefits to the general public under public policy, laws or regulations.

The Company is subject to regulation of rates and other matters by state and federal regulatory agencies (collectively, the “Commissions”), which have jurisdiction with respect to the rates of electric distribution companies in Minnesota, North Dakota and South Dakota. The Company assesses the probability of recovery of regulatory assets and the obligations arising from regulatory liabilities on a quarterly basis. Probability estimates incorporate numerous factors, including recent rate making decisions, historical precedents for similar matters, the regulatory environments in which the Company operates, and the impact that incurred costs may have on customers.

There is a risk that the Commissions will not approve full recovery of the costs of providing utility service or full recovery of all amounts invested in the utility business and a reasonable return on that investment. As a result, we identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include the recording of regulatory assets for certain costs which otherwise would be recognized in the statement of income or comprehensive income based on an expectation that the costs will be recovered in future rates and the recording of regulatory liabilities for certain credits which would otherwise be recognized in the statement of income or comprehensive income based on an expectation that the amount will be returned to customers in future rates. Given that management’s accounting judgements are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities, the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates, and the related disclosures in the notes to the financial statements.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions for the Company, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness.

•We obtained an analysis from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or a future reduction in rates.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

February 14, 2024

We have served as the Company's auditor since 1944.

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OTTER TAIL CORPORATION

CONSOLIDATED BALANCE SHEETS

	December 31,
(in thousands, except share data)	2023		2022
Assets
Current Assets
Cash and Cash Equivalents	$	230,373	$	118,996
Receivables, net of allowance for credit losses	157,143		144,393
Inventories	149,701		145,952
Regulatory Assets	16,127		24,999
Other Current Assets	16,826		18,412
Total Current Assets	570,170		452,752
Noncurrent Assets
Investments	62,516		54,845
Property, Plant and Equipment, net of accumulated depreciation	2,418,375		2,212,717
Regulatory Assets	95,715		94,655
Intangible Assets, net of accumulated amortization	6,843		7,943
Goodwill	37,572		37,572
Other Noncurrent Assets	51,377		41,177
Total Noncurrent Assets	2,672,398		2,448,909
Total Assets	$	3,242,568	$	2,901,661
Liabilities and Shareholders' Equity
Current Liabilities
Short-Term Debt	$	81,422	$	8,204
Accounts Payable	94,428		104,400
Accrued Salaries and Wages	38,134		32,327
Accrued Taxes	26,590		19,340
Regulatory Liabilities	25,408		17,300
Other Current Liabilities	43,775		56,065
Total Current Liabilities	309,757		237,636
Noncurrent Liabilities and Deferred Credits
Pension Benefit Liability	33,101		33,210
Other Postretirement Benefits Liability	27,676		46,977
Regulatory Liabilities	276,547		244,497
Deferred Income Taxes	237,273		221,302
Deferred Tax Credits	15,172		15,916
Other Noncurrent Liabilities	75,977		60,985
Total Noncurrent Liabilities and Deferred Credits	665,746		622,887
Commitments and Contingencies (Note 13)
Capitalization
Long-Term Debt	824,059		823,821
Shareholders' Equity
Common Stock: 50,000,000 shares authorized of $5 par value; 41,710,521 and 41,631,113 outstanding at December 31, 2023 and 2022	208,553		208,156
Additional Paid-In Capital	426,963		423,034
Retained Earnings	806,342		585,212
Accumulated Other Comprehensive Income	1,148		915
Total Shareholders' Equity	1,443,006		1,217,317
Total Capitalization	2,267,065		2,041,138
Total Liabilities and Shareholders' Equity	$	3,242,568	$	2,901,661

See accompanying notes to consolidated financial statements.

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OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

	Years Ended December 31,
(in thousands, except per-share amounts)	2023		2022		2021
Operating Revenues
Electric	$	528,359	$	549,699	$	480,321
Product Sales	820,807		910,510		716,523
Total Operating Revenues	1,349,166		1,460,209		1,196,844
Operating Expenses
Electric Production Fuel	60,339		65,110		59,327
Electric Purchased Power	78,292		100,281		65,409
Electric Operating and Maintenance Expenses	191,263		181,378		159,669
Cost of Products Sold (excluding depreciation)	454,122		542,944		488,370
Nonelectric Selling, General, and Administrative Expenses	72,663		69,718		65,394
Depreciation and Amortization	97,954		92,597		91,358
Electric Property Taxes	16,614		17,742		17,609
Total Operating Expenses	971,247		1,069,770		947,136
Operating Income	377,919		390,439		249,708
Other Income and Expense
Interest Expense	(37,677)		(36,016)		(37,771)
Nonservice Cost Components of Postretirement Benefits	10,597		1,075		(2,016)
Other Income (Expense), net	12,650		2,037		2,900
Income Before Income Taxes	363,489		357,535		212,821
Income Tax Expense	69,298		73,351		36,052
Net Income	$	294,191	$	284,184	$	176,769
Weighted-Average Common Shares Outstanding:
Basic	41,668		41,586		41,491
Diluted	42,039		41,931		41,818
Earnings Per Share:
Basic	$	7.06	$	6.83	$	4.26
Diluted	$	7.00	$	6.78	$	4.23

See accompanying notes to consolidated financial statements.

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OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Years Ended December 31,
(in thousands)	2023		2022		2021
Net Income	$	294,191	$	284,184	$	176,769
Other Comprehensive Income (Loss):
Unrealized Gain (Loss) on Available-for-Sale Securities, net of tax (expense) benefit of $(51), $115 and $52	192		(432)		(196)
Pension and Other Postretirement Benefit Plan, net of tax expense of $14, $2,769 and $766	41		7,871		2,179
Total Other Comprehensive Income	233		7,439		1,983
Total Comprehensive Income	$	294,424	$	291,623	$	178,752

See accompanying notes to consolidated financial statements.

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OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands, except common stock outstanding)	Common Stock Outstanding	Par Value, Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity
Balance, December 31, 2020	41,469,879	$	207,349	$	414,246	$	257,878	$	(8,507)	$	870,966
Stock Issued Under Dividend Reinvestment and Stock Purchase Plans, Net of Expenses	11,540	58		446		—		—		504
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes	70,105	351		(1,840)		—		—		(1,489)
Net Income	—	—		—		176,769		—		176,769
Other Comprehensive Income	—	—		—		—		1,983		1,983
Stock Compensation Expense	—	—		6,908		—		—		6,908
Common Dividends ($1.56 per share)	—	—		—		(64,864)		—		(64,864)
Balance, December 31, 2021	41,551,524	$	207,758	$	419,760	$	369,783	$	(6,524)	$	990,777
Employee Stock Purchase Plan Expenses	—	—		(219)		—		—		(219)
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes	79,589	398		(3,321)		—		—		(2,923)
Net Income	—	—		—		284,184		—		284,184
Other Comprehensive Income	—	—		—		—		7,439		7,439
Stock Compensation Expense	—	—		6,814		—		—		6,814
Common Dividends ($1.65 per share)	—	—		—		(68,755)		—		(68,755)
Balance, December 31, 2022	41,631,113	$	208,156	$	423,034	$	585,212	$	915	$	1,217,317
Employee Stock Purchase Plan Expenses	—	—		(339)		—		—		(339)
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes	79,408	397		(3,485)		—		—		(3,088)
Net Income	—	—		—		294,191		—		294,191
Other Comprehensive Income	—	—		—		—		233		233
Stock Compensation Expense	—	—		7,753		—		—		7,753
Common Dividends ($1.75 per share)	—	—		—		(73,061)		—		(73,061)
Balance, December 31, 2023	41,710,521	$	208,553	$	426,963	$	806,342	$	1,148	$	1,443,006

See accompanying notes to consolidated financial statements.

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OTTER TAIL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
(in thousands)	2023		2022		2021
Operating Activities
Net Income	$	294,191	$	284,184	$	176,769
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization	97,954		92,597		91,358
Deferred Tax Credits	(744)		(745)		(744)
Deferred Income Taxes	13,508		32,424		28,896
Discretionary Contribution to Pension Plan	—		(20,000)		(10,000)
Investment (Gains) Losses	(7,222)		3,296		(4,524)
Stock Compensation Expense	7,753		6,814		6,908
Other, net	(423)		(1,473)		667
Changes in Operating Assets and Liabilities:
Receivables	(12,750)		30,560		(60,994)
Inventories	(2,450)		5,339		(54,313)
Regulatory Assets	12,479		(2,464)		(4,803)
Other Assets	2,817		(368)		(14,146)
Accounts Payable	(9,988)		(29,763)		38,734
Accrued and Other Liabilities	6		(5,490)		28,386
Regulatory Liabilities	20,973		(6,846)		1,948
Pension and Other Postretirement Benefits	(11,605)		1,244		7,101
Net Cash Provided by Operating Activities	404,499		389,309		231,243
Investing Activities
Capital Expenditures	(287,134)		(171,134)		(171,829)
Proceeds from Disposal of Noncurrent Assets	6,225		4,346		9,702
Purchases of Investments and Other Assets	(8,378)		(8,283)		(9,383)
Net Cash Used in Investing Activities	(289,287)		(175,071)		(171,510)
Financing Activities
Net Borrowings (Repayments) on Short-Term Debt	73,218		(82,959)		10,166
Proceeds from Issuance of Common Stock	—		—		696
Proceeds from Issuance of Long-Term Debt	—		90,000		140,000
Payments for Retirement of Long-Term Debt	—		(30,000)		(140,169)
Dividends Paid	(73,061)		(68,755)		(64,864)
Payments for Shares Withheld for Employee Tax Obligations	(3,088)		(2,942)		(1,507)
Other, net	(904)		(2,123)		(3,681)
Net Cash Used in Financing Activities	(3,835)		(96,779)		(59,359)
Net Change in Cash and Cash Equivalents	111,377		117,459		374
Cash and Cash Equivalents at Beginning of Period	118,996		1,537		1,163
Cash and Cash Equivalents at End of Period	$	230,373	$	118,996	$	1,537
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year for:
Interest, net of amount capitalized	$	36,956	$	35,699	$	36,881
Income Taxes	$	46,284	$	43,411	$	8,445
Supplemental Disclosure of Noncash Investing Activities
Accrued Property, Plant and Equipment Additions	$	13,001	$	12,420	$	12,081

See accompanying notes to consolidated financial statements

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OTTER TAIL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Overview

Otter Tail Corporation (OTC) and its subsidiaries (collectively, the "Company", "us", "our" or "we") form a diverse, multi-platform business consisting of a vertically integrated, regulated utility with generation, transmission and distribution facilities complemented by manufacturing businesses providing metal fabrication for custom machine parts and metal components, manufacturing of extruded and thermoformed plastic products, and manufacturing of PVC pipe products. We classify our business into three segments: Electric, Manufacturing and Plastics. Note 2 includes an additional description of the segments and financial information regarding each segment.

Principles of Consolidation

These consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles and include the accounts of OTC and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation except, as applicable, profits on sales to our regulated electric utility company from our nonregulated businesses, which is in accordance with the accounting requirements of regulated operations.

Use of Estimates

We use estimates based on the best information available in recording transactions and balances resulting from business operations. As better information becomes available, or actual amounts are known, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.

Reclassifications

Certain reclassifications of amounts previously reported have been made to the accompanying consolidated statements of cash flows to maintain consistency and comparability between periods presented. Other, net operating cash flows previously reported for the years ended December 31, 2022 and 2021, included $3.3 million of investment losses and $4.5 million of investment gains, respectively, which are presented separately in the current year, and excluded $1.7 million and $0.8 million of allowance for equity funds used during construction (AFUDC), which were previously presented separately. The reclassifications had no impact on previously reported net cash provided by operating activities, net cash used in investing activities, net cash used in financing activities, or cash and cash equivalents. Certain prior period amounts related to deferred tax assets and deferred tax liabilities included in footnote 12 have been reclassified to conform to the current year presentation.

Regulatory Accounting

Our regulated electric utility company, Otter Tail Power Company (OTP), is subject to regulation of rates and other matters by state utility commissions in Minnesota, North Dakota and South Dakota and by the FERC for certain interstate operations. OTP accounts for the financial effects of regulation in accordance with accounting guidance for regulated operations. This guidance allows for the recording of a regulatory asset for certain costs which otherwise would be recognized in the statement of income or comprehensive income based on an expectation that the cost will be recovered in future rates. This guidance also requires the recording of a regulatory liability for certain credits which would otherwise be recognized in the statement of income or comprehensive income based on an expectation that the amount will be returned to customers in future rates. Amounts recorded as regulatory assets and regulatory liabilities are generally recognized in the statements of income at the time they are reflected in customer rates. In the event OTP ceases to meet the criteria to apply the guidance for regulated operations, the regulatory assets and liabilities that no longer meet such criteria would be removed from the consolidated balance sheets and included in the consolidated statement of income as an expense or income item, or in the consolidated statement of comprehensive income as a loss or gain item, in the period in which the application of this guidance ceases.

Cash Equivalents

We consider all highly liquid investments purchased with maturity dates of 90 days or less to be cash equivalents.

Concentration of Deposits

We hold deposits with financial institutions which potentially subject us to a concentration risk. These deposits are guaranteed by the Federal Deposit Insurance Corporation up to an insurance limit of $250,000. Currently, our cash deposits exceed federally insured levels.

Revenue from Contracts with Customers

Due to our diverse business operations, the recognition of revenue from contracts with customers depends on the product produced and sold or service performed. We recognize revenue from contracts with customers at prices that are fixed or determinable as evidenced by an agreement with the customer, when we have met our performance obligation under the contract and it is probable that we will collect the amount to which we are entitled in exchange for the goods or services transferred or to be transferred to the customer. Depending on the product produced and sold or service performed and the terms of the agreement with the customer, we recognize revenue either over time, in the case of delivery or transmission of electricity or related services or the production and storage of certain custom-made products, or at a point in time for the delivery of standardized products and other products made to customer specifications where the terms of the contract require transfer of the completed product. Provisions for sales returns, early payment discounts, and volume-based variable pricing incentives are recorded as reductions to revenue at the time revenue is recognized based on customer history, historical information and current trends. We include revenues received for shipping and handling in operating revenues. Expenses paid for shipping and handling are recorded as part of cost of products sold. Sales or other taxes collected from customers are excluded from operating revenues.

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Electric Segment Revenues. Most Electric segment revenues are earned from the generation, transmission and sale of electricity to retail customers at rates approved by state regulatory commissions. OTP also earns revenue from the transmission of electricity for others over the transmission assets it owns separately, or jointly with other transmission service providers, under rate tariffs established by the independent transmission system operator and approved by the FERC. A third source of revenue for OTP comes from the generation and sale of electricity to wholesale customers at contract or market rates. Revenues from all these sources meet the criteria to be classified as revenue from contracts with customers and are recognized over time as energy is delivered or transmitted. Revenue is recognized based on the metered quantity of electricity delivered or transmitted at the applicable rates. For electricity delivered and consumed after a meter is read but prior to the end of the reporting period, OTP records revenue and an unbilled receivable based on estimates of the amount of energy delivered to the customer.

Manufacturing Segment Revenues. Our Manufacturing segment businesses earn revenue predominantly from the production and delivery of custom-made or standardized parts and products to customers across several industries and from the production and sale of tools and dies to other manufacturers. For the production and delivery of standardized products and other products made to customer specifications where the terms of the contract require transfer of the completed product, we have met our performance obligation and recognize revenue at the point in time when the product is shipped. At this point we have no further obligation to provide services related to such products. The shipping terms used in these transactions are free on board (FOB) shipping point.

Plastics Segment Revenues. Our Plastics segment businesses earn revenue predominantly from the sale and delivery of standardized PVC pipe products produced at their manufacturing facilities. Revenue from the sale of these products is recognized at the point in time when the product is shipped as there is no further obligation to provide services related to such products and the shipping terms are FOB shipping point. We have one customer within our Plastics segment for which we produce and store a product made to the customer’s specifications and design under a build and hold agreement. For sales to this customer, we recognize revenue as the custom-made product is produced, adjusting the amount of revenue for volume rebate variable pricing considerations we expect the customer will earn and applicable early payment discounts we expect the customer will take. Ownership of the pipe transfers to the customer prior to delivery and we are paid a negotiated fee for storage of the pipe. Revenue for storage of the pipe is recognized over time as the pipe is stored.

Alternative Revenue

In addition to recognizing revenue from contracts with customers, our Electric segment business also records revenue under alternative revenue program (ARP) requirements. Certain rate rider mechanisms qualify as ARP revenues as they provide for adjustments to rates outside of a general rate case proceeding to encourage or incentivize investments in certain areas such as conservation, renewable energy, pollution reduction or control, improved infrastructure of the transmission grid or other programs that provide benefits to the general public under public policy, laws or regulations. ARP riders generally provide for the recovery of specified costs and investments and include an incentive component to provide the regulated utility with a return on amounts invested.

We accrue ARP revenue on the basis of cost incurred, investments made and returns on those investments that qualify for recovery through established riders. ARP revenue is disclosed separately from revenue from contracts with customers and we have elected to report ARP revenue on a net basis, whereby amounts initially recorded as ARP revenue in a period are presented net of the reversal of amounts previously recognized as ARP revenue that are reclassified and recorded as revenue from contracts with customers when such amounts are included in the price of electricity to customers.

Receivables and Allowance for Credit Losses

We grant credit to our customers in the normal course of business with repayment terms generally ranging from 30 to 90 days after the invoice date. Late fees are assessed on certain receivables once they are 30 days past due. Unbilled receivables represent estimates of energy delivered to customers but not yet billed.

Receivables are stated at the billed or estimated unbilled amount less an allowance for estimated credit losses. An allowance for credit losses is established based on losses expected to occur over the contractual life of the receivable. We estimate an allowance for credit losses on our trade and unbilled receivables by evaluating historical aging and write-off history, adjusted for current and forecasted economic conditions, for groups of receivables that share similar economic characteristics. Other receivables are evaluated by reviewing individual accounts, considering aging, financial condition of the debtor, recent payment history and other relevant factors. Account balances are written-off in the period they are deemed to be uncollectible.

Inventories

Inventories are valued at the lower of cost or net realizable value. Costs for fuel, material and supply inventories of our Electric segment are determined on an average cost basis. Costs for raw material, work in process and finished goods inventories of our Manufacturing and Plastics segments are determined on a first-in first-out (FIFO) basis.

Inventories consist of the following as of December 31, 2023 and 2022:

(in thousands)	2023		2022
Finished Goods	$	47,614	$	43,812
Work in Process	26,354		31,766
Raw Material, Fuel and Supplies	75,733		70,374
Total Inventories	$	149,701	$	145,952

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Investments

We invest in and hold, through rabbi trusts, corporate-owned life insurance policies to provide future funding for obligations under our supplemental pension plan and a nonqualified deferred compensation plan. The polices are recorded at cash surrender value and there are no restrictions on our ability to surrender the policies.

We hold debt, mutual fund, and money market fund investments either as investments within our captive insurance entity or to provide future funding for obligations under nonqualified deferred compensation plans. These investments are recorded at fair value. Debt securities are deemed to be available-for-sale securities, accordingly unrealized gains and losses are generally excluded from earnings and recognized in accumulated other comprehensive income. We evaluate whether declines in fair value of debt securities below the cost basis are other-than-temporary. Declines in fair value deemed to be other-than-temporary result in the recognition of unrealized losses, or a portion thereof, in earnings. Unrealized gains and losses on mutual and money market funds are recognized in earnings immediately.

The following is a summary of our investments at December 31, 2023 and 2022:

(in thousands)	2023		2022
Corporate-Owned Life Insurance Policies	$	42,287	$	38,991
Corporate and Government Debt Securities	9,303		8,761
Mutual Funds	7,771		5,503
Money Market Funds	3,125		1,560
Other Investments	30		30
Total Investments	$	62,516	$	54,845

The amount of unrealized gains and losses on debt securities as of December 31, 2023 and 2022 is not material and no unrealized losses were deemed to be other-than-temporary. In addition, the amount of unrealized gains and losses on marketable equity securities still held as of December 31, 2023 and 2022 is not material.

Property, Plant and Equipment

Electric plant is stated at original cost. The cost of additions includes contracted work, direct labor and materials, allocable overheads and AFUDC. The amount of interest capitalized to electric plant was $1.9 million in 2023, $0.9 million in 2022 and $0.6 million in 2021. The cost of depreciable units of property retired less salvage is charged to accumulated depreciation. Amounts recovered in rates for future removal costs are recorded as regulatory liabilities. Removal costs, when incurred, are charged against the regulatory liability. Maintenance, repairs and replacement of minor items are charged to operating expenses as incurred. The provisions for utility depreciation for financial reporting purposes are made on the straight-line method based on the estimated remaining service lives of the properties. Gains or losses on group asset dispositions are recorded to accumulated depreciation and impact current and future depreciation rates.

Property, plant and equipment of nonelectric operations are carried at historical cost and are depreciated on a straight-line basis over the assets’ estimated useful lives. The cost of additions includes contracted work, direct labor and materials, allocable overheads and capitalized interest. No interest was capitalized in 2023, 2022 or 2021. Maintenance and repairs are expensed as incurred. Gains or losses on asset dispositions are included in the determination of operating income.

The estimated service lives for rate-regulated electric assets and nonelectric assets are included below:

	Service Life Range
(years)	Low	High
Electric Assets:
Production Plant	21	114
Transmission Plant	51	75
Distribution Plant	10	70
General Plant	5	56
Nonelectric Assets:
Equipment	2	20
Buildings and Leasehold Improvements	2	40

Jointly Owned Facilities

OTP is a joint owner in two coal-fired steam-powered electric generation plants: Big Stone Plant near Big Stone City, South Dakota and Coyote Station near Beulah, North Dakota. OTP is also a joint owner, with other regional utilities, in five major transmission lines. OTP's interest in each jointly owned facility is reflected in the consolidated balance sheets on a pro-rata basis and OTP's share of direct revenue and expenses are included in operating revenues and expenses in the consolidated statements of income. Each participant in the jointly owned facilities finances their own investments.

Goodwill and Other Intangible Assets

Goodwill is recognized and initially measured as any excess of the acquisition-date consideration transferred in a business combination over amounts recognized for the net identifiable assets acquired. Goodwill is not amortized, but is tested for impairment annually, or more frequently if

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an event occurs or circumstances change that would more likely than not result in an impairment of goodwill. Impairment testing is performed at the reporting unit level, which is defined as an operating segment or one level below an operating segment. We perform our impairment testing in the fourth quarter of each year and have identified three reporting units that carry a goodwill balance.

Our impairment testing includes both an optional qualitative assessment and the quantitative impairment assessment. Our qualitative assessment includes an analysis of relevant events and circumstances to determine if it is more likely than not that the fair value of the reporting unit exceeds its book value. If, after this assessment, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no additional analysis is necessary. In contrast, if after the assessment we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we elect to skip the optional qualitative assessment, the quantitative impairment assessment is performed. The quantitative assessment is a single-step test that identifies both the existence of impairment and the amount of impairment loss by comparing the estimated fair value of a reporting unit to its carrying value, with any excess carrying value over the fair value being recognized as an impairment loss.

Intangible assets with finite lives, which primarily consist of customer relationships, are carried at estimated fair value at the time of acquisition less accumulated amortization. The costs of the intangible assets are amortized over their estimated useful lives, which generally range from 15 to 20 years.

Cloud Computing Costs

We capitalize implementation costs incurred in cloud computing arrangements that are service contracts consistent with capitalized implementation costs incurred to develop or obtain internal-use software. Costs are amortized on a straight-line basis over the life of the associated contract. Capitalized implementation costs are amortized over periods up to ten years. Capitalized costs and related accumulated amortization are included in other noncurrent assets on the consolidated balance sheets. Below are the amounts of capitalized cost and related accumulated amortization as of December 31, 2023 and 2022:

(in thousands)	2023		2022
Cloud Computing Costs	$	12,782	$	9,024
Accumulated Amortization	$	(1,505)	$	(897)
Cloud Computing Costs, net	$	11,277	$	8,127

Amortization expense of capitalized implementation costs for each of the years ended December 31, 2023, 2022 and 2021 totaled $1.3 million, $1.4 million, and $0.5 million.

Leases

We recognize right-of-use lease assets and a corresponding lease liability at the lease commencement date. The length of our lease agreements varies from less than one year to approximately ten years. We have elected to not record lease assets and liabilities for leases with a lease term at commencement of 12 months or less; such leases are expensed on a straight-line basis over the lease term. If a lease contains an option to extend the lease term and there is reasonable certainty the option will be exercised, the option is considered in the lease term at inception. We have elected to not separate non-lease components (e.g., common area maintenance) from lease components on real estate leases, accordingly the recognized lease asset and lease liability incorporate in their measurement payments for non-lease components. Certain leases include variable lease payments as the amounts are subject to change over the lease term. We are unable to determine the interest rate implicit in our leases thus we apply our incremental borrowing rate to capitalize the right-of-use asset and lease liability. We estimate our incremental borrowing rate by incorporating considerations of lease term and lessee entity.

Recoverability of Long-Lived Assets

We review our long-lived assets including, among other assets, property, plant and equipment, amortizing intangible assets and right-of-use lease assets, whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. We determine potential impairment by comparing the carrying amount of the assets with the net cash flows expected to be provided by operating activities of the business or related assets. If the sum of the expected future net cash flows is less than the carrying amount of the assets, an impairment loss would be recognized. Such an impairment loss would be measured as the amount by which the carrying amount exceeds the fair value of the asset.

Asset Retirement Obligations

Legal obligations related to the future retirement of long-lived assets are recognized as asset retirement obligations (ARO). An ARO is recognized in the period in which the legal obligation is incurred and the amount of the obligation can be reasonably estimated, with an offsetting increase to the associated long-lived asset. AROs are initially recognized at fair value and increased with the passage of time (accretion). ARO estimates are revised periodically with any adjustment reflected in the ARO and associated long-lived asset.

Income Taxes

We use the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of all temporary differences between the carrying amounts of assets and liabilities and their respective tax bases. Deferred taxes are recorded using the tax rates scheduled by tax law to be in effect in the periods when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that a portion or all of the deferred tax assets will not be realized. The realizability of deferred tax assets is determined by taking into consideration forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carryforwards and available tax planning strategies. Changes in valuation allowances are included in the provision for income taxes in the period of the changes.

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We recognize the tax effects of all tax positions that are more-likely-than-not to be sustained on audit based solely on the technical merits of those positions as of the balance sheet date. Changes in the recognition or measurement of such positions are recognized in the provision for income taxes in the period of the changes. We classify interest and penalties on tax uncertainties as components of the provision for income taxes.

We have elected to account for transferable tax credits as a component of our income tax provision. We recognize the benefit of PTCs as a reduction of income tax expense in the period the credit is generated, which corresponds to the period the energy production occurs. We apply the deferral method of accounting for ITCs and state wind energy credits. Under this method, ITCs and state wind energy credits are amortized as a reduction to income tax expense over the estimated useful lives of the underlying property that gave rise to the credit.

Deferred Compensation Plans

The Company sponsors two nonqualified deferred compensation plans for the benefit of executive officers and other select employees. Each plan allows participants to defer a specified amount or percentage of base wages or incentive compensation into the plan, subject to certain limitations. The Company, at its discretion, may make employer contributions to either plan during any annual period. Participant and employer deferred amounts are segregated into one or more accounts chosen by the participant. Participants earn a return on deferred amounts based on notional investments in the segregated accounts. Participants can elect lump sum distributions or annual installments of deferred balances during the participant's employment or upon retirement. As of December 31, 2023 and 2022, our liability to participants under these deferred compensation plans was $24.6 million and $20.6 million. Company contributions to these plans were $1.2 million, $0.9 million and $1.1 million for the years ended December 31, 2023, 2022 and 2021. Gains or (losses) recognized due to changes in our payment obligations in connection with these plans amounted to ($3.3 million), $3.1 million, and ($2.2 million) for the years ended December 31, 2023, 2022 and 2021.

Stock-Based Compensation

Stock-based compensation awards are measured at the grant-date fair value of the award and compensation expense is recognized on a straight-line basis over the applicable service or performance period. The service period may be limited to the period until such time that a recipient is retirement eligible as determined under the award agreement. Awards granted to employees eligible for retirement on the date of grant are expensed in the period of grant. We recognize the effects of award forfeitures as they occur.

Fair Value Measurements

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Three levels of inputs may be used to measure fair value:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the New York Mercantile Exchange.

Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities. 

Level 3 – Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation and may include complex and subjective models and forecasts.

In instances where the determination of the fair value measurement is based on inputs from different levels within the hierarchy, the level in the hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Related Parties

The Otter Tail Corporation Foundation and Otter Tail Power Company Foundation are independent not-for-profit charitable entities affiliated with the Company and are not included in the consolidated financial statements of Otter Tail Corporation. Contribution obligations to the two foundations totaling $5.5 million and $4.3 million were recognized as of December 31, 2023 and 2022. Cash contributions paid to the two foundations during the years ended December 31, 2023, 2022 and 2021 were $4.3 million, $4.5 million, and $3.8 million.

Variable Interest Entity

In October 2012, the Coyote Station owners, including OTP, entered into an LSA with Coyote Creek Mining Company, LLC, a subsidiary of The North American Coal Corporation, for the purchase of lignite coal to meet the coal supply requirements of Coyote Station for the period beginning in May 2016 and ending in December 2040. The price per ton paid by the Coyote Station owners under the LSA reflects the cost of production, along with an agreed upon profit and capital charge. CCMC was formed for the purpose of mining coal to meet the coal fuel supply requirements of Coyote Station from May 2016 through December 2040 and, based on the terms of the LSA, is considered a variable interest entity (VIE) due to the transfer of all operating and economic risk to the Coyote Station owners, as the agreement is structured so that the price of the coal would cover all costs of operations as well as future reclamation costs. The Coyote Station owners are required to buy certain assets of CCMC at book value should they terminate the contract prior to the end of the contract term and are providing a guarantee of the value of the equity of CCMC because the Coyote Station owners are required to buy the membership interests of CCMC at the end of the contract term at equity value. Under current accounting standards, the primary beneficiary of a VIE is required to include the assets, liabilities, results of operations and cash flows of the VIE in its consolidated financial statements. No single owner of Coyote Station owns a majority interest in Coyote Station and none, individually, has the power to direct the activities that most significantly impact CCMC. Therefore, none of the owners individually, including OTP, is considered the primary beneficiary of the VIE and the Company is not required to include CCMC in its consolidated financial statements.

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If the LSA terminates prior to the expiration of its term or the production period terminates prior to December 31, 2040 and the Coyote Station owners purchase all of the outstanding membership interests of CCMC, the owners will satisfy or, if permitted by CCMC’s applicable lenders, assume all of CCMC’s obligations owed to CCMC’s lenders under its loans and leases. The Coyote Station owners have limited rights to assign their rights and obligations under the LSA without the consent of CCMC’s lenders during any period in which CCMC’s obligations to its lenders remain outstanding. In the event the contract is terminated prior to the end of the term due to certain events, OTP’s maximum loss exposure, as a result of its involvement with CCMC, could be as high as $40 million, or OTP’s 35% share of CCMC’s unrecovered costs as of December 31, 2023, if recovery of such a loss is denied by regulatory authorities.

Recent Accounting Pronouncements

Segment Reporting. In November 2023, the Financial Accounting Standards Board (FASB) issued amended authoritative guidance codified in Accounting Standards Codification (ASC) 280, Segment Reporting. The amended guidance expands annual and interim disclosure requirements for reportable segments, primarily through expanded disclosures about significant segment expenses. The updated standard is effective for our annual periods beginning in 2024 and interim periods beginning in the first quarter of fiscal 2025. Adoption of the amended guidance must be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

Income Taxes. In December 2023, the FASB issued amended authoritative guidance codified in ASC 740, Income Taxes. The amended guidance requires additional disaggregated information in effective tax rate reconciliation disclosures and additional disaggregated information about income taxes paid. The updated standard is effective for our annual periods beginning in 2025. The amended guidance is to be applied on a prospective basis with the option to apply the standard retrospectively. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

2. Segment Information

We classify our business into three segments, Electric, Manufacturing and Plastics, consistent with our business strategy, organizational structure and our internal reporting and review processes used by our chief operating decision maker to make decisions regarding allocation of resources, to assess operating performance and to make strategic decisions.

Electric includes the production, transmission, distribution and sale of electric energy in Minnesota, North Dakota and South Dakota by OTP. In addition, OTP is a participant in the MISO markets. OTP’s operations have been our primary business since 1907.

Manufacturing consists of businesses in the following manufacturing activities: contract machining, metal parts stamping, fabrication and painting, and production of plastic thermoformed horticultural containers, life science and industrial packaging, and material handling components. These businesses have manufacturing facilities in Georgia, Illinois and Minnesota and sell products primarily in the United States.

Plastics consists of businesses producing PVC pipe at plants in North Dakota and Arizona. The PVC pipe is sold primarily in the western half of the United States and Canada.

Certain assets, income and expenses are not allocated to our operating segments. Corporate operating results include items such as corporate staff and overhead costs, the results of our captive insurance company, gains or losses on our investments and returns on our cash equivalent investments. These items and others are excluded from the measurement of operating segment performance. Corporate assets consist primarily of cash, investments, prepaid expenses, and fixed assets. Corporate is not an operating segment, rather it is added to operating segment totals to reconcile to consolidated amounts.

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Information for each segment and our unallocated corporate costs for the years ended December 31, 2023, 2022 and 2021 are as follows:

(in thousands)	2023		2022		2021
Operating Revenue
Electric	$	528,359	$	549,699	$	480,321
Manufacturing	402,781		397,983		336,294
Plastics	418,026		512,527		380,229
Total	1,349,166		1,460,209		1,196,844
Depreciation and Amortization
Electric	75,330		72,050		71,343
Manufacturing	18,495		16,202		15,436
Plastics	4,027		4,205		4,354
Corporate	102		140		225
Total	97,954		92,597		91,358
Operating Income (Loss)
Electric	106,521		113,138		106,964
Manufacturing	29,140		29,065		24,114
Plastics	254,402		264,578		132,760
Corporate	(12,144)		(16,342)		(14,130)
Total	377,919		390,439		249,708
Interest Expense
Electric	33,864		31,950		33,043
Manufacturing	2,295		2,796		2,239
Plastics	602		585		587
Corporate	916		685		1,902
Total	37,677		36,016		37,771
Income Tax Expense (Benefit)
Electric	1,648		5,065		1,663
Manufacturing	5,390		5,321		4,704
Plastics	66,066		68,688		34,374
Corporate	(3,806)		(5,723)		(4,689)
Total	69,298		73,351		36,052
Net Income (Loss)
Electric	84,424		79,974		72,458
Manufacturing	21,454		20,950		17,186
Plastics	187,748		195,374		97,823
Corporate	565		(12,114)		(10,698)
Total	294,191		284,184		176,769
Capital Expenditures
Electric	240,695		147,869		140,031
Manufacturing	23,284		17,954		20,690
Plastics	23,029		5,245		11,040
Corporate	126		66		68
Total	$	287,134	$	171,134	$	171,829

The following provides the identifiable assets by segment and corporate assets as of December 31, 2023 and 2022:

(in thousands)	2023		2022
Identifiable Assets
Electric	$	2,533,831	$	2,351,961
Manufacturing	251,343		245,869
Plastics	164,179		126,318
Corporate	293,215		177,513
Total	$	3,242,568	$	2,901,661

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Concentrations

Our Plastics segment businesses use PVC resin as a critical component within their PVC pipe manufacturing process. There are a limited number of PVC resin suppliers in the U.S., and in 2023, we sourced all of our PVC resin needs from three vendors. Although there are a limited number of PVC resin suppliers, we believe that other suppliers could provide PVC resin on comparable terms. Additionally, most U.S. resin production plants are located in the Gulf Coast region. These plants are subject to the risk of damage and production shutdowns because of exposure to hurricanes or other extreme weather events that occur in this region. The loss of a key vendor, or any interruption or delay in the supply of PVC resin could cause production delays, a possible loss of sales, or result in increased costs to secure resin, all of which would adversely affect our operating results.

Entity-Wide Information

No single customer accounted for over 10% of our consolidated operating revenues for the years ended December 31, 2023, 2022 and 2021. All of our long-lived assets are located within the United States and substantially all of our operating revenues are from customers located within the United States.

3. Revenue

We present our operating revenues from external customers, in total and by amounts arising from contracts with customers and ARP arrangements, disaggregated by revenue source and segment for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023		2022		2021
Operating Revenues
Electric Segment
Retail: Residential	$	135,570	$	143,888	$	135,361
Retail: Commercial and Industrial	312,551		318,494		262,408
Retail: Other	7,719		7,918		7,715
Total Retail	455,840		470,300		405,484
Transmission	52,555		52,213		48,835
Wholesale	12,459		18,539		17,936
Other	7,505		8,647		8,066
Total Electric Segment	528,359		549,699		480,321
Manufacturing Segment
Metal Parts and Tooling	351,267		338,865		283,527
Plastic Products and Tooling	41,395		49,080		40,231
Scrap Metal	10,119		10,038		12,536
Total Manufacturing Segment	402,781		397,983		336,294
Plastics Segment
PVC Pipe	418,026		512,527		380,229
Total Operating Revenue	1,349,166		1,460,209		1,196,844
Less: Noncontract Revenues Included Above
Electric Segment - ARP Revenues	(4,310)		(9,266)		(791)
Total Operating Revenues from Contracts with Customers	$	1,353,476	$	1,469,475	$	1,197,635

4. Receivables

Receivables as of December 31, 2023 and 2022 are as follows:

(in thousands)	2023		2022
Receivables
Trade	$	129,257	$	112,126
Other	9,084		9,983
Unbilled Receivables	21,324		23,932
Total Receivables	159,665		146,041
Less Allowance for Credit Losses	2,522		1,648
Receivables, net of allowance for credit losses	$	157,143	$	144,393

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The following is a summary of activity in the allowance for credit losses for the years ended December 31, 2023 and 2022:

(in thousands)	2023		2022
Beginning Balance	$	1,648	$	1,836
Additions Charged to Expense	2,014		909
Reductions for Amounts Written Off, Net of Recoveries	(1,140)		(1,097)
Ending Balance	$	2,522	$	1,648

5. Regulatory Matters

Regulatory Assets and Liabilities

The following presents our current and long-term regulatory assets and liabilities as of December 31, 2023 and 2022 and the period we expect to recover or refund such amounts:

	Period of	2023				2022
(in thousands)	Recovery/Refund	Current		Long-Term		Current		Long-Term
Regulatory Assets
Pension and Other Postretirement Benefit Plans1	See below	$	154	$	86,134	$	—	$	88,354
Alternative Revenue Program Riders2	Up to 2 years	3,719		158		5,679		2,508
Asset Retirement Obligations1	Asset lives	—		87		—		1,467
Deferred Income Taxes	Asset lives	—		6,940		—		—
Fuel Clause Adjustments1	Up to 1 year	7,294		—		10,893		—
Derivative Instruments1	Up to 1 year	4,210		—		7,130		—
Other1	Various	750		2,396		1,297		2,326
Total Regulatory Assets		16,127		95,715		24,999		94,655
Regulatory Liabilities
Deferred Income Taxes	Asset lives	—		136,022		—		131,480
Plant Removal Obligations	Asset lives	—		117,030		8,509		105,733
Fuel Clause Adjustments	Up to 1 year	11,350		—		365		—
Alternative Revenue Program Riders	Up to 1 year	6,885		—		2,504		—
North Dakota PTC Refunds	Asset lives	—		12,011		—		7,136
Pension and Other Postretirement Benefit Plans	See below	6,138		11,307		5,589		—
Other	Various	1,035		177		333		148
Total Regulatory Liabilities		$	25,408	$	276,547	$	17,300	$	244,497
1Costs subject to recovery without a rate of return.
2Amount eligible for recovery includes an incentive or rate of return.

Pension and Other Postretirement Benefit Plans represent benefit costs and actuarial losses and gains subject to recovery or refund through rates as they are expensed or amortized. These unrecognized benefit costs and actuarial losses and gains are eligible for treatment as regulatory assets or liabilities based on their probable inclusion in future electric rates.

Alternative Revenue Program Riders regulatory assets and liabilities are revenues not yet collected from customers or amounts subject to refund, respectively, primarily due to investments in qualifying transmission, conservation, renewable resource, environmental and other generation assets, and the impact of decoupling.

Asset Retirement Obligations represent the difference in timing of recognition of expense arising from these obligations and the amount recovered from customers.

Fuel Clause Adjustments represent the under- or over-collection of fuel costs relative to the estimated cost of fuel included in customer rates, which will be collected from or returned to customers.

Derivative Instruments represent unrealized gains and losses recognized on derivative instruments. On final settlement of such instruments, any realized gains or losses are paid to or recovered from customers.

Deferred Income Taxes represent the revaluation of accumulated deferred income taxes arising from the change in the federal income tax rate in 2017. This amount is being refunded to customers over the estimated lives of the property assets from which the deferred income taxes originated.

Plant Removal Obligations represent amounts collected from customers to be used to cover actual removal costs as incurred.

North Dakota PTC Refunds represent PTCs earned from the Merricourt Wind Energy Center. These amounts are being allocated to customers over the life of the asset.

Other regulatory assets and liabilities include other amounts that we expect to recover from, or return to, customers in future periods, such as

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the cost of abandoned projects, costs incurred in connection with recent rate cases, and other items.

North Dakota Rate Case

On November 2, 2023, OTP filed a request with the NDPSC for an increase in revenue recoverable under general rates in North Dakota. In its filing, OTP requested a net increase in annual revenue of $17.4 million, or 8.4%, based on an allowed rate of return on rate base of 7.85% and an allowed rate of return on equity of 10.6% on an equity ratio of 53.5% of total capital. Through this proceeding, OTP has proposed changes to the mechanism of cost and investment recovery, with recovery moving from riders into base rates. The filing also includes a proposal to implement a sales adjustment mechanism to address potential significant load additions or losses. The filing included an interim rate request of a net increase in annual revenue of $12.4 million, or 6.0%, which was approved by the NDPSC on December 13, 2023, and interim rates went into effect on January 1, 2024. These interim rate revenues, when collected, are subject to potential refund until the finalization of the rate case.

6. Property, Plant and Equipment

Major classes of property, plant and equipment as of December 31, 2023 and 2022 include:

(in thousands)	2023		2022
Electric Plant in Service
Production	$	1,412,826	$	1,343,097
Transmission	777,613		756,848
Distribution	654,704		612,716
General	144,738		131,718
Electric Plant in Service	2,989,881		2,844,379
Construction Work in Progress	137,212		113,932
Total Gross Electric Plant	3,127,093		2,958,311
Less Accumulated Depreciation and Amortization	851,148		859,988
Net Electric Plant	2,275,945		2,098,323
Nonelectric Property, Plant and Equipment
Equipment	233,571		218,770
Buildings and Leasehold Improvements	64,753		61,506
Land	13,600		13,652
Nonelectric Property, Plant and Equipment	311,924		293,928
Construction Work in Progress	38,062		15,170
Total Gross Nonelectric Property, Plant and Equipment	349,986		309,098
Less Accumulated Depreciation and Amortization	207,556		194,704
Net Nonelectric Property, Plant and Equipment	142,430		114,394
Net Property, Plant and Equipment	$	2,418,375	$	2,212,717

Depreciation expense for the years ended December 31, 2023, 2022 and 2021 totaled $90.8 million, $84.4 million and $85.8 million.

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The following table provides OTP’s ownership percentages and amounts included in the December 31, 2023 and 2022 consolidated balance sheets for OTP’s share of each of these jointly owned facilities:

(dollars in thousands)	Ownership Percentage		Electric Plant in Service		Construction Work in Progress		Accumulated Depreciation		Net Plant
December 31, 2023
Big Stone Plant	53.9	%	$	341,683	$	820	$	(126,904)	$	215,599
Coyote Station	35.0	%	188,656		104		(115,306)		73,454
Big Stone South–Ellendale 345 kV line	50.0	%	106,185		—		(7,181)		99,004
Fargo–Monticello 345 kV line	14.2	%	78,184		—		(11,238)		66,946
Big Stone South–Brookings 345 kV line	50.0	%	53,170		—		(5,207)		47,963
Brookings–Southeast Twin Cities 345 kV line	4.8	%	26,409		83		(3,617)		22,875
Bemidji–Grand Rapids 230 kV line	14.8	%	16,331		—		(3,568)		12,763
Jamestown– Ellendale 345 kV line	50.0	%	—		1,121		—		1,121
Big Stone South–Alexandria 345 kV line	40.0	%	—		555		—		555
Alexandria–Big Oaks 345 kV line	14.2	%	—		343		—		343
December 31, 2022
Big Stone Plant	53.9	%	$	338,411	$	557	$	(118,044)	$	220,924
Coyote Station	35.0	%	183,461		2,315		(111,666)		74,110
Big Stone South–Ellendale 345 kV line	50.0	%	106,185		—		(5,587)		100,598
Fargo–Monticello 345 kV line	14.2	%	78,184		—		(10,095)		68,089
Big Stone South–Brookings 345 kV line	50.0	%	53,041		—		(4,406)		48,635
Brookings–Southeast Twin Cities 345 kV line	4.8	%	26,291		—		(3,211)		23,080
Bemidji–Grand Rapids 230 kV line	14.8	%	16,331		—		(3,318)		13,013

7. Intangible Assets

The following table summarizes our goodwill by segment as of December 31, 2023 and 2022: 

(in thousands)	2023		2022
Manufacturing	$	18,270	$	18,270
Plastics	19,302		19,302
Total Goodwill	$	37,572	$	37,572

Our annual goodwill impairment testing, performed in the fourth quarters of 2023 and 2022, indicated no impairment existed as of the test date.

The following table summarizes the components of our intangible assets at December 31, 2023 and 2022:

(in thousands)	Gross Amount		Accumulated Amortization		Net Carrying Amount
December 31, 2023
Customer Relationships	$	22,491	$	15,667	$	6,824
Other	26		7		19
Total	22,517		15,674		6,843
December 31, 2022
Customer Relationships	22,491		14,568		7,923
Other	26		6		20
Total	$	22,517	$	14,574	$	7,943

Amortization expense for these intangible assets for each of the years ended December 31, 2023, 2022 and 2021 totaled $1.1 million.

Annual amortization expense for these intangible assets for the next five years is: 

(in thousands)	2024		2025		2026		2027		2028
Amortization Expense	$	1,100	$	1,100	$	1,092	$	1,090	$	554

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8. Leases 

We lease rail cars, warehouse and office space, land, and certain office, manufacturing, material handling, and other equipment under varying terms and conditions. All leases are classified as operating leases.

The components of lease cost and lease cash flows for the years ended December 31, 2023, 2022, and 2021 are as follows:

(in thousands)	2023		2022		2021
Lease Cost
Operating Lease Cost	$	6,309	$	5,606	$	5,298
Variable Lease Cost	1,433		1,386		1,020
Short-Term Lease Cost	2,525		1,517		1,465
Total Lease Cost	10,267		8,509		7,783
Lease Cash Flows
Operating Cash Flows from Operating Leases	$	6,424	$	5,592	$	5,642

A summary of operating lease right-of-use lease assets and lease liabilities as of December 31, 2023 and 2022 is as follows: 

(in thousands)	2023		2022
Right of Use Lease Assets1	$	16,788	$	18,610
Lease Liabilities
Current2	5,756		5,071
Long-Term3	11,258		13,876
Total Lease Liabilities	$	17,014	$	18,947
1Included in Other Noncurrent Assets in the consolidated balance sheets.
2Included in Other Current Liabilities in the consolidated balance sheets.
3Included in Other Noncurrent Liabilities in the consolidated balance sheets.

Operating lease assets obtained in exchange for new operating liabilities amounted to $3.6 million and $3.7 million for the years ended December 31, 2023 and 2022.

Maturities of lease liabilities as of December 31, 2023 for each of the next five years and in the aggregate thereafter are as follows:

(in thousands)	Operating Leases
2024	$	6,473
2025	5,357
2026	3,068
2027	2,196
2028	1,059
Thereafter	368
Total Lease Payments	18,521
Less: Interest	1,507
Present Value of Lease Liabilities	$	17,014

The weighted-average remaining lease term and the weighted-average discount rate as of December 31, 2023 and 2022 are as follows:

	2023		2022
Weighted-Average Remaining Lease Term (in years)	3.4		4.2
Weighted-Average Discount Rate	5.40	%	4.73	%

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9. Short-Term and Long-Term Borrowings

The following is a summary of our outstanding short- and long-term borrowings by borrower, OTC or OTP, as of December 31, 2023 and 2022:

	2023						2022
(in thousands)	OTC		OTP		Total		OTC		OTP		Total
Short-Term Debt	$	—	$	81,422	$	81,422	$	—	$	8,204	$	8,204
Current Maturities of Long-Term Debt	—		—		—		—		—		—
Long-Term Debt, net of current maturities	79,849		744,210		824,059		79,798		744,023		823,821
Total	$	79,849	$	825,632	$	905,481	$	79,798	$	752,227	$	832,025

Short-Term Debt

The following is a summary of our lines of credit as of December 31, 2023 and 2022:

			2023						2022
(in thousands)	Line Limit		Amount Outstanding		Letters of Credit		Amount Available		Amount Available
OTC Credit Agreement	$	170,000	$	—	$	—	$	170,000	$	170,000
OTP Credit Agreement	170,000		81,422		9,132		79,446		152,223
Total	$	340,000	$	81,422	$	9,132	$	249,446	$	322,223

OTC is party to a Fifth Amended and Restated Credit Agreement (the OTC Credit Agreement) and OTP is party to a Fourth Amended and Restated Credit Agreement (the OTP Credit Agreement). The agreements both provide for $170.0 million unsecured revolving lines of credit to support operations, fund capital expenditures, refinance certain indebtedness and provide for the issuance of letters of credit in an aggregate amount not to exceed $40.0 million under the OTC Credit Agreement and $50.0 million under the OTP Credit Agreement. Each credit facility includes an accordion provision allowing the borrower to increase the borrowing capacity under the facility, subject to certain conditions, up to $290.0 million and $250.0 million under the OTC Credit Agreement and OTP Credit Agreement, respectively.

Borrowings under each credit facility are subject to a variable rate of interest on outstanding balances and a commitment fee is charged based on the average unused amount available to be drawn under the respective facility. The variable rate of interest to be charged is based on a benchmark interest rate, either SOFR or a Base Rate, as defined in the credit agreements, selected by the borrower at the time of an advance, subject to the conditions of each agreement, plus an applicable credit spread. The credit spread ranges from zero to 2.00%, depending on the benchmark interest rate selected, and is subject to adjustment based on the credit ratings of the relevant borrower. The weighted-average interest rate on all outstanding borrowings as of December 31, 2023 and 2022 was 6.70% and 5.61%.

Each credit facility contains a number of restrictions on the borrower, including restrictions on the ability to merge, sell assets, make investments, create or incur liens on assets, guarantee the obligations of any other party and engage in transactions with related parties. The agreements also require the borrower to maintain various financial covenants, as further described below. Each credit facility expires on October 29, 2027.

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Long-Term Debt

The following is a summary of outstanding long-term debt by borrower as of December 31, 2023 and 2022: 

					(in thousands)
Entity		Debt Instrument	Rate	Maturity	2023		2022
OTC		Guaranteed Senior Notes	3.55%	12/15/26	$	80,000	$	80,000
OTP		Series 2007C Senior Unsecured Notes	6.37%	08/02/27	42,000		42,000
OTP		Series 2013A Senior Unsecured Notes	4.68%	02/27/29	60,000		60,000
OTP		Series 2019A Senior Unsecured Notes	3.07%	10/10/29	10,000		10,000
OTP		Series 2020A Senior Unsecured Notes	3.22%	02/25/30	10,000		10,000
OTP		Series 2020B Senior Unsecured Notes	3.22%	08/20/30	40,000		40,000
OTP		Series 2021A Senior Unsecured Notes	2.74%	11/29/31	40,000		40,000
OTP		Series 2007D Senior Unsecured Notes	6.47%	08/20/37	50,000		50,000
OTP		Series 2019B Senior Unsecured Notes	3.52%	10/10/39	26,000		26,000
OTP		Series 2020C Senior Unsecured Notes	3.62%	02/25/40	10,000		10,000
OTP		Series 2013B Senior Unsecured Notes	5.47%	02/27/44	90,000		90,000
OTP		Series 2018A Senior Unsecured Notes	4.07%	02/07/48	100,000		100,000
OTP		Series 2019C Senior Unsecured Notes	3.82%	10/10/49	64,000		64,000
OTP		Series 2020D Senior Unsecured Notes	3.92%	02/25/50	15,000		15,000
OTP		Series 2021B Senior Unsecured Notes	3.69%	11/29/51	100,000		100,000
OTP		Series 2022A Senior Unsecured Notes	3.77%	05/20/52	90,000		90,000
Total					827,000		827,000
Less:	Unamortized Long-Term Debt Issuance Costs				2,941		3,179
Total Long-Term Debt Net of Unamortized Debt Issuance Costs					$	824,059	$	823,821

Our guaranteed and unsecured notes require the borrower to maintain various financial covenants, as further described below. These notes provide for prepayment options allowing for a full or partial prepayment at 100% of the principal amount so prepaid, together with unpaid accrued interest and a make-whole amount, as defined. These notes also include restrictions on the borrower, including its ability to merge, sell assets, create or incur liens on assets, guarantee the obligations of any other party and engage in transactions with related parties.

Aggregate maturities of long-term debt obligations at December 31, 2023 for each of the next five years are as follows:

(in thousands)	2024		2025		2026		2027		2028
Debt Maturities	$	—	$	—	$	80,000	$	42,000	$	—

Financial Covenants

Certain of OTC's and OTP's short-term and long-term debt agreements require the borrower, whether OTC or OTP, to maintain certain financial covenants, including a maximum debt to total capitalization of 0.60 to 1.00, a minimum interest and dividend coverage ratio of 1.50 to 1.00, and a maximum level of priority indebtedness. As of December 31, 2023, OTC and OTP were in compliance with these financial covenants.

Guaranties

OTC's obligations under the terms of its Guaranteed Senior Notes are unconditionally and irrevocably guaranteed by its subsidiaries, Varistar Corporation, BTD Manufacturing, Inc., Northern Pipe Products, Inc., and Vinyltech Corporation.

10. Employee Postretirement Benefits

Pension Plan and Other Postretirement Benefits

The Company sponsors a noncontributory funded pension plan (the Pension Plan), an unfunded, nonqualified Executive Survivor and Supplemental Retirement Plan (ESSRP), both accounted for as defined benefit pension plans, and a postretirement healthcare plan accounted for as an other postretirement benefit plan.

The Pension Plan, which previously covered substantially all corporate and OTP employees, was closed to new employees in 2013. The plan provides retirement compensation to all covered employees at age 65, with reduced compensation in cases of retirement prior to age 62. Participants are fully vested after completing five years of vesting service. The plan assets consist of equity funds, fixed income funds, cash and cash equivalents and alternative investments. None of the plan assets are invested in common stock or debt securities of the Company.

The ESSRP, an unfunded plan, provides for defined benefit payments to executive officers and certain key management employees on their retirement for life, or to their beneficiaries on their death. The ESSRP was amended and restated in 2019 to i) freeze the participation in the

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restoration retirement benefit component of the plan and ii) freeze benefit accruals under the restoration retirement benefit component of the plan for all participants of the plan except any participants deemed to be grandfathered participants.

The postretirement healthcare plan, closed to new participants in 2010, provides a portion of health insurance benefits for retired and covered corporate and OTP employees. To be eligible for retiree health insurance benefits, the employee must be 55 years of age with a minimum of 10 years of service. The plan is an unfunded plan and accordingly holds no plan assets.

Pension Plan Assets. We have established a Retirement Plans Administration Committee to develop and monitor our investment strategy for our Pension Plan assets. Our investment strategy includes the following objectives:

•The assets of the plan will be invested in accordance with all applicable laws in a manner consistent with fiduciary standards including Employee Retirement Income Security Act standards of 1974 (ERISA) (if applicable). Specifically:

◦The safeguards and diversity that a prudent investor would adhere to must be present in the investment program.

◦All transactions undertaken on behalf of the Pension Plan must be in the best interest of plan participants and their beneficiaries.

•The primary objective is to provide a source of retirement income for its participants and beneficiaries.

•The near-term primary financial objective is to improve and protect the funded status of the plan.

•A secondary financial objective is to minimize pension funding and expense volatility where possible.

We have developed an asset allocation target, measured at investment market value, to provide guideline percentages of investment mix. This investment mix is intended to achieve the financial objectives of the plan. The permitted range is a guide and will at times not reflect the actual asset allocation due to market conditions, actions of our investment managers and required cash flows to and from the Pension Plan.

The following table presents our target asset allocation permitted range along with the actual asset allocation as of December 31, 2023 and 2022:

	Permitted			Actual Allocation
Asset Class	Range			2023		2022
Return Enhancement	35	–	60%	48	%	48	%
Risk Management	40	–	80%	51		51
Alternatives	0	–	20%	1		1
Total				100	%	100	%

Return Enhancement investments are those that seek to provide equity-like, long-term capital appreciation. Examples include equity securities, including dynamic asset allocation funds, and higher yielding fixed income securities, such as high yield bonds and emerging market debt.

Risk Management investments seek to decrease downside risk or act as a hedge against plan liabilities. Examples are cash and fixed income instruments.

Alternative investments seek to either provide return enhancement through long-term appreciation or risk management through decreased downside risk. The defining characteristic of these asset types is uncorrelated source of returns, less liquidity and private market access. Examples include investments in the SEI Energy Debt Collective Fund.

The following presents the fair value inputs classified within the fair value hierarchy used to measure Pension Plan assets at December 31, 2023 and 2022 and assets measured using the net asset value (NAV) practical expedient:

(in thousands)	Level 1		Level 2		Level 3		NAV		Total
December 31, 2023
Equity Funds	$	127,159	$	—	$	—	$	—	$	127,159
Fixed Income Funds	167,604		—		—		—		167,604
Hybrid Funds	10,980		—		—		—		10,980
U.S. Treasury Securities	23,218		—		—		—		23,218
SEI Energy Debt Collective Fund	—		—		—		1,518		1,518
Total	328,961		—		—		1,518		330,479
December 31, 2022
Equity Funds	124,327		—		—		—		124,327
Fixed Income Funds	156,424		—		—		—		156,424
Hybrid Funds	9,756		—		—		—		9,756
U.S. Treasury Securities	19,587		—		—		—		19,587
SEI Energy Debt Collective Fund	—		—		—		3,703		3,703
Total	$	310,094	$	—	$	—	$	3,703	$	313,797

The investments held by the SEI Energy Debt Collective Fund on December 31, 2023 and 2022 consist mainly of below investment grade high yield bonds and loans of U.S. energy companies which trade at a discount to fair value. Redemptions are allowed semi-annually with a 95-day notice

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period, subject to fund director consent and certain gate, holdback and suspension restrictions. Subscriptions are allowed monthly with a three-year lock up on subscriptions. The fund’s assets are valued in accordance with valuations reported by the fund’s sub-advisor or the fund’s underlying investments or other independent third-party sources, although SEI in its discretion may use other valuation methods, subject to compliance with ERISA, as applicable. On an annual basis, as determined by the investment manager in its sole discretion, an independent valuation agent is retained to provide a valuation of the illiquid assets of the fund and of any other asset of the fund.

Funded Status. The following table provides a reconciliation of the changes in the fair value of plan assets and the actuarially computed benefit obligation for the years ended December 31, 2023 and 2022 and the funded status of the plans as of December 31, 2023 and 2022:

	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
(in thousands)	2023		2022		2023		2022		2023		2022
Change in Fair Value of Plan Assets:
Fair Value of Plan Assets at January 1	$	313,797	$	387,212	$	—	$	—	$	—	$	—
Actual Return on Plan Assets	34,196		(76,485)		—		—		—		—
Company Contributions	—		20,000		2,197		2,205		3,167		2,294
Benefit Payments	(17,514)		(16,930)		(2,197)		(2,205)		(8,900)		(8,173)
Participant Premium Payments	—		—		—		—		5,733		5,879
Fair Value of Plan Assets at December 31	330,479		313,797		—		—		—		—
Change in Benefit Obligation:
Benefit Obligation at January 1	308,055		416,697		35,624		46,840		49,947		69,311
Service Cost	3,698		6,576		72		195		565		1,338
Interest Cost	16,436		12,344		1,889		1,341		2,416		2,041
Benefit Payments	(17,514)		(16,930)		(2,197)		(2,205)		(8,900)		(8,172)
Participant Premium Payments	—		—		—		—		5,733		5,879
Plan Amendments	—		—		—		—		(17,493)		—
Actuarial (Gain) Loss	8,126		(110,632)		392		(10,547)		(2,123)		(20,450)
Benefit Obligation at December 31	318,801		308,055		35,780		35,624		30,145		49,947
Funded Status	$	11,678	$	5,742	$	(35,780)	$	(35,624)	$	(30,145)	$	(49,947)
Amounts Recognized in Consolidated Balance Sheets at December 31:
Noncurrent Assets	$	11,678	$	5,742	$	—	$	—	$	—	$	—
Current Liabilities	—		—		(2,679)		(2,414)		(2,469)		(2,970)
Noncurrent Liabilities and Deferred Credits	—		—		(33,101)		(33,210)		(27,676)		(46,977)
Net Asset (Liability)	$	11,678	$	5,742	$	(35,780)	$	(35,624)	$	(30,145)	$	(49,947)

The accumulated benefit obligation of our Pension Plan was $288.8 million and $283.2 million as of December 31, 2023 and 2022. The accumulated benefit obligation of our ESSRP was $35.8 million and $35.6 million as of December 31, 2023 and 2022.

In 2023, the Company amended its postretirement healthcare plan to eliminate, for Medicare-eligible participants, the employer-sponsored group waiver medical plan and instead allow participants to select an individual medical plan through a private marketplace exchange. The Company now provides these plan participants with an annual reimbursement to subsidize their medical premiums. The effect of the plan amendment reduced the Company’s projected benefit obligation by $20.1 million. The reduced benefit obligation included a $2.6 million reduction attributable to an increase in the discount rate used to measure the plan liability, which was 6.06% at the time of the amendment, compared to 5.52% used at December 31, 2022. The $17.5 million of savings attributable to the plan change is being recognized as a reduction to expense over 4.8 years, the expected remaining service period to retirement-age eligibility for active participants.

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The following assumptions were used to determine benefit obligations as of December 31, 2023 and 2022:

	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
	2023		2022		2023		2022		2023		2022
Discount Rate	5.57	%	5.51	%	5.53	%	5.51	%	5.53	%	5.52	%
Long-Term Rate of Compensation Increase	n/a		n/a		3.00	%	3.00	%	n/a		n/a
Participants up to Age 39(1)	4.50	%	4.50	%	n/a		n/a		n/a		n/a
Participants Ages 40 to 49(2)	4.50	%	3.50	%	n/a		n/a		n/a		n/a
Participants Age 50 and Older(3)	3.75	%	2.75	%	n/a		n/a		n/a		n/a
Healthcare Cost Immediate Trend Rate	n/a		n/a		n/a		n/a		6.97	%	7.50	%
Healthcare Cost Ultimate Trend Rate	n/a		n/a		n/a		n/a		4.00	%	4.00	%
Year the Rate Reaches the Ultimate Trend Rate	n/a		n/a		n/a		n/a		2048		2048
(1) Amount reflects rate of compensation increases for both union and non-union employees.
(2) Amount reflects rate of compensation increases for union employees. The rate of compensation increases for non-union employees is 3.50%.
(3) Amount reflects rate of compensation increases for union employees. The rate of compensation increases for non-union employees is 3.00%.

The measurement of the plan asset or benefit obligation recognized for our Pension Plan, ESSRP and postretirement healthcare benefit plan included the following significant actuarial adjustments:

•For the Pension Plan, an increase in the discount rate in 2023 and 2022 reduced our obligation by $2.2 million and $117.1 million. Changes in retirement rate, percentage married, spouse age, benefit election, benefit commencement age and wage assumptions increased our benefit obligation in 2023 by $7.9 million. Changes in plan participant census data increased our benefit obligation by $3.1 million in 2023. Actual returns on Pension Plan assets in 2023 were $34.2 million, compared to an expected return of $25.9 million, impacting our obligation by $8.3 million.

•For the ESSRP, an increase in the discount rate in 2023 and 2022 reduced our obligation by $0.1 million and $10.2 million.

•For the postretirement healthcare plan, a plan amendment during 2023, as described above, decreased our benefit obligation by $17.5 million. An increase in the discount rate in 2023 and 2022 reduced our obligation by $1.3 million and $17.9 million. Revised estimates of healthcare cost trends and participant contribution assumptions increased the benefit obligation by $1.1 million in 2023.

Net Periodic Benefit Cost. A portion of service cost may be capitalized as a cost of self-constructed property, plant and equipment. When recognized in the consolidated statements of income, service cost is recognized within one of the components of operating expenses. Nonservice cost components of net periodic benefit cost may be deferred and recognized as a regulatory asset under the accounting guidance for regulated operations. When recognized in the consolidated statements of income, nonservice cost components are recognized as nonservice cost components of postretirement benefits.

The following table lists the components of net periodic benefit cost of our defined benefit pension plans and other postretirement benefits for the years ended December 31, 2023, 2022 and 2021:

	Pension Benefits (Pension Plan)						Pension Benefits (ESSRP)						Postretirement Benefits
(in thousands)	2023		2022		2021		2023		2022		2021		2023		2022		2021
Service Cost	$	3,698	$	6,576	$	7,462	$	72	$	195	$	187	$	565	$	1,338	$	1,722
Interest Cost	16,436		12,344		11,660		1,889		1,341		1,228		2,416		2,041		1,891
Expected Return on Assets	(25,914)		(23,684)		(22,359)		—		—		—		—		—		—
Amortization of Prior Service Cost	—		—		—		—		—		—		(6,649)		(5,733)		(5,733)
Amortization of Net Actuarial Loss	—		7,865		10,914		—		567		620		—		3,063		3,774
Net Periodic Benefit Cost	$	(5,780)	$	3,101	$	7,677	$	1,961	$	2,103	$	2,035	$	(3,668)	$	709	$	1,654

The following table includes the impact of regulation on the recognition of periodic benefit cost arising from pension and other postretirement benefits for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023		2022		2021
Net Periodic Benefit Cost	$	(7,487)	$	5,913	$	11,366
Net Amount Amortized Due to the Effect of Regulation	1,225		1,121		21
Net Periodic Benefit Cost Recognized	$	(6,262)	$	7,034	$	11,387

The following assumptions were used to determine net periodic benefit cost for the years ended December 31, 2023, 2022 and 2021:

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	Pension Benefits (Pension Plan)						Pension Benefits (ESSRP)						Postretirement Benefits
	2023		2022		2021		2023		2022		2021		2023		2022		2021
Discount Rate	5.51	%	3.03	%	2.78	%	5.51	%	2.93	%	2.61	%	5.52	%	3.01	%	2.75	%
Long-Term Rate of Return on Plan Assets	7.00	%	6.30	%	6.51	%	n/a		n/a		n/a		n/a		n/a		n/a
Long-Term Rate of Compensation Increase	n/a		n/a		n/a		3.00	%	3.00	%	3.00	%	n/a		n/a		n/a
Participants to Age 39	4.50	%	4.50	%	4.50	%	n/a		n/a		n/a		n/a		n/a		n/a
Participants Ages 40 to 49	3.50	%	3.50	%	3.50	%	n/a		n/a		n/a		n/a		n/a		n/a
Participants Age 50 and Older	2.75	%	2.75	%	2.75	%	n/a		n/a		n/a		n/a		n/a		n/a

We develop our estimated discount rate through the use of a hypothetical bond portfolio method. This method derives the discount rate from the average yield of a collection of high credit quality bonds which produce cash flows similar to our anticipated future benefit payments. We estimate the assumed long-term rate of return on plan assets based primarily on asset category studies using historical market return and volatility data with forward-looking estimates based on existing financial market conditions and forecasts of capital markets. Modest excess return expectations versus some market indices are incorporated into the return projections based on the actively managed structure of the investment programs and their records of achieving such returns historically.

The following table presents the amounts not yet recognized as components of net periodic benefit cost as of December 31, 2023 and 2022:

	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
(in thousands)	2023		2022		2023		2022		2023		2022
Regulatory Assets (Liabilities):
Unrecognized Prior Service Cost	$	—	$	—	$	—	$	—	$	(18,845)	$	(8,400)
Unrecognized Actuarial Loss	85,227		85,367		1,061		979		1,759		3,993
Net Regulatory Assets (Liabilities)	85,227		85,367		1,061		979		(17,086)		(4,407)
Accumulated Other Comprehensive Income (Loss):
Unrecognized Prior Service Cost	—		—		—		—		498		99
Unrecognized Actuarial Gain (Loss)	1,994		1,978		(1,403)		(1,093)		707		818
Total Accumulated Other Comprehensive Income (Loss)	$	1,994	$	1,978	$	(1,403)	$	(1,093)	$	1,205	$	917

Cash Flows. We did not make any contributions to our Pension Plan in 2023. We made discretionary contributions of $20.0 million and $10.0 million in 2022 and 2021. As of December 31, 2023, we had no minimum funding requirements for our Pension Plan. Contributions to our ESSRP and postretirement healthcare plan are equal to the benefits paid to plan participants.

The following reflects anticipated benefit payments to be paid in each of the next five years and in the aggregate for the five year period thereafter under our pension plans and postretirement healthcare plan:

(in thousands)	2024		2025		2026		2027		2028		2029-2033
Projected Pension Plan Benefit Payments	$	18,851	$	19,274	$	19,828	$	20,318	$	20,882	$	110,291
Projected ESSRP Benefit Payments	2,747		2,697		2,823		2,994		2,938		14,437
Projected Postretirement Benefit Payments	2,469		2,497		2,544		2,547		2,476		12,045
Total	$	24,067	$	24,468	$	25,195	$	25,859	$	26,296	$	136,773

401K Plan

We sponsor a 401K plan for the benefit of all corporate and subsidiary company employees. Contributions made to these plans totaled $7.8 million for 2023, $6.7 million for 2022 and $6.5 million for 2021.

11. Asset Retirement Obligations

We have recognized Asset Retirement Obligations (AROs) related to our coal-fired generation plants, natural gas combustion turbines, solar facility, and wind turbines. The cost of AROs include items such as site restoration, closure of ash pits, and removal of certain structures, generators, asbestos and storage tanks. We have other legal obligations associated with the retirement of a variety of other long-lived tangible assets used in electric operations where the estimated settlement costs are individually and collectively immaterial. We have no assets legally restricted for the settlement of any AROs. As of December 31, 2023 and 2022, $0.1 million and $2.7 million, respectively, was included in other current liabilities and $36.4 million and $22.5 million, respectively, was included in other noncurrent liabilities in the consolidated balance sheets related to AROs.

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A reconciliation of the carrying amounts of AROs for the years ended December 31, 2023 and 2022 is as follows: 

(in thousands)	2023		2022
Beginning Balance	$	25,182	$	24,191
New Obligations Recognized	4,506		—
Adjustments Due to Revisions in Cash Flow Estimates	8,394		—
Accrued Accretion	1,191		991
Settlements	(2,796)		—
Ending Balance	$	36,477	$	25,182

12. Income Taxes

Income before income taxes for the years ended December 31, 2023, 2022 and 2021 consists entirely of domestic earnings.

The provision for income taxes charged to income for the years ended December 31, 2023, 2022 and 2021 consisted of the following:

(in thousands)	2023		2022		2021
Current
Federal Income Taxes	$	41,253	$	31,949	$	6,806
State Income Taxes	15,126		9,568		939
Deferred
Federal Income Taxes	9,832		22,480		18,180
State Income Taxes	3,676		9,943		10,716
Tax Credits
North Dakota Wind Tax Credit Amortization, Net of Federal Tax	(586)		(586)		(586)
Investment Tax Credit Amortization	(3)		(3)		(3)
Total	$	69,298	$	73,351	$	36,052

The reconciliation of the statutory federal income tax rate to our effective tax rate for each of the years ended December 31, 2023, 2022 and 2021 is as follows:

	2023				2022				2021
Income Taxes at Federal Statutory Rate	$	76,332	21.0	%	$	75,082	21.0	%	$	44,692	21.0	%
Increases (Decreases) in Tax from:
State Taxes on Income, Net of Federal Tax	14,429		4.0		15,049		4.2		9,962		4.7
Production Tax Credits (PTCs)	(17,394)		(4.8)		(14,985)		(4.2)		(12,503)		(5.9)
Amortization of Excess Deferred Income Taxes	(2,205)		(0.6)		(1,625)		(0.5)		(4,262)		(2.0)
North Dakota Wind Tax Credit Amortization, Net of Federal Tax	(586)		(0.2)		(586)		(0.2)		(586)		(0.3)
Other, Net	(1,278)		(0.3)		416		0.2		(1,251)		(0.6)
Income Taxes at Effective Tax Rate	$	69,298	19.1	%	$	73,351	20.5	%	$	36,052	16.9	%

PTCs, North Dakota wind tax credits, and excess deferred income taxes related to the federal tax rate reduction in the 2017 Tax Cuts and Jobs Act are returned to customers as a reduction of the rates they are charged and result in a reduction of operating revenues.

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Deferred tax assets and liabilities were composed of the following on December 31, 2023 and 2022:

(in thousands)	2023		2022
Deferred Tax Assets
Employee Benefits	$	39,959	$	39,216
Regulatory Liabilities	56,479		57,353
Tax Credit Carryforwards	21,836		20,209
Cost of Removal	32,993		37,360
Asset Retirement Obligations	9,494		6,557
Net Operating Loss Carryforward	2,336		1,853
Other	11,310		5,550
Total Deferred Tax Assets	174,407		168,098
Deferred Tax Liabilities
Differences Related to Property	(347,885)		(334,201)
Retirement Benefits Regulatory Asset	(22,458)		(22,789)
Pension Expense	(24,875)		(24,269)
Other	(16,462)		(8,141)
Total Deferred Tax Liabilities	(411,680)		(389,400)
Deferred Income Taxes	$	(237,273)	$	(221,302)

The following is a schedule of tax credits and tax net operating losses available as of December 31, 2023 and the respective periods of expiration:

(in thousands)	Amount		2024-2029		2030-2037		2038-2043
State Net Operating Losses	$	2,336	$	211	$	2,125	$	—
State Tax Credits	21,836		—		—		21,836

The following table summarizes the activity for unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023		2022		2021
Balance on January 1	$	923	$	827	$	771
Increases for tax positions taken during a prior period	596		44		11
Increases for tax positions taken during the current period	163		260		189
Decreases due to settlements with taxing authorities	—		—		—
Decreases as a result of a lapse of applicable statutes of limitations	(193)		(208)		(144)
Balance on December 31	$	1,489	$	923	$	827

The balance of unrecognized tax benefits as of December 31, 2023 would reduce our effective tax rate if recognized. The total amount of unrecognized tax benefits as of December 31, 2023 is not expected to change significantly within the next 12 months. We classify interest and penalties on tax uncertainties as components of the provision for income taxes in the consolidated statements of income.

The Company and its subsidiaries file a consolidated U.S. federal income tax return and various state income tax returns. As of December 31, 2023, with limited exceptions, we are no longer subject to examinations by taxing authorities for tax years prior to 2020 for federal and North Dakota income taxes and prior to 2019 for Minnesota state income taxes.

13. Commitments and Contingencies

Commitments

Construction and Other Commitments. As of December 31, 2023, we had commitments under contracts for construction project materials, equipment, plant maintenance, and other services extending into 2046 which totaled approximately $17.1 million.

Electric Utility Capacity and Energy Requirements. OTP has commitments for the purchase of capacity and energy requirements under contractual agreements, including wind power purchase agreements extending into 2048. Generally, the terms of OTP's wind power purchase agreements require OTP to purchase all of the electricity generated by a particular wind farm and do not include fixed or minimum payments. The required payments are variable and the amounts due are determined based upon the amount of electricity generated. Capacity and energy requirement costs under these agreements totaled $5.6 million, $13.1 million and $11.5 million for the years ended December 31, 2023, 2022 and 2021.

Coal Purchase Commitments. OTP has contracts providing for the purchase and delivery of its coal requirements. OTP’s current coal purchase agreement with CCMC for Coyote Station expires December 31, 2040. All of Coyote Station’s coal requirements for the period covered must be purchased under this agreement. The agreement is structured so that the price of the coal covers all of CCMC's operating, financing, and future

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mine reclamation costs. In the table below we have estimated the future payments to be made under the terms of the agreement until its maturity. OTP has an agreement for the purchase of Big Stone Plant’s coal requirements through December 31, 2024. There is no fixed minimum purchase requirement, and no amounts for this agreement have been included in the table below; however, under this agreement all of Big Stone Plant’s coal requirements for the period covered must be purchased under this agreement. Coal purchase costs under these two agreements totaled $43.7 million, $45.1 million and $40.4 million for the years ended December 31, 2023, 2022 and 2021.

Land Easement Payments. OTP has commitments to make payments for land easements not classified as leases. The contractual terms of these easements are generally 99 years or do not have a stated maturity date, however, per the terms of the agreements, our requirement to make payment ends once we cease use of the land. As such, in the table below, we have included payments under these easements through the estimated useful lives of the facilities associated with the easement. The commitments under these arrangements extend into 2055 and total approximately $62.4 million. Land easement costs under these agreements totaled $1.8 million, $1.4 million and $1.3 million for the years ended December 31, 2023, 2022 and 2021.

Our future commitments as of December 31, 2023 were as follows:

(in thousands)	Construction Program and Other Commitments		Capacity and Energy Requirements		Coal Purchase Commitments		Land  Easement Payments
2024	$	4,374	$	245	$	24,691	$	1,804
2025	4,051		217		24,593		1,840
2026	1,377		197		25,374		1,845
2027	594		197		25,786		1,882
2028	550		197		25,344		1,921
Beyond 2028	6,165		3,939		359,610		53,107
Total	$	17,111	$	4,992	$	485,398	$	62,399

Contingencies

FERC ROE. In November 2013 and February 2015, customers filed complaints with the FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including OTP, may collect under the MISO tariff rate. FERC's most recent order, issued on November 19, 2020, adopted a revised ROE methodology and set the base ROE at 10.02% (10.52% with an adder) effective for the fifteen-month period from November 2013 to February 2015 and on a prospective basis beginning in September 2016. The order also dismissed any complaints covering the period from February 2015 to May 2016. On August 9, 2022, the U.S. Court of Appeals for the District of Columbia Circuit vacated the FERC order citing a lack of reasoned explanation by FERC in its adoption of its revised ROE methodology as outlined in its November 2020 order. The U.S. Court of Appeals remanded the matter to FERC to reopen the proceedings.

Significant uncertainty exists as to how FERC will proceed on remand and there is no prescribed timeline under which FERC must act. We have deferred recognition and recorded a refund liability of $2.8 million as of December 31, 2023. This refund liability reflects our best estimate of amounts previously collected from customers under the MISO tariff rate that may be required to be refunded to customers once all regulatory and judicial proceedings are complete and a final ROE is established for the periods outlined above.

Regional Haze Rule (RHR). The RHR was adopted in an effort to improve visibility in national parks and wilderness areas. The RHR requires states, in coordination with the EPA and other governmental agencies, to develop and implement plans to achieve natural visibility conditions. The second RHR implementation period covers the years 2018-2028. States are required to submit a state implementation plan (SIP) to assess reasonable progress with the RHR and determine what additional emission reductions are appropriate, if any.

Coyote Station, OTP's jointly owned coal-fired power plant in North Dakota, is subject to assessment in the second implementation period under the North Dakota SIP. The NDDEQ submitted its SIP to the EPA for approval in August 2022. In its plan, the NDDEQ concluded it is not reasonable to require additional emission controls during this planning period. The EPA has previously expressed disagreement with the NDDEQ's recommendation to forgo additional emission controls and has indicated that such a plan is not likely to be accepted.

We cannot predict with certainty the impact the SIP may have on our business until the SIP has been approved or otherwise acted on by the EPA. However, significant emission control investments could be required and the recovery of such costs from customers would require regulatory approval. Alternatively, investments in emission control equipment may prove to be uneconomic and result in the early retirement or the sale of our interest in Coyote Station, subject to regulatory approval. We cannot estimate the ultimate financial effects such a retirement or sale may have on our consolidated operating results, financial position or cash flows, but such amounts could be material and the recovery of such costs in rates would be subject to regulatory approval.

Self-Funding of Transmission Upgrades. The FERC has granted transmission owners within MISO the unilateral authority to determine the funding mechanism for interconnection transmission upgrades that are necessary to accommodate new generation facilities connecting to the electrical grid. Under existing FERC orders, transmission owners can unilaterally determine whether the generator pays the transmission owner in advance for the transmission upgrade or, alternatively, the transmission owner can elect to fund the upgrade and recover over time from the generator the cost of and a return on the upgrade investment (a self-funding). FERC’s orders granting transmission owners this unilateral funding authority has been judicially contested on the basis that transmission owners may be motivated to discriminate among generators in making

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funding determinations. In the most recent judicial hearing, the petitioners argued to the U.S. Court of Appeals for the District of Columbia that FERC did not comply with a previous judicial order to fully develop a record regarding the risk of discrimination and the financial risk absorbed by transmission owners for generator-funded upgrades. On December 2, 2022, the Court of Appeals ruled in favor of the petitioners remanding the matter to FERC, instructing the agency to adequately explain the basis of its orders. The Court of Appeals decision did not vacate transmission owners’ unilateral funding authority.

OTP, as a transmission owner in MISO, has exercised its authority and elected to self-fund previous transmission upgrades necessary to accommodate new system generation. Under such an election, OTP is recovering the cost of the transmission upgrade and a return on that investment from the generator over a contractual period of time. Should FERC, on remand from the Court of Appeals, eliminate transmission owners’ unilateral funding authority, on either a prospective or retrospective basis, our financial results would be impacted. We cannot at this time reasonably predict the outcome of this matter given the uncertainty as to how and when FERC may respond to the judicial remand.

Other Contingencies. We are party to litigation and regulatory enforcement matters arising in the normal course of business. We regularly analyze relevant information and, as necessary, estimate and record accrued liabilities for matters in which a loss is probable of occurring and can be reasonably estimated. We believe the effect on our consolidated operating results, financial position and cash flows, if any, for the disposition of all matters pending as of December 31, 2023 will not be material.

14. Stockholders' Equity

Capital Structure

In addition to authorized and outstanding common stock, the Company has 1,500,000 authorized no par value cumulative preferred shares and 1,000,000 authorized no par value cumulative preference shares. No cumulative preferred or cumulative preference shares were outstanding at December 31, 2023 or 2022.

Shelf Registrations

On May 3, 2021, upon the expiration of a prior shelf registration, we filed a shelf registration statement with the SEC under which we may offer for sale, from time to time, either separately or together in any combination, equity, debt or other securities described in the shelf registration statement. The registration statement expires in May 2024. No shares were issued pursuant to the shelf registration in 2023.

On May 3, 2021, upon the expiration of a prior shelf registration, we filed a registration statement with the SEC for the issuance of up to 1,500,000 common shares under an Automatic Dividend Reinvestment and Share Purchase Plan, which provides shareholders, retail customers of OTP and other interested investors a method of purchasing our common shares by reinvesting their dividends and/or making optional cash investments. Shares purchased under the plan may be new issue common shares or common shares purchased on the open market. In 2023, we issued 105,663 common shares under this program and no proceeds were received, as all shares issued were purchased on the open market. As of December 31, 2023, 1,145,330 shares remained available for purchase or issuance under the plan. The shelf registration for the plan expires in May 2024.

Dividend Restrictions

OTC is a holding company with no significant operations of its own. The primary source of funds for payments of dividends to our shareholders is from intercompany distributions made by OTC's subsidiaries to OTC. As a result of certain statutory limitations or regulatory or financing agreements, restrictions could occur on the amount of distributions allowed to be made by OTC's subsidiaries. Both the OTC Credit Agreement and OTP Credit Agreement contain restrictions on the payment of cash dividends upon a default or event of default, including failure to maintain certain financial covenants. As of December 31, 2023, we were in compliance with these financial covenants.

Under the Federal Power Act, a public utility may not pay dividends from any funds properly included in a capital account. What constitutes “funds properly included in a capital account” is undefined in the Federal Power Act and the related regulations; however, the FERC has consistently interpreted the provision to allow dividends to be paid as long as i) the source of the dividends is clearly disclosed, ii) the dividend is not excessive and iii) there is no self-dealing on the part of corporate officials.

The MPUC indirectly limits the amount of dividends OTP can pay to OTC by requiring an equity-to-total-capitalization ratio between 48.3% and 59.1%, with total capitalization not to exceed $2.0 billion based on OTP’s capital structure requirements as of December 31, 2023. As of December 31, 2023, OTP’s equity-to-total-capitalization ratio including short-term debt was 54.2% and its net assets restricted from distribution totaled approximately $771.3 million.

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15. Accumulated Other Comprehensive Income (Loss)

The Company's other comprehensive income (loss) consists of unamortized actuarial losses and prior service costs related to pension and other postretirement benefits and unrealized gains and losses on marketable securities classified as available-for-sale. The income tax expense or benefit associated with amounts reclassified from accumulated other comprehensive income (loss) and reflected in the consolidated statement of income are recognized in the same period as the amounts are reclassified.

The following table shows the changes in accumulated other comprehensive Income (loss) for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	Pension and Other Postretirement Benefits			Net Unrealized Gain (Losses) on Available-for-Sale Securities			Total
Balance, December 31, 2020	$	(8,716)		$	209		$	(8,507)
Other Comprehensive Income (Loss) Before Reclassifications, net of tax	1,638			(132)			1,506
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	541		(1)	(64)		(2)	477
Total Other Comprehensive Income (Loss)	2,179			(196)			1,983
Balance, December 31, 2021	(6,537)			13			(6,524)
Other Comprehensive Income (Loss) Before Reclassifications, net of tax	7,331			(433)			6,898
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	540		(1)	1		(2)	541
Total Other Comprehensive Income (Loss)	7,871			(432)			7,439
Balance, December 31, 2022	1,334			(419)			915
Other Comprehensive Income Before Reclassifications, net of tax	59			180			239
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(18)		(1)	12		(2)	(6)
Total Other Comprehensive Income	41			192			233
Balance, December 31, 2023	$	1,375		$	(227)		$	1,148
(1) Included in the computation of net periodic pension and other postretirement benefit costs. See Note 10 for further information.
(2) Included in other income (expense), net on the accompanying consolidated statements of income.

16. Share-Based Payments

Employee Stock Purchase Plan

The 1999 Employee Stock Purchase Plan authorizes the issuance of 1,400,000 common shares, allowing eligible employees to purchase our common shares through payroll withholding at a discount of up to 15% off the market price at the end of each six-month purchase period. Employee withholding amounts may not be less than $10 or more than $2,000 per month, subject to certain limitations, as described in the plan. A plan participant may cease making payroll deductions at any time. A participant may not purchase more than 2,000 shares in a given six month purchase period under the plan and may not purchase more than $25,000 (fair market value) of common shares under the plan and all other purchase plans (if any) in a calendar year. A participant may withdraw from the plan at any time and elect to receive the balance of their contributions to the plan that have not yet been used to purchase shares. Shares purchased under the plan are automatically enrolled in the Company's dividend reinvestment plan. Shares purchased under the plan may not be assigned, transferred, pledged, or otherwise disposed, except for certain situations allowed by the plan, such as upon death, for a period of 18 months after purchase. At our discretion, shares purchased under the plan can be either new issue shares or shares purchased in the open market. The plan shall automatically terminate when all of the shares authorized under the plan have been issued.

We recognize the 15% discount to the fair market value of the purchased shares as stock-based compensation expense, which amounted to $0.3 million, $0.3 million and $0.2 million for the years ended December 31, 2023, 2022 and 2021. For the years ended December 31, 2023, 2022 and 2021 the amount of shares issued under the plan amounted to 26,348, 26,420 and 27,975 shares. As of December 31, 2023, there were 237,367 shares available for purchase under the plan.

Share-Based Compensation Plan

The 2023 Stock Incentive Plan, which was approved by our shareholders in April 2023, authorizes the issuance of 979,891 common shares, including 500,000 newly requested common shares, for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance awards and other stock-based awards. In addition, common shares subject to any outstanding awards under our prior stock incentive plans that are forfeited, canceled or reacquired by the Company will become available for re-issuance under the 2023 Stock Incentive Plan. As of December 31, 2023, 943,192 shares were available for issuance under the plan. The plan terminates on April 17, 2033.

We grant restricted stock awards to our employees and members of our Board of Directors and stock performance awards to our executive officers and certain other key employees as part of our long-term compensation and retention program. Stock-based compensation cost, recognized within operating expenses in the consolidated statements of income, amounted to $7.4 million, $6.6 million and $6.7 million for the years ended December 31, 2023, 2022 and 2021. The related income tax benefit recognized for these periods amounted to $1.6 million, $1.7 million and $1.8 million.

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Restricted Stock Awards. Restricted stock awards are granted to executive officers and other key employees and members of the Company's Board of Directors. The awards vest, depending on award recipient, either ratably over a period of three to four years or cliff vest after four years. Vesting is accelerated in certain circumstances, including upon retirement. Awards granted to members of the Board of Directors are issued and outstanding upon grant and carry the same voting and dividend rights of unrestricted outstanding common stock. Awards granted to executive officers and other key employees are eligible to receive dividend equivalent payments during the vesting period, subject to forfeiture under the terms of the agreement, but such awards are not issued or outstanding upon grant and do not provide for voting rights.

The grant-date fair value of each restricted stock award is determined based on the market price of the Company's common stock on the date of grant adjusted to exclude the value of dividends for those awards that do not receive dividend or dividend equivalent payments during the vesting period.

The following is a summary of restricted stock award activity for the year ended December 31, 2023:

	Shares	Weighted-Average Grant-Date Fair Value
Nonvested, Beginning of Year	141,551	$	49.83
Granted	55,205	68.03
Vested	(45,493)	50.02
Forfeited	(2,350)	52.02
Nonvested, End of Year	148,913	$	56.48

The weighted-average grant-date fair value of granted awards was $68.03, $59.95 and $43.55 during the years ended December 31, 2023, 2022 and 2021. The fair value of vested awards was $3.1 million, $3.0 million and $2.1 million during the years ended December 31, 2023, 2022 and 2021. As of December 31, 2023, there was $3.4 million of unrecognized compensation cost for unvested restricted stock awards to be recognized over a weighted-average period of 1.7 years.

Stock Performance Awards. Stock performance awards are granted to executive officers and certain other key employees. The awards vest at the end of a three-year performance period. The number of common shares awarded, if any, at the end of the performance period ranges from zero to 150% of the target amount based on two performance measures: i) total shareholder return relative to a peer group (TSR component) and ii) return on equity (ROE component). The awards have no voting or dividend rights during the vesting period. Vesting of the awards is accelerated in certain circumstances, including upon retirement. The amount of common shares awarded on an accelerated vesting is based on actual performance at the end of the performance period.

The grant-date fair value of the ROE component of the stock performance awards granted during the years ended December 31, 2023, 2022 and 2021 was determined using the grant date stock price and a discounted cash flow analysis to adjust for expected unearned dividends during the vesting period. The grant-date fair value of the TSR component of the stock performance awards granted during the years ended December 31, 2023, 2022 and 2021 was determined using a Monte Carlo fair value simulation model incorporating the following assumptions:

	2023		2022		2021
Risk-free interest rate	4.15	%	1.52	%	0.18	%
Expected term (in years)	3.00		3.00		3.00
Expected volatility	34.00	%	32.00	%	32.00	%
Dividend yield	2.50	%	2.90	%	3.60	%

The risk-free interest rate was derived from yields on U.S. government bonds of a similar term. The expected term of the award is equal to the three-year performance period. Expected volatility was estimated based on actual historical volatility of our common stock over a five-year period. Dividend yield was estimated based on historic and future yield estimates.

The following is a summary of stock performance award activity for the year ended December 31, 2023 (share amounts reflect awards at target):

	Shares	Weighted-Average Grant-Date Fair Value
Nonvested, Beginning of Year	189,800	$	45.95
Granted	59,400	61.97
Vested	(55,000)	47.79
Forfeited	—	—
Nonvested, End of Year	194,200	$	50.33

The weighted-average grant-date fair value of granted awards was $61.97, $54.91 and $38.34 during the years ended December 31, 2023, 2022 and 2021. The fair value of vested awards was $5.3 million, $5.1 million and $2.5 million during the years ended December 31, 2023, 2022 and

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2021. As of December 31, 2023, there was $0.4 million of unrecognized compensation cost of unvested stock performance awards to be recognized over a weighted-average period of 0.67 years.

17. Earnings Per Share

The numerator used in the calculation of both basic and diluted earnings per share is net income. The denominator used in the calculation of basic earnings per share is the weighted-average number of shares outstanding during the period. The denominator used in the calculation of diluted earnings per share is derived by adjusting basic shares outstanding for the dilutive effect of potential shares outstanding, which consist of shares associated with time and performance based stock awards and our employee stock purchase plan.

The following includes the computation of the denominator for basic and diluted weighted-average shares outstanding for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023	2022	2021
Weighted Average Common Shares Outstanding – Basic	41,668	41,586	41,491
Effect of Dilutive Securities:
Stock Performance Awards	269	248	226
Restricted Stock Awards	100	95	87
Employee Stock Purchase Plan Shares and Other	2	2	14
Dilutive Effect of Potential Common Shares	371	345	327
Weighted Average Common Shares Outstanding – Diluted	42,039	41,931	41,818

The amount of shares excluded from diluted weighted-average common shares outstanding because such shares were anti-dilutive was not material for the years ended December 31, 2023, 2022 and 2021.

18. Derivative Instruments

OTP enters into derivative instruments to manage its exposure to future commodity price variability, specifically future wholesale energy and natural gas prices, and reduce volatility in prices for our retail electric customers. These derivative instruments are not designated as qualifying hedging transactions but provide for an economic hedge against future price variability. The instruments are recorded at fair value on the consolidated balance sheets, with changes in fair value recorded in the consolidated statements of income. However, in accordance with rate-making and cost recovery processes, we recognize a regulatory asset or liability to defer losses or gains from derivative activity until settlement of the associated derivative instrument.

As of December 31, 2023 and 2022 OTP had outstanding pay-fixed, receive-variable swap agreements with an aggregate notional amount of 187,400 and 295,000 megawatt-hours of electricity. The contracts outstanding as of December 31, 2023 had various settlement dates throughout 2024. As of December 31, 2023 and 2022, the fair value of these derivative instruments was $4.2 million and $7.1 million, which are included in other current liabilities on the consolidated balance sheets. During the years ended December 31, 2023 and 2022, contracts matured and were settled in an aggregate amount of a $16.5 million loss and a $1.0 million gain, respectively. Gains and losses recognized on the settlement of derivative instruments are returned to, or recovered from, our electric customers through fuel recovery mechanisms in each state. When recognized in the statement of income, these gains or losses are included in electric purchased power.

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19. Fair Value Measurements

The following tables present our assets measured at fair value on a recurring basis as of December 31, 2023 and 2022 classified by the input method used to measure fair value:

	Level 1		Level 2		Level 3
December 31, 2023
Assets
Investments:
Money Market Funds	$	3,125	$	—	$	—
Mutual Funds	7,771		—		—
Corporate Debt Securities	—		1,579		—
Government Debt Securities	—		7,724		—
Total Assets	10,896		9,303		—
Liabilities
Derivative Instruments	—		4,210		—
Total Liabilities	$	—	$	4,210	$	—
December 31, 2022
Assets
Investments:
Money Market Funds	$	1,560	$	—	$	—
Mutual Funds	5,503		—		—
Corporate Debt Securities	—		1,434		—
Government Debt Securities	—		7,327		—
Total Assets	$	7,063	$	8,761	$	—
Liabilities
Derivative Instruments	—		7,130		—
Total Liabilities	$	—	$	7,130	$	—

The level 2 fair value measurements for government and corporate debt securities are determined on the basis of valuations provided by a third-party pricing service which utilizes industry accepted valuation models and observable market inputs to determine valuation. Some valuations or model inputs used by the pricing service may be based on broker quotes.

The level 2 fair value measurements for derivative instruments are determined by using inputs such as forward electric commodity prices, adjusted for location differences. These inputs are observable in the marketplace throughout the full term of the instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace.

In addition to assets recorded at fair value on a recurring basis, we also hold financial instruments that are not recorded at fair value in the consolidated balance sheets but for which disclosure of the fair value of these financial instruments is provided. The following reflects the carrying value and estimated fair value of these assets and liabilities as of December 31, 2023 and 2022:

	December 31, 2023				December 31, 2022
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and Cash Equivalents	$	230,373	$	230,373	$	118,996	$	118,996
Total	230,373		230,373		118,996		118,996
Liabilities:
Short-Term Debt	81,422		81,422		8,204		8,204
Long-Term Debt	824,059		710,839		823,821		681,615
Total	$	905,481	$	792,261	$	832,025	$	689,819

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash Equivalents: The carrying amount approximates fair value because of the short-term maturity of these instruments.

Short-Term Debt: The carrying amount approximates fair value because the debt obligations are short-term in nature and balances outstanding are subject to variable rates of interest which reset frequently, a Level 2 fair value input.

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Long-Term Debt: The fair value of long-term debt is estimated based on current market indications for borrowings of similar maturities with similar terms, a Level 2 fair value input.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosures Controls and Procedures. Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)) as of December 31, 2023, the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2023.

Changes in Internal Control over Financial Reporting. There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) during the fourth quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report Regarding Internal Control Over Financial Reporting. Management is responsible for the preparation and integrity of the consolidated financial statements and representations in this report on Form 10-K. The consolidated financial statements of the Company have been prepared in conformity with generally accepted accounting principles applied on a consistent basis and include some amounts that are based on informed judgments and best estimates and assumptions of management.

In order to assure the consolidated financial statements are prepared in conformance with generally accepted accounting principles, management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). These internal controls are designed only to provide reasonable assurance, on a cost-effective basis, that transactions are carried out in accordance with management’s authorizations and assets are safeguarded against loss from unauthorized use or disposition.

Management has completed its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013) to conduct the required assessment of the effectiveness of the Company’s internal control over financial reporting. Based on this assessment, management concluded that, as of December 31, 2023, the Company’s internal control over financial reporting was effective based on those criteria. The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has audited the Company’s consolidated financial statements included in this report on Form 10-K and issued an attestation report on the Company’s internal control over financial reporting.

Attestation Report of Independent Registered Public Accounting Firm. The attestation report of Deloitte & Touche LLP, the Company’s independent registered public accounting firm, regarding the Company’s internal control over financial reporting is provided in Item 8 of this report on Form 10-K.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item regarding Directors is incorporated by reference to the information under “Election of Directors” in the Company's definitive Proxy Statement for the 2024 Annual Meeting. The information regarding executive officers and family relationships is set forth in Item 3A of this report on Form 10-K. The information required by this Item regarding the Company’s procedures for recommending nominees to the board of directors is incorporated by reference to the information under “Corporate Governance – Director Nomination Process” in the Company’s definitive Proxy Statement for the 2024 Annual Meeting. The information required by this Item regarding the Audit Committee and the Company’s Audit Committee financial experts is incorporated by reference to the information under “Committees of the Board of Directors – Audit Committee” in the Company’s definitive Proxy Statement for the 2024 Annual Meeting.

The Company has adopted a code of business ethics that applies to all of its directors, officers (including its principal executive officer, principal financial officer, and its principal accounting officer or controller or person performing similar functions) and employees. The Company’s code of business ethics is available on its website at www.ottertail.com. The Company intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of its code of business ethics by posting such information on its website at the address specified above. Information on the Company’s website is not deemed to be incorporated by reference into this report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to the information under “Compensation Discussion and Analysis”, “Report of Compensation and Human Capital Management Committee”, “Executive Compensation”, “Pay Ratio Disclosure” and “Director Compensation” in the Company's definitive Proxy Statement for the 2024 Annual Meeting.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item regarding security ownership is incorporated by reference to the information under “Security Ownership of Certain Beneficial Owners” in the Company’s definitive Proxy Statement for the 2024 Annual Meeting.

The following table sets forth information as of December 31, 2023 about the Company’s common stock that may be issued under all its equity compensation plans:

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Plan Category	(a)		(b)	(c)
Equity compensation plans approved by security holders:
2023 Stock Incentive Plan	409,880	(1)	N/A	943,192	(2)
1999 Employee Stock Purchase Plan	—		N/A	237,367	(3)
Equity compensation plans not approved by security holders	—		—	—
Total	409,880		—	1,180,559

(1)Includes 89,100, 83,700 and 118,500 performance-based share awards, assuming a maximum payout, granted in 2023, 2022 and 2021, respectively, and 118,580 restricted stock units outstanding as of December 31, 2023.

(2)The 2023 Stock Incentive Plan provides for the issuance of any shares available under the plan in the form of restricted stock, restricted stock units, performance awards and other types of stock-based awards, in addition to the granting of options, warrants or stock appreciation rights.

(3)Shares to be issued based on employee’s election to participate in the plan.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated by reference to the information under “Policy and Procedures Regarding Transactions with Related Persons”, “Election of Directors” and “Committees of the Board of Directors” in the Company’s definitive Proxy Statement for the 2024 Annual Meeting.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated by reference to the information under “Ratification of Independent Registered Public Accounting Firm – Fees” and “Ratification of Independent Registered Public Accounting Firm – Pre-Approval of Audit/Non-Audit Services Policy” in the Company’s definitive Proxy Statement for the 2024 Annual Meeting.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1. Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	40
Consolidated Balance Sheets	42
Consolidated Statements of Income	43
Consolidated Statements of Comprehensive Income	44
Consolidated Statements of Shareholders’ Equity	45
Consolidated Statements of Cash Flows	46
Notes to Consolidated Financial Statements	47

2. Financial Statement Schedules

Schedule I - Condensed Financial Information of Registrant

Schedule II - Valuation and Qualifying Accounts and Reserves

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SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED BALANCE SHEETS

	December 31,
(in thousands)	2023		2022
Assets
Current Assets
Cash and Cash Equivalents	$	228,137	$	119,246
Accounts Receivable from Subsidiaries	2,555		3,278
Interest Receivable from Subsidiaries	117		117
Other	977		1,045
Total Current Assets	231,786		123,686
Investments in Subsidiaries	1,725,584		1,463,998
Notes Receivable from Subsidiaries	78,900		78,900
Deferred Income Taxes	65,244		64,802
Other Assets	50,795		43,779
Total Assets	$	2,152,309	$	1,775,165
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable to Subsidiaries	$	7	$	7
Notes Payable to Subsidiaries	568,672		420,363
Other	15,320		15,994
Total Current Liabilities	583,999		436,364
Other Noncurrent Liabilities	45,455		41,686
Commitments and Contingencies
Capitalization
Long-Term Debt	79,849		79,798
Common Stockholders' Equity	1,443,006		1,217,317
Total Capitalization	1,522,855		1,297,115
Total Liabilities and Stockholders' Equity	$	2,152,309	$	1,775,165

See accompanying notes to condensed financial statements.

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OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED STATEMENTS OF INCOME

	Years Ended December 31,
(in thousands)	2023		2022		2021
Income
Equity Income in Earnings of Subsidiaries	$	294,467	$	296,833	$	188,375
Interest Income from Subsidiaries	2,898		3,382		2,826
Other Income	10,496		466		1,290
Total Income	307,861		300,681		192,491
Expense
Nonelectric Selling, General, and Administrative Expenses	12,816		17,269		14,825
Interest Expense	3,813		4,066		4,727
Interest Expense from Subsidiaries	6		5		3
Nonservice Cost Components of Postretirement Benefits	1,063		1,023		1,097
Total Expense	17,698		22,363		20,652
Income Before Income Taxes	290,163		278,318		171,839
Income Tax Benefit	4,028		5,866		4,930
Net Income	$	294,191	$	284,184	$	176,769

See accompanying notes to condensed financial statements.

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OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
(in thousands)	2023		2022		2021
Cash Flows from Operating Activities
Net Cash Provided by Operating Activities	$	77,139	$	28,807	$	60,695
Cash Flows from Investing Activities
Investment in Subsidiaries	(40,000)		(50,000)		—
Debt Repaid by Subsidiaries	—		—		169
Other, net	(68)		(1,695)		(884)
Net Cash Used in Investing Activities	(40,068)		(51,695)		(715)
Cash Flows from Financing Activities
Net (Repayments) Borrowings on Short-Term Debt	—		(22,637)		(42,529)
Borrowings from Subsidiaries	148,308		236,926		49,085
Proceeds from Issuance of Common Stock	—		—		696
Payments for Shares Withheld for Employee Tax Obligations	(3,088)		(2,942)		(1,507)
Payments for Retirement of Long-Term Debt	—		—		(169)
Dividends Paid	(73,061)		(68,755)		(64,864)
Other, net	(339)		(461)		(689)
Net Cash Provided by (Used in) Financing Activities	71,820		142,131		(59,977)
Net Change in Cash and Cash Equivalents	108,891		119,243		3
Cash and Cash Equivalents at Beginning of Period	119,246		3		—
Cash and Cash Equivalents at End of Period	$	228,137	$	119,246	$	3

 

See accompanying notes to condensed financial statements.

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OTTER TAIL CORPORATION (PARENT COMPANY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

Incorporated by Reference

OTC’s consolidated statements of comprehensive income and common shareholders’ equity in Part II, Item 8 are incorporated by reference.

Basis of Presentation

The condensed financial information of OTC is presented to comply with Rule 12-04 of Regulation S-X. The unconsolidated condensed financial statements do not reflect all of the information and notes normally included with financial statements prepared in accordance with generally accepted accounting principles. Therefore, these condensed financial statements should be read with the consolidated financial statements and related notes included in this report on Form 10-K.

OTC’s investments in subsidiaries are presented under the equity method of accounting. Under this method, the assets and liabilities of subsidiaries are not consolidated. The investments in net assets of the subsidiaries are recorded in the balance sheets. The income from operations of the subsidiaries is reported on a net basis as equity income in earnings of subsidiaries.

Related Party Transactions

Outstanding receivables from and payables to OTC's subsidiaries as of December 31, 2023 and 2022 are as follows:

(in thousands)	Accounts Receivable		Interest Receivable		Long-Term Notes Receivable		Accounts Payable		Current Notes Payable
December 31, 2023
Otter Tail Power Company	$	2,415	$	—	$	—	$	7	$	—
Northern Pipe Products, Inc.	—		7		5,000		—		56,917
Vinyltech Corporation	14		17		11,500		—		98,016
BTD Manufacturing, Inc.	—		78		52,000		—		6,291
T.O. Plastics, Inc.	36		15		10,400		—		980
Varistar Corporation	—		—		—		—		406,468
Otter Tail Assurance Limited	90		—		—		—		—
	$	2,555	$	117	$	78,900	$	7	$	568,672
December 31, 2022
Otter Tail Power Company	$	3,016	$	—	$	—	$	7	$	—
Northern Pipe Products, Inc.	—		7		5,000		—		77,182
Vinyltech Corporation	—		18		11,500		—		90,425
BTD Manufacturing, Inc.	—		77		52,000		—		693
T.O. Plastics, Inc.	20		15		10,400		—		5,855
Varistar Corporation	—		—		—		—		246,208
Otter Tail Assurance Limited	242		—		—		—		—
	$	3,278	$	117	$	78,900	$	7	$	420,363

Dividends

Dividends paid to OTC (the Parent) from its subsidiaries were as follows:

(in thousands)	2023		2022		2021
Cash Dividends Paid to Parent by Subsidiaries	$	72,982	$	68,680	$	64,790

See OTC’s notes to consolidated financial statements in Part II, Item 8 for other disclosures.

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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

OTTER TAIL CORPORATION

Below is a summary of activity within valuation and qualifying accounts for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	Balance, January 1		Charged to Cost and Expenses		Deductions 1, 2		Balance, December 31
Allowance for Credit Losses
2023	$	1,648	$	2,014	$	(1,140)	$	2,522
2022	1,836		909		(1,097)		1,648
2021	3,215		93		(1,472)		1,836
Deferred Tax Asset Valuation Allowance
2023	$	—	$	—	$	—	$	—
2022	—		—		—		—
2021	800		—		(800)		—
1Amounts under Allowance for Credit Losses reflect deductions to the allowance for amounts written-off, net of recoveries.
2Amounts under Deferred Tax Asset Valuation Allowance reflect a release of a valuation allowance based on current expectations of the realizability of the associated deferred tax asset.

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3. Exhibits

The following Exhibits are filed as part of, or incorporated by reference into, this report.

No.	Description
3.1	Third Restated Articles of Incorporation, dated April 12, 2021.
3.2	Restated Bylaws, dated April 12, 2021.
4.1	Description of Securities
10.1.0	Note Purchase Agreement, dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein.
10.1.1	First Amendment, dated as of December 14, 2007, to Note Purchase Agreement, dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein.
10.1.2	Second Amendment, dated as of September 11, 2008, to Note Purchase Agreement, dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein.
10.1.3	Third Amendment, dated as of June 26, 2009, to Note Purchase Agreement dated as of August 20, 2007, between Otter Tail Power Company and the Purchasers named therein.
10.2	Note Purchase Agreement dated as of August 14, 2013 between Otter Tail Power Company and the Purchasers named therein.
10.3	Note Purchase Agreement dated as of September 23, 2016 between Otter Tail Corporation and the Purchasers named therein.
10.4	Note Purchase Agreement dated as of November 14, 2017 between Otter Tail Power Company and the Purchasers named therein.
10.5	Note Purchase Agreement dated as of September 12, 2019 between Otter Tail Power Company and the Purchasers named therein.
10.6	Note Purchase Agreement dated as of June 10, 2021 between Otter Tail Power Company and the Purchasers named therein.
10.7	Fifth Amended and Restated Credit Agreement, dated as of October 31, 2022, by and between Otter Tail Corporation, as Borrower, and the banks named therein, with U.S. Bank National Association, as Administrative Agent.
10.8	Fourth Amended and Restated Credit Agreement, dated as of October 31, 2022, by and between Otter Tail Power Company, as Borrower, and the banks named therein, with U.S. Bank Nation Association, as Administration Agent.
10.9.0	Agreement for Sharing Ownership of Generating Plant by and between the Company, Montana-Dakota Utilities Co., and Northwestern Public Service Company (dated as of January 7, 1970). Previously filed as Exhibit 10-F in Form 10-K for the year ended December 31, 1989.
10.9.1	Letter of Intent for purchase of share of Big Stone Plant from Northwestern Public Service Company (dated as of May 8, 1984). Previously filed as Exhibit 10-F-1 in Form 10-K for the year ended December 31, 1989.
10.9.2	Supplemental Agreement No. 1 to Agreement for Sharing Ownership of Big Stone Plant (dated as of July 1, 1983). Previously filed as Exhibit 10-F-2 in Form 10-K for the year ended December 31, 1991.
10.9.3	Supplemental Agreement No. 2 to Agreement for Sharing Ownership of Big Stone Plant (dated as of March 1, 1985). Previously filed as Exhibit 10-F-3 in Form 10-K for the year ended December 31, 1991.
10.9.4	Supplemental Agreement No. 3 to Agreement for Sharing Ownership of Big Stone Plant (dated as of March 31, 1986). Previously filed as Exhibit 10-F-4 in Form 10-K for the year ended December 31, 1991.
10.9.5	Supplemental Agreement No. 4 to Agreement for Sharing Ownership of Big Stone Plant (dated as of April 24, 2003).
10.9.6	Amendment I to Letter of Intent dated May 8, 1984, for purchase of share of Big Stone Plant. Previously filed as Exhibit 10-F-5 in Form 10-K for the year ended December 31, 1992.
10.10	Big Stone South–Ellendale Project Ownership Agreement dated as of June 12, 2015 between Otter Tail Power Company, a wholly owned subsidiary of Otter Tail Corporation, and Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc.**
10.11.0	Agreement for Sharing Ownership of Coyote Station Generating Unit No. 1 by and between the Company, Minnkota Power Cooperative, Inc., Montana-Dakota Utilities Co., Northwestern Public Service Company and Minnesota Power & Light Company (dated as of July 1, 1977). Previously filed as Exhibit 5-H in filing 2-61043.
10.11.1	Supplemental Agreement No. One, dated as of November 30, 1978, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1. Previously filed as Exhibit 10-H-1 in Form 10-K for the year ended December 31, 1989.
10.11.2	Supplemental Agreement No. Two, dated as of March 1, 1981, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1 and Amendment No. 2 dated March 1, 1981, to Coyote Plant Coal Agreement. Previously filed as Exhibit 10-H-2 in Form 10-K for the year ended December 31, 1989.
10.11.3	Amendment, dated as of July 29, 1983, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1. Previously filed as Exhibit 10-H-3 in Form 10-K for the year ended December 31, 1989.
10.11.4	Agreement, dated as of September 5, 1985, containing Amendment No. 3 to Agreement for Sharing Ownership of Coyote Generating Unit No. 1, dated as of July 1, 1977, and Amendment No. 5 to Coyote Plant Coal Agreement, dated as of January 1, 1978. Previously filed as Exhibit 10-H-4 in Form 10-K for the year ended December 31, 1992.
10.11.5	Amendment, dated as of June 14, 2001, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1.
10.11.6	Amendment, dated as of April 24, 2003, to Agreement for Sharing Ownership of Coyote Generating Unit No. 1.
10.12.0	Lignite Sales Agreement between Coyote Creek Mining Company, L.L.C. and Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Co., Northwestern Corporation, dated as of October 10, 2012.**
10.12.1	First Amendment to Lignite Sales Agreement dated as of January 30, 2014 among Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc., NorthWestern Corporation and Coyote Creek Mining Company, L.L.C.
10.12.2	Second Amendment to Lignite Sales Agreement dated as of March 16, 2015 among Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc., NorthWestern Corporation and Coyote Creek Mining Company, L.L.C.
10.13.0	Deferred Compensation Plan for Directors (2003 Restatement).*

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No.	Description
10.13.1	First Amendment of Deferred Compensation Plan for Directors (2003 Restatement), as Amended.*
10.13.2	Second Amendment of Deferred Compensation Plan for Directors (2003 Restatement), as Amended.*
10.14	Executive Survivor and Supplemental Retirement Plan (2020 Restatement).*
10.15	Nonqualified Retirement Plan (2021 Restatement).*
10.16	1999 Employee Stock Purchase Plan, As Amended (2016).
10.17	2014 Stock Incentive Plan
10.18	2023 Executive Annual Incentive Plan.*
10.19	Otter Tail Corporation Executive Restoration Plus Plan, 2020 Restatement.*
10.20	Summary of Non-Employee Director Compensation (2023).*
10.21	Change in Control Severance Agreement, Chuck MacFarlane, dated February 24, 2012.*
10.22	Change in Control Severance Agreement, Timothy Rogelstad, dated April 14, 2014.*
10.23	Change in Control Severance Agreement, Paul Knutson, dated December 17, 2012.*
10.24	Change in Control Severance Agreement, John Abbott, dated April 13, 2015.*
10.25	Change in Control Severance Agreement, Todd Wahlund, dated January 1, 2024.*
10.26	Change in Control Severance Agreement, Jennifer Smestad, dated January 1, 2018.*
10.27	Form of Change in Control Severance Agreement (2023)*
10.28	Otter Tail Corporation Executive Severance Plan (2024).*
10.29	Form of 2023 Restricted Stock Award Agreements for Directors
10.30	2023 Stock Incentive Plan
10.31	Form of 2023 Executive Performance Share Award Agreement (Executives)
10.32	Form of 2023 Restricted Stock Unit Award Agreement (Executives)
10.33	Consulting Agreement, Kevin G. Moug, dated January 8, 2024*
21	Subsidiaries of Registrant.
23	Consent of Deloitte & Touche LLP.
24	Power of Attorney.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97	Incentive Compensation Recovery Policy
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*Management contract, compensatory plan or arrangement required to be filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.

**Confidential information has been omitted from this Exhibit and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2.

The Company hereby undertakes to furnish copies of any of the omitted schedules and exhibits to the Securities and Exchange Commission upon request.

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain instruments defining the rights of holders of certain long-term debt of the Company are not filed, and in lieu thereof, the Company agrees to furnish copies thereof to the Securities and Exchange Commission upon request.

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ITEM 16. FORM 10-K SUMMARY

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

OTTER TAIL CORPORATION
By:	/s/ Todd R. Wahlund
	Todd R. Wahlund Vice President and Chief Financial Officer (authorized officer and principal financial officer)
	Dated: February 14, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature and Title 

Charles S. MacFarlane	)
President and Chief Executive Officer	)
(principal executive officer) and Director	)
	)
Todd R. Wahlund	)
Vice President and Chief Financial Officer	)
(principal financial and accounting officer)	)
	)	By	/s/ Charles S. MacFarlane
Nathan I. Partain	)		Charles S. MacFarlane
Chairman of the Board and Director	)		Pro Se and Attorney-in-Fact
	)		Dated: February 14, 2024
Karen M. Bohn, Director	)
	)
Jeanne H. Crain, Director	)
	)
John D. Erickson, Director	)
	)
Steven L. Fritze, Director	)
	)
Kathryn O. Johnson, Director	)
	)
Michael E. LeBeau, Director	)
	)
Mary E. Ludford, Director	)
	)
Thomas J. Webb, Director	)

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OTTER TAIL CORPORATION

NONQUALIFIED RETIREMENT PLAN

2021 RESTATEMENT

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ARTICLE 1.DEFINITIONS, GENDER, AND NUMBER.	1
Section 1.1.Definitions	1
Section 1.2.Gender and Number	14
ARTICLE 2.DEFERRED COMPENSATION ACCOUNTS	14
Section 2.1.Establishment of Accounts	14
Section 2.2.Property of Company	14
ARTICLE 3.PARTICIPATION	14
Section 3.1.Who May Participate	14
Section 3.2.Time and Conditions of Participation	14
Section 3.3.Termination of Participation	15
Section 3.4.Missing Persons	15
Section 3.5.Relationship to Other Plans	16
ARTICLE 4.ENTRIES TO THE ACCOUNT	16
Section 4.1.Deferrals	16
Section 4.2.Company Contributions	18
Section 4.3.Disability	19
Section 4.4.Change in Eligibility Status	19
Section 4.5.Allocation to Accounts	19
Section 4.6.Earnings Crediting	20
ARTICLE 5.DISTRIBUTION OF BENEFITS	21
Section 5.1.Election of Benefit Commencement	21
Section 5.2.Benefit Commencement	22
Section 5.3.Form of Benefit Payment	24
Section 5.4.Death Benefits	25
Section 5.5.Change in Elections	27
Section 5.6.Confidentiality	28
Section 5.7.Competition	28
Section 5.8.Forfeiture for Cause	30
Section 5.9.Minimum Amount and Frequency of Payments	30
Section 5.10.Acceleration of Distributions	30
Section 5.11.Unforeseeable Emergencies	31
Section 5.12.Deferred Election Termination	32
Section 5.13.Limitation on Payment	32
Section 5.14.Delay of Distribution	32
Section 5.15.Distributions on Plan Termination	33
Section 5.16. Claims Procedure	33
ARTICLE 6.FUNDING	38
Section 6.1.Source of Benefits.	38

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Section 6.2.No Claim on Specific Assets	38
ARTICLE 7.ADMINISTRATION AND FINANCES	38
Section 7.1.Administration	38
Section 7.2.Powers of Committee	38
Section 7.3.Actions of the Committee	39
Section 7.4.Delegation	39
Section 7.5.Reports and Records	40
ARTICLE 8.AMENDMENTS AND TERMINATION.	40
Section 8.1.Amendments	40
Section 8.2.Termination	40
ARTICLE 9.MISCELLANEOUS	41
Section 9.1.No Guarantee of Employment	41
Section 9.2.Release	42
Section 9.3.Notices	42
Section 9.4.Nonalienation	42
Section 9.5.Tax Liability	43
Section 9.6.Parachute and Other Payments	43
Section 9.7.Indemnification	43
Section 9.8.Captions	43
Section 9.9.Applicable Law	43

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NONQUALIFIED RETIREMENT PLAN

2021 RESTATEMENT

Effective January 1, 2005, the Otter Tail Corporation Revised Nonqualified Retirement Plan (as amended from time to time, the “Plan”) became effective. Effective January 1, 2011, the Plan was amended and restated by the “Otter Tail Corporation Nonqualified Retirement Plan 2011 Restatement.” This document restates the Plan as the “Otter Tail Corporation Nonqualified Retirement Plan 2021 Restatement,” generally effective January 1, 2021. This restatement does not eliminate or reduce the account balance of any Participant or Beneficiary eligible for benefits as of the date of that this restatement is signed. The Plan continues to be a nonqualified deferred compensation plan for the benefit of certain executive employees of Otter Tail Corporation and its subsidiaries. The Plan is intended to comply with Section 409A of the Code. It continues to apply to amounts previously deferred under the Otter Tail Corporation Nonqualified Retirement Plan effective January 1, 2003, that were not earned and vested as of December 31, 2004, as well as to amounts deferred under the Otter Tail Revised Nonqualified Retirement Plan effective January 1, 2005. The Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, as described in Sections 201(2), 301(a)(3) and 401(a)(1) of Title I of ERISA.

ARTICLE 1.    DEFINITIONS, GENDER, AND NUMBER.

Section 1.1.    Definitions. Whenever used in the Plan, the following words and phrases shall have the meanings set forth below unless the context plainly requires a different meaning, and when a defined meaning is intended, the term is capitalized.

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1.1.1.    “Account” means the bookkeeping account used to measure and determine the amount of deferred compensation to be paid to a Participant or Beneficiary under the Plan, consisting of one or more of the Company Account, the Retirement Account, or a Scheduled Withdrawal Account. Accounts that had been opened under the Otter Tail Corporation Nonqualified Retirement Plan with respect to amounts not earned and vested as of December 31, 2004 became Accounts of the same kind (Company Account, Retirement Account or Scheduled Withdrawal Account) under this Plan and elections made with respect to such Accounts shall continue in effect as elections made under this Plan unless and until changed as permitted under this Plan.

1.1.2.    “Affiliates” means any entity that employs employees and in which the Company has a controlling interest. In addition, “Affiliates” includes any entity affiliated with the Company that the Company determines is an Affiliate under this Plan for legitimate business reasons consistent with the provisions of Section 409A of the Code. With respect to the definition of “employer” under Section 409A of the Code, the language “at least 50%” shall be used each place where it appears in Section 1563(a)(1), (2), and (3) of the Code to determine a controlled group of corporations under Section 414(b) of the Code and in applying Regulation Section 1.414(c)-2 to determine whether trades or businesses are under common control. Affiliates as of the date that this restated Plan is adopted are listed on Appendix A to the Plan.

1.1.3.    “Base Salary” of a Participant for any Plan Year means the total annual salary and wages paid by the Company or an Affiliate to such individual for such Plan Year, including any amount which would be included in the definition of Base Salary but for the individual's election to defer some of the individual’s compensation pursuant to

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this Plan or any other deferred compensation plan established by the Company or an Affiliate; but excluding any other remuneration paid by the Company or an Affiliate, such as bonuses, commissions, overtime, Incentive Compensation, equity-based compensation, including, but not limited to stock options, restricted stock or stock-based units, distributions of compensation previously deferred, allowances for expenses (including moving expenses, travel expenses, and automobile allowances), and fringe benefits, whether payable in cash or in a form other than cash. In the case of an individual who is a participant in a plan sponsored by the Company or an Affiliate which is described in Section 401(k), 125 or 132(f) of the Code, the term Base Salary shall include any amount which would be included in the definition of Base Salary but for the individual's election to reduce the individual’s compensation and have the amount of the reduction contributed to or used to purchase benefits under such plan.

1.1.4.    “Beneficiary” or “Beneficiaries” means the persons or trusts designated by a Participant in writing pursuant to Section 5.4.1 of the Plan as being entitled to receive any benefit payable under the Plan by reason of the death of a Participant, or, in the absence of such designation, the persons specified in Section 5.4.2 of the Plan.

1.1.5.    “Board” means the Board of Directors of the Company as constituted at the relevant time.

1.1.6.    “Cause” means the occurrence of one of the following: (a) a Participant’s violation in any material respect of any agreement or representation set forth in any employment or other agreement, if any, between the Company or an Affiliate and the Participant; (b) the occurrence of an event that would constitute “cause” (or any similar concept) under any employment or other agreement, plan, or program that governs the

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Participant or by which the Participant is bound; (c) a Participant’s willful violation of any material rule or policy of the Company or an Affiliate or any theft or defalcation of property committed against the Company or an Affiliate; (d) any continual willful or material failure by a Participant to comply with a reasonable and lawful direction of the Board or any duly authorized committee of the Board or the chief executive officer of the Company or an Affiliate, or the willful misconduct by Participant in the responsibilities reasonably assigned to the Participant; (e) conviction of or plea of nolo contendere by a Participant to a felony or other actions or omissions that reflect moral turpitude or threaten to materially and adversely reflect on the Company or an Affiliate in the conduct of its business; or (f) violation of the confidentiality provisions of Section 5.6 or the noncompetition provisions of Section 5.7.

1.1.7.    “Change in Control” of the Company means:

(a)    Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes within a 12 month period ending on the date of the most recent acquisition the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities; or

(b)    Within a 12 month period the Continuing Directors cease to constitute a majority of the Company’s Board of Directors; provided that such change is the direct or indirect result of a proxy fight and contested election or elections for positions on the Board of Directors.

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(c)    With respect to a Plan Participant, a Change in Control event must relate to: (i) the corporation for which the Participant is performing services at the time of the Change in Control event; (ii) the corporation that is liable for the payment of the deferred compensation (or all corporations liable for the payment if more than one corporation is liable); or (iii) a corporation that is a majority shareholder of a corporation identified in part (i) or part (ii) above, or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in part (i) or part (ii) above. For purposes of this provision, a majority shareholder is a shareholder owning more than 50% of the total fair market value and total voting power of such corporation. Also, for purposes of this provision, Section 318(a) of the Code applies to determine stock ownership.

(d)    The provisions of this Section 1.1.7 regarding the definition of the term “Change in Control,” shall be determined and administered in accordance with Section 409A of the Code so that no Change in Control shall be considered to have occurred unless and until it is also a change in control under Section 409A of the Code. Provided, however, that a Change in Control must relate to the Company and not to Affiliates, and a Sale is not a Change in Control of the Company under the Plan.

1.1.8.    “Code” means the Internal Revenue Code of 1986, as amended from time to time and any successor statute. References to a Code section shall be deemed to be to that section or to any successor to that section and to the guidance issued under that section.

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1.1.9.    “Committee” means the Benefits Administration Committee of Otter Tail Corporation.

1.1.10.    “Company” means Otter Tail Corporation, a Minnesota corporation. Prior to July 1, 2009, “Company” meant Otter Tail Corporation, a Minnesota corporation doing business as Otter Tail Power Company. Effective July 1, 2009, that Otter Tail Corporation became a wholly owned subsidiary of a new holding company in a reverse triangular merger pursuant to which the new holding company took the name “Otter Tail Corporation,” which is now the “Company” under the Plan, and the subsidiary took the name “Otter Tail Power Company.”

1.1.11.    “Company Account” means a bookkeeping account established for a Participant for Company Contributions made to the Plan under Section 4.2.

1.1.12.    “Company Contribution” means the contribution of the Company to a Participant’s Company Account under Section 4.2.

1.1.13.    “Compensation” with respect to a Participant for any period means the sum of such Participant's Base Salary paid and Incentive Compensation accrued with respect to such period.

1.1.14.    “Confidential Information” means unique, confidential and proprietary systems, records, customer lists, product information and other information of the Participant’s Employer that derives value from not being generally known to the public and with respect to which the Employer takes reasonable steps to keep confidential.

1.1.15.    “Continuing Director” means any person who is a member of the Board of Directors of the Company, while such person is a member of the Board of Directors, and who (a) was a member of the Board of Directors on the Effective Date or (b)

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subsequently becomes a member of the Board of Directors, if such person’s nomination for election or initial election to the Board of Directors is recommended or approved by a majority of the Continuing Directors.

1.1.16.    “Crediting Rate” with respect to any Plan Year means the rate or rates established by the Company in its sole discretion to determine earnings and losses with respect to an Account. The Company may select any investment index (i.e., mutual funds, annuities, bank collective funds or an insurance company dividend rate) as a Crediting Rate to be applied to amounts credited to a Participant’s Accounts as set forth in Section 4.6. The Company may change such indices at any time or from time to time and can restrict or limit at any time and from time to time the Account(s) eligible for any Crediting Rate. The Company has the discretion to determine the exact manner in which any Crediting Rate shall be calculated and applied to an Account. The Company also has the discretion to determine the Crediting Rate to apply as a default Crediting Rate to any Account for which a Participant fails or refuses to select a Crediting Rate. The Company shall not be liable to any person or entity, including the Participant, for losses or reduced gains associated with or relating to the selection or application of a particular Crediting Rate, whether as a default rate or otherwise.

1.1.17.    “Deferral Account” means one or more of the Retirement Account or a Scheduled Withdrawal Account, according to the context.

1.1.18.    “Disabled” or “Disability” means, with respect to a Participant, that the Participant (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; (b) by

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reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company; or (c) has been determined to be totally disabled by the Social Security Administration. Disability under subsections (a) and (b) shall be determined by a physician selected by the Company. A Participant shall cooperate with the Company, including making the Participant reasonably available for examination by physicians at the Company’s request and at the Company’s expense to determine whether or not the Participant is Disabled.

1.1.19.    “Early Retirement” means a Participant’s termination of employment with the Company and Affiliates before the Participant’s Retirement and before there has occurred a Sale or Change in Control, but only if before the Participant’s termination of employment or within 30 days thereafter, the Committee determines in its sole discretion to consider the termination an Early Retirement. The sole effect of a determination that the termination is an Early Retirement is that the Participant shall become vested in the Company Account. Provided, however, that a Participant will not be considered to have attained “Early Retirement” if the Participant is or could have been terminated from employment for Cause. Provided further, that a Participant shall not be considered to have terminated employment with the Company and Affiliates unless and until the Participant terminates employment with the Company and Affiliates and with any entity that is the parent company of the Company or an entity that is affiliated with the Company or the Affiliates or the parent company of the Company, and a transfer of employment between or among such entities shall not be considered a termination of

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employment under this Plan. In determining whether an entity is affiliated with the Company, the Company shall include all members of a controlled group of corporations and all trades or businesses under common control. The language “at least eighty percent” used in applying the concepts of Section 1563 of the Internal Revenue Code and Section 414(b) and (c) of the Internal Revenue Code shall be replaced by “at least fifty percent.” Any termination of employment under this Plan must also constitute a separation from service under the provisions of Section 409A of the Code.

1.1.20.    “Effective Date” means January 1, 2005, the date on which this Plan becomes effective. The effective date of this restatement of the Plan is January 1, 2021.

1.1.21.    “Eligible Executive” means any employee of the Company or an Affiliate who is designated by the Committee, in its sole discretion, as an Eligible Executive. An employee shall cease to be an Eligible Executive if the Committee, in its sole discretion, determines not to designate the employee as an Eligible Executive for the year; or if such Committee, in its sole discretion, determines at any time that the employee should no longer participate in the Plan. The Committee shall notify any employee who has been an Eligible Executive and who is no longer an Eligible Executive.

1.1.22.    “Eligible Pay” with respect to a Participant for any Plan Year, means the taxable income reported on the Participant’s Form W-2 for the Plan Year, reduced by income attributable to taxable fringe benefits, including, but not limited to automobile allowances, excess life insurance coverage, moving expenses, travel expenses, amounts realized on the sale or disposition of qualified or nonqualified stock options or stock purchases, or amounts realized on the inclusion in income of property under Section 83 of the Code. Eligible Pay shall include any amount which would be included in the

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definition of Eligible Pay but for the individual's election to defer some of the individual’s compensation pursuant to this Plan or any other deferred compensation plan established by the Company or an Affiliate; and shall exclude distributions of compensation previously deferred. In the case of an individual who is a participant in a plan sponsored by the Company or an Affiliate which is described in Section 401(k), 125, 132(f) of the Code, the term Eligible Pay shall include any amount which would be included in the definition of Eligible Pay but for the individual's election to reduce the individual’s compensation and have the amount of the reduction contributed to or used to purchase benefits under such plan. Eligible Pay for any Participant for a Plan Year may be limited to such amount as the Committee shall determine.

1.1.23.    “Employer” means with respect to a Participant the Company or Affiliate that employs that Participant.

1.1.24.    “Enrollment Period” means the period during each Plan Year designated by the Committee during which new Accounts may be opened and deferral elections may be changed for Compensation payable with respect to the immediately succeeding Plan Year. The Enrollment Period for a Plan Year with respect to Base Salary and Incentive Compensation shall end no later than December 31 preceding the first day of the Plan Year for which the election is to be effective and any deferral election shall become irrevocable as of such December 31 (or such earlier date as established by the Committee). Provided, however, that for the initial year that an Employee is selected as an Eligible Executive, the Enrollment Period shall be such period of time following selection as the Committee shall determine consistent with the requirements of Section 409A of the Code and Section 4.1.

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1.1.25.    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time and any successor statute. References to an ERISA section shall be deemed to be to that section or to any successor to that section and to the guidance issued under that section.

1.1.26.    “Incentive Compensation” of a Participant for any Plan Year means the total remuneration paid to such Participant under the various incentive compensation programs maintained by the Company or an Affiliate with respect to that Plan Year, including any amount which would be included in the definition of Incentive Compensation but for the Participant's election to defer some or all of the Participant’s Incentive Compensation pursuant to this Plan or some other deferred compensation plan established by the Company or an Affiliate; but excluding any other remuneration paid by the Company or an Affiliate, such as Base Salary, overtime, net commissions, equity-based compensation including, but not limited to, stock options, restricted stock or stock-based units, distributions of compensation previously deferred, allowances for expenses (including moving expenses, travel expenses, and automobile allowances), and fringe benefits whether payable in cash or in a form other than cash. In the case of an individual who is a participant in a plan sponsored by the Company or an Affiliate which is described in Section 401(k), 125, or 132(f) of the Code, the term Incentive Compensation shall include any amount which would be included in the definition of Incentive Compensation but for the individual's election to reduce the individual’s compensation and have the amount of the reduction contributed to or used to purchase benefits under such plan.

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1.1.27.    “Maximum Annual Deferral” with respect to a Participant for a Plan Year means the sum of (a) 50% of the Participant's Base Salary paid for such Plan Year; and (b) 100% of the Participant's Incentive Compensation accrued for such Plan Year.

1.1.28.    “Participant” means an Eligible Executive who has satisfied the requirements of Article 3.

1.1.29.    “Plan” means the “Otter Tail Corporation Nonqualified Retirement Plan 2021 Restatement” (formerly known as the Otter Tail Corporation Revised Nonqualified Retirement Plan effective January 1, 2005 and the Otter Tail Corporation Nonqualified Retirement Plan 2011 Restatement), as set forth herein and as amended or restated from time to time.

1.1.30.    “Plan Year” means January 1 through December 31.

1.1.31.    “Retirement” means a Participant’s termination of employment with the Company and Affiliates at any age as a result of death or Disability; or a Participant’s termination of employment with the Company and Affiliates on or after age 58. Provided, however, that a Participant will not be considered to have attained “Retirement” if the Participant is or could have been terminated from employment for Cause. Provided further, that a Participant shall not be considered to have terminated employment with the Company and Affiliates unless and until the Participant terminates employment with the Company and Affiliates and with any entity that is the parent company of the Company or an entity that is affiliated with the Company or the Affiliates or the parent company of the Company, and a transfer of employment between or among such entities shall not be considered a termination of employment under this Plan. In determining whether an entity is affiliated with the Company, the Company shall include all members of a

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controlled group of corporations and all trades or businesses under common control. The language “at least eighty percent” used in applying the concepts of Section 1563 of the Internal Revenue Code and Section 414(b) and (c) of the Internal Revenue Code shall be replaced by “at least fifty percent.” Any termination of employment under this Plan must also constitute a separation from service under the provisions of Section 409A of the Code.

1.1.32.    “Retirement Account” means a bookkeeping account that a Participant may have established for deferral of Compensation made to the Plan under Section 4.1.3.

1.1.33.    “Sale” means the occurrence of an event pursuant to which the Participant’s Employer is sold or transferred to an entity that is not the Company or an Affiliate; however, no Sale shall be considered to have occurred unless and until it is also a change in control under Section 409A of the Code.

1.1.34.    “Scheduled Withdrawal Account” means a bookkeeping account that a Participant may have established for deferral of Compensation made to the Plan under Section 4.1.3. When a Participant opens a Scheduled Withdrawal Account, the Participant shall establish the Specified Year in which benefits are to commence pursuant to Section 5.1.2. Effective with respect to deferrals of Compensation during the Plan Year beginning January 1, 2011, a Participant may have open no more than two Scheduled Withdrawal Accounts with positive balances at any time.

1.1.35.    “Specified Year” means the year in which the Participant wishes to receive distributions from a Scheduled Withdrawal Account, as specified at the time that the Participant opens the Account.

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1.1.36.    “Trust” means the Trust under the Otter Tail Corporation Revised Nonqualified Retirement Plan (or the Otter Tail Corporation Nonqualified Retirement Account 2021 Restatement, if the Trust name is so amended), as amended from time to time.

Section 1.2.    Gender and Number. Except as otherwise indicated by context, masculine terminology used herein also includes the feminine and neuter, and terms used in the singular may also include the plural.

ARTICLE 2.    DEFERRED COMPENSATION ACCOUNTS.

Section 2.1.    Establishment of Accounts. The Company shall establish one or more (but no more than four) Accounts for each Participant which shall be utilized solely as a device to measure and determine the amount of deferred compensation to be paid under the Plan to the Participant or the Participant’s Beneficiaries.

Section 2.2.    Property of Company. Any amounts so set aside for benefits payable under the Plan are the property of the Company, except, and to the extent, provided in the Trust.

ARTICLE 3.    PARTICIPATION.

Section 3.1.    Who May Participate. Participation in the Plan is limited to those Eligible Executives selected by the Committee for participation in the Plan. Unless specifically excluded by the Committee, Eligible Executives participating in the Otter Tail Corporation Nonqualified Retirement Plan as of December 31, 2004, shall participate in the Plan, and Eligible Executives participating in the Otter Tail Corporation Revised Nonqualified Retirement Plan effective January 1, 2005, shall continue to participate in the Plan.

Section 3.2.    Time and Conditions of Participation. An Eligible Executive shall become a Participant only upon the Eligible Executive’s compliance with such terms and conditions as

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the Committee may from time to time establish for the implementation of the Plan, including but not limited to, any condition the Committee may deem necessary or appropriate for the Company to meet its obligations under the Plan. The Company may, in its sole discretion, purchase insurance on the lives of each Participant. The Committee may, in its sole discretion, reject for participation in the Plan Eligible Executives who fail or refuse to cooperate with the Company in obtaining insurance on their lives.

Section 3.3.    Termination of Participation. Once an individual has become a Participant in the Plan, participation shall continue until the first to occur of (a) payment in full of all benefits to which the Participant or the Participant’s Beneficiary is entitled under the Plan, or (b) the occurrence of the event specified in Section 3.4 which results in loss of benefits. Except as otherwise specified in the Plan, the Company may not terminate an individual's participation in the Plan; provided, however, that if the Committee, in its discretion, determines that it is likely that a Participant would not be considered to be a member of a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(l) of ERISA, for any period, the Committee may require that no contributions be made to the Plan by or on behalf of such Participant during such period, at the time and to the extent consistent with Section 409A of the Code.

Section 3.4.    Missing Persons. If the Company is unable to locate the Participant or the Participant’s Beneficiary for purposes of making a distribution, the amount of a Participant's benefits under the Plan that would otherwise be considered as nonforfeitable shall be forfeited on the first to occur of the following dates: (a) effective one year after the Participant’s termination from employment; (b) effective on the date of termination of the Plan; or (c) effective at such

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time as is required under Section 409A of the Code. If a person is located after the date of such forfeiture, the benefits for such Participant or Beneficiary shall not be reinstated under the Plan.

Section 3.5.    Relationship to Other Plans. Participation in the Plan shall not preclude participation of the Participant in any other fringe benefit program or plan sponsored by the Company for which such Participant would otherwise be eligible.

ARTICLE 4.    ENTRIES TO THE ACCOUNT.

Section 4.1.    Deferrals.

4.1.1.    Deferral Elections. Each Participant wishing to defer Compensation under the Plan shall enter into a deferral election, which shall specify the amount of Compensation the Participant wishes to have deducted from the Participant’s pay and contributed to the Plan. Deferral elections with respect to Base Salary must specify the percentage (stated as an integer) of the Compensation that the Participant wishes to have deducted from Base Salary. Deferral elections with respect to Incentive Compensation must specify either the percentage (stated as an integer) or the dollar amount, or a combination of percentage and dollar amount, as determined by the Committee in its discretion, of the Compensation that the Participant wishes to have deducted from Incentive Compensation.

4.1.2.    Timing of Elections. To the extent permissible under Section 409A of the Code, Eligible Executives who first become eligible to participate in the Plan may make a deferral election with respect to Base Salary and Incentive Compensation within 30 days after the date the Eligible Executive becomes eligible to participate in the Plan. Such election shall apply with respect to Base Salary to be paid after the date of the election. However, with respect to Incentive Compensation, the deferral election shall apply to the

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total amount of the Incentive Compensation accrued for the Plan Year in which the initial election is made multiplied by a fraction, the numerator of which is the number of days remaining in the performance period after the election and the denominator of which is the total number of days in the performance period. The election shall become irrevocable as of the date that it is made. Eligible Executives after their first year of selection must make a deferral election with respect to Base Salary and Incentive Compensation during the Enrollment Period preceding the beginning of a Plan Year. The Participant’s deferral election shall remain in effect unless and until terminated or changed by the Participant in accordance with the terms of the Plan and consistent with Section 409A of the Code.

4.1.3.    Allocation Between Accounts. At the time a Participant makes the Participant’s initial deferral election, the Participant shall specify the Deferral Account(s) the Participant wishes to open in the Plan. A Participant with a deferral election shall always have at least one Deferral Account in the Plan and may, at the Participant’s election, have up to three Deferral Accounts, specifically, a Retirement Account and two Scheduled Withdrawal Accounts. A Participant may open a new Deferral Account (up to a total of three Deferral Accounts) during an Enrollment Period. A Participant shall specify in the Participant’s deferral election the proportions in which the Participant’s deferrals are to be allocated between the Participant’s Retirement Account and the Participant’s Scheduled Withdrawal Account(s). Provided, however, that no deferrals may be contributed to a Participant’s Scheduled Withdrawal Account in the calendar year in which a distribution is to be made from said Account.

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4.1.4.    Limitation on Deferral Elections. A Participant may make a deferral election for any Plan Year provided that: (a) in no event may the amount deferred by a Participant for a Plan Year under the Participant’s Deferral Account(s) exceed the Maximum Annual Deferral; and (b) the Participant's remaining Compensation, after all deferrals, is sufficient to enable the Employer to withhold from the Participant's Compensation (i) any amounts necessary to satisfy withholding requirements under applicable tax law; (ii) the amount of any contributions which the Participant may be required to make or may have elected to make under the various benefit plans of the Company or an Affiliate; and (iii) any other payroll deduction from Compensation required by law or authorized by the Participant.

Section 4.2.    Company Contributions. For each Plan Year that commences on or after the Effective Date, the Company and/or any Affiliate may, but is not required to credit a contribution to the Plan on behalf of any Participant who was an Eligible Employee during the Plan Year. The amount of the contribution credited shall be the amount determined by the Company or Affiliate in its sole discretion. Such amount is not required to be uniform among the Eligible Employees, and the Company or Affiliate is permitted to credit Company Contributions for some Eligible Employees and not for other Eligible Employees. Such Company Contributions can be expressed as a fixed dollar amount; a percentage of Compensation, Base Salary, Incentive Compensation or Eligible Pay; or as a matching contribution based on the Deferrals made by the Eligible Employee. A Company Contribution on behalf of a Participant pursuant to this Section 4.2 shall be allocated to the Company Account of the Participant on whose behalf the contribution is made. Provided, however, that at the discretion of the

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Committee exercised at the time the Contribution is credited, the contribution may be allocated to the Participant’s Retirement Account.

Section 4.3.    Disability. If a Participant becomes Disabled, deferrals and Company Contributions, if any, shall continue to be allocated as described in Sections 4.1 and 4.2 during the period in which the Participant is entitled to receive Compensation or Eligible Pay from the Company or an Affiliate, other than compensation under a long term disability plan. If a Participant continues to be Disabled after such period, deferrals and other Plan contributions will cease.

Section 4.4.    Change in Eligibility Status. If a Participant in the Plan ceases to be an Eligible Executive for a Plan Year, the Participant’s deferrals to the Plan shall cease. No further Company Contributions under Section 4.2 shall be made to the Plan unless and until the employee again becomes an Eligible Executive. The Participant’s Account shall continue to be credited with earnings and losses under Section 4.6 and shall be paid in accordance with Article 5.

Section 4.5.    Allocation to Accounts. During each Plan Year, the Company shall post to the appropriate Deferral Account(s) of each Participant the amount of Base Salary and Incentive Compensation to be deferred under such Deferral Account(s) as designated by the Participant in the Participant’s deferral election in effect for that Plan Year. Such allocation shall occur as of the dates that the Base Salary and Incentive Compensation would have been paid to the Participant. The Company shall also post to the Company Account amounts to be allocated to the Participant pursuant to Sections 4.2 and 4.3.

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Section 4.6.    Earnings Crediting.     

4.6.1.    Earnings Credits for Company Account. During each Plan Year a Participant's Company Account will be credited with interest at the Crediting Rate in effect for the Company Account for the Plan Year.

4.6.2.    Earnings Credits for Deferral Accounts. Each Participant may request that a Scheduled Withdrawal Account or the Retirement Account be allocated to one or more investment indices selected by the Committee and credited or debited, as the case may be, with such earnings or losses as the Account would have been credited or debited had it been actually invested in such investment indices. The initial allocation request may be made at the time of opening of an Account. Once made, an investment allocation request shall remain in effect for all subsequent contributions until changed by the Participant. The Participant may change the investment allocation election by submitting a written request to the Committee. Participants may change elections no more than once in any calendar quarter. Such changes shall become effective as of the first day of the next quarter that is administratively feasible after the Committee receives such written request. Provided, however, that during the Plan Year in which a final distribution of a Participant’s Deferral Account is expected to occur, the Committee may apply to that Deferral Account the Crediting Rate applicable to Company Accounts for that Plan Year. Allocation requests shall be subject to such other requirements as established by the Committee.

4.6.3.    Period of Crediting Rates. Crediting Rates shall continue to be credited or debited until the first to occur of (a) the Participant’s termination of employment that is

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not a Retirement under the Plan or (b) payment of all amounts owed to the Participant under all Account(s).

4.6.4.    No Guarantee of Account Value. The Participant agrees on behalf of the Participant and any Beneficiary to assume all risk in connection with any decrease in value of the Deferral Accounts resulting from the Participant’s request and selection of any particular investment index under the Plan or from the application of any default Crediting Rate in accordance with the terms of the Plan.

4.6.5.    No Actual Investment. The Company is under no obligation to make investments or change investments in a manner consistent with the investment indices available under the Plan. The elections made by the Participant are for purposes of determining earnings and losses to be credited to the Accounts and not for the purpose of determining any actual investment of the assets of the Company or the Trust, if any.

4.6.6.    Participant Statements. At least annually, the Company shall provide each Participant with a statement of the Participant’s Account(s).

ARTICLE 5.    DISTRIBUTION OF BENEFITS.

Section 5.1.     Election of Benefit Commencement.

5.1.1.    Distribution on Change in Control. During a Participant’s first Enrollment Period under this Plan, the Participant may elect to commence distribution of all Accounts upon a Change in Control, if such a Change in Control should occur before the Account would otherwise be payable under this Plan. If such election is not made at such time, then no acceleration of any Account shall occur upon a Change in Control under the Plan. If such an election is made and if distribution of an Account has commenced in installments before a Change in Control, the balance of the Account shall be paid in a

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lump sum within 90 days of the date of the Change in Control. Provided, however, that except as otherwise provided in Section 5.5.2, a Participant who was first eligible under the Otter Tail Corporation Nonqualified Retirement Plan or the Varistar Corporation Incentive and Deferral Plan may not make an election under this Section 5.1.1, but the election made by such Participant under the Otter Tail Corporation Nonqualified Retirement Plan or the Varistar Corporation Incentive and Deferral Plan, as the case may be, with respect to a distribution of all Accounts upon a Change in Control shall be considered an election under this Plan.

5.1.2.    Scheduled Withdrawal Account. At the time a Participant opens a Scheduled Withdrawal Account under the Plan, the Participant shall establish the Specified Year for that Account. The Specified Year must be a year that is at least two years following the beginning of the Plan Year in which deferrals to the Scheduled Withdrawal Account commence.

Section 5.2.    Benefit Commencement.

5.2.1.    Scheduled Withdrawal Account. Distribution of a Scheduled Withdrawal Account will be made in a lump sum during March of the Specified Year unless any of the following occurs before January 1 of the Specified Year: (a) the Participant terminates employment for reason other than Retirement, in which event distributions will be made in a lump sum within 90 days following the Participant’s termination of employment; (b) the Participant dies, in which event distributions will commence in the manner specified in Section 5.4.4; or (c) there occurs a Change in Control and the Participant requested distribution to commence upon the Change in Control (as described in Section 5.1.1), in which event distribution will be made in a lump sum within 90 days following the

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Change in Control; (d) the Participant’s Retirement occurs (other than by reason of death), in which event distribution will be made in a lump sum within 90 days following the date of Retirement; or (e) the Plan terminates, in which event distributions will be made in the manner specified in Section 8.2. Provided, however, that a Participant who transfers employment between or among the Company, an Affiliate, the parent company of the Company or an Affiliate, or any entity affiliated with any of the foregoing as determined under Section 1.1.30 shall not be considered to have terminated employment for purposes of this Section.

5.2.2.    Retirement Account. Distribution of a Retirement Account will commence in January of the Plan Year following Retirement (other than by reason of death) unless any of the following occurs before the Participant’s Retirement (other than by reason of death): (a) the Participant terminates employment for reasons other than Retirement, in which event distribution will be made in a lump sum within 90 days following the Participant’s termination of employment (including Early Retirement); (b) the Participant dies, in which event distribution will commence in the manner specified in Section 5.4.4; or (c) there occurs a Change in Control and the Participant requested distribution to commence upon the Change in Control (as described in Section 5.1.1), in which event distribution will be made in a lump sum within 90 days following the Change in Control; or (d) the Plan terminates, in which event distributions will be made in the manner specified in Section 8.2. Provided, however, that a Participant who transfers employment between or among the Company, an Affiliate, the parent company of the Company or an Affiliate, or any entity affiliated with any of the foregoing as determined under Section

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1.1.30 shall not be considered to have terminated employment for purposes of this Section.

5.2.3.    Company Account. Distribution of a Company Account will be made only if the Participant remains employed with the Company or an Affiliate until Early Retirement, Retirement, Sale, or a Change in Control. In such event, distribution will commence in accordance with the following: (a) if the Participant reaches Early Retirement or Retirement (other than by reason of Disability or death), the first month of Plan Year following the later of the Participant’s 58th birthday or termination of employment; (b) in the event of Disability or Sale, within 90 days following the Disability or Sale, as the case may be; (c) if the Participant dies, in the manner specified in Section 5.4.4; or (d) if there occurs a Change in Control and the Participant requested to commence distribution upon the Change in Control (as described in Section 5.1.1), in a lump sum within 90 days following the Change in Control; or (e) the Plan terminates, in which event distributions will be made in the manner specified in Section 8.2. Provided, however, that a Participant who transfers employment between or among the Company, an Affiliate, the parent company of the Company or an Affiliate, or any entity affiliated with any of the foregoing as determined under Section 1.1.30 shall not be considered to have terminated employment for purposes of this Section. Any portion not payable as of the Participant’s termination of employment shall be forfeited.

5.2.4.    Special Rule in Event of Sale. If a Participant remains employed with the Company or an Affiliate until the Sale of the Participant’s Employer and if after the Sale, the Participant is no longer employed by the Company, an Affiliate, or the parent company of the Company or an Affiliate, or any entity affiliated with any of the

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foregoing as determined under Section 1.1.30, the Sale shall be a distribution event with respect to a Participant’s Scheduled Withdrawal Accounts and Retirement Account, including that portion of such Accounts with respect to which distribution has commenced in installments on or before the Sale, but only with respect to amounts deferred under the Plan on or after January 1, 2011. Such distribution shall be made in a lump sum within 90 days following the Sale. The Plan shall separately account for amounts deferred on or before December 31, 2010 and on or after January 1, 2011, under a Participant’s Scheduled Withdrawal Accounts and Retirement Account.

Section 5.3.    Form of Benefit Payment. At the time that a Retirement Account or Company Account is first opened under the Plan for a Participant, the Participant shall select the period over which payments from both Accounts will be made, and an election made with respect to one Account shall apply with respect to the other Account even if the other Account has not yet been opened. Provided, however, that if the Company Account is the first Account of the two to be opened, an election with respect to that Company Account must be made either before the Company Account is opened or, if made after the Account has been opened, only if the Participant will not be vested in the Account for at least 12 months from the date of the election and only if the election is made within 30 days of the date that the Account is opened. If made after the Account is opened, the election made will not be effective until 12 months after the date of the election. The Participant may elect to receive payment in the form of a lump sum or in monthly installments over 10, 15 or 20 years, or in a combination of lump sum and installments except that a distribution upon a Change in Control or Sale or upon termination of employment (including Early Retirement, but not including Retirement) will be distributed in the form of a lump sum only. If no valid election is made, the Participant shall be deemed to have

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made an election to receive payments from the Retirement Account and Company Account in a lump sum. A Participant's Account will continue to be credited during the payment period with earnings and losses as set forth in Section 4.6, except that earnings and losses shall not be credited after termination of employment other than Early Retirement (with respect to the Company Account only), Retirement, Sale or Change in Control.

Section 5.4.    Death Benefits.

5.4.1.    Beneficiary Designation. At the time a Participant begins participation in the Plan, the Participant may designate primary and contingent Beneficiaries for death benefits payable under the Plan. Such Beneficiaries may be individuals or trusts for the benefit of individuals. If the Participant is married at the time of the Participant’s death, the designation of a primary Beneficiary other than the Participant’s spouse as sole primary Beneficiary shall be valid only if the Participant’s spouse has consented in writing to the naming of such primary Beneficiary and only if the spouse’s consent has been notarized. A Beneficiary designation by a Participant shall be in writing on a form acceptable to the Committee and shall only be effective upon delivery to the Committee. A Beneficiary designation may be revoked by a Participant at any time by delivering to the Company a new Beneficiary designation form. The Beneficiary designation form last delivered to the Committee before the death of a Participant, if valid, shall control.

5.4.2.    Failure to Designate. If there is no valid Beneficiary designation on file with the Company, or if all Beneficiaries designated by a Participant have predeceased the Participant, the benefits payable under the Plan by reason of the death of the Participant shall be paid to the Participant's spouse, if living; if the Participant does not leave a surviving spouse, to the Participant's issue by right of representation; or, if there

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are no such issue then living, to the Participant's estate. If there are benefits remaining unpaid at the death of a sole Beneficiary (who died after the Participant) under the Plan and if no successor Beneficiary has been designated, the remaining balance of the benefits under the Plan shall be paid to the deceased Beneficiary's estate, unless the Beneficiary designation form provides to the contrary. If there are benefits remaining unpaid at the death of a Beneficiary (who died after the Participant) who is one of multiple concurrent Beneficiaries, such remaining benefits shall be paid proportionally to the surviving Beneficiaries, unless the Beneficiary designation form provides to the contrary.

5.4.3.    Death After Benefit Commencement. If a Participant dies after benefits have commenced pursuant to Section 5.2, the Participant's Account balance(s), if any, shall be paid to the Participant's Beneficiary in the same manner that benefits would have been paid to the Participant had the Participant survived.

5.4.4.    Death Before Benefit Commencement. If the Participant dies before distribution has commenced to the Participant, distribution to the Beneficiary shall be in the form of a lump sum. Distribution shall be made as soon as administratively practicable following the Participant's death, but in no event later than 90 days following the date of death.

5.4.5.    Marital Deduction. If any benefits are payable under the Plan to the surviving spouse of a deceased Participant, the estate of the Participant's spouse shall be entitled to all remaining benefits, if any, at the spouse’s death, unless specifically directed to the contrary by an effective Beneficiary designation.

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Section 5.5.    Change in Elections. A Participant may change a distribution election only in conformance with the provisions of Section 409A of the Code. Specifically, a change in distribution election must conform to the following: (a) The change cannot be effective for 12 months after the election is made, or such later date as the Participant specifies in the election; (b) The change in election must be made at least 12 months before the date that the distribution was otherwise to commence; and (c) The commencement date of the distribution must be delayed for at least five years. For purposes of this provision, an installment payment shall be deemed to be a single payment so that a change in a payment election relating to installment payments shall apply to all installments. A change in election cannot be made after benefit payments have begun to the Participant or Beneficiary and cannot be made after the Participant or Beneficiary is in constructive receipt of the benefit payments to be changed.

Section 5.6.    Confidentiality. By accepting benefits under this Plan, a Participant recognizes that the Participant’s knowledge of the Employer’s Confidential Information is of great value to the Employer. Therefore, each Participant shall be bound by the following provisions:

Section 5.6.1.    Duty of Confidentiality. The Participant shall not, during the Participant’s employment, or at any time thereafter, use, divulge or disclose to any person, firm, corporation or other entity, any Confidential Information, except in the performance of the Participant’s duties for the Employer.

Section 5.6.2.    Injunctive Relief. Recognizing that damages at law would be difficult to ascertain, a Participant consents to the granting of equitable relief by way of restraining order or injunction in any court of competent jurisdiction to prevent the breach or threatened breach of the covenants contained in this Section 5.6.

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Section 5.6.3.    Forfeiture of Account for Breach of Confidentiality Covenant. In addition to injunctive relief, if the Participant breaches or threatens to breach the covenants contained in this Section 5.6, the Participant shall forfeit 100% of the Company Account under this Plan.

Section 5.6.4.    Costs of Suit. The Participant shall pay all costs of any suit brought to enforce the provisions of this Section 5.6, including, but not limited to, reasonable attorneys’ fees.

Section 5.7.    Competition. By accepting benefits under this Plan, a Participant recognizes that the Participant’s knowledge of the business, customers, suppliers and employees of the Participant’s Employer is of great value to the Employer. The Participant understands that the Company and the Employer are willing to make the full benefit of the Plan available to a Participant only if the Participant does not reduce that value to the Company and the Employer through Competition as defined in Sections 5.7.1 and 5.7.2. The Company and the Participants understand that the provisions of this Section 5.7 do not prevent the Participant from taking any of the actions set forth below. The consequence of the Participant’s engaging in Competition as set forth below is the forfeiture of the Accounts as set forth in Section 5.7.3.

5.7.1.     Employment by Competition. A Participant shall be considered to be in Competition for purposes of this Plan if during the Participant’s employment or during any of the three year period beginning on the date that the Participant leaves the employ of the Employer, the Participant enters the employ or is engaged as an officer or director of any person, firm, corporation or other entity, or engages, directly or indirectly, as a proprietor, partner, shareholder, member, agent, officer, director, independent contractor, financier, or co-investor in a business competitive with that of the Employer, as such

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business is now or may hereafter be conducted in the United States, other than as the owner of less than 5% of the securities of a publicly-traded corporation.

5.7.2.    Solicitation of Customers, Suppliers or Employees. A Participant shall be considered to be in Competition for purposes of this Plan if during the Participant’s employment or during any of the three year period beginning on the date the Participant leaves the employ of the Employer, the Participant solicits for business, directly or indirectly, otherwise than on behalf of the Employer, any person, firm, corporation or other entity which is or was a customer or supplier of the Employer at any time during the Participant’s employment or which the Employer is or was actively soliciting as a customer or supplier during said time, or if the Participant solicits for business or for employment, directly or indirectly, any person who is or was an employee of the Employer at the time or during the six month period preceding the date the Participant leaves the employ of the Employer.

Section 5.7.3.    Forfeiture of Account for Breach of Competition Covenants. The Company’s remedy for any Competition by the Participant under Section 5.7.1 or 5.7.2 is the forfeiture of 100% of the Company Account under this Plan. Neither the Company nor the Employer can obtain injunctive relief for Competition by the Participant under this Section 5.7.

Section 5.7.4.    Costs of Suit. The Participant shall pay all costs of any suit brought to enforce the provisions of this Section 5.7, including, but not limited to, reasonable attorneys’ fees.

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Section 5.8.    Forfeiture for Cause. Anything in this Plan to the contrary notwithstanding, the Participant shall forfeit 100% of the unpaid portion of the Company Account if the Participant is or could have been terminated from employment for Cause.

Section 5.9.    Minimum Amount and Frequency of Payments. If the value of all Accounts at the date of initial distribution is less than $50,000, then, notwithstanding any other provision of the Plan to the contrary, the Committee shall pay the Accounts in a lump sum.

Section 5.10.    Acceleration of Distributions. If the Internal Revenue Service determines that the Plan violates Section 409A of the Code and has made a final assessment of an income tax deficiency with respect to such determination or if a final judicial determination has been entered that the Plan violates Section 409A of the Code with respect to a Participant or Beneficiary, the Committee shall distribute to such Participant or Beneficiary an amount equal to the taxable income recognized.

Section 5.11.    Unforeseeable Emergencies. Upon the application of any Participant, the Committee may permit such Participant to withdraw some or all of the amount in one or more of the Participant’s Deferral Accounts. A Participant must provide the Committee with a written petition of the intent to withdraw from the Participant’s Deferral Accounts at least 60 days (or such shorter time as permitted by the Committee in its discretion) before the date of withdrawal. No withdrawal shall be made under the provisions of this Section except for the purpose of enabling a Participant to meet immediate needs created by a severe financial hardship to the Participant or resulting from an illness or accident of the Participant or of the spouse or dependent (as determined under Section 152 of the Code, without regard to Section 152(b)(1), (b)(2) and (d)(3)(B)) or Beneficiary of the Participant, loss of the property of the Participant due to casualty, the Disability of the Participant, or other similar extraordinary and unforeseeable

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circumstances arising as a result of events beyond the control of the Participant. The circumstances that will constitute a severe financial hardship will depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved: (a) through reimbursement or compensation through insurance or otherwise; (b) by liquidation of the Participant’s assets, to the extent such liquidation would not itself cause a severe financial hardship; or (c) by termination of deferrals under the Plan, which termination shall be required. If a withdrawal is permitted, the amount of the withdrawal, which may include amounts reasonably anticipated as needed to pay applicable federal, state or local taxes and penalties, shall be distributed to the Participant in a lump sum as soon as is administratively practicable following the requested withdrawal date. If the deferral election of the Participant is terminated under this Section the Participant may not enter into a new deferral election until a Plan Year that begins at least 12 months following the date of the withdrawal and then only at a time consistent with Section 4.1. and Section 409A of the Code.

Section 5.12.    Deferral Election Termination. Notwithstanding any provision of this Plan to the contrary, a Participant’s deferral election shall be terminated if the Participant receives a hardship withdrawal distribution from a plan described in Section 401(k) of the Code in which the Participant participates, but only if the terms of such 401(k) plan require that the deferral election under this Plan be terminated. The Participant may not enter into a new deferral election until at least six months following the effective date of the termination of the deferral election and then only at a time consistent with Section 4.1 and Section 409A of the Code.

Section 5.13.    Limitation on Payment. Notwithstanding any provision in the Plan to the contrary, the payment of a benefit payable under the Plan to a Participant or Beneficiary may be deferred or limited in order to comply with applicable securities laws, tax laws, judicial

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determinations or orders, bank covenants, or any other applicable law as permitted under Section 409A of the Code.

Section 5.14.    Delay of Distribution. Notwithstanding any other provision of the Plan to the contrary, distribution on separation from service, as defined under Code Section 409A, shall be delayed until the first day of the month following the six month anniversary of the Participant’s separation from service, or if earlier, the death of the Participant, but only with respect to a specified employee, as defined in Code Section 409A. If such distribution is delayed, then the first payment under the Plan shall include all amounts that were otherwise scheduled to be paid but for the required delay. Earnings shall be credited on such amounts as calculated under Section 4.6.

Section 5.15.    Distributions on Plan Termination. Notwithstanding anything in Article 5 to the contrary, if the Plan is terminated, distributions shall be made in accordance with Section 8.2.

Section 5.16.    Claims Procedure.

5.16.1.    Initial Claim for Benefits. The following shall apply with respect to claims of Participants for benefits under the Plan, other than claims governed by Section 5.16.3 below. The Committee shall give notice to a Participant within 90 days of the Participant's written application for benefits of the Participant’s eligibility or noneligibility for benefits under the Plan. If the Committee determines that a Participant is not eligible for benefits or full benefits, the notice shall set forth (a) the specific reasons for such denial, (b) a specific reference to the provision of the Plan on which the denial is based, (c) a description of any additional information or material necessary for the claimant to perfect the claim, and a description of why it is needed, and (d) an

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explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Committee determines that there are special circumstances requiring additional time to make a decision, the Committee shall give notice to the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90-day period.

5.16.2.    Appeal of Claim Denial. If a Participant is determined by the Committee under Section 5.16.1 above to be not eligible for benefits, or if the Participant believes that the Participant is entitled to greater or different benefits, the Participant shall have the opportunity to have the claim reviewed by filing a petition for review within 60 days after the Participant has been given the notice issued by the Committee. If there is no Trust in place with respect to the Participant’s benefit, or if there is a Trust, but the Trustee has not agreed to determine appeals from denials of claims for benefits under the Plan, then the petition shall be filed with the Committee. If there is a Trust in place with respect to the Participant’s benefit and if the Trustee has agreed to determine appeals from denials of claims for benefits under the Plan, then the petition shall be filed with the Trustee of the Trust. A petition shall state the specific reasons the Participant believes that the Participant is entitled to benefits or greater or different benefits. Within 60 days after the petition has been filed, the Committee or the Trustee, as the case may be, shall afford the Participant an opportunity to present the Participant’s position to the Committee or the Trustee, as the case may be, in writing, and the Participant shall have the right to review pertinent documents. The Committee or the Trustee, as the case may be, shall give notice to the Participant of its decision in writing within said 60-day period, stating specifically

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the basis of the decision written in a manner calculated to be understood by the Participant and the specific provisions of the Plan on which the decision is based. If because of special circumstances, the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Committee or the Trustee, as the case may be, but notice of this deferral shall be given to the Participant.

5.16.3. Disability Claim for Benefits. If a Participant makes a claim for benefits under the Plan that is contingent on the Committee’s determining that the Participant is Disabled, the Committee will give notice to the Participant within 45 days of the Participant's written application for benefits of the Participant’s eligibility or non-eligibility for benefits under the Plan. If special circumstances require an extension, the Committee will notify the Participant within the 45-day processing period that additional time is needed. The notice will specify the circumstances requiring the extension and the date a decision can be expected. The extension notice will also: (a) explain the standards for approving a disability claim; (b) state the unresolved issue(s) that prevent the Committee from reaching a decision; and (c) describe any additional information needed to resolve the issue(s). If the Committee requests the Participant to provide additional information so it can process the claim, the Participant will be given at least 45 days in which to provide the information. Otherwise, the initial extension cannot exceed 30 days. If circumstances require further extension, the Committee will notify the Participant before the end of the initial 30-day extension. The notice will specify the circumstances requiring the further extension and the date a decision can be expected. In no event will a decision be postponed beyond an additional 30 days after the end of the first 30-day extension. If the disability claim is denied based on an internal rule, guideline, protocol,

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or other similar provision, in addition to the notice provisions described in this section, the Committee’s notice will provide that a copy of such rule, guideline, protocol or other similar provision is available upon request and free of charge. The notice will also identify any medical or vocational experts consulted on the claim. The Participant may obtain reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits and may request, in writing, a list of medical or vocational experts consulted.

5.16.4. Review of a Denied Disability Claim. A Participant may request a review of the Committee’s decision regarding a disability claim within 180 days after receipt of the denial of the disability claim. This request must be in writing and addressed to the Plan Administrator. The Participant may, but is not required to, submit written comments, documents, records and other information relating to the claim for benefits. The review will take into account any such comments, documents, records and other information submitted by the Participant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The review will be conducted by a Plan fiduciary different from the fiduciary who originally denied the claim. This fiduciary cannot be a subordinate of the fiduciary who originally denied the claim. If the original denial of the claim was based on a medical judgment, the reviewing fiduciary will consult with an appropriate health care professional who was not consulted on the original claim and who is not subordinate to someone who was. The Participant will receive notice of the reviewing fiduciary's final decision regarding the disability claim within 45 days of the request for review.

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5.16.5.    Deadline to File Claim. To be considered timely under the Plan’s Claims Procedures, a claim must be filed under Section 5.16.1 or 5.16.3 within one year after the claimant knew or reasonably should have known of the principal facts upon which the claim is based. Knowledge of all facts that the Participant knew or reasonably should have known shall be imputed to the claimant for the purpose of applying this deadline.

5.16.6.    Exhaustion of Administrative Remedies. The exhaustion of the Plan’s claims procedures is mandatory for resolving every claim and dispute arising under this Plan. As to such claims and disputes: (a) No claimant shall be permitted to commence any legal action to recover Plan benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, until the claims procedures have been exhausted in their entirety; and (b) In any such legal action all explicit and all implicit determinations by the Committee, Trustee or Plan Administrator, as the case may be, (including, but not limited to, determinations as to whether the claim, or a request for a review of a denied claim, was timely filed) shall be afforded the maximum deference permitted by law.

5.16.7.    Deadline to File Legal Action. No legal action to recover Plan benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, may be brought by any claimant on any matter pertaining to this Plan unless the legal action is commenced in the proper forum before the earlier of: (a) 30 months after the claimant knew or reasonably should have known of the principal facts on which the claim is based, or (b) six months after the claimant has exhausted the claims procedure under this Plan. Knowledge of all facts that the Participant knew or reasonably should have known shall be imputed to

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every claimant who is or claims to be a beneficiary of the Participant or otherwise claims to derive an entitlement by reference to the Participant for the purpose of applying the previously specified periods.

5.16.8.    Committee Discretion; Court Review. The Committee and all persons determining or reviewing claims have full discretion to determine benefit claims under the Plan. Any interpretation, determination or other action of such persons shall be subject to review only if it is arbitrary or capricious or otherwise an abuse of discretion. Any review of a final decision or action of the persons reviewing a claim shall be based only on such evidence presented to or considered by such persons at the time they made the decision that is the subject of review.

5.16.9.    Delegation of Authority. Subject to the limitations in Article 7, all decisions on claims and on requests for a review of denied claims shall be made by the Committee unless delegated as provided for in the Plan, in which case references in this Section 5.16 to the Committee shall be treated as references to the Committee’s delegate. The Committee has delegated such power to Otter Tail Corporation’s Vice President of Human Resources, or, if no Vice President of Human Resources exists, the highest ranking member of the human resources department (the “Head of Human Resources”), whatever the title of such officer may be.

ARTICLE 6.    FUNDING.

Section 6.1.    Source of Benefits. All benefits under the Plan shall be paid when due by the Company out of its assets or from the Trust.

Section 6.2.    No Claim on Specific Assets. No Participant shall be deemed to have, by virtue of being a Participant in the Plan, any claim on any specific assets of the Company such

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that the Participant would be subject to income taxation on the Participant’s benefits under the Plan before distribution. The rights of Participants and Beneficiaries to benefits to which they are otherwise entitled under the Plan shall be those of an unsecured general creditor of the Company.

ARTICLE 7.    ADMINISTRATION AND FINANCES.

Section 7.1.    Administration. The Compensation and Human Capital Management Committee of the Board of Directors of Otter Tail Corporation has delegated administrative responsibilities with respect to the Plan to the Committee, subject to all limitations in the Committee’s charter, applicable law and exchange listing requirements. The Company shall bear all administrative costs of the Plan other than those specifically charged to a Participant or Beneficiary. The organization and operation of the Committee shall be determined in accordance with the Committee’s charter, as amended from time to time.

Section 7.2.    Powers of Committee. Subject to all limitations in the Committee’s charter, applicable law and exchange listing requirements, the Committee shall have all powers necessary to administer the Plan, including, without limitation, power exercisable in its sole discretion (a) to interpret the provisions of the Plan; (b) to determine the rights of employees, Participants and Beneficiaries to benefits under the Plan; (c) to establish and revise the method of accounting for the Plan; (d) to maintain the Accounts; (e) to determine the Crediting Rate for the Accounts; (f) to establish rules for the administration of the Plan; and (g) to prescribe any forms required to administer the Plan.

Section 7.3.    Actions of the Committee. Subject to all limitations in the Committee’s charter, applicable law and exchange listing requirements, the Committee (including any person or entity to whom the Committee has delegated duties, responsibilities or authority, to the extent of such delegation) has total and complete discretionary authority to determine conclusively for

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all parties all questions arising in the administration of the Plan, to interpret and construe the terms of the Plan, and to determine all questions of eligibility and status of employees, Participants and Beneficiaries under the Plan and their respective interests. Subject to the claims procedures of Section 5.16, all determinations, interpretations, rules and decisions of the Committee (including those made or established by any person or entity to whom the Committee has delegated duties, responsibilities or authority, if made or established pursuant to such delegation) are conclusive and binding upon all persons having or claiming to have any interest or right under the Plan.

Section 7.4.    Delegation. The Committee, or the Head of Human Resources, shall have the power to delegate specific duties and responsibilities to officers or other employees of the Company or other individuals or entities. Any delegation may be rescinded by the Committee at any time. Each person or entity to whom a duty or responsibility has been delegated shall be responsible for the exercise of such duty or responsibility and shall not be responsible for any act or failure to act of any other person or entity. All delegations made under the Otter Tail Corporation Nonqualified Retirement Plan effective January 1, 2003 shall also apply under this Plan.

Section 7.5.    Reports and Records. The Committee, and those to whom the Committee has delegated duties under the Plan, shall keep records of all their proceedings and actions and shall maintain books of account, records, and other data as shall be necessary for the proper administration of the Plan and for compliance with applicable law.

ARTICLE 8.    AMENDMENTS AND TERMINATION.

Section 8.1.    Amendments. The Company, by action of the Board (or the Compensation and Human Capital Management Committee of the Board) or, subject to the limitations in the

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Committee’s charter, the Committee or the Head of Human Resources, may amend the Plan, in whole or in part, at any time and from time to time. Provided, however, that for a period of 24 months following a Change in Control, no amendment shall be effective without the approval of a majority of the Participants in the Plan (so long as there is more than one Participant). Any amendment shall be filed with the Plan documents. No amendment, however, may be effective to eliminate or reduce any Account balance, determined as of the date of such amendment, of any Participant or of any Beneficiary then eligible for benefits, without such Participant's or Beneficiary's consent.

Section 8.2.    Termination.

8.2.1.    Termination of Plan. The Company reserves the right to terminate the Plan at any time by action of the Board or the Compensation and Human Capital Management Committee of the Board. Provided, however, that for a period of 24 months following a Change in Control, no termination shall be effective without the approval of a majority of the Participants in the Plan (so long as there is more than one Participant). Upon termination of the Plan, all deferrals and Company Contributions will cease and no future deferrals or Company Contributions will be made. Termination of the Plan shall not operate to eliminate or reduce any Account balance, determined as of the date of such termination, of any Participant or of any Beneficiary then eligible for benefits, without such Participant's or Beneficiary's consent. If the Company desires to distribute benefits on termination of the Plan, the Company must also meet the following requirements: (a) The distribution must not occur proximate to a downturn in the financial health of the Company; (b) The Company must terminate all arrangements of a type similar to the Plan; (c) No distributions may be made as a result of the termination within 12 months of the termination of all the arrangements; (d) All distributions must be made in a lump sum within 24

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months of the termination of the Plan; and (e) The Company may not adopt a new arrangement of the same type covering any of the Participants at any time within three years following the date of termination of the Plan. Provided, however, that if the termination occurs within 12 months following a Change in Control, then in lieu of the requirements of the foregoing sentence, the Company must terminate the arrangement for all Participants affected by the Change in Control and distribution must be made in a lump sum as soon as administratively practicable (but in no event longer than 90 days) following the termination and in no event later than 12 months following the Change in Control. Accounts shall be credited with earnings during the payment period in accordance with Section 4.6 and 5.3. Each Participant who has not terminated employment shall become entitled to 100% of the amount in all the Participant’s Accounts on Plan termination. These termination provisions shall be interpreted in a manner consistent with Section 409A of the Code.

8.2.2.    Termination of Portion of Plan after a Sale. The Company reserves the right to terminate that portion of the Plan applicable to Participants employed by an Employer that is the subject of a Sale to an entity that is not the Company or an Affiliate so long as the Sale is considered a change in control under Section 409A of the Code with respect to the Participants whose Accounts shall be paid in connection with the termination. The Company may terminate and liquidate that portion of the Plan pursuant to irrevocable action taken within 30 days preceding or 12 months following the Sale. Provided, however, that all agreements, methods, programs and other arrangements sponsored by the Company and its Affiliates immediately after the Sale with respect to which deferrals of compensation are treated as having been deferred under a single plan under Section 409A of the Code are terminated and liquidated with respect to each

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Participant that experienced the Sale so that all such Participants receive all amounts of compensation under the Plan and all such agreements, methods, programs and other arrangements. Such payment shall be made within 12 months of the date the Company irrevocably takes all necessary action to terminate and liquidate such portion of the Plan and all other arrangements. The Company may take this action only if the Company remains primarily liable after the Sale for the payment of the deferred compensation under the Plan. Accounts under this Plan to be liquidated shall be credited with earnings during the period between the action taken to terminate the portion of the Plan and the distribution in accordance with Sections 4.6 and 5.3. This termination provision shall be interpreted in a manner consistent with Section 409A of the Code and shall be effective on the date the restated Plan is adopted by the Company.

ARTICLE 9.    MISCELLANEOUS.

Section 9.1.    No Guarantee of Employment. Neither the adoption and maintenance of the Plan nor the execution by the Company of a deferral or Account election with any Participant shall be deemed to be a contract of employment between the Company or any Affiliate and any Participant. Nothing contained herein shall give any Participant the right to be retained in the employ of the Company or any Affiliate or to interfere with the right of the Company or any Affiliate to discharge any Participant at any time, nor shall it give the Company or any Affiliate the right to require any Participant to remain in its employ or to interfere with the Participant's right to terminate the Participant’s employment at any time.

Section 9.2.    Release. Any payment of benefits to or for the benefit of a Participant or a Participant's Beneficiaries that is made in good faith by the Company in accordance with the

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Company's interpretation of its obligations hereunder shall be in full satisfaction of all claims against the Company or an Affiliate for benefits under this Plan to the extent of such payment.

Section 9.3.    Notices. Any notice or communication permitted or required under the Plan shall be in writing and shall be delivered personally, or sent by registered or certified mail, return receipt requested, postage prepaid, or sent by nationally recognized overnight carrier, postage prepaid, or sent by facsimile transmission to the principal office of the Company, if to the Company, or to the address last shown on the records of the Company or an Affiliate, if to a Participant or Beneficiary. Such notice or communication shall be deemed given (a) when delivered if personally delivered; (b) five mailing days after having been placed in the mail, if delivered by registered or certified mail; (c) the business day after having been placed with a nationally recognized overnight carrier, if delivered by nationally recognized overnight carrier, and (d) the business day after transmittal when transmitted with electronic confirmation of receipt, if transmitted by facsimile. Any party may change the address or facsimile number to which notices or communications are to be sent to it by giving notice of such change in the manner herein provided for giving notice.

Section 9.4.    Nonalienation. No benefit payable at any time under this Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, levy, attachment, or encumbrance of any kind by any Participant or Beneficiary.

Section 9.5.    Tax Liability. The Company may withhold or direct the trustee of the Trust to withhold from any payment of benefits (or from any other amounts to be paid to the Participant or Beneficiaries) such amounts as the Company determines are reasonably necessary to pay any taxes (and interest thereon) required to be withheld or for which the trustee of the Trust may become liable under applicable law. The Company may also forward or direct the

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trustee of the Trust to forward to the appropriate taxing authority any amounts required to be paid by the Company or the Trust under the preceding sentence.

Section 9.6.    Parachute and Other Payments. No gross up or other recalculations of amounts owed under this Plan shall be made to avoid excess parachute payments under Section 280G of the Code or excise tax liability under Section 4999 of the Code or liability under Section 409A of the Code.

Section 9.7.    Indemnification. The Company shall indemnify and defend to the fullest extent permitted by law any director, employee, or former employee serving or formerly service as a member of the Committee administering the Plan against all liabilities, damages, costs and expenses (including attorneys' fees and amounts paid in settlement of any claims approved by the Company) occasioned by any act or omission to act in connection with the Plan, if such act or omission is in good faith.

Section 9.8.    Captions. Article and section headings and captions are provided for purposes of reference and convenience only and shall not be relied upon to construe, define, modify, limit, or extend the scope of any provision of the Plan.

Section 9.9.    Applicable Law. The Plan and all rights hereunder shall be governed by and construed according to the laws of the State of Minnesota, except to the extent such laws are preempted by the laws of the United States of America. The Plan shall be interpreted in a manner consistent with all applicable laws, including the Americans with Disabilities Act and Section 409A of the Code. The restatement of the Plan shall be interpreted in a manner that does not change the time or form of distribution of any deferrals made to the Plan before the effective date of the restatement.

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IN WITNESS WHEREOF, Otter Tail Corporation has caused this Plan to be executed and has confirmed the joinder of the Affiliates listed on the attached Appendix A by its duly authorized officers this ____ day of December, 2020.

OTTER TAIL CORPORATION

By _________________________________

Its _______________________________

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APPENDIX A

AFFILIATES

The following entities are Affiliates under the Plan as of the date of adoption of the restated Plan:

BTD Manufacturing, Inc.

Northern Pipe Products, Inc.

Otter Tail Power Company

T.O. Plastics, Inc.

Vinyltech Corporation

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EX-10.20

SUMMARY OF NON-EMPLOYEE DIRECTOR COMPENSATION (APRIL 2023)

Compensation: Non-employee directors shall receive the following remuneration:

Director’s Retainer (except Chairman)	$	80,000
Chairman of the Board Retainer	$	148,000
Compensation and Corporate Governance Committee Chair Retainer	$	15,000
Audit Committee Chair Retainer	$	21,000
Restricted Stock Award Value (except Chairman)	$	110,000
Restricted Stock Award Value (Chairman of the Board)	$	136,500
Restricted Stock Award Value (additional per committee)	$	10,500

Directors may elect to receive their retainer (other than expense reimbursements) in the form of cash, stock or a combination. Directors may elect to defer the receipt of all or part of their cash compensation pursuant to the Deferred Compensation Plan for Directors. The deferral may be in the form of cash or stock units. Cash deferrals receive interest at a rate equal to 1% over the prime commercial rate of U.S. Bank National Association. Deferrals in the form of stock units are credited quarterly with dividend equivalents equal to the dividend rate on Otter Tail Corporation’s common shares and the deferred amount is paid out in common shares.

EX-10.25

CHANGE IN CONTROL
SEVERANCE AGREEMENT

This Change in Control Severance Agreement (the “Agreement”) is made as of the 1st day of January, 2024, between Otter Tail Corporation, a Minnesota corporation, with its principal offices at 215 South Cascade Street, P.O. Box 496, Fergus Falls, Minnesota 56538-0496 (the “Corporation “) and Todd Wahlund (“You”), residing at 34353 County Highway 32, Richville, MN 56576, and supersedes any prior Change in Control Agreement between the Corporation and You.

WITNESSETH THAT:

WHEREAS, this Agreement is intended to specify the financial arrangements that the Corporation will provide to You upon Your separation from employment with the Corporation under any of the circumstances described herein; and

WHEREAS, this Agreement is entered into by the Corporation in the belief that it is in the best interests of the Corporation and its shareholders to provide stable conditions of employment for You notwithstanding the possibility, threat or occurrence of certain types of change in control, thereby enhancing the Corporation’s ability to attract and retain highly qualified people; and

NOW, THEREFORE, to assure the Corporation that it will have Your continued dedication notwithstanding the possibility, threat or occurrence of a bid to take over control of the Corporation, and to induce You to remain in the employ of the Corporation, and for other good and valuable consideration, the Corporation and You agree as follows:

1.Termination of Employment.

(i)Prior to a Change in Control. Your rights upon termination of employment prior to a Change in Control (as defined in Section 2(i) hereof) shall be governed by the terms of the Otter Tail Corporation Executive Severance Plan (or any successor plan) in effect at the time of termination or Your Severance Agreement.

(ii)After a Change in Control.

(a)    From and after the date of a Change in Control until the 24-month anniversary of the Change in Control (the “Qualifying Termination Period”), the Corporation shall not terminate You from employment with the Corporation except as provided in this Section 1(ii) or as a result of Your Disability (as defined in Section 2(iv) hereof) or death.

(b)    From and after the date of a Change in Control during the Qualifying Termination Period, the Corporation shall have the right to terminate You from employment with the Corporation at any time during the Qualifying Termination Period for Cause (as defined in Section 2(iii) hereof), by written notice to You, specifying the particulars of Your conduct forming the basis for such termination.

(c)    From and after the date of a Change in Control during the Qualifying Termination Period: (i) the Corporation shall have the right to terminate Your employment without Cause at any time; and (ii) You shall, upon the occurrence of such a termination by the Corporation without Cause, or upon the voluntary termination of employment by You for Good Reason (as defined in Section 2(ii) hereof), be entitled to receive the benefits provided in Section 3 hereof. You shall evidence a voluntary termination for Good Reason by written notice

to the Corporation given within ninety (90) days after the date of the occurrence of any event that You know or should reasonably have known constitutes Good Reason for voluntary termination and the Corporation has thirty (30) days from the date the Corporation receives the notice from You to remedy the condition. Such notice need only identify You and set forth in reasonable detail the facts and circumstances claimed by You to constitute Good Reason.

Any notice given by You pursuant to this Section 1 shall be effective five (5) business days after the date it is given by You.

1.Definitions.

(i)“Change in Control” shall mean any one of the following events:

(a)    The acquisition by any person, entity or “group,” within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or any of its Affiliates, or any employee benefit plan of the Company and/or one or more of its Affiliates, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of either the then outstanding common shares of the Company or the combined voting power of the Company’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as hereinafter defined); or

(b)    Individuals who, as of the date of this Agreement, constitute the Board of Directors of the Company (generally the “Directors” and as of the date of this Agreement, the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the date of this Agreement whose nomination for election was approved in advance by a vote of at least three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

(c)    The consummation of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors.

(ii) “Good Reason” shall mean the occurrence of any of the following events that results in a material negative change to You, except for the occurrence of such an event in connection with the termination or reassignment of You by the Corporation for Cause, for Disability or for death:

(a)    the assignment to You of employment responsibilities which are not of comparable responsibility and status as the employment responsibilities held by You immediately prior to a Change in Control;

(b)    a reduction by the Corporation in Your base salary as in effect immediately prior to a Change in Control;

(c)    an amendment or modification of the Corporation’s incentive compensation program (except as may be required by applicable law) which affects the terms or

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administration of the program in a manner adverse to Your interest as compared to the terms and administration of such program immediately prior to a Change in Control;

(d)    the Corporation’s requiring You to be based anywhere other than within 50 miles of Your office location immediately prior to a Change in Control, except for requirements of temporary travel on the Corporation’s business to an extent substantially consistent with Your business travel obligations immediately prior to a Change in Control;

(e)    except to the extent otherwise required by applicable law, the failure by the Corporation to continue in effect any benefit or compensation plan, stock ownership plan, stock purchase plan, stock incentive plan, bonus plan, life insurance plan, health-and-accident plan, or disability plan in which You are participating immediately prior to a Change in Control (or plans providing You with substantially similar benefits), the taking of any action by the Corporation which would adversely affect Your participation in, or materially reduce Your benefits under, any of such plans or deprive You of any material fringe benefit enjoyed by You immediately prior to such Change in Control, or the failure by the Corporation to provide You with the number of paid vacation days to which You are entitled immediately prior to such Change in Control in accordance with the Corporation’s vacation policy as then in effect; or

(f)    the failure by the Corporation to obtain, as specified in Section 5(i) hereof, an assumption of the obligations of the Corporation to perform this Agreement by any successor to the Corporation.

(iii)“Cause” shall mean termination by the Corporation of Your employment based upon (a) the willful and continued failure by You substantially to perform Your duties and obligations (other than any such failure resulting from Your incapacity due to physical or mental illness or any such actual or anticipated failure resulting from Your termination for Good Reason) or (b) the willful engaging by You in misconduct which is materially injurious to the Corporation, monetarily or otherwise. For purposes of this Section 2(iii), no action or failure to act on Your part shall be considered “willful” unless done, or omitted to be done, by You in bad faith and without reasonable belief that such action or omission was in the best interests of the Corporation.

(iv)“Disability” shall mean any physical or mental condition which would qualify You for a disability benefit under the Corporation’s long-term disability plan.

(v)“Continuing Director” shall mean any person who is a member of the Board of Directors of the Corporation, while such person is a member of the Board of Directors, who is not an Acquiring Person (as hereinafter defined) or an Affiliate or Associate (as hereinafter defined) of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and who (a) was a member of the Board of Directors on the date of this Agreement as first written above or (b) subsequently becomes a member of the Board of Directors, if such person’s nomination for election or initial election to the Board of Directors is recommended or approved by a majority of the Continuing Directors. For purposes of this Section 2(v):  “Acquiring Person” shall mean any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) who or which, together with all Affiliates and Associates of such person, is the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the shares of Common Stock of the Corporation then outstanding, but shall not include the Corporation, any subsidiary of the Corporation or any employee benefit plan of the Corporation or of any subsidiary of the Corporation or any entity holding shares of Common Stock organized, appointed or established for, or pursuant to the terms of, any such plan; and “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

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1.Benefits Upon Termination Under Section 1(ii)(c).

(i)Upon the termination (voluntary or involuntary) of Your employment pursuant to Section 1(ii)(c) hereof, You shall be entitled to receive the benefits specified in this Section 3. The amounts due to You under subparagraph (a) of this Section 3(i) shall be paid to You in a lump sum not later than one business day prior to the date that the termination of Your employment becomes effective. The amounts due to You under subparagraphs (b), (c) and (d) of this Section 3(i) shall be paid to You not later than one business day prior to the date that the termination of Your employment becomes effective. Subject to the provisions of Section 3(ii) hereof, all benefits to You pursuant to this Section 3(i) shall be subject to any applicable payroll or other taxes required by law to be withheld;

(a)    The Corporation shall pay as severance pay to You an amount equal to two times the sum of (1) Your highest annual rate of salary from the Corporation in effect at any time during the 24 months preceding the date that the termination of Your employment became effective and (2) the average of the annual bonus paid or to be paid to You in respect of each of the two fiscal years preceding the fiscal year when the termination of Your employment became effective;

(b)    For a period of 24 months following the date that the termination of Your employment became effective or until You reach age 65 or die, whichever is the shorter period, the Corporation shall continue for You, at the Corporation’s expense, the health, disability and life insurance coverage in effect for You immediately prior to the date that the termination of Your employment became effective under the plans provided by the Corporation for its executive personnel generally or, if such coverage cannot by the terms of such plans be provided thereunder, then the Corporation shall provide equivalent insurance coverage for You for such period under specially obtained policies of insurance;

(c)    The Corporation shall pay to You (1) any amount earned by You as a bonus with respect to the fiscal year of the Corporation preceding the termination of Your employment if such bonus has not theretofore been paid to You, and (2) an amount representing credit for any vacation earned or accrued by You but not taken;

(d)    The Corporation shall also pay to You all legal fees and expenses incurred by You as a result of such termination of employment (including all fees and expenses, if any, incurred by You in seeking to obtain or enforce any right or benefit provided to You by this Agreement whether by arbitration or otherwise);

(e)    Any and all contracts, agreements or arrangements between the Corporation and You prohibiting or restricting You from owning, operating, participating in, or providing employment or consulting services to, any business or company competitive with the Corporation at any time or during any period after the date the termination of Your employment becomes effective, shall be deemed terminated and of no further force or effect as of the date the termination of Your employment becomes effective, to the extent, but only to the extent, such contracts, agreements or arrangements so prohibit or restrict You; provided that the foregoing provision shall not constitute a license or right to use any proprietary information of the Corporation and shall in no way affect any such contracts, agreements or arrangements insofar as they relate to nondisclosure and nonuse of proprietary information of the Corporation notwithstanding the fact that such nondisclosure and nonuse may prohibit or restrict You in certain competitive activities;

(f)    Notwithstanding the foregoing, to the extent that any payment due hereunder is (A) deferred compensation subject to section 409A of the Internal Revenue Code, and (B) is payable to a specified employee (as that term is defined in section 409A), and (C) is

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payable on account of the specified employee’s separation from service as that term is defined in section 409A), payment of any part of such amount that would have been made during the six (6) months following the separation from service shall not then be paid but shall rather be paid on the first day of the seventh (7th) month following the separation from service.

(A)    For this purpose, specified employees shall be identified by the Employer on a basis consistent with regulations issued under section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Employer that are subject to section 409A.

(B)    For this purpose, separation from service shall be defined as it is defined in the regulations under section 409A.

(C)    To the extent that 409A is applicable to this Agreement, this Agreement shall be construed and administered to comply with the rules of section 409A. Neither the Employer nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any Participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the Participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

(ii)Any payment not made to You when due hereunder shall thereafter, until paid in full, bear interest at the rate of interest equal to the reference rate announced from time to time by U.S. Bank National Association, plus two percent, with such interest to be paid to You upon demand or monthly in the absence of a demand.

(iii)You shall not be required to mitigate the amount of any payment provided for in this Section 3 by seeking other employment or otherwise. The amount of any payment or benefit provided in this Section 3 shall not be reduced by any compensation earned by You as a result of any employment by another employer.

1.Your Agreements.

You agree that:

(i)Without the consent of the Corporation, You will not terminate employment with the Corporation without giving 60 days’ prior notice to the Corporation, and during such sixty (60) day period You will assist the Corporation, as and to the extent reasonably requested by the Corporation, in training the successor to Your position with the Corporation. The provisions of this Section 4(i) shall not apply to any termination (voluntary or involuntary) of Your employment pursuant to Section 1(ii)(c) hereof.

(ii)Without the consent of the Corporation or except as may be required by law, You will not at any time after termination of Your employment with the Corporation disclose to any person, corporation, firm, or other entity, confidential information concerning the Corporation of which You have gained knowledge during employment with the Corporation.

(iii)In the event that You have received any benefits from the Corporation under Section 3 of this Agreement, then, during the period of 24 months following the date that the termination of Your employment became effective, You, upon request by the Corporation:

(a)    Will consult with one or more of the executive officers concerning the business and affairs of the Corporation for not to exceed four hours in any month at times and

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places selected by You, all without compensation other than what is provided for in Section 3 of this Agreement; and

(b)    Will testify as a witness on behalf of the Corporation in any legal proceedings involving the Corporation which arise out of events or circumstances that occurred or existed prior to the date that the termination of Your employment became effective (except for any such proceedings relating to this Agreement), without compensation other than what is provided for in Section 3 of this Agreement, provided that all out-of-pocket expenses incurred by You in connection with serving as a witness shall be paid by the Corporation.

You shall not be required to perform Your obligations under this Section 4(iii) if and so long as the Corporation is in default with respect to performance of any of its obligations under this Agreement.

1.Successors and Binding Agreement.

(i)The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Corporation), by agreement in form and substance satisfactory to You, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. Failure of the Corporation to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle You to compensation from the Corporation in the same amount and on the same terms as You would be entitled hereunder if employee terminated employment after a Change in Control for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the date that the termination of Your employment becomes effective. As used in this Agreement, “Corporation” shall mean the Corporation and any successor to its business and/or assets which executes and delivers the agreement provided for in this Section 5(i) or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(ii)This Agreement is personal to You, and You may not assign or transfer any part of Your rights or duties hereunder, or any compensation due to You hereunder, to any other person. Notwithstanding the foregoing, this Agreement shall inure to the benefit of and be enforceable by Your personal or legal representatives, executors, administrators, heirs, distributees, devisees, and legatees.

1.Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Fergus Falls, Minnesota, in accordance with the applicable rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

2.Modification; Waiver. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in a writing signed by You and such officer as may be designated by the Board of Directors of the Corporation. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

3.Notice. All notices, requests, demands, and all other communications required or permitted by either party to the other party by this Agreement (including, without limitation, any notice of termination of employment and any notice of an intention to arbitrate) shall be in writing and shall be deemed to have been duly given when delivered personally or received by

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certified or registered mail, return receipt requested, postage prepaid, at the address of the other party, as first written above (directed to the attention of the Board of Directors and Corporate Secretary in the case of the Corporation ). Either party hereto may change its address for purposes of this Section 8 by giving fifteen (15) days’ prior notice to the other party hereto.

4.Severability. If any term or provision of this Agreement or the application hereof to any person or circumstances shall to any extent be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

5.Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

6.Governing Law. This Agreement has been executed and delivered in the State of Minnesota and shall, in all respects, be governed by, and construed and enforced in accordance with, the laws of the State of Minnesota, including all matters of construction, validity and performance.

7.Effect of Agreement; Entire Agreement. The Corporation and You understand and agree that this Agreement is intended to reflect their agreement only with respect to payments and benefits upon termination in certain cases and is not intended to create any obligation on the part of either party to continue employment. This Agreement supersedes any and all other oral or written agreements or policies made relating to the subject matter hereof and constitutes the entire agreement of the parties relating to the subject matter hereof; provided that this Agreement shall not supersede or limit in any way Your rights under any benefit plan, program or arrangements in accordance with their terms.

8.ERISA. For purposes of the Employee Retirement Income Security Act of 1974, this Agreement is intended to be a severance pay employee welfare benefit plan, and not an employee pension benefit plan, and shall be construed and administered with that intention.

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed in its name by a duly authorized director and officer, and You have hereunto set Your hand, all as of the date first written above.

OTTER TAIL CORPORATION


By:    /s/ Chuck MacFarlane
    Chuck MacFarlane
Its:    President &CEO/s/ Todd R. Wahlund                    
Todd R. Wahlund

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4889-2223-2137\4

EX-10.26

CHANGE IN CONTROL
SEVERANCE AGREEMENT

This Change in Control Severance Agreement (the “Agreement”) is made as of the 1st day of January, 2018, between Otter Tail Corporation, a Minnesota corporation, with its principal offices at 215 South Cascade Street, P.O. Box 496, Fergus Falls, Minnesota 56538-0496 (the “Corporation “) and Jennifer O. Smestad (“You”), residing at 17746 County Highway 29, Fergus Falls, MN 56537, and supersedes any prior Change in Control Agreement between the Corporation and You.

WITNESSETH THAT:

WHEREAS, this Agreement is intended to specify the financial arrangements that the Corporation will provide to You upon Your separation from employment with the Corporation under any of the circumstances described herein; and

WHEREAS, this Agreement is entered into by the Corporation in the belief that it is in the best interests of the Corporation and its shareholders to provide stable conditions of employment for You notwithstanding the possibility, threat or occurrence of certain types of change in control, thereby enhancing the Corporation’s ability to attract and retain highly qualified people; and

NOW, THEREFORE, to assure the Corporation that it will have Your continued dedication notwithstanding the possibility, threat or occurrence of a bid to take over control of the Corporation, and to induce You to remain in the employ of the Corporation, and for other good and valuable consideration, the Corporation and You agree as follows:

1.Termination of Employment.

(i)Prior to a Change in Control. Your rights upon termination of employment prior to a Change in Control (as defined in Section 2(i) hereof) shall be governed by the terms of the Otter Tail Corporation Executive Severance Plan (or any successor plan) in effect at the time of termination or Your Severance Agreement.

(ii)After a Change in Control.

(a)    From and after the date of a Change in Control until the 24-month anniversary of the Change in Control (the “Qualifying Termination Period”), the Corporation shall not terminate You from employment with the Corporation except as provided in this Section 1(ii) or as a result of Your Disability (as defined in Section 2(iv) hereof) or death.

(b)    From and after the date of a Change in Control during the Qualifying Termination Period, the Corporation shall have the right to terminate You from employment with the Corporation at any time during the Qualifying Termination Period for Cause (as defined in Section 2(iii) hereof), by written notice to You, specifying the particulars of Your conduct forming the basis for such termination.

(c)    From and after the date of a Change in Control during the Qualifying Termination Period: (i) the Corporation shall have the right to terminate Your employment without Cause at any time; and (ii) You shall, upon the occurrence of such a termination by the Corporation without Cause, or upon the voluntary termination of employment by You for Good Reason (as defined in Section 2(ii) hereof), be entitled to receive the benefits provided in Section 3 hereof. You shall evidence a voluntary termination for Good Reason by written notice

to the Corporation given within ninety (90) days after the date of the occurrence of any event that You know or should reasonably have known constitutes Good Reason for voluntary termination and the Corporation has thirty (30) days from the date the Corporation receives the notice from You to remedy the condition. Such notice need only identify You and set forth in reasonable detail the facts and circumstances claimed by You to constitute Good Reason.

Any notice given by You pursuant to this Section 1 shall be effective five (5) business days after the date it is given by You.

1.Definitions.

(i)“Change in Control” shall mean any one of the following events:

(a)    The acquisition by any person, entity or “group,” within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or any of its Affiliates, or any employee benefit plan of the Company and/or one or more of its Affiliates, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of either the then outstanding common shares of the Company or the combined voting power of the Company’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as hereinafter defined); or

(b)    Individuals who, as of the date of this Agreement, constitute the Board of Directors of the Company (generally the “Directors” and as of the date of this Agreement, the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the date of this Agreement whose nomination for election was approved in advance by a vote of at least three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

(c)    The consummation of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors.

(ii) “Good Reason” shall mean the occurrence of any of the following events that results in a material negative change to You, except for the occurrence of such an event in connection with the termination or reassignment of You by the Corporation for Cause, for Disability or for death:

(a)    the assignment to You of employment responsibilities which are not of comparable responsibility and status as the employment responsibilities held by You immediately prior to a Change in Control;

(b)    a reduction by the Corporation in Your base salary as in effect immediately prior to a Change in Control;

(c)    an amendment or modification of the Corporation’s incentive compensation program (except as may be required by applicable law) which affects the terms or

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administration of the program in a manner adverse to Your interest as compared to the terms and administration of such program immediately prior to a Change in Control;

(d)    the Corporation’s requiring You to be based anywhere other than within 50 miles of Your office location immediately prior to a Change in Control, except for requirements of temporary travel on the Corporation’s business to an extent substantially consistent with Your business travel obligations immediately prior to a Change in Control;

(e)    except to the extent otherwise required by applicable law, the failure by the Corporation to continue in effect any benefit or compensation plan, stock ownership plan, stock purchase plan, stock incentive plan, bonus plan, life insurance plan, health-and-accident plan, or disability plan in which You are participating immediately prior to a Change in Control (or plans providing You with substantially similar benefits), the taking of any action by the Corporation which would adversely affect Your participation in, or materially reduce Your benefits under, any of such plans or deprive You of any material fringe benefit enjoyed by You immediately prior to such Change in Control, or the failure by the Corporation to provide You with the number of paid vacation days to which You are entitled immediately prior to such Change in Control in accordance with the Corporation’s vacation policy as then in effect; or

(f)    the failure by the Corporation to obtain, as specified in Section 5(i) hereof, an assumption of the obligations of the Corporation to perform this Agreement by any successor to the Corporation.

(iii)“Cause” shall mean termination by the Corporation of Your employment based upon (a) the willful and continued failure by You substantially to perform Your duties and obligations (other than any such failure resulting from Your incapacity due to physical or mental illness or any such actual or anticipated failure resulting from Your termination for Good Reason) or (b) the willful engaging by You in misconduct which is materially injurious to the Corporation, monetarily or otherwise. For purposes of this Section 2(iii), no action or failure to act on Your part shall be considered “willful” unless done, or omitted to be done, by You in bad faith and without reasonable belief that such action or omission was in the best interests of the Corporation.

(iv)“Disability” shall mean any physical or mental condition which would qualify You for a disability benefit under the Corporation’s long-term disability plan.

(v)“Continuing Director” shall mean any person who is a member of the Board of Directors of the Corporation, while such person is a member of the Board of Directors, who is not an Acquiring Person (as hereinafter defined) or an Affiliate or Associate (as hereinafter defined) of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and who (a) was a member of the Board of Directors on the date of this Agreement as first written above or (b) subsequently becomes a member of the Board of Directors, if such person’s nomination for election or initial election to the Board of Directors is recommended or approved by a majority of the Continuing Directors. For purposes of this Section 2(v):  “Acquiring Person” shall mean any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) who or which, together with all Affiliates and Associates of such person, is the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the shares of Common Stock of the Corporation then outstanding, but shall not include the Corporation, any subsidiary of the Corporation or any employee benefit plan of the Corporation or of any subsidiary of the Corporation or any entity holding shares of Common Stock organized, appointed or established for, or pursuant to the terms of, any such plan; and “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

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1.Benefits Upon Termination Under Section 1(ii)(c).

(i)Upon the termination (voluntary or involuntary) of Your employment pursuant to Section 1(ii)(c) hereof, You shall be entitled to receive the benefits specified in this Section 3. The amounts due to You under subparagraph (a) of this Section 3(i) shall be paid to You in a lump sum not later than one business day prior to the date that the termination of Your employment becomes effective. The amounts due to You under subparagraphs (b), (c) and (d) of this Section 3(i) shall be paid to You not later than one business day prior to the date that the termination of Your employment becomes effective. Subject to the provisions of Section 3(ii) hereof, all benefits to You pursuant to this Section 3(i) shall be subject to any applicable payroll or other taxes required by law to be withheld;

(a)    The Corporation shall pay as severance pay to You an amount equal to two times the sum of (1) Your highest annual rate of salary from the Corporation in effect at any time during the 24 months preceding the date that the termination of Your employment became effective and (2) the average of the annual bonus paid or to be paid to You in respect of each of the two fiscal years preceding the fiscal year when the termination of Your employment became effective;

(b)    For a period of 24 months following the date that the termination of Your employment became effective or until You reach age 65 or die, whichever is the shorter period, the Corporation shall continue for You, at the Corporation’s expense, the health, disability and life insurance coverage in effect for You immediately prior to the date that the termination of Your employment became effective under the plans provided by the Corporation for its executive personnel generally or, if such coverage cannot by the terms of such plans be provided thereunder, then the Corporation shall provide equivalent insurance coverage for You for such period under specially obtained policies of insurance;

(c)    The Corporation shall pay to You (1) any amount earned by You as a bonus with respect to the fiscal year of the Corporation preceding the termination of Your employment if such bonus has not theretofore been paid to You, and (2) an amount representing credit for any vacation earned or accrued by You but not taken;

(d)    The Corporation shall also pay to You all legal fees and expenses incurred by You as a result of such termination of employment (including all fees and expenses, if any, incurred by You in seeking to obtain or enforce any right or benefit provided to You by this Agreement whether by arbitration or otherwise);

(e)    Any and all contracts, agreements or arrangements between the Corporation and You prohibiting or restricting You from owning, operating, participating in, or providing employment or consulting services to, any business or company competitive with the Corporation at any time or during any period after the date the termination of Your employment becomes effective, shall be deemed terminated and of no further force or effect as of the date the termination of Your employment becomes effective, to the extent, but only to the extent, such contracts, agreements or arrangements so prohibit or restrict You; provided that the foregoing provision shall not constitute a license or right to use any proprietary information of the Corporation and shall in no way affect any such contracts, agreements or arrangements insofar as they relate to nondisclosure and nonuse of proprietary information of the Corporation notwithstanding the fact that such nondisclosure and nonuse may prohibit or restrict You in certain competitive activities;

(f)    Notwithstanding the foregoing, to the extent that any payment due hereunder is (A) deferred compensation subject to section 409A of the Internal Revenue Code, and (B) is payable to a specified employee (as that term is defined in section 409A), and (C) is

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payable on account of the specified employee’s separation from service as that term is defined in section 409A), payment of any part of such amount that would have been made during the six (6) months following the separation from service shall not then be paid but shall rather be paid on the first day of the seventh (7th) month following the separation from service.

(A)    For this purpose, specified employees shall be identified by the Employer on a basis consistent with regulations issued under section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Employer that are subject to section 409A.

(B)    For this purpose, separation from service shall be defined as it is defined in the regulations under section 409A.

(C)    To the extent that 409A is applicable to this Agreement, this Agreement shall be construed and administered to comply with the rules of section 409A. Neither the Employer nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any Participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the Participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

(ii)Any payment not made to You when due hereunder shall thereafter, until paid in full, bear interest at the rate of interest equal to the reference rate announced from time to time by U.S. Bank National Association, plus two percent, with such interest to be paid to You upon demand or monthly in the absence of a demand.

(iii)You shall not be required to mitigate the amount of any payment provided for in this Section 3 by seeking other employment or otherwise. The amount of any payment or benefit provided in this Section 3 shall not be reduced by any compensation earned by You as a result of any employment by another employer.

1.Your Agreements.

You agree that:

(i)Without the consent of the Corporation, You will not terminate employment with the Corporation without giving 60 days’ prior notice to the Corporation, and during such sixty (60) day period You will assist the Corporation, as and to the extent reasonably requested by the Corporation, in training the successor to Your position with the Corporation. The provisions of this Section 4(i) shall not apply to any termination (voluntary or involuntary) of Your employment pursuant to Section 1(ii)(c) hereof.

(ii)Without the consent of the Corporation or except as may be required by law, You will not at any time after termination of Your employment with the Corporation disclose to any person, corporation, firm, or other entity, confidential information concerning the Corporation of which You have gained knowledge during employment with the Corporation.

(iii)In the event that You have received any benefits from the Corporation under Section 3 of this Agreement, then, during the period of 24 months following the date that the termination of Your employment became effective, You, upon request by the Corporation:

(a)    Will consult with one or more of the executive officers concerning the business and affairs of the Corporation for not to exceed four hours in any month at times and

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places selected by You, all without compensation other than what is provided for in Section 3 of this Agreement; and

(b)    Will testify as a witness on behalf of the Corporation in any legal proceedings involving the Corporation which arise out of events or circumstances that occurred or existed prior to the date that the termination of Your employment became effective (except for any such proceedings relating to this Agreement), without compensation other than what is provided for in Section 3 of this Agreement, provided that all out-of-pocket expenses incurred by You in connection with serving as a witness shall be paid by the Corporation.

You shall not be required to perform Your obligations under this Section 4(iii) if and so long as the Corporation is in default with respect to performance of any of its obligations under this Agreement.

1.Successors and Binding Agreement.

(i)The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Corporation), by agreement in form and substance satisfactory to You, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. Failure of the Corporation to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle You to compensation from the Corporation in the same amount and on the same terms as You would be entitled hereunder if employee terminated employment after a Change in Control for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the date that the termination of Your employment becomes effective. As used in this Agreement, “Corporation” shall mean the Corporation and any successor to its business and/or assets which executes and delivers the agreement provided for in this Section 5(i) or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(ii)This Agreement is personal to You, and You may not assign or transfer any part of Your rights or duties hereunder, or any compensation due to You hereunder, to any other person. Notwithstanding the foregoing, this Agreement shall inure to the benefit of and be enforceable by Your personal or legal representatives, executors, administrators, heirs, distributees, devisees, and legatees.

1.Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Fergus Falls, Minnesota, in accordance with the applicable rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

2.Modification; Waiver. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in a writing signed by You and such officer as may be designated by the Board of Directors of the Corporation. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

3.Notice. All notices, requests, demands, and all other communications required or permitted by either party to the other party by this Agreement (including, without limitation, any notice of termination of employment and any notice of an intention to arbitrate) shall be in writing and shall be deemed to have been duly given when delivered personally or received by

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certified or registered mail, return receipt requested, postage prepaid, at the address of the other party, as first written above (directed to the attention of the Board of Directors and Corporate Secretary in the case of the Corporation ). Either party hereto may change its address for purposes of this Section 8 by giving fifteen (15) days’ prior notice to the other party hereto.

4.Severability. If any term or provision of this Agreement or the application hereof to any person or circumstances shall to any extent be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

5.Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

6.Governing Law. This Agreement has been executed and delivered in the State of Minnesota and shall, in all respects, be governed by, and construed and enforced in accordance with, the laws of the State of Minnesota, including all matters of construction, validity and performance.

7.Effect of Agreement; Entire Agreement. The Corporation and You understand and agree that this Agreement is intended to reflect their agreement only with respect to payments and benefits upon termination in certain cases and is not intended to create any obligation on the part of either party to continue employment. This Agreement supersedes any and all other oral or written agreements or policies made relating to the subject matter hereof and constitutes the entire agreement of the parties relating to the subject matter hereof; provided that this Agreement shall not supersede or limit in any way Your rights under any benefit plan, program or arrangements in accordance with their terms.

8.ERISA. For purposes of the Employee Retirement Income Security Act of 1974, this Agreement is intended to be a severance pay employee welfare benefit plan, and not an employee pension benefit plan, and shall be construed and administered with that intention.

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed in its name by a duly authorized director and officer, and You have hereunto set Your hand, all as of the date first written above.

OTTER TAIL CORPORATION


By:    /s/ Chuck MacFarlane
    Chuck MacFarlane
Its:    President &CEO /s/ Jennifer O. Smestad                
Jennifer O. Smestad

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EX-10.28

OTTER TAIL CORPORATION
EXECUTIVE SEVERANCE PLAN

Effective February 6, 2015

Schedule A amended on January 1, 2018, and January 1, 2024

OTTER TAIL CORPORATION
EXECUTIVE SEVERANCE PLAN

TABLE OF CONTENTS

SECTION 1 - INTRODUCTION	1
SECTION 2 - DEFINITIONS	1
SECTION 3 - ELIGIBILITY FOR SEVERANCE	2
SECTION 4 - AMOUNT OF SEVERANCE PAY AND OTHER BENEFITS	3
SECTION 5 - WHEN SEVERANCE PAY WILL BE PAID	3
SECTION 6 - MISCELLANEOUS PROVISIONS	3
SECTION 7 - ADMINISTRATION	5

2

OTTER TAIL CORPORATION
EXECUTIVE SEVERANCE PLAN

SECTION 1 - INTRODUCTION

This Otter Tail Corporation Executive Severance Plan (the “Plan”) is effective for the benefit of designated Employees of Otter Tail Corporation (the “Corporation”) and its affiliates. The Plan is an unfunded employee welfare benefit plan that provides severance benefits to a select group of management or highly compensated employees under the Employee Retirement Income Security Act (ERISA).

The Plan replaces and supersedes all severance agreements, obligations, plans, policies and/or practices of the Employer covering any Employee prior to the date the Employee becomes a Participant as described in Section 3 below, except that the Plan shall not replace or supersede any change in control severance agreement between the Employer and the Employee that provides for severance, termination or other benefits in connection with a change in control or any equity award agreement between the Employer and the Employee.

SECTION 2 - DEFINITIONS

Cause. “Cause” shall mean the termination of the Employee’s employment by the Employer based upon (i) the willful and continued failure by the Employee substantially to perform the Employee’s duties and obligations (other than any such failure resulting from the Employee’s incapacity due to physical or mental illness or any such actual or anticipated failure resulting from the Employee’s resignation for Good Reason) or (ii) the willful engaging by the Employee in misconduct which is materially injurious to the Corporation or any of its affiliates, monetarily or otherwise. No action or failure to act on the Employee’s part shall be considered “willful” unless done, or omitted to be done, by the Employee in bad faith and without reasonable belief that such action or omission was in the best interests of the Corporation and its affiliates.

Committee. “Committee” shall mean the Compensation Committee of the Board of Directors of the Corporation and any successor thereto. The Committee shall be the “plan administrator” for purposes of section 3(16) of ERISA.

Disability. “Disability” shall mean any physical or mental condition that qualifies the Employee for a disability benefit under the Employer’s long-term disability plan.

Employee. An “Employee” shall mean any management or highly compensated employeethe Employer (or group or class of such employees) designated by the Committee as an Employee for purposes of this Plan and listed on Schedule A attached hereto, as revised from time to time.

Employer. The “Employer” shall mean, collectively, the Corporation and any affiliate that employs an Employee.

Employment Termination. “Employment Termination” shall have meaning ascribed to that term in Section 3 of the Plan.

Good Reason. “Good Reason” shall mean the occurrence of any of the following actions taken by the Employer (without the Employee’s consent) that results in a material negative change to the Employee, except for the occurrence of such action in connection with the termination or reassignment of the Employee for Cause, Disability or death: (i) a breach or alteration of any material term of any employment agreement or change in control agreement to which the Employee is a party without the Employee’s consent; (ii) any reduction in the Employee’s base pay that (either individually or when aggregated with any prior reductions) equals or exceeds 20%; (iii) a

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modification of the Employer’s incentive compensation program covering the Employee which (either individually or when aggregated with any prior modifications) results in a reduction of 20% or more in combined incentive opportunity at target; or (iv) a material reduction in the aggregate benefits available to the Employee under the retirement programs that apply to the Employee at the time of becoming a participant in this Plan, but excluding 401(k) and ESOP. Any reduction or modification under (ii) and (iii) above shall be disregarded if it is made on the same or substantially similar basis for substantially all senior executives of the Corporation or any affiliate that employs the Employee. For avoidance of doubt, a change in incentive plan metrics does not constitute a modification of incentive opportunity.

Good Reason shall not exist unless the Employee evidences a voluntary resignation for Good Reason by written notice to the Employer given within 30 days after the date of the occurrence of any event that the Employee knows or should reasonably have known constitutes Good Reason for voluntary resignation, and the Employer shall have 30 days from the date the Employer receives the notice to remedy the condition. Such notice need only identify the Employee and set forth in reasonable detail the facts and circumstances claimed to constitute Good Reason. If the Employer fails to timely remedy the condition, the Employee must resign within 10 days following the failure to cure, otherwise the Employee will be deemed to have consented to the action.

Participant. “Participant” shall have the meaning ascribed to that term in Section 3 of the Plan.

Severance Multiplier. The “Severance Multiplier” means the severance multiplier specified in Schedule A applicable to an Employee.

SECTION 3 - ELIGIBILITY FOR SEVERANCE

An Employee will become a “Participant” eligible for severance and other benefits under the Plan if: (a) the Employee has had a termination that qualifies as an “Employment Termination”; (b) the Employee is not a party to a change in control severance agreement with the Employer that provides for severance, termination or other benefits for the same Employment Termination; (c) the Employee has returned all property of the Corporation and its affiliates; (d) the Employee has signed and returned to the Employer a separation agreement in a form acceptable to the Employer, in its sole discretion, on or before the deadline communicated to the Employee; and (e) any revocation period described in such separation agreement has expired.

An Employee will no longer be a Participant once all severance benefits have been provided to such Employee under the Plan.

Employment Termination

An Employment Termination for purposes of severance benefit eligibility shall be the Employee’s (i) involuntary employment termination by the Employer without Cause (other than for death or Disability), or (ii) voluntary resignation for Good Reason. An Employee’s employment termination for any other reason is not a qualifying Employment Termination under the Plan.

The determination of whether a termination is a qualifying Employment Termination under the Plan will be made by the Committee, in its sole discretion, and such determination will be conclusive.

Separation Agreement the Employee Must Sign

The agreement the Employee must sign will contain a comprehensive release of claims relating to the Employee’s employment and termination, along with the following: (i) an agreement not to disparage the Corporation and its affiliates; (ii) an agreement not to compete with the Corporation and/or its affiliates for a period of months following the Employment Termination corresponding to the Employee’s Severance Multiplier (e.g, if the Severance Multiplier is 1.5, the non-compete period is 18 months, and if the Severance Multiplier is 2, the non-compete period is 24 months, etc.); an

agreement not to solicit employees or vendors of the Corporation and/or its affiliates for a period of months following the Employment Termination corresponding to the Employee’s Severance Multiplier; and an assignment of intellectual property the Employee created or conceived within the scope of the Employee’s duties with the Corporation and/or its affiliates. If the Employee breaches the separation agreement in any material respect, the Employee may be required to repay to the Employer the severance benefits provided to the Employee.

SECTION 4 - AMOUNT OF SEVERANCE PAY AND OTHER BENEFITS

Upon an Employment Termination, a Participant will be entitled to a severance benefit equal to the Employee’s Severance Multiplier in Schedule A times the sum of: (i) the Employee’s annual base salary in effect when the Employment Termination occurs (but disregarding any decrease thereof that constituted “Good Reason”); and (ii) the target bonus under the Employee’s applicable annual bonus plan for the fiscal year in which the Employment Termination occurs (but disregarding any decrease thereof that constituted “Good Reason” and, for avoidance of doubt, excluding any long-term incentive compensation for which the Employee is eligible).

Offsets. The Employer has the right to reduce the Employee’s severance pay by any amounts owed by the Employee to the Employer. In addition, if an Employee becomes entitled to or receives any severance, termination or notice payments under any Federal, State or other law (for example, any WARN law, but excluding state unemployment compensation benefits) or otherwise, the Employee’s severance pay under the Plan will be reduced by the amount of such other payments paid or payable.

SECTION 5 - WHEN SEVERANCE PAY WILL BE PAID

Severance pay under the Plan will be paid to the Employee in a lump sum as soon as practicable (generally, within two pay periods) after the Employee signs the required separation agreement and any revocation period under such separation agreement has expired, subject to the limitations under Section 6.H. below.

SECTION 6 - MISCELLANEOUS PROVISIONS

A.Amendment and Termination. The Corporation reserves the right, in its sole discretion, to amend or terminate the Plan, in whole or in part, at any time and for any reason; provided that no amendment or termination may materially and adversely alter or impair an Employee’s rights or benefits under this Plan without the written consent of the Employee.

B.Severability. If any of the Plan’s provisions are found to be unlawful, such finding will not affect the Plan’s other provisions unless such finding makes impossible or impracticable the Plan’s functioning, in which case appropriate provisions will be adopted so that the Plan may continue to function.

C.Incompetency. If the Committee finds that a Participant is unable to care for his/her affairs, and a claim for Plan benefits has not been made by a duly appointed legal representative, such benefits may be paid in any manner the Committee determines, and such payment will be a complete discharge of liability for Plan benefits to which such Participant was entitled.

D.Not an Employment Contract. Nothing contained in this Plan is intended to create any liability of the Employer to retain any Employee in its service. All Employees remain subject to termination as if the Plan had not been established.

E.Financing. Severance benefits payable under the Plan will be paid out of the general assets of the Employer. No Participant’s right to receive payments under the Plan will be secured by any assets of the Corporation or its affiliates.

F.Nontransferability. A Participant has no right to assign or otherwise dispose of any interest under the Plan, nor may any right be assigned or transferred by operation of law.

G.Legally-Required Withholdings. Benefits under the Plan will be subject to all legally-required withholdings, including tax withholdings.

H.409A Limitation. The Plan is intended to qualify as an involuntary separation arrangement that is exempt from section 409A of the Internal Revenue Code (“Section 409A”). Specifically, any benefits paid within the Applicable 2-1/2 Month Period (as defined below) are intended to constitute separate payments (for purposes of Treasury Regulation § 1.409A-2(b)(2)) that are exempt from Section 409A pursuant to the “short-term deferral” rule set forth in Treasury Regulation § 1.409A-1(b)(4). To the extent that any benefits do not qualify for the foregoing exemptions, such benefits are intended to be exempt from section 409A under the “involuntary separation pay plan” exception set forth in Treasury Regulation § 1.409A-1(b)(9)(iii), up to the maximum extent permitted by said provision (generally, two times the lesser of the Employee’s annualized compensation or the compensation limit then in effect under section 401(a)(17) of the Code). Benefits in excess of the maximum shall be delayed as necessary to avoid application of Section 409A (unless otherwise exempt). The term “Employment Termination” shall be interpreted to mean a “separation from service” as that term is defined under Section 409A to the extent necessary to qualify the arrangement as an involuntary separation arrangement. “Applicable 2-1/2 Month Period” means the period beginning upon the Employee’s Employment Termination and ending 2-1/2 months after the later of (i) the end of the calendar year in which the Employee’s Employment Termination occurred, or (ii) the end of the Employer’s fiscal year in which the Employee’s Employment Termination occurred.

I.Governing Law. To the extent not preempted by federal law, this Plan shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

SECTION 7 - ADMINISTRATION

A.Claim Procedure. An individual who believes he/she is eligible for benefits under the Plan, or believes he/she is eligible for benefits that are different from those being offered to the individual, may submit a written claim with the Committee. Any such claim must be submitted within 180 days after the employment termination upon which the claim is based, and any claim submitted after that period will be denied as untimely. The claim will be reviewed by one or more individuals appointed by the Committee to serve as the claim administrator under the Plan.

The claimant will be informed of the claim administrator’s decision regarding the claim within 90 days after it is filed. Under special circumstances, the claim administrator may require an additional period of not more than 90 days to review a claim. If this occurs, the claimant will be notified in writing as to the length of the extension, the reason for the extension, and any other information needed in order to process the claim. If a claimant is not notified within the 90-day period (or 180-day period, if so extended), the claimant may consider the claim to be denied.

If a claim is denied, in whole or in part, the claimant will be notified in writing of the specific reason(s) for the denial, the Plan provision(s) on which the decision was based, what additional material or information is relevant to the case and what procedure the claimant should follow to get the claim reviewed again. The claimant then has 60 days to appeal the decision to the Committee. The appeal must be submitted in writing to the Committee. A claimant may request to review pertinent documents and may submit a written statement of issues and comments.

A decision as to a claimant’s appeal will be made within 60 days after the appeal is received. Under special circumstances, the Committee may require an additional period of not more than 60 days to review an appeal. If this occurs, the claimant will be notified in writing as to the length of the extension, not to exceed 120 days from the day on which the appeal was received.

If a claimant’s appeal is denied, in whole or in part, the claimant will be notified in writing of the specific reason(s) for the denial and the Plan provision(s) on which the decision was based. The Committee’s decision on an appeal will be final and binding on all parties and persons affected. If a claimant is not notified within the 60-day (or 120-day, if so extended) period, the claimant may consider the appeal to be denied.

The claim procedure in the Plan, including appeals, must be fully exhausted and a final determination made by the Committee before a claimant may file a lawsuit based on a denial of Plan benefits. Any lawsuit for Plan benefits must be filed within one year after the Committee’s final determination of the claim for benefits.

B.Plan Interpretations and Benefit Determinations. The Plan is administered and operated by the Committee who has complete authority and sole discretion to interpret the Plan’s terms (and any related documents), and to determine eligibility for, and amounts of, benefits under the Plan. All such interpretations and determinations (including factual determinations) by the Committee will be final and binding upon affected parties.

The Committee may, subject to limitations under applicable law or securities exchange rules, delegate such powers and duties as are deemed desirable to the Chief Executive Officer or one or more other individuals, in which case every reference made to the Committee will be deemed to mean or include such individuals as to matters within their jurisdiction.

If any individual to whom authority has been delegated hereunder shall also be an Employee in the Plan, the individual shall have no authority with respect to any matter specially affecting his or her individual interest in the Plan.

C.Miscellaneous.

•THE PLAN’S SPONSOR:

Otter Tail Corporation

215 South Cascade Street

Fergus Falls, MN 58637

•AGENT FOR SERVICE OF LEGAL PROCESS:

General Counsel

Otter Tail Corporation

215 South Cascade Street

Fergus Falls, MN 58637

SCHEDULE A

NameSeverance MultiplierDate Added

Timothy J. Rogelstad                    1.5            2/06/2015

Paul Knutson                        1.5            2/06/2015

Chuck MacFarlane                    2.0            4/13/2015

John Abbott                        1.5            4/13/2015

Jennifer Smestad                    1.5            1/1/2018

Todd Wahlund                        1.5            1/1/2024

EX-10.31

OTTER TAIL CORPORATION
2023 STOCK INCENTIVE PLAN
2023 EXECUTIVE PERFORMANCE AWARD AGREEMENT

This Performance Award Agreement is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and you, as an employee of the Corporation, effective as of the date of grant (the “Grant Date”) set forth in the attached Performance Award Certificate.

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 2023 Stock Incentive Plan (the “Plan”), wishes to grant to you the opportunity and right to receive a number of the Corporation’s common shares, par value $5.00 per share (the “Shares”), subject to the terms and conditions contained in this Agreement and in the attached Performance Award Certificate, which is made a part of this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Corporation and you hereby agree as follows:

1.Performance Award. The Corporation hereby grants to you, effective as of the Grant Date, a Performance Award representing the right to receive a specified number of Shares, as set forth in the attached Performance Award Certificate and subject to the terms and conditions set forth in this Agreement, the Performance Award Certificate and the Plan. The Performance Award, to the extent it becomes payable, shall be paid in Shares of the Corporation.

2.Performance Period and Performance Goals. The performance period for purposes of determining whether the Performance Award will be paid shall be January 1, 20[__] through December 31, 20[__] (the “Performance Period”). The performance goals for purposes of determining whether, and the extent to which, the Performance Award will be paid are set forth in Exhibit 1 to this Agreement, which Exhibit is made a part of this Agreement.

3.Payment. Subject to the provisions of Sections 4 and 5 of this Agreement, the Performance Award shall be paid within 59 days after the January 15 following the end of the Performance Period after the Committee of the Corporation’s Board of Directors (the “Committee”) determines, in its discretion, whether and to what extent the performance goals have been achieved in accordance with the terms set forth in Exhibit 1 to this Agreement.

4.Forfeiture; Early Vesting. Notwithstanding the provisions of Section 3 of this Agreement, in the event your employment is terminated during the Performance Period, the Performance Award and your right to receive any Shares shall be immediately and irrevocably forfeited, unless such termination is by reason of your:

(a)disability (as determined under any long-term disability program then maintained by the Corporation or any of its Affiliates that is applicable to you);

(b)death;

(c)retirement (voluntary resignation at or after the earlier of (i) age 62 or (ii) your qualifying for normal or early retirement under any retirement plan of the Corporation that is applicable to you); or

(d)resignation for good reason or involuntary termination without cause that qualifies you for severance benefits under an employment agreement or severance plan applicable to you.

In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clauses (a) or (b) above, you or your estate shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would be achieved at the Target level, as set forth in Exhibit 1 to this Agreement. Such payment shall be made as soon as administratively feasible following your separation from service (subject to any required delay under Section 9(a)). If a payment is made pursuant to this paragraph, no payment shall be made pursuant to Section 3 of this Agreement.

In the event you retire during the Performance Period under clause (c) above, your rights under the Performance Award shall remain outstanding as if you had remained employed for the duration of the Performance Period. You shall be entitled to receive payment of the Performance Award, if any, that becomes payable under Section 3 of this Agreement following the end of the Performance Period, prorated as follows. If you retire on or before June 30 of the calendar year that includes the Grant Date, the Performance Award shall be prorated by multiplying the Performance Award by a fraction, the numerator of which shall be the number of full calendar months during the Performance Period you were so employed, and the denominator of which shall be twelve (12). If you retire after June 30 of the calendar year that includes the Grant Date, any Performance Award that becomes payable under Section 3 shall not be prorated.

In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clause (d) above, your rights under the Performance Award shall remain outstanding as if you had remained employed for the duration of the Performance Period. You shall be entitled to receive payment of the Performance Award, if any, that becomes payable under Section 3 of this Agreement following the end of the Performance Period, prorated as follows. The Performance Award shall be prorated by multiplying the Performance Award by a fraction, the numerator of which shall be the number of full calendar months during the Performance Period you were so employed, and the denominator of which shall be thirty-six (36).

5.Change in Control. Notwithstanding the provisions of Section 3 of this Agreement, upon the occurrence of a Change in Control (as defined in the Plan) during the Performance Period that occurs prior to your termination of employment, you shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would have been achieved at the Target level, as set forth in Exhibit 1 to this Agreement. Such payment shall be made promptly following the date of the Change in Control. If a payment is made pursuant to this Section 5, no payment shall be made pursuant to Section 3 of this Agreement. Notwithstanding the foregoing, if any payment due under Section 5 is deferred compensation subject to Section 409A of the Code, and if the Change in Control is not a “change in control event” that serves as a permissible payment event under Treasury Regulation § 1.409A-3(i)(5) or such other regulation or guidance issued under Section 409A of the Code, then the Performance Award shall vest upon the Change in Control as provided above but payment under this Section 5 shall be delayed until the earlier of (i) January 15 following the end of the Performance Period or (ii) your separation from service (subject to any additional required delay under Section 9(a)).

6.Restriction on Transfer. The Performance Award, and the right to receive Shares, may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, other than by will or the laws of descent and distribution, and no attempt to transfer the Performance Award, and the right to receive the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Performance Award or the Shares. No transfer by will or the applicable laws of descent and distribution of the Performance Award shall be effective to bind the Corporation unless the Committee shall have been furnished with written notice of such transfer and a copy

2

of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.

7.Issuance of Shares. After the Performance Award becomes payable pursuant to Section 3, 4 or 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 8 hereof, the Corporation shall promptly cause to be issued uncertified book-entry shares, registered in your name or in the name of your legal representatives, beneficiaries or heirs, as the case may be, representing the Shares (less any shares withheld to pay withholding taxes). These Shares shall be recorded by the Corporation or its transfer agents or registrars, and shall be delivered through electronic delivery to a brokerage account.

8.Income Tax Matters.

(a)You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the grant of the Performance Award, the receipt of Shares upon any payment of the Performance Award, the subsequent disposition of the Shares and any other matters related to this Agreement. In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.

(b)In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, you may elect to satisfy your federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation, or (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, provided it does not exceed the employee’s maximum statutory withholding requirements. The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

9.Miscellaneous.

(a)Notwithstanding the foregoing, to the extent that any payment due hereunder is (i) deferred compensation subject to Section 409A of the Code (“Section 409A”), and (ii) is payable to a specified employee (as that term is defined in Section 409A), and (iii) is payable on account of the specified employee’s separation from service (as that term is defined in Section 409A), payment of any part of such amount that would have been made during the six (6) months following the separation from service shall not then be paid but shall rather be paid on the first day of the seventh (7th) month following the separation from service.

(i)For this purpose, specified employees shall be identified by the Corporation on a basis consistent with regulations issued under Section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Corporation that are subject to Section 409A.

(ii)For this purpose “termination of employment” shall be defined as “separation from service” as that term is defined under Section 409A.

(iii)To the extent that Section 409A is applicable to this Agreement, this Agreement shall be construed and administered to comply with the rules of

3

Section 409A. Neither the Corporation nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

(b)Nothing contained in this Agreement or the Plan shall confer on you any right to continue in the employ of the Corporation or any Affiliate or affect in any way the right of the Corporation or any Affiliate to terminate your employment at any time.

(c)In accordance with Section 10 of the Plan, this Performance Award is subject to recovery or other penalties under any Corporation clawback policy, as may be adopted or amended from time to time.

(d)The Corporation may, in its sole discretion, decide to deliver any documents related to the Shares by electronic means or request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through any online or electronic system established and maintained by the Corporation or another third party designated by the Corporation.

(e)You shall not have any rights of a holder of Shares unless and until Shares are actually issued to you after the end of the Performance Period as provided in this Agreement.

(f)The Corporation shall not be required to deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

(g)This Agreement is subject to the terms of the Plan, including, without limitation, the provision for adjustments in Section 4(c) of the Plan. Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to you upon request.

(h)This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

(i)Headings in this Agreement are for convenience of reference only and shall not be deemed in any way to be material or relevant to the construction or interpretation of this Agreement or any provision hereof.

(j)THIS PERFORMANCE AWARD AGREEMENT IS ATTACHED TO AND MADE A PART OF A PERFORMANCE AWARD CERTIFICATE AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH PERFORMANCE AWARD CERTIFICATE IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND YOU.

* * * * * * * *

4

OTTER TAIL CORPORATION
2023 STOCK INCENTIVE PLAN

PERFORMANCE AWARD CERTIFICATE

This certifies the Performance Award, as specified below, has been granted under the Otter Tail Corporation 2023 Stock Incentive Plan (the “Plan”), the terms and conditions of which are incorporated by reference herein and made a part hereof. In addition, the award shown in this Certificate is nontransferable and is subject to the terms and conditions set forth in the attached 2023 Performance Award Agreement of which this Certificate is a part.

«First» «M» «Last»

«Address»

«City». «State» «Zip»

«SS»

You have been granted the following Award:

Grant Type:	Performance Award
Target Number of Shares Subject to Award:	«Target»
Maximum Number of Shares Subject to Award:	«Max»
Grant Date:
Performance Period:	January 1, 20[__] – December 31, 20[__]
Performance Goals:	Set forth in Exhibit 1 to the 2023 Executive Performance Award Agreement

By the Corporation’s and your signature below, it is agreed that this Performance Award is governed by the terms and conditions of the Performance Award Agreement, a copy of which is attached and made a part of this document, and the Plan.

OTTER TAIL CORPORATION

By: ______________________________________
    Charles S. MacFarlane
    Its: President & CEO



«First» «Last»

Exhibit 1

Performance Goals for Three-Year Performance Period
(January 1, 20[__] – December 31, 20[__])

		Threshold	Target	Maximum
Performance Goal	Otter Tail TSR performance relative to peer group
Payment Levels	% of target shares

•Amounts payable for performance will be treated linearly from threshold to target and from target to maximum.

•Total Shareholders Return (TSR) (for both Otter Tail and peer group determination) = stock price appreciation (measured as of the average closing price for the 20 trading days immediately following January 1, 20[__] and as of the average closing price for the 20 trading days immediately preceding January 1, 20[__]), plus value of dividends.

•Peer group = Edison Electric Institute Index as of 12/31/20[__].

•Award capped at Target if there is negative TSR.

		Threshold	Target	Maximum
Performance Goal	Adjusted 3-Year ROE
Payment Levels	% of target shares

•Amounts payable for performance will be treated linearly from threshold to target and from target to maximum.

•Adjusted 3-Year Return on Equity (ROE) is equal to the average of Adjusted Return on Equity for each of the three years in the Performance Period.

•Adjusted Return on Equity is equal to the Corporation’s Adjusted Earnings divided by the 13-month average of Total Outstanding Common Equity using the 13 months ending at the end of the fiscal year.

•Adjusted Earnings is equal to the earnings available for Shares as reported in the Corporation’s annual year-end financial report, as adjusted to reflect (1) unusual, extraordinary or nonrecurring events; (2) changes in applicable accounting rules or principles or in the Company’s methods of accounting; (3) results of discontinued operations; (4) asset write-downs; (5) litigation or claim judgments or settlements; (6) changes in tax law affecting reported results; (7) severance, contract termination and other costs related to exiting business activities; (8) acquisitions; (9) gains or losses from the disposition of businesses or assets; (10) gains or losses from the early extinguishment of debt; and (11) other publicly identified one-time items (collectively, the “Adjustment Items”).

•Total Outstanding Common Equity is equal to the month end common equity balance.

•The Committee may exercise discretion to not make adjustment for one or more Adjustment Items when determining Adjusted Earnings.

The number of Shares payable is determined by taking the sum of the percentages earned in each of the tables.

4855-6565-5407\2

EX-10.32

OTTER TAIL CORPORATION
2023 STOCK INCENTIVE PLAN
2023 RESTRICTED STOCK UNIT AWARD AGREEMENT
FOR EXECUTIVE OFFICERS

This Restricted Stock Unit Award Agreement for Executive Officers is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and the person named in the attached Restricted Stock Unit Award Certificate who is an Executive Officer of the Corporation effective as of the date of grant (the “Grant Date”) set forth in the attached Restricted Stock Unit Award Certificate.

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 2023 Stock Incentive Plan (the “Plan”), wishes to grant the Executive Officer the opportunity and right to receive a number of the Corporation’s common shares, par value $5.00 per share (the “Shares”), subject to the terms and conditions contained in this Agreement and in the attached Restricted Stock Unit Award Certificate, which is made a part of this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Corporation and the Executive Officer hereby agree as follows:

1.Restricted Stock Unit Award. The Corporation hereby grants to the Executive Officer, effective as of the Grant Date, this Restricted Stock Unit Award representing the right to receive that number of Shares set forth in the attached Restricted Stock Unit Award Certificate (the “Shares”), on the terms and conditions set forth in this Agreement, the Restricted Stock Unit Award Certificate and the Plan. This Restricted Stock Unit Award, to the extent it vests, shall be paid in Shares of the Corporation.

2.Rights of the Executive Officer with Respect to the Units. The Executive Officer shall not have any rights of a holder of Shares unless and until Shares are actually issued to the Executive Officer after vesting as provided in this Agreement. However, if any cash dividends or other cash distributions are distributed to shareholders of the Corporation, the Executive Officer shall have the right to receive a Dividend Equivalent (as defined under Section 6(d) of the Plan) in cash equal to the amount of the dividend or distribution that would have been paid on the number of Shares equal to the number of Restricted Stock Units then outstanding under this Agreement (whether vested or unvested) as of the close of business on the applicable record date. Payment of the Dividend Equivalent shall be made at or near the same time the corresponding dividend is distributed to shareholders of the Corporation generally, but in all events shall be paid within the same calendar year that includes the declaration date. Any Dividend Equivalent paid on unvested Restricted Stock Units under this Section 2 shall be subject to the Corporation’s right to demand repayment under Section 5 below.

3.Vesting. Subject to the terms and conditions of this Agreement, this Restricted Stock Unit Award shall vest, and the restrictions with respect to this Restricted Stock Unit Award shall lapse, on the date or dates and in the amount or amounts set forth in the attached Restricted Stock Unit Award Certificate if the Executive Officer remains continuously employed by the Corporation until the respective vesting dates.

4.Change in Control. Notwithstanding the vesting provision contained in Section 3 above, but subject to the other terms and conditions set forth herein, upon the occurrence of a Change in Control (as defined in the Plan) prior to any termination of the Executive Officer’s employment, the Executive Officer shall become immediately and unconditionally vested in all of the Restricted Stock Units then outstanding under this Agreement, and the corresponding

Shares shall be issued promptly following the Change in Control. Notwithstanding the foregoing, if any payment due under this Section 4 is deferred compensation subject to Section 409A of the Code, and if the Change in Control is not a “change in control event” that serves as a permissible payment event under Treasury Regulation § 1.409A-3(i)(5) or such other regulation or guidance issued under Section 409A of the Code, then this Restricted Stock Unit Award shall vest upon the Change in Control as provided above but payment under this Section 4 shall be delayed until the earlier of (i) the applicable vesting dates (corresponding to each installment) set forth in the vesting schedule in the attached Restricted Stock Unit Award Certificate or (ii) the Executive’s separation from service (subject to any additional required delay under Section 9(a)).

5.Additional Vesting Rules; Forfeiture.

(a)Notwithstanding the vesting provisions contained in Section 3 above, but subject to the other terms and conditions set forth herein, if the Executive Officer ceases to be employed by the Corporation by reason of disability (as determined under any long-term disability program then maintained by the Corporation that is applicable to the Executive Officer) or death prior to the vesting of this Restricted Stock Unit award pursuant to Section 3 or 4 hereof, this Restricted Stock Unit Award shall lapse, on the date or dates and in the amount or amounts set forth in the attached Restricted Stock Unit Award Certificate for the benefit of the Executive Officer or the Executive Officer’s legal representations, beneficiaries or heirs, as the case may be. No transfer by will or the applicable laws of descent and distribution of this Restricted Stock Unit Award by reason of the Executive Officer’s death shall be effective to bind the Corporation unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.

(b)If the Executive Officer ceases to be employed by the Corporation by reason of retirement (voluntary resignation at or after the earlier of (i) age 62 or (ii) qualifying for normal or early retirement under any retirement plan of the Corporation that is applicable to the Executive Officer) prior to the vesting of this Restricted Stock Unit Award pursuant to Section 3 or 4 hereof, the Executive Officer shall become immediately vested, as of the date of such retirement, in this Restricted Stock Unit Award (subject to proration as provided below), and the corresponding Shares shall be issued upon such termination of employment (subject to any required delay under Section 9(a)). If the Executive Officer retires on or before June 30 of the calendar year that includes the Grant Date, the number of remaining unvested Restricted Stock Units that becomes vested shall be prorated by multiplying the remaining unvested Restricted Stock Units then outstanding under this Agreement by a fraction, the numerator of which shall be the number of full months during the vesting schedule the Executive was employed, and the denominator of which shall be twelve (12). If the Executive Officer retires after June 30 of the calendar year that includes the Grant Date, the unvested portion of this Restricted Stock Unit Award shall become immediately vested without proration.

(c)If the Executive Officer’s employment relationship with the Corporation ceases for reasons other than disability, death or retirement prior to the vesting of the Shares pursuant to Section 3 or 4 hereof, the Executive Officer’s rights to the unvested portion of this Restricted Stock Unit Award shall be immediately and irrevocably forfeited, including the right to Dividend Equivalents, unless the Executive Officer is expressly entitled to retain the unvested portion of this Restricted Stock Unit Award or its value pursuant to an employment or severance agreement entered into on or before the Grant Date. In addition, upon such event, the Corporation shall have the right to demand

2

immediate repayment of any Dividend Equivalents paid on the unvested portion of this Restricted Stock Unit Award.

6.Restriction on Transfer. This Restricted Stock Unit Award, the right to Dividend Equivalents or the right to receive Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, other than by will or the laws of descent and distribution, and no attempt to transfer this Restricted Stock Unit Award, the right to Dividend Equivalents and the right to receive the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to this Restricted Stock Unit Award, Dividend Equivalents or the Shares. No transfer by will or the applicable laws of descent and distribution of this Restricted Stock Unit Award, the Dividend Equivalents or the Shares shall be effective to bind the Corporation unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.

7.Issuance of Shares. After the Shares become payable pursuant to Section 3, 4 or 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 8 hereof, the Corporation shall promptly cause to be issued uncertified book-entry shares, registered in the Executive Officer’s name or in the name of the Executive Officer’s legal representative, beneficiaries or heirs, as the case may be, representing the Shares (less any Shares withheld to pay withholding taxes).. These Shares shall be recorded by the Corporation or its transfer agents or registrars, and shall be delivered through electronic delivery to a brokerage account. Upon issuance of the Shares, the corresponding Restricted Stock Units (and Dividend Equivalent rights) shall be cancelled.

8.Income Tax Matters.

(a)The Executive Officer acknowledges that the Executive Officer will consult with the Executive Officer’s personal tax advisor regarding the income tax consequences of the grant of this Restricted Stock Unit Award, the payment of Dividend Equivalents on this Restricted Stock Unit Award and the receipt of Shares upon the vesting of this Restricted Stock Unit Award, the subsequent disposition of the Shares and any other matters related to this Agreement. In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of the Executive Officer, are withheld or collected from the Executive Officer.

(b)In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, you may elect to satisfy your federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation, or (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of the Corporation’s minimum statutory withholding requirements. The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. The Executive Officer’s election must be made on or before the date that the amount of tax to be withheld is determined.

9.Miscellaneous.

(a)Notwithstanding the foregoing, to the extent that any payment due hereunder is (i) deferred compensation subject to Section 409A of the Code

3

(“Section 409A”), and (ii) is payable to a specified employee (as that term is defined in Section 409A), and (iii) is payable on account of the specified employee’s separation from service (as that term is defined in Section 409A), payment of any part of such amount that would have been made during the six (6) months following the separation from service shall not then be paid but shall rather be paid on the first day of the seventh (7th) month following the separation from service.

(i)For this purpose, specified employees shall be identified by the Corporation on a basis consistent with regulations issued under Section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Corporation that are subject to Section 409A.

(ii)For this purpose “termination of employment” shall be defined as “separation from service” as that term is defined under Section 409A.

(iii)The right to payment of Dividend Equivalents is, for purposes of Section 409A, intended to be a separate right to payment (apart from the right to receive Shares) that is payable currently as and when cash dividends or other cash distributions are distributed, as permitted under § 1.409A-3(e) where dividends or distributions are anticipated to be paid at least annually.

(iv)To the extent that Section 409A is applicable to this Agreement, this Agreement shall be construed and administered to comply with the rules of Section 409A. Neither the Corporation nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

(b)Nothing contained in this Agreement or the Plan shall confer on the Executive Officer any right to continue in the employ of the Corporation or affect in any way the right of the Corporation to terminate the employment of the Executive Officer at any time.

(c)In accordance with Section 10 of the Plan, this Restricted Stock Unit Award is subject to recovery or other penalties under any Corporation clawback policy, as may be adopted or amended from time to time.

(d)The Corporation may, in its sole discretion, decide to deliver any documents related to the Shares by electronic means or request the Executive Officer’s consent to participate in the Plan by electronic means. The Executive Officer hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any online or electronic system established and maintained by the Corporation or another third party designated by the Corporation.

(e)The Corporation shall not be required to deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

(f)This Agreement is subject to the terms of the Plan, including, without limitation, the provision for adjustments in Section 4(c) of the Plan. Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to the Executive Officer upon request.

4

(g)This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

(h)Headings in this Agreement are for convenience of reference only and shall not be deemed in any way to be material or relevant to the construction or interpretation of this Agreement or any provision hereof.

(i)THIS RESTRICTED STOCK UNIT AWARD AGREEMENT FOR EXECUTIVE OFFICERS IS ATTACHED TO AND MADE A PART OF A RESTRICTED STOCK UNIT AWARD CERTIFICATE FOR EXECUTIVE OFFICERS AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH RESTRICTED STOCK UNIT AWARD CERTIFICATE FOR EXECUTIVE OFFICERS IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND THE EXECUTIVE OFFICER.

* * * * * * * *

5

OTTER TAIL CORPORATION
2023 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD CERTIFICATE FOR EXECUTIVE OFFICERS

This certifies that the 2023 Restricted Stock Unit Award, as specified below, which has been granted under the Otter Tail Corporation 2023 Stock Incentive Plan (the “Plan”), the terms and conditions of which are incorporated by reference herein and made a part hereof. In addition, the award shown in this Certificate is nontransferable and is subject to the terms and conditions set forth in the attached 2023 Restricted Stock Unit Award Agreement for Executive Officers of which this Certificate is a part.

[Name and address of recipient]

[Social Security Number of recipient]

You have been granted the following Award:

Grant Type:        Restricted Stock Unit

Number of Units:    ____________________

Grant Date:        ____________________

Vesting Schedule:
Date	Percentage of Restricted Units Vested

By the Corporation’s and your signature below, it is agreed that this Restricted Stock Unit Award is governed by the terms and conditions of the 2023 Restricted Stock Unit Award Agreement for Executive Officers, a copy of which is attached and made a part of this document, and the Corporation’s 2023 Stock Incentive Plan, a copy of which is enclosed.

OTTER TAIL CORPORATION

By: _________________________________
    Charles S. MacFarlane
    Its: President and CEO

    _________________________________
    [Name of recipient]

EX-10.33

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT executed this 8th day of January 2024, by and between Otter Tail Corporation (“Company”) a Minnesota corporation, and Kevin G. Moug (“Consultant”).

WHEREAS it is the mutual desire of the parties that Consultant provide Company with certain consulting services as related to various projects as outlined in Schedule A (the “Services”), subject to the terms and conditions below. Accordingly, the parties agree as follows:

1.Scope of Services. Consultant agrees that he will perform consulting services for Company throughout the term of this Consulting Agreement (“Agreement”) for Services as defined in Schedule A.

2.Compensation. Consultant shall be paid as described in Schedule A as sole compensation for the performance of the Services. As an independent contractor, Consultant shall not be entitled to benefits currently available to Company, such as health care coverage, vacation, sick leave or holiday pay.

3.Independent Contractor. The parties expressly agree that Consultant shall be an independent contractor for all purposes in the performance of this Agreement and shall not be an employee of Company. Consultant will perform Services under the Company’s general direction as to the result of activity, but Consultant shall determine, in Consultant’s discretion, the manner and means by which the Services are accomplished, subject to the express condition that Consultant will at all times comply with applicable law. It is also expressly understood that Consultant shall not be considered an agent or employee of the Company and shall have no authority whatsoever to bind the Company by contract or otherwise. Consultant expressly waives any right to participate in any of the Company’s employee benefit plans or perquisites. Consultant further disclaims any intention or right to participate in any of the Company’s employee benefit plans or perquisites eve if Consultant’s status with the Company is determined by a third-party tribunal to be that of an employee. Consultant shall exercise his own self- employment tax reporting for income tax and social security purposes. Except insofar as it would preclude the Consultant from providing the Services under this Agreement or violate Section 9 hereof, Consultant is free to perform services for any other person. Consultant further acknowledges and agrees to the following:

(a)While providing Services, Consultant is, and shall at all times be and remain, an independent contractor to the fullest extent permitted by law;

(b)Nothing in this Agreement or otherwise shall be construed as identifying Consultant as an employee, agent, or legal representative of the Company or any of the Company’s related or affiliated entities during the term for any purpose whatsoever;

(c)Consultant is not authorized to transact business, incur obligations, sell goods, receive payments, solicit orders or assign or create any obligation of any kind, express or

implied, on behalf of the Company or any of the Company’s related or affiliated entities, or to bind in any way whatsoever, or to make any promise, warranty or representation on behalf of the Company or any of the Company’s related or affiliated entities with respect to any matter, except as expressly authorized in writing by the Company;

(d)While Consultant will receive instruction on the objects and goals for which he is responsible, the Company has no right to control the manner in which Consultant performs Services under this Agreement and Consultant is free to perform Services in the manner Consultant deems fit and in accordance with recognized standards for such services;

(e)Consultant shall not use the Company’s trade names, trademarks, service names or service marks without the prior written approval of the Company; and

(f)If, at any time, Consultant’s status with the Company as an independent contractor changes or if Consultant’s employment changes or Consultant is ever deemed to be an employee of the Company, each of the covenants set forth above and this Agreement remain in full force and effect in its entirety until and unless it is replaced with a subsequent and superseding agreement.

4.Limitation of Damages. The parties agree that neither party shall be liable to the other for any special, consequential, incidental, indirect, or other such damages of any kind.

5.Indemnification. Consultant shall indemnify and hold Company, its affiliates and their respective directors, officers, agents and employees harmless from and against all claims, demands, losses, damages and judgments, including court costs and attorneys’ fees, arising out of or based upon any breach or alleged breach by Consultant of any representation, warranty, certification, covenant, obligation or other agreement set forth in this Agreement. The Company shall indemnify and hold Consultant harmless from and against all claims, demands, losses, damages and judgments, including court costs and attorneys’ fees, arising out of or based upon any breach or alleged breach by the Company of any representation, warranty, certification, covenant, obligation or other agreement set forth in this Agreement.

6.Consultant’s Warranties. Consultant expressly warrants as follows: (a) that he has the skill and expertise to perform the responsibilities hereunder and that he shall use reasonable care and skill in carrying out the responsibilities hereunder; (b) that he will not, during the term of this Agreement, represent any other company, which, in the sole judgment of Company, could give rise to a conflict of interest; (c) that he will keep in strict confidence all Company trade secrets, Material Non-Public Information (“MNPI”) and other sensitive information as a result of the work performed under this Agreement; and (d) that he will strictly adhere to all securities law and all relevant laws and regulations.

7.Intellectual Property. The Company is and shall be, the sole and exclusive owner of all right, title and interest throughout the world in and to all the results and proceeds of the Services performed under this Agreement including all patents, copyrights, trademarks, trade secrets and other intellectual property rights (collectively Intellectual Property Rights) therein. Consultant agrees that the Deliverables are hereby deemed a "work made for hire" as defined in 17 U.S.C. § 101 for the Company. If, for any reason, any of the Deliverables do not constitute a "work made

for hire," Consultant hereby irrevocably assign to the Company, in each case without additional consideration, all right, title and interest throughout the world in and to the Deliverables, including all Intellectual Property Rights therein.

8.Confidentiality. Consultant acknowledges that he will have access to information that is treated as confidential and proprietary by the Company, including, without limitation any trade secrets, technology, information pertaining to business operations and strategies, customers, pricing, marketing, finances, sourcing, personnel, MNPI or operations of the Company, its affiliates or their suppliers or customers, in each case whether spoken, printed, electronic or in any other form or medium (collectively, the Confidential Information). Any Confidential Information that consultant develops in connection with the Services, including but not limited to any Deliverables, shall be subject to the terms and conditions of this paragraph. Consultant agrees to treat all Confidential Information as strictly confidential, not to disclose Confidential Information or permit it to be disclosed, in whole or part, to any third party without the prior written consent of the Company in each instance, and not to use any Confidential Information for any purpose except as required in the performance of the Services. Consultant shall notify the Company immediately in the event consultant becomes aware of any loss or disclosure of any Confidential Information.

9.Avoidance of Conflict of Interest. Consultant represents and warrants that Consultant has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement, or that would preclude Consultant from fully complying with the provisions hereof, and further certifies that Consultant will not enter into such conflicting agreement during the term of this Agreement. Consultant will advise the Company at such time as any activity of either the Company or another business presents Consultant with a conflict of interest or the appearance of a conflict of interest. Consultant further represents and warrants that it has full power and authority to enter into this Agreement and perform the obligations hereunder.

10.No Assignment. In no event shall Consultant assign this Agreement or delegate its responsibilities hereunder.

11.Term and Termination. This Agreement will terminate as identified in Schedule A.

12.Entire Agreement and Modification. This Agreement represents the entire and final agreement between the parties. No amendment, modification or waiver of, or consent with respect to any provision of this Agreement shall be effective unless the same shall be in writing and signed by both parties and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

13.Savings Clause. If any provision of this Agreement shall be found invalid or unenforceable, in whole or in part, by a court of competent jurisdiction, then such provision shall be deemed to be modified or restricted to the extent and in a manner necessary to render the same valid and enforceable, or if that is not possible, such provision shall be stricken and deleted from this Agreement, as the case may require, and this Agreement shall then be construed and enforced to the maximum extent permitted by law and with the purpose to achieve the fundamental intent of the parties.

14.Waiver. Any waiver at any time by either party of its rights with respect to a default under this Agreement, or with respect to any other matters arising in connection with this Agreement, shall be in writing and shall not be deemed a waiver with respect to any subsequent default or other matter.

15.Choice of Laws. This Agreement shall be construed and interpreted in accordance with the laws of the State of North Dakota and excluding any choice of law rules which may direct the application of laws of another jurisdiction.

16.Insider Trading. Consultant acknowledges and agree that he shall comply with all applicable Company policies and procedures including the Company’s Insider Trading and Pre- Clearance Policy as well as the Code of Business Ethics.

17.Standard of Care. Consultant agrees to provide services to the level care, diligence and skill prescribed in the code of practice ordinarily used by members of the subject professional practicing under similar circumstances at the same time and in the same locality.

18.Electronic Signatures. This Agreement may be electronically signed, that any digital or electronic signatures (including pdf, facsimile or electronically imaged signatures provided by DocuSign or any other digital signature provider) appearing on this Agreement are the same as handwritten signatures for the purposes of validity, enforceability and admissibility, and that delivery of any such electronic signature to, or a signed copy of, this Agreement may be made by facsimile, email or other electronic transmission.

(Signature Page to Follow)

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

Otter Tail Corporation

/s/ Todd R. Wahlund

Todd R. Wahlund

Consultant

/s/ Kevin G. Moug

Kevin G. Moug

SCHEDULE A

•TERM OF AGREEMENT: This Agreement will commence on January 8, 2024, and will continue until the earlier to occur of: (i) April 7, 2024, or (ii) termination as provided below. The Company and Consultant may extend the term of this Agreement upon mutual agreement. Unless earlier terminated, Consultant agrees to notify the Company no later than 30 days prior to the date set forth in (i) above if Consultant is unable to continue to perform his obligations hereunder in connection with any such extension. Either party may terminate this agreement upon 15 days prior written notice, with payment for services to be prorated up to the date of termination.

•PAYMENT FOR SERVICES: Ten Thousand and no/100 Dollars ($10,000.00) per month, not to exceed Thirty Thousand and no/100 Dollars ($30,000.00), unless extended as above.

•SCOPE OF SERVICES

oAdvise on financial close items and 10-K.

oAdvise on February and April Board of Directors materials.

oAdvise on 2024 earnings guidance and press release.

oAdvise on and review of strategic planning activities.

oOther advisory and coaching work in support of CFO responsibilities as directed.

EX-21

Exhibit 21

OTTER TAIL CORPORATION

Subsidiaries of the Registrant

February 14, 2024

Company	State of Organization
BTD Manufacturing, Inc.	Minnesota
Northern Pipe Products, Inc.	North Dakota
Otter Tail Assurance Limited	Cayman Islands
Otter Tail Power Company	Minnesota
T.O. Plastics, Inc.	Minnesota
Varistar Corporation	Minnesota
Vinyltech Corporation	Arizona

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-255714 and 333-255717 on Form S-3, and Registration Statement Nos. 333-181362, 333-204043, and 333-271284 on Form S-8 of our report dated February 14, 2024, relating to the financial statements of Otter Tail Corporation and the effectiveness of Otter Tail Corporation's internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2023.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

February 14, 2024

EX-24

Exhibit 24

POWER OF ATTORNEY

    KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints CHARLES S. MACFARLANE, TODD R. WAHLUND, and JENNIFER O. SMESTAD, and each of them, his or her true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K of Otter Tail Corporation for its fiscal year ended December 31, 2023, and any and all amendments to said Annual Report, and to deliver on my behalf said Annual Report and any and all amendments thereto, as each thereof is so signed, for filing with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.

    IN WITNESS WHEREOF, this Power of Attorney has been signed on the 6th day of February 2024 by the following persons:

/s/ Karen M. Bohn	/s/ Mary E. Ludford
Karen M. Bohn	Mary E. Ludford
/s/ Jeanne H. Crain	/s/ Charles S. MacFarlane
Jeanne H. Crain	Charles S. MacFarlane
/s/ John D. Erickson	/s/ Jennifer O. Smestad
John D. Erickson	Jennifer O. Smestad
/s/ Steven L. Fritze	/s/ Nathan I. Partain
Steven L. Fritze	Nathan I. Partain
/s/ Kathryn O. Johnson	/s/ Thomas J. Webb
Kathryn O. Johnson	Thomas J. Webb
/s/ Michael E. LeBeau	/s/ Todd R. Wahlund
Michael E. LeBeau	Todd R. Wahlund

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles S. MacFarlane, certify that:

1.I have reviewed this Annual Report on Form 10-K of Otter Tail Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 14, 2024

/s/ Charles S. MacFarlane

Charles S. MacFarlane

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Todd R. Wahlund, certify that:

1.I have reviewed this Annual Report on Form 10-K of Otter Tail Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 14, 2024

/s/ Todd R. Wahlund

Todd R. Wahlund
Chief Financial Officer and Vice President

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Otter Tail Corporation (the “Company”) on Form 10-K for the period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles S. MacFarlane, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Charles S. MacFarlane

Charles S. MacFarlane

President and Chief Executive Officer

February 14, 2024

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Otter Tail Corporation (the “Company”) on Form 10-K for the period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Todd R. Wahlund, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Todd R. Wahlund

Todd R. Wahlund
Chief Financial Officer and Vice President

February 14, 2024

EX-97

Exhibit 97

OTTER TAIL CORPORATION INCENTIVE COMPENSATION RECOVERY POLICY

1.Introduction.

The Board of Directors of Otter Tail Corporation (the “Company”) believes that it is in the best interests of the Company and its shareholders to create and maintain a culture that emphasizes integrity and accountability and that reinforces the Company's compensation philosophy. The Board has therefore adopted this policy, which provides for the recovery of erroneously awarded incentive compensation in the event that the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirements under the federal securities laws,(the “Policy”). This Policy is designed to comply with Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), related rules and the listing standards of Nasdaq or any other securities exchange on which the Company’s shares are listed in the future.

2.Administration.

This Policy shall be administered by the Board or, if so designated by the Board, the Compensation and Human Capital Management Committee (the “Committee”), in which case, all references herein to the Board shall be deemed references to the Committee. Any determinations made by the Board shall be final and binding on all affected individuals.

3.Covered Executives.1

Unless and until the Board determines otherwise, for purposes of this Policy, the term “Covered Executive” means a current or former employee who is or was identified by the Company as the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company. Executive officers of the Company’s subsidiaries are deemed “Covered Executives” if they perform such policy-making functions for the Company. “Policy-making function” is not intended to include policy-making functions that are not

significant. “Covered Executives” will include, at minimum, the executive officers identified by the Company pursuant to Item 401(b) of Regulation S-K of the Exchange Act. For the

avoidance of doubt, “Covered Executives” will include at least the following Company officers: Chief Executive Officer, President, Chief Financial Officer and Senior Vice President, Senior Vice President Manufacturing Segment, Senior Vice President Electric Segment, Vice President and General Counsel and Vice President of Human Resources.

1“Covered Executive” is based on the definition of “officer” under Rule 16a-1(f) of the Exchange Act as presented in the listings standards.

1

This Policy covers Incentive Compensation received by a person after beginning service as a Covered Executive and who served as a Covered Executive at any time during the performance period for that Incentive Compensation.

4.Recovery: Accounting Restatement.

In the event the Company is required to prepare an accounting restatement of its financial statements filed with the Securities and Exchange Commission (the “SEC”) due to the Company’s material noncompliance with any financial reporting requirements under the federal securities laws (including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period) (an “Accounting Restatement”), the Company will recover reasonably promptly any excess Incentive Compensation received by any Covered Executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an Accounting Restatement, including transition periods resulting from a

change in the Company’s fiscal year as provided in Rule 10D-1 of the Exchange Act 2. Incentive Compensation is deemed “received” in the Company’s fiscal period during which the financial reporting measure specified in the Incentive Compensation award is attained, even if the payment or grant of the Incentive Compensation occurs after the end of that period. The determination of the time when the Company is “required” to prepare an Accounting Restatement shall be made in accordance with applicable SEC and national securities exchange rules and regulations. 3

(a)Definition of Incentive Compensation.

For purposes of this Policy, “Incentive Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a “financial reporting measure” (as defined in paragraph (b) below), including, for example, bonuses or awards under the Company’s short and long-term incentive plans, grants and awards under the Company’s equity incentive plans, and contributions of such bonuses or awards to the Company’s deferred

2 Rule 10D-1(b)(1)(i)(D): In addition to these last three completed fiscal years, the recovery policy must apply to any transition period (that results from a change in the issuer's fiscal year) within or immediately following those three completed fiscal years. However, a transition period between the last day of the issuer's previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to 12 months would be deemed a completed fiscal year.

3 Rule 10D-1(b)(ii): For purposes of determining the relevant recovery period, the date that an issuer is required to prepare an accounting restatement as described in paragraph (b)(1) of this section is the earlier to occur of:

(A)The date the issuer's board of directors, a committee of the board of directors, or the officer or officers of the issuer authorized to take such action if board action is not required, concludes, or reasonably should have concluded, that the issuer is required to prepare an accounting restatement as described in paragraph (b)(1) of this section; or

(B)The date a court, regulator, or other legally authorized body directs the issuer to prepare an accounting restatement as described in paragraph (b)(1) of this section.

2

compensation plans or other employee benefit plans that are not tax-qualified plans.

For avoidance of doubt, Incentive Compensation that is deferred (either

mandatorily or voluntarily) under the Company’s qualified and non-qualified deferred compensation plans, as well as any matching amounts and earnings thereon, are subject to this Policy.

Incentive Compensation does not include awards which are granted, earned and vested without regard to attainment of financial reporting measures, such as time- vesting awards, discretionary awards and awards based wholly on subjective standards, strategic measures or operational measures.

(b)Financial Reporting Measures.

Financial reporting measures are those that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements (including non-GAAP financial measures) and any measures derived wholly or in part from such financial measures. For the avoidance of doubt, financial reporting measures include stock price and total shareholder return. A measure need not be presented within the financial statements or included in a filing with the SEC to constitute a financial reporting measure for purposes of this Policy.

(c)Excess Incentive Compensation: Amount Subject to Recovery.

The amount(s) to be recovered from the Covered Executive will be the amount(s) by which the Covered Executive’s Incentive Compensation for the relevant period(s) exceeded the amount(s) that the Covered Executive otherwise would have received had such Incentive Compensation been determined based on the restated amounts contained in the Accounting Restatement. All amounts shall be computed without regard to taxes paid.

For Incentive Compensation based on financial reporting measures such as stock price or total shareholder return, where the amount of excess compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement, the Board will calculate the amount to be reimbursed based on a reasonable estimate of the effect of the Accounting Restatement on such financial reporting measure upon which the Incentive Compensation was received. The Company will maintain documentation of that reasonable estimate and will provide such documentation to the applicable national securities exchange.

3

(d)Method of Recovery.

The Board will determine, in its sole discretion, the method(s) for recovering reasonably promptly4 excess Incentive Compensation hereunder. Such methods may include, without limitation:

(i)requiring reimbursement of Incentive Compensation previously paid;

(ii)forfeiting any Incentive Compensation contribution made under the Company’s deferred compensation plans;

(iii)offsetting the recovered amount from any compensation or Incentive Compensation that the Covered Executive may earn or be awarded in the future;

(iv)some combination of the foregoing; or

(v)taking any other remedial and recovery action permitted by law, as determined by the Board.

5.No Indemnification or Advance.

Subject to applicable law, the Company shall not indemnify, including by paying or reimbursing for premiums for any insurance policy covering any potential losses, any Covered Executives against the loss of any erroneously awarded Incentive Compensation, nor shall the Company advance any costs or expenses to any Covered Executives in connection with any action to recover excess Incentive Compensation.

6.Interpretation.

The Board is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate or advisable for the administration of this Policy. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the Exchange Act and any applicable rules or standards adopted by the SEC or any national securities exchange on which the Company's securities are listed.

7.Effective Date.

The effective date of this Policy is July 1, 2023 (the “Effective Date”). This Policy applies to Incentive Compensation received by Covered Executives on or after the Effective Date that results from attainment of a financial reporting measure based on or derived from financial information for any fiscal period ending on or after the Effective Date. Incentive Compensation received by Covered Executives prior to the Effective Date remains subject to the Company’s prior Recoupment Policy dated December 10, 2022. In addition, this Policy is intended to be and will be incorporated as an essential term and condition of any Incentive Compensation agreement, plan or program that the Company establishes or maintains on or after the Effective Date.

4 SEC adopting release allows for discretion as long as amounts are recovered reasonably promptly.

4

8.Amendment and Termination.

The Board may amend this Policy from time to time in its discretion, and shall amend this Policy as it deems necessary to reflect changes in regulations adopted by the SEC under Section 10D of the Exchange Act and to comply with any rules or standards adopted by Nasdaq or any other

securities exchange on which the Company’s shares are listed in the future.

9.Other Recovery Rights.

The Board intends that this Policy will be applied to the fullest extent of the law. The Board may require that any employment agreement or similar agreement relating to Incentive Compensation entered into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require a Covered Executive to agree to abide by the terms of this Policy. Any right of recovery under this Policy is in addition to, and not in lieu of, any (i) other remedies or rights of compensation recovery that may be available to the Company pursuant to the terms of any similar policy in any employment agreement, or similar agreement relating to Incentive Compensation, unless any such agreement expressly prohibits such right of recovery, and (ii) any other legal remedies available to the Company. The provisions of this Policy are in addition to (and not in lieu of) any rights to repayment the Company may have under Section 304 of the Sarbanes-Oxley Act of 2002 and other applicable laws.

10.Impracticability.

The Company shall recover any excess Incentive Compensation in accordance with this Policy, except to the extent that certain conditions are met and the Board has determined that such recovery would be impracticable, all in accordance with Rule 10D-1 of the Exchange Act and the listing standards of Nasdaq or any other securities exchange on which the Company’s shares are listed in the future.

11.Successors.

This Policy shall be binding upon and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or other legal representatives.

5

XML

Cover - USD ($)

12 Months Ended

Dec. 31, 2023

Jan. 31, 2024

Jun. 30, 2023

Cover [Abstract]

Document Type

10-K

Document Annual Report

true

Document Period End Date

Dec. 31, 2023

Current Fiscal Year End Date

--12-31

Document Transition Report

false

Entity File Number

0-53713

Entity Registrant Name

OTTER TAIL CORPORATION

Entity Incorporation, State or Country Code

MN

Entity Tax Identification Number

27-0383995

Entity Address, Address Line One

215 South Cascade Street

Entity Address, Address Line Two

Box 496

Entity Address, City or Town

Fergus Falls

Entity Address, State or Province

MN

Entity Address, Postal Zip Code

56538-0496

City Area Code

866

Local Phone Number

410-8780

Title of 12(b) Security

Common Shares, par value $5.00 per share

Trading Symbol

OTTR

Security Exchange Name

NASDAQ

Entity Well-known Seasoned Issuer

Yes

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Filer Category

Large Accelerated Filer

Entity Small Business

false

Entity Emerging Growth Company

false

ICFR Auditor Attestation Flag

true

Document Financial Statement Error Correction

false

Entity Shell Company

false

Entity Public Float

$ 3,646,181,401

Entity Common Stock, Shares Outstanding

41,710,521

Documents Incorporated by Reference

The Registrant's definitive Proxy Statement for its 2024 Annual Meeting of Shareholders is incorporated by reference into Part III of this Form 10-K.

Entity Central Index Key

0001466593

Amendment Flag

false

Document Fiscal Period Focus

FY

Document Fiscal Year Focus

2023

XML

Audit Information	12 Months Ended
	Dec. 31, 2023
Auditor Information [Abstract]
Auditor Firm ID	34
Auditor Name	Deloitte & Touche LLP
Auditor Location	Minneapolis, Minnesota

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Current Assets
Cash and Cash Equivalents	$ 230,373	$ 118,996
Receivables, net of allowance for credit losses	157,143	144,393
Inventories	149,701	145,952
Regulatory Assets	16,127	24,999
Other Current Assets	16,826	18,412
Total Current Assets	570,170	452,752
Noncurrent Assets
Investments	62,516	54,845
Property, Plant and Equipment, net of accumulated depreciation	2,418,375	2,212,717
Regulatory Assets	95,715	94,655
Intangible Assets, net of accumulated amortization	6,843	7,943
Goodwill	37,572	37,572
Other Noncurrent Assets	51,377	41,177
Total Noncurrent Assets	2,672,398	2,448,909
Total Assets	3,242,568	2,901,661
Current Liabilities
Short-Term Debt	81,422	8,204
Accounts Payable	94,428	104,400
Accrued Salaries and Wages	38,134	32,327
Accrued Taxes	26,590	19,340
Regulatory Liabilities	25,408	17,300
Other Current Liabilities	43,775	56,065
Total Current Liabilities	309,757	237,636
Noncurrent Liabilities and Deferred Credits
Pension Benefit Liability	33,101	33,210
Other Postretirement Benefits Liability	27,676	46,977
Regulatory Liabilities	276,547	244,497
Deferred Income Taxes	237,273	221,302
Deferred Tax Credits	15,172	15,916
Other Noncurrent Liabilities	75,977	60,985
Total Noncurrent Liabilities and Deferred Credits	665,746	622,887
Commitments and Contingencies (Note 13)
Capitalization
Long-Term Debt	824,059	823,821
Shareholders' Equity
Common Stock: 50,000,000 shares authorized of $5 par value; 41,710,521 and 41,631,113 outstanding at December 31, 2023 and 2022	208,553	208,156
Additional Paid-In Capital	426,963	423,034
Retained Earnings	806,342	585,212
Accumulated Other Comprehensive Income	1,148	915
Total Shareholders' Equity	1,443,006	1,217,317
Total Capitalization	2,267,065	2,041,138
Total Liabilities and Shareholders' Equity	$ 3,242,568	$ 2,901,661

XML

CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares	Dec. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, par value (in dollars per share)	$ 5	$ 5
Common stock, shares outstanding (in shares)	41,710,521	41,631,113

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Operating Revenues
Total Operating Revenues	$ 1,349,166	$ 1,460,209	$ 1,196,844
Operating Expenses
Electric Production Fuel	60,339	65,110	59,327
Electric Purchased Power	78,292	100,281	65,409
Electric Operating and Maintenance Expenses	191,263	181,378	159,669
Cost of Products Sold (excluding depreciation)	454,122	542,944	488,370
Nonelectric Selling, General, and Administrative Expenses	72,663	69,718	65,394
Depreciation and Amortization	97,954	92,597	91,358
Electric Property Taxes	16,614	17,742	17,609
Total Operating Expenses	971,247	1,069,770	947,136
Operating Income	377,919	390,439	249,708
Other Income and Expense
Interest Expense	(37,677)	(36,016)	(37,771)
Nonservice Cost Components of Postretirement Benefits	10,597	1,075	(2,016)
Other Income (Expense), net	12,650	2,037	2,900
Income Before Income Taxes	363,489	357,535	212,821
Income Tax Expense	69,298	73,351	36,052
Net Income	$ 294,191	$ 284,184	$ 176,769
Weighted-Average Common Shares Outstanding:
Basic (in shares)	41,668	41,586	41,491
Diluted (in shares)	42,039	41,931	41,818
Earnings Per Share:
Basic (in dollars per share)	$ 7.06	$ 6.83	$ 4.26
Diluted (in dollars per share)	$ 7.00	$ 6.78	$ 4.23
Electric
Operating Revenues
Total Operating Revenues	$ 528,359	$ 549,699	$ 480,321
Product Sales
Operating Revenues
Total Operating Revenues	$ 820,807	$ 910,510	$ 716,523

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Statement of Comprehensive Income [Abstract]
Net Income	$ 294,191	$ 284,184	$ 176,769
Other Comprehensive Income (Loss):
Unrealized Gain (Loss) on Available-for-Sale Securities, net of tax (expense) benefit of $(51), $115 and $52	192	(432)	(196)
Pension and Other Postretirement Benefit Plan, net of tax expense of $14, $2,769 and $766	41	7,871	2,179
Total Other Comprehensive Income	233	7,439	1,983
Total Comprehensive Income	$ 294,424	$ 291,623	$ 178,752

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parentheticals) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Statement of Comprehensive Income [Abstract]
Unrealized Gain (Loss) on Available-for-Sale Securities, tax (expense) benefit	$ (51)	$ 115	$ 52
Pension and Other Postretirement Benefit Plan, tax expense	$ (14)	$ (2,769)	$ (766)

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Shares	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2020		41,469,879
Beginning balance at Dec. 31, 2020	$ 870,966	$ 207,349	$ 414,246	$ 257,878	$ (8,507)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Issued Under Dividend Reinvestment and Stock Purchase Plans, Net of Expenses (in shares)		11,540
Stock Issued Under Dividend Reinvestment and Stock Purchase Plans, Net of Expenses	504	$ 58	446
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes (in shares)		70,105
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes	(1,489)	$ 351	(1,840)
Net Income	176,769			176,769
Other Comprehensive Income	1,983				1,983
Stock Compensation Expense	6,908		6,908
Common Dividends	(64,864)			(64,864)
Ending balance (in shares) at Dec. 31, 2021		41,551,524
Ending balance at Dec. 31, 2021	990,777	$ 207,758	419,760	369,783	(6,524)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Employee Stock Purchase Plan Expenses	(219)		(219)
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes (in shares)		79,589
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes	(2,923)	$ 398	(3,321)
Net Income	284,184			284,184
Other Comprehensive Income	7,439				7,439
Stock Compensation Expense	6,814		6,814
Common Dividends	$ (68,755)			(68,755)
Ending balance (in shares) at Dec. 31, 2022	41,631,113	41,631,113
Ending balance at Dec. 31, 2022	$ 1,217,317	$ 208,156	423,034	585,212	915
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Employee Stock Purchase Plan Expenses	(339)		(339)
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes (in shares)		79,408
Stock Issued Under Share-Based Compensation Plans, Net of Shares Withheld for Employee Taxes	(3,088)	$ 397	(3,485)
Net Income	294,191			294,191
Other Comprehensive Income	233				233
Stock Compensation Expense	7,753		7,753
Common Dividends	$ (73,061)			(73,061)
Ending balance (in shares) at Dec. 31, 2023	41,710,521	41,710,521
Ending balance at Dec. 31, 2023	$ 1,443,006	$ 208,553	$ 426,963	$ 806,342	$ 1,148

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Statement of Stockholders' Equity [Abstract]
Common Dividends (in dollars per share)	$ 1.75	$ 1.65	$ 1.56

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Operating Activities
Net Income	$ 294,191	$ 284,184	$ 176,769
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization	97,954	92,597	91,358
Deferred Tax Credits	(744)	(745)	(744)
Deferred Income Taxes	13,508	32,424	28,896
Discretionary Contribution to Pension Plan	0	(20,000)	(10,000)
Investment (Gains) Losses	(7,222)	3,296	(4,524)
Stock Compensation Expense	7,753	6,814	6,908
Other, net	(423)	(1,473)	667
Changes in Operating Assets and Liabilities:
Receivables	(12,750)	30,560	(60,994)
Inventories	(2,450)	5,339	(54,313)
Regulatory Assets	12,479	(2,464)	(4,803)
Other Assets	2,817	(368)	(14,146)
Accounts Payable	(9,988)	(29,763)	38,734
Accrued and Other Liabilities	6	(5,490)	28,386
Regulatory Liabilities	20,973	(6,846)	1,948
Pension and Other Postretirement Benefits	(11,605)	1,244	7,101
Net Cash Provided by Operating Activities	404,499	389,309	231,243
Investing Activities
Capital Expenditures	(287,134)	(171,134)	(171,829)
Proceeds from Disposal of Noncurrent Assets	6,225	4,346	9,702
Purchases of Investments and Other Assets	(8,378)	(8,283)	(9,383)
Net Cash Used in Investing Activities	(289,287)	(175,071)	(171,510)
Financing Activities
Net Borrowings (Repayments) on Short-Term Debt	73,218	(82,959)	10,166
Proceeds from Issuance of Common Stock	0	0	696
Proceeds from Issuance of Long-Term Debt	0	90,000	140,000
Payments for Retirement of Long-Term Debt	0	(30,000)	(140,169)
Dividends Paid	(73,061)	(68,755)	(64,864)
Payments for Shares Withheld for Employee Tax Obligations	(3,088)	(2,942)	(1,507)
Other, net	(904)	(2,123)	(3,681)
Net Cash Used in Financing Activities	(3,835)	(96,779)	(59,359)
Net Change in Cash and Cash Equivalents	111,377	117,459	374
Cash and Cash Equivalents at Beginning of Period	118,996	1,537	1,163
Cash and Cash Equivalents at End of Period	230,373	118,996	1,537
Supplemental Disclosures of Cash Flow Information
Interest, net of amount capitalized	36,956	35,699	36,881
Income Taxes	46,284	43,411	8,445
Supplemental Disclosure of Noncash Investing Activities
Accrued Property, Plant and Equipment Additions	$ 13,001	$ 12,420	$ 12,081

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Overview

Otter Tail Corporation (OTC) and its subsidiaries (collectively, the "Company", "us", "our" or "we") form a diverse, multi-platform business consisting of a vertically integrated, regulated utility with generation, transmission and distribution facilities complemented by manufacturing businesses providing metal fabrication for custom machine parts and metal components, manufacturing of extruded and thermoformed plastic products, and manufacturing of PVC pipe products. We classify our business into three segments: Electric, Manufacturing and Plastics. Note 2 includes an additional description of the segments and financial information regarding each segment.

Principles of Consolidation

These consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles and include the accounts of OTC and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation except, as applicable, profits on sales to our regulated electric utility company from our nonregulated businesses, which is in accordance with the accounting requirements of regulated operations.

Use of Estimates

We use estimates based on the best information available in recording transactions and balances resulting from business operations. As better information becomes available, or actual amounts are known, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.

Reclassifications

Certain reclassifications of amounts previously reported have been made to the accompanying consolidated statements of cash flows to maintain consistency and comparability between periods presented. Other, net operating cash flows previously reported for the years ended December 31, 2022 and 2021, included $3.3 million of investment losses and $4.5 million of investment gains, respectively, which are presented separately in the current year, and excluded $1.7 million and $0.8 million of allowance for equity funds used during construction (AFUDC), which were previously presented separately. The reclassifications had no impact on previously reported net cash provided by operating activities, net cash used in investing activities, net cash used in financing activities, or cash and cash equivalents. Certain prior period amounts related to deferred tax assets and deferred tax liabilities included in footnote 12 have been reclassified to conform to the current year presentation.

Regulatory Accounting

Our regulated electric utility company, Otter Tail Power Company (OTP), is subject to regulation of rates and other matters by state utility commissions in Minnesota, North Dakota and South Dakota and by the FERC for certain interstate operations. OTP accounts for the financial effects of regulation in accordance with accounting guidance for regulated operations. This guidance allows for the recording of a regulatory asset for certain costs which otherwise would be recognized in the statement of income or comprehensive income based on an expectation that the cost will be recovered in future rates. This guidance also requires the recording of a regulatory liability for certain credits which would otherwise be recognized in the statement of income or comprehensive income based on an expectation that the amount will be returned to customers in future rates. Amounts recorded as regulatory assets and regulatory liabilities are generally recognized in the statements of income at the time they are reflected in customer rates. In the event OTP ceases to meet the criteria to apply the guidance for regulated operations, the regulatory assets and liabilities that no longer meet such criteria would be removed from the consolidated balance sheets and included in the consolidated statement of income as an expense or income item, or in the consolidated statement of comprehensive income as a loss or gain item, in the period in which the application of this guidance ceases.

Cash Equivalents

We consider all highly liquid investments purchased with maturity dates of 90 days or less to be cash equivalents.

Concentration of Deposits

We hold deposits with financial institutions which potentially subject us to a concentration risk. These deposits are guaranteed by the Federal Deposit Insurance Corporation up to an insurance limit of $250,000. Currently, our cash deposits exceed federally insured levels.

Revenue from Contracts with Customers

Due to our diverse business operations, the recognition of revenue from contracts with customers depends on the product produced and sold or service performed. We recognize revenue from contracts with customers at prices that are fixed or determinable as evidenced by an agreement with the customer, when we have met our performance obligation under the contract and it is probable that we will collect the amount to which we are entitled in exchange for the goods or services transferred or to be transferred to the customer. Depending on the product produced and sold or service performed and the terms of the agreement with the customer, we recognize revenue either over time, in the case of delivery or transmission of electricity or related services or the production and storage of certain custom-made products, or at a point in time for the delivery of standardized products and other products made to customer specifications where the terms of the contract require transfer of the completed product. Provisions for sales returns, early payment discounts, and volume-based variable pricing incentives are recorded as reductions to revenue at the time revenue is recognized based on customer history, historical information and current trends. We include revenues received for shipping and handling in operating revenues. Expenses paid for shipping and handling are recorded as part of cost of products sold. Sales or other taxes collected from customers are excluded from operating revenues.

Electric Segment Revenues. Most Electric segment revenues are earned from the generation, transmission and sale of electricity to retail customers at rates approved by state regulatory commissions. OTP also earns revenue from the transmission of electricity for others over the transmission assets it owns separately, or jointly with other transmission service providers, under rate tariffs established by the independent transmission system operator and approved by the FERC. A third source of revenue for OTP comes from the generation and sale of electricity to wholesale customers at contract or market rates. Revenues from all these sources meet the criteria to be classified as revenue from contracts with customers and are recognized over time as energy is delivered or transmitted. Revenue is recognized based on the metered quantity of electricity delivered or transmitted at the applicable rates. For electricity delivered and consumed after a meter is read but prior to the end of the reporting period, OTP records revenue and an unbilled receivable based on estimates of the amount of energy delivered to the customer.

Manufacturing Segment Revenues. Our Manufacturing segment businesses earn revenue predominantly from the production and delivery of custom-made or standardized parts and products to customers across several industries and from the production and sale of tools and dies to other manufacturers. For the production and delivery of standardized products and other products made to customer specifications where the terms of the contract require transfer of the completed product, we have met our performance obligation and recognize revenue at the point in time when the product is shipped. At this point we have no further obligation to provide services related to such products. The shipping terms used in these transactions are free on board (FOB) shipping point.

Plastics Segment Revenues. Our Plastics segment businesses earn revenue predominantly from the sale and delivery of standardized PVC pipe products produced at their manufacturing facilities. Revenue from the sale of these products is recognized at the point in time when the product is shipped as there is no further obligation to provide services related to such products and the shipping terms are FOB shipping point. We have one customer within our Plastics segment for which we produce and store a product made to the customer’s specifications and design under a build and hold agreement. For sales to this customer, we recognize revenue as the custom-made product is produced, adjusting the amount of revenue for volume rebate variable pricing considerations we expect the customer will earn and applicable early payment discounts we expect the customer will take. Ownership of the pipe transfers to the customer prior to delivery and we are paid a negotiated fee for storage of the pipe. Revenue for storage of the pipe is recognized over time as the pipe is stored.

Alternative Revenue

In addition to recognizing revenue from contracts with customers, our Electric segment business also records revenue under alternative revenue program (ARP) requirements. Certain rate rider mechanisms qualify as ARP revenues as they provide for adjustments to rates outside of a general rate case proceeding to encourage or incentivize investments in certain areas such as conservation, renewable energy, pollution reduction or control, improved infrastructure of the transmission grid or other programs that provide benefits to the general public under public policy, laws or regulations. ARP riders generally provide for the recovery of specified costs and investments and include an incentive component to provide the regulated utility with a return on amounts invested.

We accrue ARP revenue on the basis of cost incurred, investments made and returns on those investments that qualify for recovery through established riders. ARP revenue is disclosed separately from revenue from contracts with customers and we have elected to report ARP revenue on a net basis, whereby amounts initially recorded as ARP revenue in a period are presented net of the reversal of amounts previously recognized as ARP revenue that are reclassified and recorded as revenue from contracts with customers when such amounts are included in the price of electricity to customers.

Receivables and Allowance for Credit Losses

We grant credit to our customers in the normal course of business with repayment terms generally ranging from 30 to 90 days after the invoice date. Late fees are assessed on certain receivables once they are 30 days past due. Unbilled receivables represent estimates of energy delivered to customers but not yet billed.

Receivables are stated at the billed or estimated unbilled amount less an allowance for estimated credit losses. An allowance for credit losses is established based on losses expected to occur over the contractual life of the receivable. We estimate an allowance for credit losses on our trade and unbilled receivables by evaluating historical aging and write-off history, adjusted for current and forecasted economic conditions, for groups of receivables that share similar economic characteristics. Other receivables are evaluated by reviewing individual accounts, considering aging, financial condition of the debtor, recent payment history and other relevant factors. Account balances are written-off in the period they are deemed to be uncollectible.

Inventories

Inventories are valued at the lower of cost or net realizable value. Costs for fuel, material and supply inventories of our Electric segment are determined on an average cost basis. Costs for raw material, work in process and finished goods inventories of our Manufacturing and Plastics segments are determined on a first-in first-out (FIFO) basis.

Inventories consist of the following as of December 31, 2023 and 2022:

(in thousands)	2023		2022
Finished Goods	$	47,614	$	43,812
Work in Process	26,354		31,766
Raw Material, Fuel and Supplies	75,733		70,374
Total Inventories	$	149,701	$	145,952

Investments

We invest in and hold, through rabbi trusts, corporate-owned life insurance policies to provide future funding for obligations under our supplemental pension plan and a nonqualified deferred compensation plan. The polices are recorded at cash surrender value and there are no restrictions on our ability to surrender the policies.

We hold debt, mutual fund, and money market fund investments either as investments within our captive insurance entity or to provide future funding for obligations under nonqualified deferred compensation plans. These investments are recorded at fair value. Debt securities are deemed to be available-for-sale securities, accordingly unrealized gains and losses are generally excluded from earnings and recognized in accumulated other comprehensive income. We evaluate whether declines in fair value of debt securities below the cost basis are other-than-temporary. Declines in fair value deemed to be other-than-temporary result in the recognition of unrealized losses, or a portion thereof, in earnings. Unrealized gains and losses on mutual and money market funds are recognized in earnings immediately.

The following is a summary of our investments at December 31, 2023 and 2022:

(in thousands)	2023		2022
Corporate-Owned Life Insurance Policies	$	42,287	$	38,991
Corporate and Government Debt Securities	9,303		8,761
Mutual Funds	7,771		5,503
Money Market Funds	3,125		1,560
Other Investments	30		30
Total Investments	$	62,516	$	54,845

The amount of unrealized gains and losses on debt securities as of December 31, 2023 and 2022 is not material and no unrealized losses were deemed to be other-than-temporary. In addition, the amount of unrealized gains and losses on marketable equity securities still held as of December 31, 2023 and 2022 is not material.

Property, Plant and Equipment

Electric plant is stated at original cost. The cost of additions includes contracted work, direct labor and materials, allocable overheads and AFUDC. The amount of interest capitalized to electric plant was $1.9 million in 2023, $0.9 million in 2022 and $0.6 million in 2021. The cost of depreciable units of property retired less salvage is charged to accumulated depreciation. Amounts recovered in rates for future removal costs are recorded as regulatory liabilities. Removal costs, when incurred, are charged against the regulatory liability. Maintenance, repairs and replacement of minor items are charged to operating expenses as incurred. The provisions for utility depreciation for financial reporting purposes are made on the straight-line method based on the estimated remaining service lives of the properties. Gains or losses on group asset dispositions are recorded to accumulated depreciation and impact current and future depreciation rates.

Property, plant and equipment of nonelectric operations are carried at historical cost and are depreciated on a straight-line basis over the assets’ estimated useful lives. The cost of additions includes contracted work, direct labor and materials, allocable overheads and capitalized interest. No interest was capitalized in 2023, 2022 or 2021. Maintenance and repairs are expensed as incurred. Gains or losses on asset dispositions are included in the determination of operating income.

The estimated service lives for rate-regulated electric assets and nonelectric assets are included below:

	Service Life Range
(years)	Low	High
Electric Assets:
Production Plant	21	114
Transmission Plant	51	75
Distribution Plant	10	70
General Plant	5	56
Nonelectric Assets:
Equipment	2	20
Buildings and Leasehold Improvements	2	40

Jointly Owned Facilities

OTP is a joint owner in two coal-fired steam-powered electric generation plants: Big Stone Plant near Big Stone City, South Dakota and Coyote Station near Beulah, North Dakota. OTP is also a joint owner, with other regional utilities, in five major transmission lines. OTP's interest in each jointly owned facility is reflected in the consolidated balance sheets on a pro-rata basis and OTP's share of direct revenue and expenses are included in operating revenues and expenses in the consolidated statements of income. Each participant in the jointly owned facilities finances their own investments.

Goodwill and Other Intangible Assets

Goodwill is recognized and initially measured as any excess of the acquisition-date consideration transferred in a business combination over amounts recognized for the net identifiable assets acquired. Goodwill is not amortized, but is tested for impairment annually, or more frequently if

an event occurs or circumstances change that would more likely than not result in an impairment of goodwill. Impairment testing is performed at the reporting unit level, which is defined as an operating segment or one level below an operating segment. We perform our impairment testing in the fourth quarter of each year and have identified three reporting units that carry a goodwill balance.

Our impairment testing includes both an optional qualitative assessment and the quantitative impairment assessment. Our qualitative assessment includes an analysis of relevant events and circumstances to determine if it is more likely than not that the fair value of the reporting unit exceeds its book value. If, after this assessment, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no additional analysis is necessary. In contrast, if after the assessment we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we elect to skip the optional qualitative assessment, the quantitative impairment assessment is performed. The quantitative assessment is a single-step test that identifies both the existence of impairment and the amount of impairment loss by comparing the estimated fair value of a reporting unit to its carrying value, with any excess carrying value over the fair value being recognized as an impairment loss.

Intangible assets with finite lives, which primarily consist of customer relationships, are carried at estimated fair value at the time of acquisition less accumulated amortization. The costs of the intangible assets are amortized over their estimated useful lives, which generally range from 15 to 20 years.

Cloud Computing Costs

We capitalize implementation costs incurred in cloud computing arrangements that are service contracts consistent with capitalized implementation costs incurred to develop or obtain internal-use software. Costs are amortized on a straight-line basis over the life of the associated contract. Capitalized implementation costs are amortized over periods up to ten years. Capitalized costs and related accumulated amortization are included in other noncurrent assets on the consolidated balance sheets. Below are the amounts of capitalized cost and related accumulated amortization as of December 31, 2023 and 2022:

(in thousands)	2023		2022
Cloud Computing Costs	$	12,782	$	9,024
Accumulated Amortization	$	(1,505)	$	(897)
Cloud Computing Costs, net	$	11,277	$	8,127

Amortization expense of capitalized implementation costs for each of the years ended December 31, 2023, 2022 and 2021 totaled $1.3 million, $1.4 million, and $0.5 million.

Leases

We recognize right-of-use lease assets and a corresponding lease liability at the lease commencement date. The length of our lease agreements varies from less than one year to approximately ten years. We have elected to not record lease assets and liabilities for leases with a lease term at commencement of 12 months or less; such leases are expensed on a straight-line basis over the lease term. If a lease contains an option to extend the lease term and there is reasonable certainty the option will be exercised, the option is considered in the lease term at inception. We have elected to not separate non-lease components (e.g., common area maintenance) from lease components on real estate leases, accordingly the recognized lease asset and lease liability incorporate in their measurement payments for non-lease components. Certain leases include variable lease payments as the amounts are subject to change over the lease term. We are unable to determine the interest rate implicit in our leases thus we apply our incremental borrowing rate to capitalize the right-of-use asset and lease liability. We estimate our incremental borrowing rate by incorporating considerations of lease term and lessee entity.

Recoverability of Long-Lived Assets

We review our long-lived assets including, among other assets, property, plant and equipment, amortizing intangible assets and right-of-use lease assets, whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. We determine potential impairment by comparing the carrying amount of the assets with the net cash flows expected to be provided by operating activities of the business or related assets. If the sum of the expected future net cash flows is less than the carrying amount of the assets, an impairment loss would be recognized. Such an impairment loss would be measured as the amount by which the carrying amount exceeds the fair value of the asset.

Asset Retirement Obligations

Legal obligations related to the future retirement of long-lived assets are recognized as asset retirement obligations (ARO). An ARO is recognized in the period in which the legal obligation is incurred and the amount of the obligation can be reasonably estimated, with an offsetting increase to the associated long-lived asset. AROs are initially recognized at fair value and increased with the passage of time (accretion). ARO estimates are revised periodically with any adjustment reflected in the ARO and associated long-lived asset.

Income Taxes

We use the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of all temporary differences between the carrying amounts of assets and liabilities and their respective tax bases. Deferred taxes are recorded using the tax rates scheduled by tax law to be in effect in the periods when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that a portion or all of the deferred tax assets will not be realized. The realizability of deferred tax assets is determined by taking into consideration forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carryforwards and available tax planning strategies. Changes in valuation allowances are included in the provision for income taxes in the period of the changes.

We recognize the tax effects of all tax positions that are more-likely-than-not to be sustained on audit based solely on the technical merits of those positions as of the balance sheet date. Changes in the recognition or measurement of such positions are recognized in the provision for income taxes in the period of the changes. We classify interest and penalties on tax uncertainties as components of the provision for income taxes.

We have elected to account for transferable tax credits as a component of our income tax provision. We recognize the benefit of PTCs as a reduction of income tax expense in the period the credit is generated, which corresponds to the period the energy production occurs. We apply the deferral method of accounting for ITCs and state wind energy credits. Under this method, ITCs and state wind energy credits are amortized as a reduction to income tax expense over the estimated useful lives of the underlying property that gave rise to the credit.

Deferred Compensation Plans

The Company sponsors two nonqualified deferred compensation plans for the benefit of executive officers and other select employees. Each plan allows participants to defer a specified amount or percentage of base wages or incentive compensation into the plan, subject to certain limitations. The Company, at its discretion, may make employer contributions to either plan during any annual period. Participant and employer deferred amounts are segregated into one or more accounts chosen by the participant. Participants earn a return on deferred amounts based on notional investments in the segregated accounts. Participants can elect lump sum distributions or annual installments of deferred balances during the participant's employment or upon retirement. As of December 31, 2023 and 2022, our liability to participants under these deferred compensation plans was $24.6 million and $20.6 million. Company contributions to these plans were $1.2 million, $0.9 million and $1.1 million for the years ended December 31, 2023, 2022 and 2021. Gains or (losses) recognized due to changes in our payment obligations in connection with these plans amounted to ($3.3 million), $3.1 million, and ($2.2 million) for the years ended December 31, 2023, 2022 and 2021.

Stock-Based Compensation

Stock-based compensation awards are measured at the grant-date fair value of the award and compensation expense is recognized on a straight-line basis over the applicable service or performance period. The service period may be limited to the period until such time that a recipient is retirement eligible as determined under the award agreement. Awards granted to employees eligible for retirement on the date of grant are expensed in the period of grant. We recognize the effects of award forfeitures as they occur.

Fair Value Measurements

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Three levels of inputs may be used to measure fair value:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the New York Mercantile Exchange.

Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities. 

Level 3 – Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation and may include complex and subjective models and forecasts.

In instances where the determination of the fair value measurement is based on inputs from different levels within the hierarchy, the level in the hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Related Parties

The Otter Tail Corporation Foundation and Otter Tail Power Company Foundation are independent not-for-profit charitable entities affiliated with the Company and are not included in the consolidated financial statements of Otter Tail Corporation. Contribution obligations to the two foundations totaling $5.5 million and $4.3 million were recognized as of December 31, 2023 and 2022. Cash contributions paid to the two foundations during the years ended December 31, 2023, 2022 and 2021 were $4.3 million, $4.5 million, and $3.8 million.

Variable Interest Entity

In October 2012, the Coyote Station owners, including OTP, entered into an LSA with Coyote Creek Mining Company, LLC, a subsidiary of The North American Coal Corporation, for the purchase of lignite coal to meet the coal supply requirements of Coyote Station for the period beginning in May 2016 and ending in December 2040. The price per ton paid by the Coyote Station owners under the LSA reflects the cost of production, along with an agreed upon profit and capital charge. CCMC was formed for the purpose of mining coal to meet the coal fuel supply requirements of Coyote Station from May 2016 through December 2040 and, based on the terms of the LSA, is considered a variable interest entity (VIE) due to the transfer of all operating and economic risk to the Coyote Station owners, as the agreement is structured so that the price of the coal would cover all costs of operations as well as future reclamation costs. The Coyote Station owners are required to buy certain assets of CCMC at book value should they terminate the contract prior to the end of the contract term and are providing a guarantee of the value of the equity of CCMC because the Coyote Station owners are required to buy the membership interests of CCMC at the end of the contract term at equity value. Under current accounting standards, the primary beneficiary of a VIE is required to include the assets, liabilities, results of operations and cash flows of the VIE in its consolidated financial statements. No single owner of Coyote Station owns a majority interest in Coyote Station and none, individually, has the power to direct the activities that most significantly impact CCMC. Therefore, none of the owners individually, including OTP, is considered the primary beneficiary of the VIE and the Company is not required to include CCMC in its consolidated financial statements.

If the LSA terminates prior to the expiration of its term or the production period terminates prior to December 31, 2040 and the Coyote Station owners purchase all of the outstanding membership interests of CCMC, the owners will satisfy or, if permitted by CCMC’s applicable lenders, assume all of CCMC’s obligations owed to CCMC’s lenders under its loans and leases. The Coyote Station owners have limited rights to assign their rights and obligations under the LSA without the consent of CCMC’s lenders during any period in which CCMC’s obligations to its lenders remain outstanding. In the event the contract is terminated prior to the end of the term due to certain events, OTP’s maximum loss exposure, as a result of its involvement with CCMC, could be as high as $40 million, or OTP’s 35% share of CCMC’s unrecovered costs as of December 31, 2023, if recovery of such a loss is denied by regulatory authorities.

Recent Accounting Pronouncements

Segment Reporting. In November 2023, the Financial Accounting Standards Board (FASB) issued amended authoritative guidance codified in Accounting Standards Codification (ASC) 280, Segment Reporting. The amended guidance expands annual and interim disclosure requirements for reportable segments, primarily through expanded disclosures about significant segment expenses. The updated standard is effective for our annual periods beginning in 2024 and interim periods beginning in the first quarter of fiscal 2025. Adoption of the amended guidance must be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

Income Taxes. In December 2023, the FASB issued amended authoritative guidance codified in ASC 740, Income Taxes. The amended guidance requires additional disaggregated information in effective tax rate reconciliation disclosures and additional disaggregated information about income taxes paid. The updated standard is effective for our annual periods beginning in 2025. The amended guidance is to be applied on a prospective basis with the option to apply the standard retrospectively. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

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Segment Information

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Segment Information

Segment Information

We classify our business into three segments, Electric, Manufacturing and Plastics, consistent with our business strategy, organizational structure and our internal reporting and review processes used by our chief operating decision maker to make decisions regarding allocation of resources, to assess operating performance and to make strategic decisions.

Electric includes the production, transmission, distribution and sale of electric energy in Minnesota, North Dakota and South Dakota by OTP. In addition, OTP is a participant in the MISO markets. OTP’s operations have been our primary business since 1907.

Manufacturing consists of businesses in the following manufacturing activities: contract machining, metal parts stamping, fabrication and painting, and production of plastic thermoformed horticultural containers, life science and industrial packaging, and material handling components. These businesses have manufacturing facilities in Georgia, Illinois and Minnesota and sell products primarily in the United States.

Plastics consists of businesses producing PVC pipe at plants in North Dakota and Arizona. The PVC pipe is sold primarily in the western half of the United States and Canada.

Certain assets, income and expenses are not allocated to our operating segments. Corporate operating results include items such as corporate staff and overhead costs, the results of our captive insurance company, gains or losses on our investments and returns on our cash equivalent investments. These items and others are excluded from the measurement of operating segment performance. Corporate assets consist primarily of cash, investments, prepaid expenses, and fixed assets. Corporate is not an operating segment, rather it is added to operating segment totals to reconcile to consolidated amounts.

Information for each segment and our unallocated corporate costs for the years ended December 31, 2023, 2022 and 2021 are as follows:

(in thousands)	2023		2022		2021
Operating Revenue
Electric	$	528,359	$	549,699	$	480,321
Manufacturing	402,781		397,983		336,294
Plastics	418,026		512,527		380,229
Total	1,349,166		1,460,209		1,196,844
Depreciation and Amortization
Electric	75,330		72,050		71,343
Manufacturing	18,495		16,202		15,436
Plastics	4,027		4,205		4,354
Corporate	102		140		225
Total	97,954		92,597		91,358
Operating Income (Loss)
Electric	106,521		113,138		106,964
Manufacturing	29,140		29,065		24,114
Plastics	254,402		264,578		132,760
Corporate	(12,144)		(16,342)		(14,130)
Total	377,919		390,439		249,708
Interest Expense
Electric	33,864		31,950		33,043
Manufacturing	2,295		2,796		2,239
Plastics	602		585		587
Corporate	916		685		1,902
Total	37,677		36,016		37,771
Income Tax Expense (Benefit)
Electric	1,648		5,065		1,663
Manufacturing	5,390		5,321		4,704
Plastics	66,066		68,688		34,374
Corporate	(3,806)		(5,723)		(4,689)
Total	69,298		73,351		36,052
Net Income (Loss)
Electric	84,424		79,974		72,458
Manufacturing	21,454		20,950		17,186
Plastics	187,748		195,374		97,823
Corporate	565		(12,114)		(10,698)
Total	294,191		284,184		176,769
Capital Expenditures
Electric	240,695		147,869		140,031
Manufacturing	23,284		17,954		20,690
Plastics	23,029		5,245		11,040
Corporate	126		66		68
Total	$	287,134	$	171,134	$	171,829

The following provides the identifiable assets by segment and corporate assets as of December 31, 2023 and 2022:

(in thousands)	2023		2022
Identifiable Assets
Electric	$	2,533,831	$	2,351,961
Manufacturing	251,343		245,869
Plastics	164,179		126,318
Corporate	293,215		177,513
Total	$	3,242,568	$	2,901,661

Concentrations

Our Plastics segment businesses use PVC resin as a critical component within their PVC pipe manufacturing process. There are a limited number of PVC resin suppliers in the U.S., and in 2023, we sourced all of our PVC resin needs from three vendors. Although there are a limited number of PVC resin suppliers, we believe that other suppliers could provide PVC resin on comparable terms. Additionally, most U.S. resin production plants are located in the Gulf Coast region. These plants are subject to the risk of damage and production shutdowns because of exposure to hurricanes or other extreme weather events that occur in this region. The loss of a key vendor, or any interruption or delay in the supply of PVC resin could cause production delays, a possible loss of sales, or result in increased costs to secure resin, all of which would adversely affect our operating results.

Entity-Wide Information

No single customer accounted for over 10% of our consolidated operating revenues for the years ended December 31, 2023, 2022 and 2021. All of our long-lived assets are located within the United States and substantially all of our operating revenues are from customers located within the United States.

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Revenue

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

We present our operating revenues from external customers, in total and by amounts arising from contracts with customers and ARP arrangements, disaggregated by revenue source and segment for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023		2022		2021
Operating Revenues
Electric Segment
Retail: Residential	$	135,570	$	143,888	$	135,361
Retail: Commercial and Industrial	312,551		318,494		262,408
Retail: Other	7,719		7,918		7,715
Total Retail	455,840		470,300		405,484
Transmission	52,555		52,213		48,835
Wholesale	12,459		18,539		17,936
Other	7,505		8,647		8,066
Total Electric Segment	528,359		549,699		480,321
Manufacturing Segment
Metal Parts and Tooling	351,267		338,865		283,527
Plastic Products and Tooling	41,395		49,080		40,231
Scrap Metal	10,119		10,038		12,536
Total Manufacturing Segment	402,781		397,983		336,294
Plastics Segment
PVC Pipe	418,026		512,527		380,229
Total Operating Revenue	1,349,166		1,460,209		1,196,844
Less: Noncontract Revenues Included Above
Electric Segment - ARP Revenues	(4,310)		(9,266)		(791)
Total Operating Revenues from Contracts with Customers	$	1,353,476	$	1,469,475	$	1,197,635

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Receivables

12 Months Ended

Dec. 31, 2023

Receivables [Abstract]

Receivables

Receivables

Receivables as of December 31, 2023 and 2022 are as follows:

(in thousands)	2023		2022
Receivables
Trade	$	129,257	$	112,126
Other	9,084		9,983
Unbilled Receivables	21,324		23,932
Total Receivables	159,665		146,041
Less Allowance for Credit Losses	2,522		1,648
Receivables, net of allowance for credit losses	$	157,143	$	144,393

The following is a summary of activity in the allowance for credit losses for the years ended December 31, 2023 and 2022:

(in thousands)	2023		2022
Beginning Balance	$	1,648	$	1,836
Additions Charged to Expense	2,014		909
Reductions for Amounts Written Off, Net of Recoveries	(1,140)		(1,097)
Ending Balance	$	2,522	$	1,648

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Regulatory Matters

12 Months Ended

Dec. 31, 2023

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Matters

Regulatory Matters

Regulatory Assets and Liabilities

The following presents our current and long-term regulatory assets and liabilities as of December 31, 2023 and 2022 and the period we expect to recover or refund such amounts:

	Period of	2023				2022
(in thousands)	Recovery/Refund	Current		Long-Term		Current		Long-Term
Regulatory Assets
Pension and Other Postretirement Benefit Plans1	See below	$	154	$	86,134	$	—	$	88,354
Alternative Revenue Program Riders2	Up to 2 years	3,719		158		5,679		2,508
Asset Retirement Obligations1	Asset lives	—		87		—		1,467
Deferred Income Taxes	Asset lives	—		6,940		—		—
Fuel Clause Adjustments1	Up to 1 year	7,294		—		10,893		—
Derivative Instruments1	Up to 1 year	4,210		—		7,130		—
Other1	Various	750		2,396		1,297		2,326
Total Regulatory Assets		16,127		95,715		24,999		94,655
Regulatory Liabilities
Deferred Income Taxes	Asset lives	—		136,022		—		131,480
Plant Removal Obligations	Asset lives	—		117,030		8,509		105,733
Fuel Clause Adjustments	Up to 1 year	11,350		—		365		—
Alternative Revenue Program Riders	Up to 1 year	6,885		—		2,504		—
North Dakota PTC Refunds	Asset lives	—		12,011		—		7,136
Pension and Other Postretirement Benefit Plans	See below	6,138		11,307		5,589		—
Other	Various	1,035		177		333		148
Total Regulatory Liabilities		$	25,408	$	276,547	$	17,300	$	244,497
1Costs subject to recovery without a rate of return.
2Amount eligible for recovery includes an incentive or rate of return.

Pension and Other Postretirement Benefit Plans represent benefit costs and actuarial losses and gains subject to recovery or refund through rates as they are expensed or amortized. These unrecognized benefit costs and actuarial losses and gains are eligible for treatment as regulatory assets or liabilities based on their probable inclusion in future electric rates.

Alternative Revenue Program Riders regulatory assets and liabilities are revenues not yet collected from customers or amounts subject to refund, respectively, primarily due to investments in qualifying transmission, conservation, renewable resource, environmental and other generation assets, and the impact of decoupling.

Asset Retirement Obligations represent the difference in timing of recognition of expense arising from these obligations and the amount recovered from customers.

Fuel Clause Adjustments represent the under- or over-collection of fuel costs relative to the estimated cost of fuel included in customer rates, which will be collected from or returned to customers.

Derivative Instruments represent unrealized gains and losses recognized on derivative instruments. On final settlement of such instruments, any realized gains or losses are paid to or recovered from customers.

Deferred Income Taxes represent the revaluation of accumulated deferred income taxes arising from the change in the federal income tax rate in 2017. This amount is being refunded to customers over the estimated lives of the property assets from which the deferred income taxes originated.

Plant Removal Obligations represent amounts collected from customers to be used to cover actual removal costs as incurred.

North Dakota PTC Refunds represent PTCs earned from the Merricourt Wind Energy Center. These amounts are being allocated to customers over the life of the asset.

Other regulatory assets and liabilities include other amounts that we expect to recover from, or return to, customers in future periods, such as

the cost of abandoned projects, costs incurred in connection with recent rate cases, and other items.

North Dakota Rate Case

On November 2, 2023, OTP filed a request with the NDPSC for an increase in revenue recoverable under general rates in North Dakota. In its filing, OTP requested a net increase in annual revenue of $17.4 million, or 8.4%, based on an allowed rate of return on rate base of 7.85% and an allowed rate of return on equity of 10.6% on an equity ratio of 53.5% of total capital. Through this proceeding, OTP has proposed changes to the mechanism of cost and investment recovery, with recovery moving from riders into base rates. The filing also includes a proposal to implement a sales adjustment mechanism to address potential significant load additions or losses. The filing included an interim rate request of a net increase in annual revenue of $12.4 million, or 6.0%, which was approved by the NDPSC on December 13, 2023, and interim rates went into effect on January 1, 2024. These interim rate revenues, when collected, are subject to potential refund until the finalization of the rate case.

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

Major classes of property, plant and equipment as of December 31, 2023 and 2022 include:

(in thousands)	2023		2022
Electric Plant in Service
Production	$	1,412,826	$	1,343,097
Transmission	777,613		756,848
Distribution	654,704		612,716
General	144,738		131,718
Electric Plant in Service	2,989,881		2,844,379
Construction Work in Progress	137,212		113,932
Total Gross Electric Plant	3,127,093		2,958,311
Less Accumulated Depreciation and Amortization	851,148		859,988
Net Electric Plant	2,275,945		2,098,323
Nonelectric Property, Plant and Equipment
Equipment	233,571		218,770
Buildings and Leasehold Improvements	64,753		61,506
Land	13,600		13,652
Nonelectric Property, Plant and Equipment	311,924		293,928
Construction Work in Progress	38,062		15,170
Total Gross Nonelectric Property, Plant and Equipment	349,986		309,098
Less Accumulated Depreciation and Amortization	207,556		194,704
Net Nonelectric Property, Plant and Equipment	142,430		114,394
Net Property, Plant and Equipment	$	2,418,375	$	2,212,717

Depreciation expense for the years ended December 31, 2023, 2022 and 2021 totaled $90.8 million, $84.4 million and $85.8 million.

The following table provides OTP’s ownership percentages and amounts included in the December 31, 2023 and 2022 consolidated balance sheets for OTP’s share of each of these jointly owned facilities:

(dollars in thousands)	Ownership Percentage		Electric Plant in Service		Construction Work in Progress		Accumulated Depreciation		Net Plant
December 31, 2023
Big Stone Plant	53.9	%	$	341,683	$	820	$	(126,904)	$	215,599
Coyote Station	35.0	%	188,656		104		(115,306)		73,454
Big Stone South–Ellendale 345 kV line	50.0	%	106,185		—		(7,181)		99,004
Fargo–Monticello 345 kV line	14.2	%	78,184		—		(11,238)		66,946
Big Stone South–Brookings 345 kV line	50.0	%	53,170		—		(5,207)		47,963
Brookings–Southeast Twin Cities 345 kV line	4.8	%	26,409		83		(3,617)		22,875
Bemidji–Grand Rapids 230 kV line	14.8	%	16,331		—		(3,568)		12,763
Jamestown– Ellendale 345 kV line	50.0	%	—		1,121		—		1,121
Big Stone South–Alexandria 345 kV line	40.0	%	—		555		—		555
Alexandria–Big Oaks 345 kV line	14.2	%	—		343		—		343
December 31, 2022
Big Stone Plant	53.9	%	$	338,411	$	557	$	(118,044)	$	220,924
Coyote Station	35.0	%	183,461		2,315		(111,666)		74,110
Big Stone South–Ellendale 345 kV line	50.0	%	106,185		—		(5,587)		100,598
Fargo–Monticello 345 kV line	14.2	%	78,184		—		(10,095)		68,089
Big Stone South–Brookings 345 kV line	50.0	%	53,041		—		(4,406)		48,635
Brookings–Southeast Twin Cities 345 kV line	4.8	%	26,291		—		(3,211)		23,080
Bemidji–Grand Rapids 230 kV line	14.8	%	16,331		—		(3,318)		13,013

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Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible Assets

The following table summarizes our goodwill by segment as of December 31, 2023 and 2022: 

(in thousands)	2023		2022
Manufacturing	$	18,270	$	18,270
Plastics	19,302		19,302
Total Goodwill	$	37,572	$	37,572

Our annual goodwill impairment testing, performed in the fourth quarters of 2023 and 2022, indicated no impairment existed as of the test date.

The following table summarizes the components of our intangible assets at December 31, 2023 and 2022:

(in thousands)	Gross Amount		Accumulated Amortization		Net Carrying Amount
December 31, 2023
Customer Relationships	$	22,491	$	15,667	$	6,824
Other	26		7		19
Total	22,517		15,674		6,843
December 31, 2022
Customer Relationships	22,491		14,568		7,923
Other	26		6		20
Total	$	22,517	$	14,574	$	7,943

Amortization expense for these intangible assets for each of the years ended December 31, 2023, 2022 and 2021 totaled $1.1 million.

Annual amortization expense for these intangible assets for the next five years is: 

(in thousands)	2024		2025		2026		2027		2028
Amortization Expense	$	1,100	$	1,100	$	1,092	$	1,090	$	554

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Leases

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Leases

Leases 

We lease rail cars, warehouse and office space, land, and certain office, manufacturing, material handling, and other equipment under varying terms and conditions. All leases are classified as operating leases.

The components of lease cost and lease cash flows for the years ended December 31, 2023, 2022, and 2021 are as follows:

(in thousands)	2023		2022		2021
Lease Cost
Operating Lease Cost	$	6,309	$	5,606	$	5,298
Variable Lease Cost	1,433		1,386		1,020
Short-Term Lease Cost	2,525		1,517		1,465
Total Lease Cost	10,267		8,509		7,783
Lease Cash Flows
Operating Cash Flows from Operating Leases	$	6,424	$	5,592	$	5,642

A summary of operating lease right-of-use lease assets and lease liabilities as of December 31, 2023 and 2022 is as follows: 

(in thousands)	2023		2022
Right of Use Lease Assets1	$	16,788	$	18,610
Lease Liabilities
Current2	5,756		5,071
Long-Term3	11,258		13,876
Total Lease Liabilities	$	17,014	$	18,947
1Included in Other Noncurrent Assets in the consolidated balance sheets.
2Included in Other Current Liabilities in the consolidated balance sheets.
3Included in Other Noncurrent Liabilities in the consolidated balance sheets.

Operating lease assets obtained in exchange for new operating liabilities amounted to $3.6 million and $3.7 million for the years ended December 31, 2023 and 2022.

Maturities of lease liabilities as of December 31, 2023 for each of the next five years and in the aggregate thereafter are as follows:

(in thousands)	Operating Leases
2024	$	6,473
2025	5,357
2026	3,068
2027	2,196
2028	1,059
Thereafter	368
Total Lease Payments	18,521
Less: Interest	1,507
Present Value of Lease Liabilities	$	17,014

The weighted-average remaining lease term and the weighted-average discount rate as of December 31, 2023 and 2022 are as follows:

	2023		2022
Weighted-Average Remaining Lease Term (in years)	3.4		4.2
Weighted-Average Discount Rate	5.40	%	4.73	%

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Short-Term and Long-Term Borrowings

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Short-Term and Long-Term Borrowings

Short-Term and Long-Term Borrowings

The following is a summary of our outstanding short- and long-term borrowings by borrower, OTC or OTP, as of December 31, 2023 and 2022:

	2023						2022
(in thousands)	OTC		OTP		Total		OTC		OTP		Total
Short-Term Debt	$	—	$	81,422	$	81,422	$	—	$	8,204	$	8,204
Current Maturities of Long-Term Debt	—		—		—		—		—		—
Long-Term Debt, net of current maturities	79,849		744,210		824,059		79,798		744,023		823,821
Total	$	79,849	$	825,632	$	905,481	$	79,798	$	752,227	$	832,025

Short-Term Debt

The following is a summary of our lines of credit as of December 31, 2023 and 2022:

			2023						2022
(in thousands)	Line Limit		Amount Outstanding		Letters of Credit		Amount Available		Amount Available
OTC Credit Agreement	$	170,000	$	—	$	—	$	170,000	$	170,000
OTP Credit Agreement	170,000		81,422		9,132		79,446		152,223
Total	$	340,000	$	81,422	$	9,132	$	249,446	$	322,223

OTC is party to a Fifth Amended and Restated Credit Agreement (the OTC Credit Agreement) and OTP is party to a Fourth Amended and Restated Credit Agreement (the OTP Credit Agreement). The agreements both provide for $170.0 million unsecured revolving lines of credit to support operations, fund capital expenditures, refinance certain indebtedness and provide for the issuance of letters of credit in an aggregate amount not to exceed $40.0 million under the OTC Credit Agreement and $50.0 million under the OTP Credit Agreement. Each credit facility includes an accordion provision allowing the borrower to increase the borrowing capacity under the facility, subject to certain conditions, up to $290.0 million and $250.0 million under the OTC Credit Agreement and OTP Credit Agreement, respectively.

Borrowings under each credit facility are subject to a variable rate of interest on outstanding balances and a commitment fee is charged based on the average unused amount available to be drawn under the respective facility. The variable rate of interest to be charged is based on a benchmark interest rate, either SOFR or a Base Rate, as defined in the credit agreements, selected by the borrower at the time of an advance, subject to the conditions of each agreement, plus an applicable credit spread. The credit spread ranges from zero to 2.00%, depending on the benchmark interest rate selected, and is subject to adjustment based on the credit ratings of the relevant borrower. The weighted-average interest rate on all outstanding borrowings as of December 31, 2023 and 2022 was 6.70% and 5.61%.

Each credit facility contains a number of restrictions on the borrower, including restrictions on the ability to merge, sell assets, make investments, create or incur liens on assets, guarantee the obligations of any other party and engage in transactions with related parties. The agreements also require the borrower to maintain various financial covenants, as further described below. Each credit facility expires on October 29, 2027.

Long-Term Debt

The following is a summary of outstanding long-term debt by borrower as of December 31, 2023 and 2022: 

					(in thousands)
Entity		Debt Instrument	Rate	Maturity	2023		2022
OTC		Guaranteed Senior Notes	3.55%	12/15/26	$	80,000	$	80,000
OTP		Series 2007C Senior Unsecured Notes	6.37%	08/02/27	42,000		42,000
OTP		Series 2013A Senior Unsecured Notes	4.68%	02/27/29	60,000		60,000
OTP		Series 2019A Senior Unsecured Notes	3.07%	10/10/29	10,000		10,000
OTP		Series 2020A Senior Unsecured Notes	3.22%	02/25/30	10,000		10,000
OTP		Series 2020B Senior Unsecured Notes	3.22%	08/20/30	40,000		40,000
OTP		Series 2021A Senior Unsecured Notes	2.74%	11/29/31	40,000		40,000
OTP		Series 2007D Senior Unsecured Notes	6.47%	08/20/37	50,000		50,000
OTP		Series 2019B Senior Unsecured Notes	3.52%	10/10/39	26,000		26,000
OTP		Series 2020C Senior Unsecured Notes	3.62%	02/25/40	10,000		10,000
OTP		Series 2013B Senior Unsecured Notes	5.47%	02/27/44	90,000		90,000
OTP		Series 2018A Senior Unsecured Notes	4.07%	02/07/48	100,000		100,000
OTP		Series 2019C Senior Unsecured Notes	3.82%	10/10/49	64,000		64,000
OTP		Series 2020D Senior Unsecured Notes	3.92%	02/25/50	15,000		15,000
OTP		Series 2021B Senior Unsecured Notes	3.69%	11/29/51	100,000		100,000
OTP		Series 2022A Senior Unsecured Notes	3.77%	05/20/52	90,000		90,000
Total					827,000		827,000
Less:	Unamortized Long-Term Debt Issuance Costs				2,941		3,179
Total Long-Term Debt Net of Unamortized Debt Issuance Costs					$	824,059	$	823,821

Our guaranteed and unsecured notes require the borrower to maintain various financial covenants, as further described below. These notes provide for prepayment options allowing for a full or partial prepayment at 100% of the principal amount so prepaid, together with unpaid accrued interest and a make-whole amount, as defined. These notes also include restrictions on the borrower, including its ability to merge, sell assets, create or incur liens on assets, guarantee the obligations of any other party and engage in transactions with related parties.

Aggregate maturities of long-term debt obligations at December 31, 2023 for each of the next five years are as follows:

(in thousands)	2024		2025		2026		2027		2028
Debt Maturities	$	—	$	—	$	80,000	$	42,000	$	—

Financial Covenants

Certain of OTC's and OTP's short-term and long-term debt agreements require the borrower, whether OTC or OTP, to maintain certain financial covenants, including a maximum debt to total capitalization of 0.60 to 1.00, a minimum interest and dividend coverage ratio of 1.50 to 1.00, and a maximum level of priority indebtedness. As of December 31, 2023, OTC and OTP were in compliance with these financial covenants.

Guaranties

OTC's obligations under the terms of its Guaranteed Senior Notes are unconditionally and irrevocably guaranteed by its subsidiaries, Varistar Corporation, BTD Manufacturing, Inc., Northern Pipe Products, Inc., and Vinyltech Corporation.

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Employee Postretirement Benefits

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Employee Postretirement Benefits

Employee Postretirement Benefits

Pension Plan and Other Postretirement Benefits

The Company sponsors a noncontributory funded pension plan (the Pension Plan), an unfunded, nonqualified Executive Survivor and Supplemental Retirement Plan (ESSRP), both accounted for as defined benefit pension plans, and a postretirement healthcare plan accounted for as an other postretirement benefit plan.

The Pension Plan, which previously covered substantially all corporate and OTP employees, was closed to new employees in 2013. The plan provides retirement compensation to all covered employees at age 65, with reduced compensation in cases of retirement prior to age 62. Participants are fully vested after completing five years of vesting service. The plan assets consist of equity funds, fixed income funds, cash and cash equivalents and alternative investments. None of the plan assets are invested in common stock or debt securities of the Company.

The ESSRP, an unfunded plan, provides for defined benefit payments to executive officers and certain key management employees on their retirement for life, or to their beneficiaries on their death. The ESSRP was amended and restated in 2019 to i) freeze the participation in the

restoration retirement benefit component of the plan and ii) freeze benefit accruals under the restoration retirement benefit component of the plan for all participants of the plan except any participants deemed to be grandfathered participants.

The postretirement healthcare plan, closed to new participants in 2010, provides a portion of health insurance benefits for retired and covered corporate and OTP employees. To be eligible for retiree health insurance benefits, the employee must be 55 years of age with a minimum of 10 years of service. The plan is an unfunded plan and accordingly holds no plan assets.

Pension Plan Assets. We have established a Retirement Plans Administration Committee to develop and monitor our investment strategy for our Pension Plan assets. Our investment strategy includes the following objectives:

•The assets of the plan will be invested in accordance with all applicable laws in a manner consistent with fiduciary standards including Employee Retirement Income Security Act standards of 1974 (ERISA) (if applicable). Specifically:

◦The safeguards and diversity that a prudent investor would adhere to must be present in the investment program.

◦All transactions undertaken on behalf of the Pension Plan must be in the best interest of plan participants and their beneficiaries.

•The primary objective is to provide a source of retirement income for its participants and beneficiaries.

•The near-term primary financial objective is to improve and protect the funded status of the plan.

•A secondary financial objective is to minimize pension funding and expense volatility where possible.

We have developed an asset allocation target, measured at investment market value, to provide guideline percentages of investment mix. This investment mix is intended to achieve the financial objectives of the plan. The permitted range is a guide and will at times not reflect the actual asset allocation due to market conditions, actions of our investment managers and required cash flows to and from the Pension Plan.

The following table presents our target asset allocation permitted range along with the actual asset allocation as of December 31, 2023 and 2022:

	Permitted			Actual Allocation
Asset Class	Range			2023		2022
Return Enhancement	35	–	60%	48	%	48	%
Risk Management	40	–	80%	51		51
Alternatives	0	–	20%	1		1
Total				100	%	100	%

Return Enhancement investments are those that seek to provide equity-like, long-term capital appreciation. Examples include equity securities, including dynamic asset allocation funds, and higher yielding fixed income securities, such as high yield bonds and emerging market debt.

Risk Management investments seek to decrease downside risk or act as a hedge against plan liabilities. Examples are cash and fixed income instruments.

Alternative investments seek to either provide return enhancement through long-term appreciation or risk management through decreased downside risk. The defining characteristic of these asset types is uncorrelated source of returns, less liquidity and private market access. Examples include investments in the SEI Energy Debt Collective Fund.

The following presents the fair value inputs classified within the fair value hierarchy used to measure Pension Plan assets at December 31, 2023 and 2022 and assets measured using the net asset value (NAV) practical expedient:

(in thousands)	Level 1		Level 2		Level 3		NAV		Total
December 31, 2023
Equity Funds	$	127,159	$	—	$	—	$	—	$	127,159
Fixed Income Funds	167,604		—		—		—		167,604
Hybrid Funds	10,980		—		—		—		10,980
U.S. Treasury Securities	23,218		—		—		—		23,218
SEI Energy Debt Collective Fund	—		—		—		1,518		1,518
Total	328,961		—		—		1,518		330,479
December 31, 2022
Equity Funds	124,327		—		—		—		124,327
Fixed Income Funds	156,424		—		—		—		156,424
Hybrid Funds	9,756		—		—		—		9,756
U.S. Treasury Securities	19,587		—		—		—		19,587
SEI Energy Debt Collective Fund	—		—		—		3,703		3,703
Total	$	310,094	$	—	$	—	$	3,703	$	313,797

The investments held by the SEI Energy Debt Collective Fund on December 31, 2023 and 2022 consist mainly of below investment grade high yield bonds and loans of U.S. energy companies which trade at a discount to fair value. Redemptions are allowed semi-annually with a 95-day notice

period, subject to fund director consent and certain gate, holdback and suspension restrictions. Subscriptions are allowed monthly with a three-year lock up on subscriptions. The fund’s assets are valued in accordance with valuations reported by the fund’s sub-advisor or the fund’s underlying investments or other independent third-party sources, although SEI in its discretion may use other valuation methods, subject to compliance with ERISA, as applicable. On an annual basis, as determined by the investment manager in its sole discretion, an independent valuation agent is retained to provide a valuation of the illiquid assets of the fund and of any other asset of the fund.

Funded Status. The following table provides a reconciliation of the changes in the fair value of plan assets and the actuarially computed benefit obligation for the years ended December 31, 2023 and 2022 and the funded status of the plans as of December 31, 2023 and 2022:

	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
(in thousands)	2023		2022		2023		2022		2023		2022
Change in Fair Value of Plan Assets:
Fair Value of Plan Assets at January 1	$	313,797	$	387,212	$	—	$	—	$	—	$	—
Actual Return on Plan Assets	34,196		(76,485)		—		—		—		—
Company Contributions	—		20,000		2,197		2,205		3,167		2,294
Benefit Payments	(17,514)		(16,930)		(2,197)		(2,205)		(8,900)		(8,173)
Participant Premium Payments	—		—		—		—		5,733		5,879
Fair Value of Plan Assets at December 31	330,479		313,797		—		—		—		—
Change in Benefit Obligation:
Benefit Obligation at January 1	308,055		416,697		35,624		46,840		49,947		69,311
Service Cost	3,698		6,576		72		195		565		1,338
Interest Cost	16,436		12,344		1,889		1,341		2,416		2,041
Benefit Payments	(17,514)		(16,930)		(2,197)		(2,205)		(8,900)		(8,172)
Participant Premium Payments	—		—		—		—		5,733		5,879
Plan Amendments	—		—		—		—		(17,493)		—
Actuarial (Gain) Loss	8,126		(110,632)		392		(10,547)		(2,123)		(20,450)
Benefit Obligation at December 31	318,801		308,055		35,780		35,624		30,145		49,947
Funded Status	$	11,678	$	5,742	$	(35,780)	$	(35,624)	$	(30,145)	$	(49,947)
Amounts Recognized in Consolidated Balance Sheets at December 31:
Noncurrent Assets	$	11,678	$	5,742	$	—	$	—	$	—	$	—
Current Liabilities	—		—		(2,679)		(2,414)		(2,469)		(2,970)
Noncurrent Liabilities and Deferred Credits	—		—		(33,101)		(33,210)		(27,676)		(46,977)
Net Asset (Liability)	$	11,678	$	5,742	$	(35,780)	$	(35,624)	$	(30,145)	$	(49,947)

The accumulated benefit obligation of our Pension Plan was $288.8 million and $283.2 million as of December 31, 2023 and 2022. The accumulated benefit obligation of our ESSRP was $35.8 million and $35.6 million as of December 31, 2023 and 2022.

In 2023, the Company amended its postretirement healthcare plan to eliminate, for Medicare-eligible participants, the employer-sponsored group waiver medical plan and instead allow participants to select an individual medical plan through a private marketplace exchange. The Company now provides these plan participants with an annual reimbursement to subsidize their medical premiums. The effect of the plan amendment reduced the Company’s projected benefit obligation by $20.1 million. The reduced benefit obligation included a $2.6 million reduction attributable to an increase in the discount rate used to measure the plan liability, which was 6.06% at the time of the amendment, compared to 5.52% used at December 31, 2022. The $17.5 million of savings attributable to the plan change is being recognized as a reduction to expense over 4.8 years, the expected remaining service period to retirement-age eligibility for active participants.

The following assumptions were used to determine benefit obligations as of December 31, 2023 and 2022:

	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
	2023		2022		2023		2022		2023		2022
Discount Rate	5.57	%	5.51	%	5.53	%	5.51	%	5.53	%	5.52	%
Long-Term Rate of Compensation Increase	n/a		n/a		3.00	%	3.00	%	n/a		n/a
Participants up to Age 39(1)	4.50	%	4.50	%	n/a		n/a		n/a		n/a
Participants Ages 40 to 49(2)	4.50	%	3.50	%	n/a		n/a		n/a		n/a
Participants Age 50 and Older(3)	3.75	%	2.75	%	n/a		n/a		n/a		n/a
Healthcare Cost Immediate Trend Rate	n/a		n/a		n/a		n/a		6.97	%	7.50	%
Healthcare Cost Ultimate Trend Rate	n/a		n/a		n/a		n/a		4.00	%	4.00	%
Year the Rate Reaches the Ultimate Trend Rate	n/a		n/a		n/a		n/a		2048		2048
(1) Amount reflects rate of compensation increases for both union and non-union employees.
(2) Amount reflects rate of compensation increases for union employees. The rate of compensation increases for non-union employees is 3.50%.
(3) Amount reflects rate of compensation increases for union employees. The rate of compensation increases for non-union employees is 3.00%.

The measurement of the plan asset or benefit obligation recognized for our Pension Plan, ESSRP and postretirement healthcare benefit plan included the following significant actuarial adjustments:

•For the Pension Plan, an increase in the discount rate in 2023 and 2022 reduced our obligation by $2.2 million and $117.1 million. Changes in retirement rate, percentage married, spouse age, benefit election, benefit commencement age and wage assumptions increased our benefit obligation in 2023 by $7.9 million. Changes in plan participant census data increased our benefit obligation by $3.1 million in 2023. Actual returns on Pension Plan assets in 2023 were $34.2 million, compared to an expected return of $25.9 million, impacting our obligation by $8.3 million.

•For the ESSRP, an increase in the discount rate in 2023 and 2022 reduced our obligation by $0.1 million and $10.2 million.

•For the postretirement healthcare plan, a plan amendment during 2023, as described above, decreased our benefit obligation by $17.5 million. An increase in the discount rate in 2023 and 2022 reduced our obligation by $1.3 million and $17.9 million. Revised estimates of healthcare cost trends and participant contribution assumptions increased the benefit obligation by $1.1 million in 2023.

Net Periodic Benefit Cost. A portion of service cost may be capitalized as a cost of self-constructed property, plant and equipment. When recognized in the consolidated statements of income, service cost is recognized within one of the components of operating expenses. Nonservice cost components of net periodic benefit cost may be deferred and recognized as a regulatory asset under the accounting guidance for regulated operations. When recognized in the consolidated statements of income, nonservice cost components are recognized as nonservice cost components of postretirement benefits.

The following table lists the components of net periodic benefit cost of our defined benefit pension plans and other postretirement benefits for the years ended December 31, 2023, 2022 and 2021:

	Pension Benefits (Pension Plan)						Pension Benefits (ESSRP)						Postretirement Benefits
(in thousands)	2023		2022		2021		2023		2022		2021		2023		2022		2021
Service Cost	$	3,698	$	6,576	$	7,462	$	72	$	195	$	187	$	565	$	1,338	$	1,722
Interest Cost	16,436		12,344		11,660		1,889		1,341		1,228		2,416		2,041		1,891
Expected Return on Assets	(25,914)		(23,684)		(22,359)		—		—		—		—		—		—
Amortization of Prior Service Cost	—		—		—		—		—		—		(6,649)		(5,733)		(5,733)
Amortization of Net Actuarial Loss	—		7,865		10,914		—		567		620		—		3,063		3,774
Net Periodic Benefit Cost	$	(5,780)	$	3,101	$	7,677	$	1,961	$	2,103	$	2,035	$	(3,668)	$	709	$	1,654

The following table includes the impact of regulation on the recognition of periodic benefit cost arising from pension and other postretirement benefits for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023		2022		2021
Net Periodic Benefit Cost	$	(7,487)	$	5,913	$	11,366
Net Amount Amortized Due to the Effect of Regulation	1,225		1,121		21
Net Periodic Benefit Cost Recognized	$	(6,262)	$	7,034	$	11,387

The following assumptions were used to determine net periodic benefit cost for the years ended December 31, 2023, 2022 and 2021:

	Pension Benefits (Pension Plan)						Pension Benefits (ESSRP)						Postretirement Benefits
	2023		2022		2021		2023		2022		2021		2023		2022		2021
Discount Rate	5.51	%	3.03	%	2.78	%	5.51	%	2.93	%	2.61	%	5.52	%	3.01	%	2.75	%
Long-Term Rate of Return on Plan Assets	7.00	%	6.30	%	6.51	%	n/a		n/a		n/a		n/a		n/a		n/a
Long-Term Rate of Compensation Increase	n/a		n/a		n/a		3.00	%	3.00	%	3.00	%	n/a		n/a		n/a
Participants to Age 39	4.50	%	4.50	%	4.50	%	n/a		n/a		n/a		n/a		n/a		n/a
Participants Ages 40 to 49	3.50	%	3.50	%	3.50	%	n/a		n/a		n/a		n/a		n/a		n/a
Participants Age 50 and Older	2.75	%	2.75	%	2.75	%	n/a		n/a		n/a		n/a		n/a		n/a

We develop our estimated discount rate through the use of a hypothetical bond portfolio method. This method derives the discount rate from the average yield of a collection of high credit quality bonds which produce cash flows similar to our anticipated future benefit payments. We estimate the assumed long-term rate of return on plan assets based primarily on asset category studies using historical market return and volatility data with forward-looking estimates based on existing financial market conditions and forecasts of capital markets. Modest excess return expectations versus some market indices are incorporated into the return projections based on the actively managed structure of the investment programs and their records of achieving such returns historically.

The following table presents the amounts not yet recognized as components of net periodic benefit cost as of December 31, 2023 and 2022:

	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
(in thousands)	2023		2022		2023		2022		2023		2022
Regulatory Assets (Liabilities):
Unrecognized Prior Service Cost	$	—	$	—	$	—	$	—	$	(18,845)	$	(8,400)
Unrecognized Actuarial Loss	85,227		85,367		1,061		979		1,759		3,993
Net Regulatory Assets (Liabilities)	85,227		85,367		1,061		979		(17,086)		(4,407)
Accumulated Other Comprehensive Income (Loss):
Unrecognized Prior Service Cost	—		—		—		—		498		99
Unrecognized Actuarial Gain (Loss)	1,994		1,978		(1,403)		(1,093)		707		818
Total Accumulated Other Comprehensive Income (Loss)	$	1,994	$	1,978	$	(1,403)	$	(1,093)	$	1,205	$	917

Cash Flows. We did not make any contributions to our Pension Plan in 2023. We made discretionary contributions of $20.0 million and $10.0 million in 2022 and 2021. As of December 31, 2023, we had no minimum funding requirements for our Pension Plan. Contributions to our ESSRP and postretirement healthcare plan are equal to the benefits paid to plan participants.

The following reflects anticipated benefit payments to be paid in each of the next five years and in the aggregate for the five year period thereafter under our pension plans and postretirement healthcare plan:

(in thousands)	2024		2025		2026		2027		2028		2029-2033
Projected Pension Plan Benefit Payments	$	18,851	$	19,274	$	19,828	$	20,318	$	20,882	$	110,291
Projected ESSRP Benefit Payments	2,747		2,697		2,823		2,994		2,938		14,437
Projected Postretirement Benefit Payments	2,469		2,497		2,544		2,547		2,476		12,045
Total	$	24,067	$	24,468	$	25,195	$	25,859	$	26,296	$	136,773

401K Plan

We sponsor a 401K plan for the benefit of all corporate and subsidiary company employees. Contributions made to these plans totaled $7.8 million for 2023, $6.7 million for 2022 and $6.5 million for 2021.

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Asset Retirement Obligations

12 Months Ended

Dec. 31, 2023

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

Asset Retirement Obligations

We have recognized Asset Retirement Obligations (AROs) related to our coal-fired generation plants, natural gas combustion turbines, solar facility, and wind turbines. The cost of AROs include items such as site restoration, closure of ash pits, and removal of certain structures, generators, asbestos and storage tanks. We have other legal obligations associated with the retirement of a variety of other long-lived tangible assets used in electric operations where the estimated settlement costs are individually and collectively immaterial. We have no assets legally restricted for the settlement of any AROs. As of December 31, 2023 and 2022, $0.1 million and $2.7 million, respectively, was included in other current liabilities and $36.4 million and $22.5 million, respectively, was included in other noncurrent liabilities in the consolidated balance sheets related to AROs.

A reconciliation of the carrying amounts of AROs for the years ended December 31, 2023 and 2022 is as follows: 

(in thousands)	2023		2022
Beginning Balance	$	25,182	$	24,191
New Obligations Recognized	4,506		—
Adjustments Due to Revisions in Cash Flow Estimates	8,394		—
Accrued Accretion	1,191		991
Settlements	(2,796)		—
Ending Balance	$	36,477	$	25,182

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Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income before income taxes for the years ended December 31, 2023, 2022 and 2021 consists entirely of domestic earnings.

The provision for income taxes charged to income for the years ended December 31, 2023, 2022 and 2021 consisted of the following:

(in thousands)	2023		2022		2021
Current
Federal Income Taxes	$	41,253	$	31,949	$	6,806
State Income Taxes	15,126		9,568		939
Deferred
Federal Income Taxes	9,832		22,480		18,180
State Income Taxes	3,676		9,943		10,716
Tax Credits
North Dakota Wind Tax Credit Amortization, Net of Federal Tax	(586)		(586)		(586)
Investment Tax Credit Amortization	(3)		(3)		(3)
Total	$	69,298	$	73,351	$	36,052

The reconciliation of the statutory federal income tax rate to our effective tax rate for each of the years ended December 31, 2023, 2022 and 2021 is as follows:

	2023				2022				2021
Income Taxes at Federal Statutory Rate	$	76,332	21.0	%	$	75,082	21.0	%	$	44,692	21.0	%
Increases (Decreases) in Tax from:
State Taxes on Income, Net of Federal Tax	14,429		4.0		15,049		4.2		9,962		4.7
Production Tax Credits (PTCs)	(17,394)		(4.8)		(14,985)		(4.2)		(12,503)		(5.9)
Amortization of Excess Deferred Income Taxes	(2,205)		(0.6)		(1,625)		(0.5)		(4,262)		(2.0)
North Dakota Wind Tax Credit Amortization, Net of Federal Tax	(586)		(0.2)		(586)		(0.2)		(586)		(0.3)
Other, Net	(1,278)		(0.3)		416		0.2		(1,251)		(0.6)
Income Taxes at Effective Tax Rate	$	69,298	19.1	%	$	73,351	20.5	%	$	36,052	16.9	%

PTCs, North Dakota wind tax credits, and excess deferred income taxes related to the federal tax rate reduction in the 2017 Tax Cuts and Jobs Act are returned to customers as a reduction of the rates they are charged and result in a reduction of operating revenues.

Deferred tax assets and liabilities were composed of the following on December 31, 2023 and 2022:

(in thousands)	2023		2022
Deferred Tax Assets
Employee Benefits	$	39,959	$	39,216
Regulatory Liabilities	56,479		57,353
Tax Credit Carryforwards	21,836		20,209
Cost of Removal	32,993		37,360
Asset Retirement Obligations	9,494		6,557
Net Operating Loss Carryforward	2,336		1,853
Other	11,310		5,550
Total Deferred Tax Assets	174,407		168,098
Deferred Tax Liabilities
Differences Related to Property	(347,885)		(334,201)
Retirement Benefits Regulatory Asset	(22,458)		(22,789)
Pension Expense	(24,875)		(24,269)
Other	(16,462)		(8,141)
Total Deferred Tax Liabilities	(411,680)		(389,400)
Deferred Income Taxes	$	(237,273)	$	(221,302)

The following is a schedule of tax credits and tax net operating losses available as of December 31, 2023 and the respective periods of expiration:

(in thousands)	Amount		2024-2029		2030-2037		2038-2043
State Net Operating Losses	$	2,336	$	211	$	2,125	$	—
State Tax Credits	21,836		—		—		21,836

The following table summarizes the activity for unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023		2022		2021
Balance on January 1	$	923	$	827	$	771
Increases for tax positions taken during a prior period	596		44		11
Increases for tax positions taken during the current period	163		260		189
Decreases due to settlements with taxing authorities	—		—		—
Decreases as a result of a lapse of applicable statutes of limitations	(193)		(208)		(144)
Balance on December 31	$	1,489	$	923	$	827

The balance of unrecognized tax benefits as of December 31, 2023 would reduce our effective tax rate if recognized. The total amount of unrecognized tax benefits as of December 31, 2023 is not expected to change significantly within the next 12 months. We classify interest and penalties on tax uncertainties as components of the provision for income taxes in the consolidated statements of income.

The Company and its subsidiaries file a consolidated U.S. federal income tax return and various state income tax returns. As of December 31, 2023, with limited exceptions, we are no longer subject to examinations by taxing authorities for tax years prior to 2020 for federal and North Dakota income taxes and prior to 2019 for Minnesota state income taxes.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Commitments

Construction and Other Commitments. As of December 31, 2023, we had commitments under contracts for construction project materials, equipment, plant maintenance, and other services extending into 2046 which totaled approximately $17.1 million.

Electric Utility Capacity and Energy Requirements. OTP has commitments for the purchase of capacity and energy requirements under contractual agreements, including wind power purchase agreements extending into 2048. Generally, the terms of OTP's wind power purchase agreements require OTP to purchase all of the electricity generated by a particular wind farm and do not include fixed or minimum payments. The required payments are variable and the amounts due are determined based upon the amount of electricity generated. Capacity and energy requirement costs under these agreements totaled $5.6 million, $13.1 million and $11.5 million for the years ended December 31, 2023, 2022 and 2021.

Coal Purchase Commitments. OTP has contracts providing for the purchase and delivery of its coal requirements. OTP’s current coal purchase agreement with CCMC for Coyote Station expires December 31, 2040. All of Coyote Station’s coal requirements for the period covered must be purchased under this agreement. The agreement is structured so that the price of the coal covers all of CCMC's operating, financing, and future

mine reclamation costs. In the table below we have estimated the future payments to be made under the terms of the agreement until its maturity. OTP has an agreement for the purchase of Big Stone Plant’s coal requirements through December 31, 2024. There is no fixed minimum purchase requirement, and no amounts for this agreement have been included in the table below; however, under this agreement all of Big Stone Plant’s coal requirements for the period covered must be purchased under this agreement. Coal purchase costs under these two agreements totaled $43.7 million, $45.1 million and $40.4 million for the years ended December 31, 2023, 2022 and 2021.

Land Easement Payments. OTP has commitments to make payments for land easements not classified as leases. The contractual terms of these easements are generally 99 years or do not have a stated maturity date, however, per the terms of the agreements, our requirement to make payment ends once we cease use of the land. As such, in the table below, we have included payments under these easements through the estimated useful lives of the facilities associated with the easement. The commitments under these arrangements extend into 2055 and total approximately $62.4 million. Land easement costs under these agreements totaled $1.8 million, $1.4 million and $1.3 million for the years ended December 31, 2023, 2022 and 2021.

Our future commitments as of December 31, 2023 were as follows:

(in thousands)	Construction Program and Other Commitments		Capacity and Energy Requirements		Coal Purchase Commitments		Land  Easement Payments
2024	$	4,374	$	245	$	24,691	$	1,804
2025	4,051		217		24,593		1,840
2026	1,377		197		25,374		1,845
2027	594		197		25,786		1,882
2028	550		197		25,344		1,921
Beyond 2028	6,165		3,939		359,610		53,107
Total	$	17,111	$	4,992	$	485,398	$	62,399

Contingencies

FERC ROE. In November 2013 and February 2015, customers filed complaints with the FERC seeking to reduce the ROE component of the transmission rates that MISO transmission owners, including OTP, may collect under the MISO tariff rate. FERC's most recent order, issued on November 19, 2020, adopted a revised ROE methodology and set the base ROE at 10.02% (10.52% with an adder) effective for the fifteen-month period from November 2013 to February 2015 and on a prospective basis beginning in September 2016. The order also dismissed any complaints covering the period from February 2015 to May 2016. On August 9, 2022, the U.S. Court of Appeals for the District of Columbia Circuit vacated the FERC order citing a lack of reasoned explanation by FERC in its adoption of its revised ROE methodology as outlined in its November 2020 order. The U.S. Court of Appeals remanded the matter to FERC to reopen the proceedings.

Significant uncertainty exists as to how FERC will proceed on remand and there is no prescribed timeline under which FERC must act. We have deferred recognition and recorded a refund liability of $2.8 million as of December 31, 2023. This refund liability reflects our best estimate of amounts previously collected from customers under the MISO tariff rate that may be required to be refunded to customers once all regulatory and judicial proceedings are complete and a final ROE is established for the periods outlined above.

Regional Haze Rule (RHR). The RHR was adopted in an effort to improve visibility in national parks and wilderness areas. The RHR requires states, in coordination with the EPA and other governmental agencies, to develop and implement plans to achieve natural visibility conditions. The second RHR implementation period covers the years 2018-2028. States are required to submit a state implementation plan (SIP) to assess reasonable progress with the RHR and determine what additional emission reductions are appropriate, if any.

Coyote Station, OTP's jointly owned coal-fired power plant in North Dakota, is subject to assessment in the second implementation period under the North Dakota SIP. The NDDEQ submitted its SIP to the EPA for approval in August 2022. In its plan, the NDDEQ concluded it is not reasonable to require additional emission controls during this planning period. The EPA has previously expressed disagreement with the NDDEQ's recommendation to forgo additional emission controls and has indicated that such a plan is not likely to be accepted.

We cannot predict with certainty the impact the SIP may have on our business until the SIP has been approved or otherwise acted on by the EPA. However, significant emission control investments could be required and the recovery of such costs from customers would require regulatory approval. Alternatively, investments in emission control equipment may prove to be uneconomic and result in the early retirement or the sale of our interest in Coyote Station, subject to regulatory approval. We cannot estimate the ultimate financial effects such a retirement or sale may have on our consolidated operating results, financial position or cash flows, but such amounts could be material and the recovery of such costs in rates would be subject to regulatory approval.

Self-Funding of Transmission Upgrades. The FERC has granted transmission owners within MISO the unilateral authority to determine the funding mechanism for interconnection transmission upgrades that are necessary to accommodate new generation facilities connecting to the electrical grid. Under existing FERC orders, transmission owners can unilaterally determine whether the generator pays the transmission owner in advance for the transmission upgrade or, alternatively, the transmission owner can elect to fund the upgrade and recover over time from the generator the cost of and a return on the upgrade investment (a self-funding). FERC’s orders granting transmission owners this unilateral funding authority has been judicially contested on the basis that transmission owners may be motivated to discriminate among generators in making

funding determinations. In the most recent judicial hearing, the petitioners argued to the U.S. Court of Appeals for the District of Columbia that FERC did not comply with a previous judicial order to fully develop a record regarding the risk of discrimination and the financial risk absorbed by transmission owners for generator-funded upgrades. On December 2, 2022, the Court of Appeals ruled in favor of the petitioners remanding the matter to FERC, instructing the agency to adequately explain the basis of its orders. The Court of Appeals decision did not vacate transmission owners’ unilateral funding authority.

OTP, as a transmission owner in MISO, has exercised its authority and elected to self-fund previous transmission upgrades necessary to accommodate new system generation. Under such an election, OTP is recovering the cost of the transmission upgrade and a return on that investment from the generator over a contractual period of time. Should FERC, on remand from the Court of Appeals, eliminate transmission owners’ unilateral funding authority, on either a prospective or retrospective basis, our financial results would be impacted. We cannot at this time reasonably predict the outcome of this matter given the uncertainty as to how and when FERC may respond to the judicial remand.

Other Contingencies. We are party to litigation and regulatory enforcement matters arising in the normal course of business. We regularly analyze relevant information and, as necessary, estimate and record accrued liabilities for matters in which a loss is probable of occurring and can be reasonably estimated. We believe the effect on our consolidated operating results, financial position and cash flows, if any, for the disposition of all matters pending as of December 31, 2023 will not be material.

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Stockholders' Equity

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

Stockholders' Equity

Stockholders' Equity

Capital Structure

In addition to authorized and outstanding common stock, the Company has 1,500,000 authorized no par value cumulative preferred shares and 1,000,000 authorized no par value cumulative preference shares. No cumulative preferred or cumulative preference shares were outstanding at December 31, 2023 or 2022.

Shelf Registrations

On May 3, 2021, upon the expiration of a prior shelf registration, we filed a shelf registration statement with the SEC under which we may offer for sale, from time to time, either separately or together in any combination, equity, debt or other securities described in the shelf registration statement. The registration statement expires in May 2024. No shares were issued pursuant to the shelf registration in 2023.

On May 3, 2021, upon the expiration of a prior shelf registration, we filed a registration statement with the SEC for the issuance of up to 1,500,000 common shares under an Automatic Dividend Reinvestment and Share Purchase Plan, which provides shareholders, retail customers of OTP and other interested investors a method of purchasing our common shares by reinvesting their dividends and/or making optional cash investments. Shares purchased under the plan may be new issue common shares or common shares purchased on the open market. In 2023, we issued 105,663 common shares under this program and no proceeds were received, as all shares issued were purchased on the open market. As of December 31, 2023, 1,145,330 shares remained available for purchase or issuance under the plan. The shelf registration for the plan expires in May 2024.

Dividend Restrictions

OTC is a holding company with no significant operations of its own. The primary source of funds for payments of dividends to our shareholders is from intercompany distributions made by OTC's subsidiaries to OTC. As a result of certain statutory limitations or regulatory or financing agreements, restrictions could occur on the amount of distributions allowed to be made by OTC's subsidiaries. Both the OTC Credit Agreement and OTP Credit Agreement contain restrictions on the payment of cash dividends upon a default or event of default, including failure to maintain certain financial covenants. As of December 31, 2023, we were in compliance with these financial covenants.

Under the Federal Power Act, a public utility may not pay dividends from any funds properly included in a capital account. What constitutes “funds properly included in a capital account” is undefined in the Federal Power Act and the related regulations; however, the FERC has consistently interpreted the provision to allow dividends to be paid as long as i) the source of the dividends is clearly disclosed, ii) the dividend is not excessive and iii) there is no self-dealing on the part of corporate officials.

The MPUC indirectly limits the amount of dividends OTP can pay to OTC by requiring an equity-to-total-capitalization ratio between 48.3% and 59.1%, with total capitalization not to exceed $2.0 billion based on OTP’s capital structure requirements as of December 31, 2023. As of December 31, 2023, OTP’s equity-to-total-capitalization ratio including short-term debt was 54.2% and its net assets restricted from distribution totaled approximately $771.3 million.

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Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

The Company's other comprehensive income (loss) consists of unamortized actuarial losses and prior service costs related to pension and other postretirement benefits and unrealized gains and losses on marketable securities classified as available-for-sale. The income tax expense or benefit associated with amounts reclassified from accumulated other comprehensive income (loss) and reflected in the consolidated statement of income are recognized in the same period as the amounts are reclassified.

The following table shows the changes in accumulated other comprehensive Income (loss) for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	Pension and Other Postretirement Benefits			Net Unrealized Gain (Losses) on Available-for-Sale Securities			Total
Balance, December 31, 2020	$	(8,716)		$	209		$	(8,507)
Other Comprehensive Income (Loss) Before Reclassifications, net of tax	1,638			(132)			1,506
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	541		(1)	(64)		(2)	477
Total Other Comprehensive Income (Loss)	2,179			(196)			1,983
Balance, December 31, 2021	(6,537)			13			(6,524)
Other Comprehensive Income (Loss) Before Reclassifications, net of tax	7,331			(433)			6,898
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	540		(1)	1		(2)	541
Total Other Comprehensive Income (Loss)	7,871			(432)			7,439
Balance, December 31, 2022	1,334			(419)			915
Other Comprehensive Income Before Reclassifications, net of tax	59			180			239
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(18)		(1)	12		(2)	(6)
Total Other Comprehensive Income	41			192			233
Balance, December 31, 2023	$	1,375		$	(227)		$	1,148
(1) Included in the computation of net periodic pension and other postretirement benefit costs. See Note 10 for further information.
(2) Included in other income (expense), net on the accompanying consolidated statements of income.

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Share-Based Payments

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Share-Based Payments

Share-Based Payments

Employee Stock Purchase Plan

The 1999 Employee Stock Purchase Plan authorizes the issuance of 1,400,000 common shares, allowing eligible employees to purchase our common shares through payroll withholding at a discount of up to 15% off the market price at the end of each six-month purchase period. Employee withholding amounts may not be less than $10 or more than $2,000 per month, subject to certain limitations, as described in the plan. A plan participant may cease making payroll deductions at any time. A participant may not purchase more than 2,000 shares in a given six month purchase period under the plan and may not purchase more than $25,000 (fair market value) of common shares under the plan and all other purchase plans (if any) in a calendar year. A participant may withdraw from the plan at any time and elect to receive the balance of their contributions to the plan that have not yet been used to purchase shares. Shares purchased under the plan are automatically enrolled in the Company's dividend reinvestment plan. Shares purchased under the plan may not be assigned, transferred, pledged, or otherwise disposed, except for certain situations allowed by the plan, such as upon death, for a period of 18 months after purchase. At our discretion, shares purchased under the plan can be either new issue shares or shares purchased in the open market. The plan shall automatically terminate when all of the shares authorized under the plan have been issued.

We recognize the 15% discount to the fair market value of the purchased shares as stock-based compensation expense, which amounted to $0.3 million, $0.3 million and $0.2 million for the years ended December 31, 2023, 2022 and 2021. For the years ended December 31, 2023, 2022 and 2021 the amount of shares issued under the plan amounted to 26,348, 26,420 and 27,975 shares. As of December 31, 2023, there were 237,367 shares available for purchase under the plan.

Share-Based Compensation Plan

The 2023 Stock Incentive Plan, which was approved by our shareholders in April 2023, authorizes the issuance of 979,891 common shares, including 500,000 newly requested common shares, for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance awards and other stock-based awards. In addition, common shares subject to any outstanding awards under our prior stock incentive plans that are forfeited, canceled or reacquired by the Company will become available for re-issuance under the 2023 Stock Incentive Plan. As of December 31, 2023, 943,192 shares were available for issuance under the plan. The plan terminates on April 17, 2033.

We grant restricted stock awards to our employees and members of our Board of Directors and stock performance awards to our executive officers and certain other key employees as part of our long-term compensation and retention program. Stock-based compensation cost, recognized within operating expenses in the consolidated statements of income, amounted to $7.4 million, $6.6 million and $6.7 million for the years ended December 31, 2023, 2022 and 2021. The related income tax benefit recognized for these periods amounted to $1.6 million, $1.7 million and $1.8 million.

Restricted Stock Awards. Restricted stock awards are granted to executive officers and other key employees and members of the Company's Board of Directors. The awards vest, depending on award recipient, either ratably over a period of three to four years or cliff vest after four years. Vesting is accelerated in certain circumstances, including upon retirement. Awards granted to members of the Board of Directors are issued and outstanding upon grant and carry the same voting and dividend rights of unrestricted outstanding common stock. Awards granted to executive officers and other key employees are eligible to receive dividend equivalent payments during the vesting period, subject to forfeiture under the terms of the agreement, but such awards are not issued or outstanding upon grant and do not provide for voting rights.

The grant-date fair value of each restricted stock award is determined based on the market price of the Company's common stock on the date of grant adjusted to exclude the value of dividends for those awards that do not receive dividend or dividend equivalent payments during the vesting period.

The following is a summary of restricted stock award activity for the year ended December 31, 2023:

	Shares	Weighted-Average Grant-Date Fair Value
Nonvested, Beginning of Year	141,551	$	49.83
Granted	55,205	68.03
Vested	(45,493)	50.02
Forfeited	(2,350)	52.02
Nonvested, End of Year	148,913	$	56.48

The weighted-average grant-date fair value of granted awards was $68.03, $59.95 and $43.55 during the years ended December 31, 2023, 2022 and 2021. The fair value of vested awards was $3.1 million, $3.0 million and $2.1 million during the years ended December 31, 2023, 2022 and 2021. As of December 31, 2023, there was $3.4 million of unrecognized compensation cost for unvested restricted stock awards to be recognized over a weighted-average period of 1.7 years.

Stock Performance Awards. Stock performance awards are granted to executive officers and certain other key employees. The awards vest at the end of a three-year performance period. The number of common shares awarded, if any, at the end of the performance period ranges from zero to 150% of the target amount based on two performance measures: i) total shareholder return relative to a peer group (TSR component) and ii) return on equity (ROE component). The awards have no voting or dividend rights during the vesting period. Vesting of the awards is accelerated in certain circumstances, including upon retirement. The amount of common shares awarded on an accelerated vesting is based on actual performance at the end of the performance period.

The grant-date fair value of the ROE component of the stock performance awards granted during the years ended December 31, 2023, 2022 and 2021 was determined using the grant date stock price and a discounted cash flow analysis to adjust for expected unearned dividends during the vesting period. The grant-date fair value of the TSR component of the stock performance awards granted during the years ended December 31, 2023, 2022 and 2021 was determined using a Monte Carlo fair value simulation model incorporating the following assumptions:

	2023		2022		2021
Risk-free interest rate	4.15	%	1.52	%	0.18	%
Expected term (in years)	3.00		3.00		3.00
Expected volatility	34.00	%	32.00	%	32.00	%
Dividend yield	2.50	%	2.90	%	3.60	%

The risk-free interest rate was derived from yields on U.S. government bonds of a similar term. The expected term of the award is equal to the three-year performance period. Expected volatility was estimated based on actual historical volatility of our common stock over a five-year period. Dividend yield was estimated based on historic and future yield estimates.

The following is a summary of stock performance award activity for the year ended December 31, 2023 (share amounts reflect awards at target):

	Shares	Weighted-Average Grant-Date Fair Value
Nonvested, Beginning of Year	189,800	$	45.95
Granted	59,400	61.97
Vested	(55,000)	47.79
Forfeited	—	—
Nonvested, End of Year	194,200	$	50.33

The weighted-average grant-date fair value of granted awards was $61.97, $54.91 and $38.34 during the years ended December 31, 2023, 2022 and 2021. The fair value of vested awards was $5.3 million, $5.1 million and $2.5 million during the years ended December 31, 2023, 2022 and

2021. As of December 31, 2023, there was $0.4 million of unrecognized compensation cost of unvested stock performance awards to be recognized over a weighted-average period of 0.67 years.

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Earnings Per Share

12 Months Ended

Dec. 31, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The numerator used in the calculation of both basic and diluted earnings per share is net income. The denominator used in the calculation of basic earnings per share is the weighted-average number of shares outstanding during the period. The denominator used in the calculation of diluted earnings per share is derived by adjusting basic shares outstanding for the dilutive effect of potential shares outstanding, which consist of shares associated with time and performance based stock awards and our employee stock purchase plan.

The following includes the computation of the denominator for basic and diluted weighted-average shares outstanding for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023	2022	2021
Weighted Average Common Shares Outstanding – Basic	41,668	41,586	41,491
Effect of Dilutive Securities:
Stock Performance Awards	269	248	226
Restricted Stock Awards	100	95	87
Employee Stock Purchase Plan Shares and Other	2	2	14
Dilutive Effect of Potential Common Shares	371	345	327
Weighted Average Common Shares Outstanding – Diluted	42,039	41,931	41,818

The amount of shares excluded from diluted weighted-average common shares outstanding because such shares were anti-dilutive was not material for the years ended December 31, 2023, 2022 and 2021.

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Derivative Instruments

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

OTP enters into derivative instruments to manage its exposure to future commodity price variability, specifically future wholesale energy and natural gas prices, and reduce volatility in prices for our retail electric customers. These derivative instruments are not designated as qualifying hedging transactions but provide for an economic hedge against future price variability. The instruments are recorded at fair value on the consolidated balance sheets, with changes in fair value recorded in the consolidated statements of income. However, in accordance with rate-making and cost recovery processes, we recognize a regulatory asset or liability to defer losses or gains from derivative activity until settlement of the associated derivative instrument.

As of December 31, 2023 and 2022 OTP had outstanding pay-fixed, receive-variable swap agreements with an aggregate notional amount of 187,400 and 295,000 megawatt-hours of electricity. The contracts outstanding as of December 31, 2023 had various settlement dates throughout 2024. As of December 31, 2023 and 2022, the fair value of these derivative instruments was $4.2 million and $7.1 million, which are included in other current liabilities on the consolidated balance sheets. During the years ended December 31, 2023 and 2022, contracts matured and were settled in an aggregate amount of a $16.5 million loss and a $1.0 million gain, respectively. Gains and losses recognized on the settlement of derivative instruments are returned to, or recovered from, our electric customers through fuel recovery mechanisms in each state. When recognized in the statement of income, these gains or losses are included in electric purchased power

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Fair Value Measurements

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The following tables present our assets measured at fair value on a recurring basis as of December 31, 2023 and 2022 classified by the input method used to measure fair value:

	Level 1		Level 2		Level 3
December 31, 2023
Assets
Investments:
Money Market Funds	$	3,125	$	—	$	—
Mutual Funds	7,771		—		—
Corporate Debt Securities	—		1,579		—
Government Debt Securities	—		7,724		—
Total Assets	10,896		9,303		—
Liabilities
Derivative Instruments	—		4,210		—
Total Liabilities	$	—	$	4,210	$	—
December 31, 2022
Assets
Investments:
Money Market Funds	$	1,560	$	—	$	—
Mutual Funds	5,503		—		—
Corporate Debt Securities	—		1,434		—
Government Debt Securities	—		7,327		—
Total Assets	$	7,063	$	8,761	$	—
Liabilities
Derivative Instruments	—		7,130		—
Total Liabilities	$	—	$	7,130	$	—

The level 2 fair value measurements for government and corporate debt securities are determined on the basis of valuations provided by a third-party pricing service which utilizes industry accepted valuation models and observable market inputs to determine valuation. Some valuations or model inputs used by the pricing service may be based on broker quotes.

The level 2 fair value measurements for derivative instruments are determined by using inputs such as forward electric commodity prices, adjusted for location differences. These inputs are observable in the marketplace throughout the full term of the instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace.

In addition to assets recorded at fair value on a recurring basis, we also hold financial instruments that are not recorded at fair value in the consolidated balance sheets but for which disclosure of the fair value of these financial instruments is provided. The following reflects the carrying value and estimated fair value of these assets and liabilities as of December 31, 2023 and 2022:

	December 31, 2023				December 31, 2022
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and Cash Equivalents	$	230,373	$	230,373	$	118,996	$	118,996
Total	230,373		230,373		118,996		118,996
Liabilities:
Short-Term Debt	81,422		81,422		8,204		8,204
Long-Term Debt	824,059		710,839		823,821		681,615
Total	$	905,481	$	792,261	$	832,025	$	689,819

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash Equivalents: The carrying amount approximates fair value because of the short-term maturity of these instruments.

Short-Term Debt: The carrying amount approximates fair value because the debt obligations are short-term in nature and balances outstanding are subject to variable rates of interest which reset frequently, a Level 2 fair value input.

Long-Term Debt: The fair value of long-term debt is estimated based on current market indications for borrowings of similar maturities with similar terms, a Level 2 fair value input.

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Schedule I - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2023

Condensed Financial Information Disclosure [Abstract]

Schedule I - Condensed Financial Information of Registrant

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED BALANCE SHEETS

	December 31,
(in thousands)	2023		2022
Assets
Current Assets
Cash and Cash Equivalents	$	228,137	$	119,246
Accounts Receivable from Subsidiaries	2,555		3,278
Interest Receivable from Subsidiaries	117		117
Other	977		1,045
Total Current Assets	231,786		123,686
Investments in Subsidiaries	1,725,584		1,463,998
Notes Receivable from Subsidiaries	78,900		78,900
Deferred Income Taxes	65,244		64,802
Other Assets	50,795		43,779
Total Assets	$	2,152,309	$	1,775,165
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable to Subsidiaries	$	7	$	7
Notes Payable to Subsidiaries	568,672		420,363
Other	15,320		15,994
Total Current Liabilities	583,999		436,364
Other Noncurrent Liabilities	45,455		41,686
Commitments and Contingencies
Capitalization
Long-Term Debt	79,849		79,798
Common Stockholders' Equity	1,443,006		1,217,317
Total Capitalization	1,522,855		1,297,115
Total Liabilities and Stockholders' Equity	$	2,152,309	$	1,775,165

See accompanying notes to condensed financial statements.

OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED STATEMENTS OF INCOME

	Years Ended December 31,
(in thousands)	2023		2022		2021
Income
Equity Income in Earnings of Subsidiaries	$	294,467	$	296,833	$	188,375
Interest Income from Subsidiaries	2,898		3,382		2,826
Other Income	10,496		466		1,290
Total Income	307,861		300,681		192,491
Expense
Nonelectric Selling, General, and Administrative Expenses	12,816		17,269		14,825
Interest Expense	3,813		4,066		4,727
Interest Expense from Subsidiaries	6		5		3
Nonservice Cost Components of Postretirement Benefits	1,063		1,023		1,097
Total Expense	17,698		22,363		20,652
Income Before Income Taxes	290,163		278,318		171,839
Income Tax Benefit	4,028		5,866		4,930
Net Income	$	294,191	$	284,184	$	176,769

See accompanying notes to condensed financial statements.

OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
(in thousands)	2023		2022		2021
Cash Flows from Operating Activities
Net Cash Provided by Operating Activities	$	77,139	$	28,807	$	60,695
Cash Flows from Investing Activities
Investment in Subsidiaries	(40,000)		(50,000)		—
Debt Repaid by Subsidiaries	—		—		169
Other, net	(68)		(1,695)		(884)
Net Cash Used in Investing Activities	(40,068)		(51,695)		(715)
Cash Flows from Financing Activities
Net (Repayments) Borrowings on Short-Term Debt	—		(22,637)		(42,529)
Borrowings from Subsidiaries	148,308		236,926		49,085
Proceeds from Issuance of Common Stock	—		—		696
Payments for Shares Withheld for Employee Tax Obligations	(3,088)		(2,942)		(1,507)
Payments for Retirement of Long-Term Debt	—		—		(169)
Dividends Paid	(73,061)		(68,755)		(64,864)
Other, net	(339)		(461)		(689)
Net Cash Provided by (Used in) Financing Activities	71,820		142,131		(59,977)
Net Change in Cash and Cash Equivalents	108,891		119,243		3
Cash and Cash Equivalents at Beginning of Period	119,246		3		—
Cash and Cash Equivalents at End of Period	$	228,137	$	119,246	$	3

 

See accompanying notes to condensed financial statements.

OTTER TAIL CORPORATION (PARENT COMPANY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

Incorporated by Reference

OTC’s consolidated statements of comprehensive income and common shareholders’ equity in Part II, Item 8 are incorporated by reference.

Basis of Presentation

The condensed financial information of OTC is presented to comply with Rule 12-04 of Regulation S-X. The unconsolidated condensed financial statements do not reflect all of the information and notes normally included with financial statements prepared in accordance with generally accepted accounting principles. Therefore, these condensed financial statements should be read with the consolidated financial statements and related notes included in this report on Form 10-K.

OTC’s investments in subsidiaries are presented under the equity method of accounting. Under this method, the assets and liabilities of subsidiaries are not consolidated. The investments in net assets of the subsidiaries are recorded in the balance sheets. The income from operations of the subsidiaries is reported on a net basis as equity income in earnings of subsidiaries.

Related Party Transactions

Outstanding receivables from and payables to OTC's subsidiaries as of December 31, 2023 and 2022 are as follows:

(in thousands)	Accounts Receivable		Interest Receivable		Long-Term Notes Receivable		Accounts Payable		Current Notes Payable
December 31, 2023
Otter Tail Power Company	$	2,415	$	—	$	—	$	7	$	—
Northern Pipe Products, Inc.	—		7		5,000		—		56,917
Vinyltech Corporation	14		17		11,500		—		98,016
BTD Manufacturing, Inc.	—		78		52,000		—		6,291
T.O. Plastics, Inc.	36		15		10,400		—		980
Varistar Corporation	—		—		—		—		406,468
Otter Tail Assurance Limited	90		—		—		—		—
	$	2,555	$	117	$	78,900	$	7	$	568,672
December 31, 2022
Otter Tail Power Company	$	3,016	$	—	$	—	$	7	$	—
Northern Pipe Products, Inc.	—		7		5,000		—		77,182
Vinyltech Corporation	—		18		11,500		—		90,425
BTD Manufacturing, Inc.	—		77		52,000		—		693
T.O. Plastics, Inc.	20		15		10,400		—		5,855
Varistar Corporation	—		—		—		—		246,208
Otter Tail Assurance Limited	242		—		—		—		—
	$	3,278	$	117	$	78,900	$	7	$	420,363

Dividends

Dividends paid to OTC (the Parent) from its subsidiaries were as follows:

(in thousands)	2023		2022		2021
Cash Dividends Paid to Parent by Subsidiaries	$	72,982	$	68,680	$	64,790

See OTC’s notes to consolidated financial statements in Part II, Item 8 for other disclosures.

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Schedule II - Valuation and Qualifying Accounts and Reserves

12 Months Ended

Dec. 31, 2023

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts and Reserves

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

OTTER TAIL CORPORATION

Below is a summary of activity within valuation and qualifying accounts for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	Balance, January 1		Charged to Cost and Expenses		Deductions 1, 2		Balance, December 31
Allowance for Credit Losses
2023	$	1,648	$	2,014	$	(1,140)	$	2,522
2022	1,836		909		(1,097)		1,648
2021	3,215		93		(1,472)		1,836
Deferred Tax Asset Valuation Allowance
2023	$	—	$	—	$	—	$	—
2022	—		—		—		—
2021	800		—		(800)		—
1Amounts under Allowance for Credit Losses reflect deductions to the allowance for amounts written-off, net of recoveries.
2Amounts under Deferred Tax Asset Valuation Allowance reflect a release of a valuation allowance based on current expectations of the realizability of the associated deferred tax asset.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Basis of Accounting

These consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles and include the accounts of OTC and its wholly owned subsidiaries.

Principles of Consolidation

All intercompany balances and transactions have been eliminated in consolidation except, as applicable, profits on sales to our regulated electric utility company from our nonregulated businesses, which is in accordance with the accounting requirements of regulated operations.

Use of Estimates

Use of Estimates

We use estimates based on the best information available in recording transactions and balances resulting from business operations. As better information becomes available, or actual amounts are known, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.

Reclassifications

Reclassifications

Certain reclassifications of amounts previously reported have been made to the accompanying consolidated statements of cash flows to maintain consistency and comparability between periods presented. Other, net operating cash flows previously reported for the years ended December 31, 2022 and 2021, included $3.3 million of investment losses and $4.5 million of investment gains, respectively, which are presented separately in the current year, and excluded $1.7 million and $0.8 million of allowance for equity funds used during construction (AFUDC), which were previously presented separately. The reclassifications had no impact on previously reported net cash provided by operating activities, net cash used in investing activities, net cash used in financing activities, or cash and cash equivalents. Certain prior period amounts related to deferred tax assets and deferred tax liabilities included in footnote 12 have been reclassified to conform to the current year presentation.

Regulatory Accounting

Regulatory Accounting

Our regulated electric utility company, Otter Tail Power Company (OTP), is subject to regulation of rates and other matters by state utility commissions in Minnesota, North Dakota and South Dakota and by the FERC for certain interstate operations. OTP accounts for the financial effects of regulation in accordance with accounting guidance for regulated operations. This guidance allows for the recording of a regulatory asset for certain costs which otherwise would be recognized in the statement of income or comprehensive income based on an expectation that the cost will be recovered in future rates. This guidance also requires the recording of a regulatory liability for certain credits which would otherwise be recognized in the statement of income or comprehensive income based on an expectation that the amount will be returned to customers in future rates. Amounts recorded as regulatory assets and regulatory liabilities are generally recognized in the statements of income at the time they are reflected in customer rates. In the event OTP ceases to meet the criteria to apply the guidance for regulated operations, the regulatory assets and liabilities that no longer meet such criteria would be removed from the consolidated balance sheets and included in the consolidated statement of income as an expense or income item, or in the consolidated statement of comprehensive income as a loss or gain item, in the period in which the application of this guidance ceases.

Cash Equivalents

Cash Equivalents

We consider all highly liquid investments purchased with maturity dates of 90 days or less to be cash equivalents.

Concentration of Deposits

Concentration of Deposits

We hold deposits with financial institutions which potentially subject us to a concentration risk. These deposits are guaranteed by the Federal Deposit Insurance Corporation up to an insurance limit of $250,000. Currently, our cash deposits exceed federally insured levels.

Revenue from Contracts with Customer

Revenue from Contracts with Customers

Due to our diverse business operations, the recognition of revenue from contracts with customers depends on the product produced and sold or service performed. We recognize revenue from contracts with customers at prices that are fixed or determinable as evidenced by an agreement with the customer, when we have met our performance obligation under the contract and it is probable that we will collect the amount to which we are entitled in exchange for the goods or services transferred or to be transferred to the customer. Depending on the product produced and sold or service performed and the terms of the agreement with the customer, we recognize revenue either over time, in the case of delivery or transmission of electricity or related services or the production and storage of certain custom-made products, or at a point in time for the delivery of standardized products and other products made to customer specifications where the terms of the contract require transfer of the completed product. Provisions for sales returns, early payment discounts, and volume-based variable pricing incentives are recorded as reductions to revenue at the time revenue is recognized based on customer history, historical information and current trends. We include revenues received for shipping and handling in operating revenues. Expenses paid for shipping and handling are recorded as part of cost of products sold. Sales or other taxes collected from customers are excluded from operating revenues.

Electric Segment Revenues. Most Electric segment revenues are earned from the generation, transmission and sale of electricity to retail customers at rates approved by state regulatory commissions. OTP also earns revenue from the transmission of electricity for others over the transmission assets it owns separately, or jointly with other transmission service providers, under rate tariffs established by the independent transmission system operator and approved by the FERC. A third source of revenue for OTP comes from the generation and sale of electricity to wholesale customers at contract or market rates. Revenues from all these sources meet the criteria to be classified as revenue from contracts with customers and are recognized over time as energy is delivered or transmitted. Revenue is recognized based on the metered quantity of electricity delivered or transmitted at the applicable rates. For electricity delivered and consumed after a meter is read but prior to the end of the reporting period, OTP records revenue and an unbilled receivable based on estimates of the amount of energy delivered to the customer.

Manufacturing Segment Revenues. Our Manufacturing segment businesses earn revenue predominantly from the production and delivery of custom-made or standardized parts and products to customers across several industries and from the production and sale of tools and dies to other manufacturers. For the production and delivery of standardized products and other products made to customer specifications where the terms of the contract require transfer of the completed product, we have met our performance obligation and recognize revenue at the point in time when the product is shipped. At this point we have no further obligation to provide services related to such products. The shipping terms used in these transactions are free on board (FOB) shipping point.

Plastics Segment Revenues. Our Plastics segment businesses earn revenue predominantly from the sale and delivery of standardized PVC pipe products produced at their manufacturing facilities. Revenue from the sale of these products is recognized at the point in time when the product is shipped as there is no further obligation to provide services related to such products and the shipping terms are FOB shipping point. We have one customer within our Plastics segment for which we produce and store a product made to the customer’s specifications and design under a build and hold agreement. For sales to this customer, we recognize revenue as the custom-made product is produced, adjusting the amount of revenue for volume rebate variable pricing considerations we expect the customer will earn and applicable early payment discounts we expect the customer will take. Ownership of the pipe transfers to the customer prior to delivery and we are paid a negotiated fee for storage of the pipe. Revenue for storage of the pipe is recognized over time as the pipe is stored.

Alternative Revenue

Alternative Revenue

In addition to recognizing revenue from contracts with customers, our Electric segment business also records revenue under alternative revenue program (ARP) requirements. Certain rate rider mechanisms qualify as ARP revenues as they provide for adjustments to rates outside of a general rate case proceeding to encourage or incentivize investments in certain areas such as conservation, renewable energy, pollution reduction or control, improved infrastructure of the transmission grid or other programs that provide benefits to the general public under public policy, laws or regulations. ARP riders generally provide for the recovery of specified costs and investments and include an incentive component to provide the regulated utility with a return on amounts invested.

We accrue ARP revenue on the basis of cost incurred, investments made and returns on those investments that qualify for recovery through established riders. ARP revenue is disclosed separately from revenue from contracts with customers and we have elected to report ARP revenue on a net basis, whereby amounts initially recorded as ARP revenue in a period are presented net of the reversal of amounts previously recognized as ARP revenue that are reclassified and recorded as revenue from contracts with customers when such amounts are included in the price of electricity to customers.

Receivables and Allowance for Credit Losses

Receivables and Allowance for Credit Losses

We grant credit to our customers in the normal course of business with repayment terms generally ranging from 30 to 90 days after the invoice date. Late fees are assessed on certain receivables once they are 30 days past due. Unbilled receivables represent estimates of energy delivered to customers but not yet billed.

Receivables are stated at the billed or estimated unbilled amount less an allowance for estimated credit losses. An allowance for credit losses is established based on losses expected to occur over the contractual life of the receivable. We estimate an allowance for credit losses on our trade and unbilled receivables by evaluating historical aging and write-off history, adjusted for current and forecasted economic conditions, for groups of receivables that share similar economic characteristics. Other receivables are evaluated by reviewing individual accounts, considering aging, financial condition of the debtor, recent payment history and other relevant factors. Account balances are written-off in the period they are deemed to be uncollectible.

Inventories

Inventories

Inventories are valued at the lower of cost or net realizable value. Costs for fuel, material and supply inventories of our Electric segment are determined on an average cost basis. Costs for raw material, work in process and finished goods inventories of our Manufacturing and Plastics segments are determined on a first-in first-out (FIFO) basis.

Investments

Investments

We invest in and hold, through rabbi trusts, corporate-owned life insurance policies to provide future funding for obligations under our supplemental pension plan and a nonqualified deferred compensation plan. The polices are recorded at cash surrender value and there are no restrictions on our ability to surrender the policies.

We hold debt, mutual fund, and money market fund investments either as investments within our captive insurance entity or to provide future funding for obligations under nonqualified deferred compensation plans. These investments are recorded at fair value. Debt securities are deemed to be available-for-sale securities, accordingly unrealized gains and losses are generally excluded from earnings and recognized in accumulated other comprehensive income. We evaluate whether declines in fair value of debt securities below the cost basis are other-than-temporary. Declines in fair value deemed to be other-than-temporary result in the recognition of unrealized losses, or a portion thereof, in earnings. Unrealized gains and losses on mutual and money market funds are recognized in earnings immediately.

Property, Plant and Equipment

Property, Plant and Equipment

Electric plant is stated at original cost. The cost of additions includes contracted work, direct labor and materials, allocable overheads and AFUDC. The amount of interest capitalized to electric plant was $1.9 million in 2023, $0.9 million in 2022 and $0.6 million in 2021. The cost of depreciable units of property retired less salvage is charged to accumulated depreciation. Amounts recovered in rates for future removal costs are recorded as regulatory liabilities. Removal costs, when incurred, are charged against the regulatory liability. Maintenance, repairs and replacement of minor items are charged to operating expenses as incurred. The provisions for utility depreciation for financial reporting purposes are made on the straight-line method based on the estimated remaining service lives of the properties. Gains or losses on group asset dispositions are recorded to accumulated depreciation and impact current and future depreciation rates.

Property, plant and equipment of nonelectric operations are carried at historical cost and are depreciated on a straight-line basis over the assets’ estimated useful lives. The cost of additions includes contracted work, direct labor and materials, allocable overheads and capitalized interest. No interest was capitalized in 2023, 2022 or 2021. Maintenance and repairs are expensed as incurred. Gains or losses on asset dispositions are included in the determination of operating income.

Jointly Owned Facilities

Jointly Owned Facilities

OTP is a joint owner in two coal-fired steam-powered electric generation plants: Big Stone Plant near Big Stone City, South Dakota and Coyote Station near Beulah, North Dakota. OTP is also a joint owner, with other regional utilities, in five major transmission lines. OTP's interest in each jointly owned facility is reflected in the consolidated balance sheets on a pro-rata basis and OTP's share of direct revenue and expenses are included in operating revenues and expenses in the consolidated statements of income. Each participant in the jointly owned facilities finances their own investments.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill is recognized and initially measured as any excess of the acquisition-date consideration transferred in a business combination over amounts recognized for the net identifiable assets acquired. Goodwill is not amortized, but is tested for impairment annually, or more frequently if

an event occurs or circumstances change that would more likely than not result in an impairment of goodwill. Impairment testing is performed at the reporting unit level, which is defined as an operating segment or one level below an operating segment. We perform our impairment testing in the fourth quarter of each year and have identified three reporting units that carry a goodwill balance.

Our impairment testing includes both an optional qualitative assessment and the quantitative impairment assessment. Our qualitative assessment includes an analysis of relevant events and circumstances to determine if it is more likely than not that the fair value of the reporting unit exceeds its book value. If, after this assessment, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no additional analysis is necessary. In contrast, if after the assessment we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we elect to skip the optional qualitative assessment, the quantitative impairment assessment is performed. The quantitative assessment is a single-step test that identifies both the existence of impairment and the amount of impairment loss by comparing the estimated fair value of a reporting unit to its carrying value, with any excess carrying value over the fair value being recognized as an impairment loss.

Intangible assets with finite lives, which primarily consist of customer relationships, are carried at estimated fair value at the time of acquisition less accumulated amortization. The costs of the intangible assets are amortized over their estimated useful lives, which generally range from 15 to 20 years.

Cloud Computing Costs

Cloud Computing Costs

We capitalize implementation costs incurred in cloud computing arrangements that are service contracts consistent with capitalized implementation costs incurred to develop or obtain internal-use software. Costs are amortized on a straight-line basis over the life of the associated contract. Capitalized implementation costs are amortized over periods up to ten years. Capitalized costs and related accumulated amortization are included in other noncurrent assets on the consolidated balance sheets.

Leases

Leases

We recognize right-of-use lease assets and a corresponding lease liability at the lease commencement date. The length of our lease agreements varies from less than one year to approximately ten years. We have elected to not record lease assets and liabilities for leases with a lease term at commencement of 12 months or less; such leases are expensed on a straight-line basis over the lease term. If a lease contains an option to extend the lease term and there is reasonable certainty the option will be exercised, the option is considered in the lease term at inception. We have elected to not separate non-lease components (e.g., common area maintenance) from lease components on real estate leases, accordingly the recognized lease asset and lease liability incorporate in their measurement payments for non-lease components. Certain leases include variable lease payments as the amounts are subject to change over the lease term. We are unable to determine the interest rate implicit in our leases thus we apply our incremental borrowing rate to capitalize the right-of-use asset and lease liability. We estimate our incremental borrowing rate by incorporating considerations of lease term and lessee entity.

Recoverability of Long-Lived Assets

Recoverability of Long-Lived Assets

We review our long-lived assets including, among other assets, property, plant and equipment, amortizing intangible assets and right-of-use lease assets, whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. We determine potential impairment by comparing the carrying amount of the assets with the net cash flows expected to be provided by operating activities of the business or related assets. If the sum of the expected future net cash flows is less than the carrying amount of the assets, an impairment loss would be recognized. Such an impairment loss would be measured as the amount by which the carrying amount exceeds the fair value of the asset.

Asset Retirement Obligation

Asset Retirement Obligations

Legal obligations related to the future retirement of long-lived assets are recognized as asset retirement obligations (ARO). An ARO is recognized in the period in which the legal obligation is incurred and the amount of the obligation can be reasonably estimated, with an offsetting increase to the associated long-lived asset. AROs are initially recognized at fair value and increased with the passage of time (accretion). ARO estimates are revised periodically with any adjustment reflected in the ARO and associated long-lived asset.

Income Taxes

Income Taxes

We use the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of all temporary differences between the carrying amounts of assets and liabilities and their respective tax bases. Deferred taxes are recorded using the tax rates scheduled by tax law to be in effect in the periods when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that a portion or all of the deferred tax assets will not be realized. The realizability of deferred tax assets is determined by taking into consideration forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carryforwards and available tax planning strategies. Changes in valuation allowances are included in the provision for income taxes in the period of the changes.

We recognize the tax effects of all tax positions that are more-likely-than-not to be sustained on audit based solely on the technical merits of those positions as of the balance sheet date. Changes in the recognition or measurement of such positions are recognized in the provision for income taxes in the period of the changes. We classify interest and penalties on tax uncertainties as components of the provision for income taxes.

We have elected to account for transferable tax credits as a component of our income tax provision. We recognize the benefit of PTCs as a reduction of income tax expense in the period the credit is generated, which corresponds to the period the energy production occurs. We apply the deferral method of accounting for ITCs and state wind energy credits. Under this method, ITCs and state wind energy credits are amortized as a reduction to income tax expense over the estimated useful lives of the underlying property that gave rise to the credit.

Deferred Compensation Plans

Deferred Compensation Plans

The Company sponsors two nonqualified deferred compensation plans for the benefit of executive officers and other select employees. Each plan allows participants to defer a specified amount or percentage of base wages or incentive compensation into the plan, subject to certain limitations. The Company, at its discretion, may make employer contributions to either plan during any annual period. Participant and employer deferred amounts are segregated into one or more accounts chosen by the participant. Participants earn a return on deferred amounts based on notional investments in the segregated accounts. Participants can elect lump sum distributions or annual installments of deferred balances during the participant's employment or upon retirement.

Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation awards are measured at the grant-date fair value of the award and compensation expense is recognized on a straight-line basis over the applicable service or performance period. The service period may be limited to the period until such time that a recipient is retirement eligible as determined under the award agreement. Awards granted to employees eligible for retirement on the date of grant are expensed in the period of grant. We recognize the effects of award forfeitures as they occur.

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Three levels of inputs may be used to measure fair value:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the New York Mercantile Exchange.

Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities. 

Level 3 – Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation and may include complex and subjective models and forecasts.

In instances where the determination of the fair value measurement is based on inputs from different levels within the hierarchy, the level in the hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Related Parties

Related Parties

The Otter Tail Corporation Foundation and Otter Tail Power Company Foundation are independent not-for-profit charitable entities affiliated with the Company and are not included in the consolidated financial statements of Otter Tail Corporation.

Variable Interest Entity

Variable Interest Entity

In October 2012, the Coyote Station owners, including OTP, entered into an LSA with Coyote Creek Mining Company, LLC, a subsidiary of The North American Coal Corporation, for the purchase of lignite coal to meet the coal supply requirements of Coyote Station for the period beginning in May 2016 and ending in December 2040. The price per ton paid by the Coyote Station owners under the LSA reflects the cost of production, along with an agreed upon profit and capital charge. CCMC was formed for the purpose of mining coal to meet the coal fuel supply requirements of Coyote Station from May 2016 through December 2040 and, based on the terms of the LSA, is considered a variable interest entity (VIE) due to the transfer of all operating and economic risk to the Coyote Station owners, as the agreement is structured so that the price of the coal would cover all costs of operations as well as future reclamation costs. The Coyote Station owners are required to buy certain assets of CCMC at book value should they terminate the contract prior to the end of the contract term and are providing a guarantee of the value of the equity of CCMC because the Coyote Station owners are required to buy the membership interests of CCMC at the end of the contract term at equity value. Under current accounting standards, the primary beneficiary of a VIE is required to include the assets, liabilities, results of operations and cash flows of the VIE in its consolidated financial statements. No single owner of Coyote Station owns a majority interest in Coyote Station and none, individually, has the power to direct the activities that most significantly impact CCMC. Therefore, none of the owners individually, including OTP, is considered the primary beneficiary of the VIE and the Company is not required to include CCMC in its consolidated financial statements.

If the LSA terminates prior to the expiration of its term or the production period terminates prior to December 31, 2040 and the Coyote Station owners purchase all of the outstanding membership interests of CCMC, the owners will satisfy or, if permitted by CCMC’s applicable lenders, assume all of CCMC’s obligations owed to CCMC’s lenders under its loans and leases. The Coyote Station owners have limited rights to assign their rights and obligations under the LSA without the consent of CCMC’s lenders during any period in which CCMC’s obligations to its lenders remain outstanding. In the event the contract is terminated prior to the end of the term due to certain events, OTP’s maximum loss exposure, as a result of its involvement with CCMC, could be as high as $40 million, or OTP’s 35% share of CCMC’s unrecovered costs as of December 31, 2023, if recovery of such a loss is denied by regulatory authorities.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Segment Reporting. In November 2023, the Financial Accounting Standards Board (FASB) issued amended authoritative guidance codified in Accounting Standards Codification (ASC) 280, Segment Reporting. The amended guidance expands annual and interim disclosure requirements for reportable segments, primarily through expanded disclosures about significant segment expenses. The updated standard is effective for our annual periods beginning in 2024 and interim periods beginning in the first quarter of fiscal 2025. Adoption of the amended guidance must be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

Income Taxes. In December 2023, the FASB issued amended authoritative guidance codified in ASC 740, Income Taxes. The amended guidance requires additional disaggregated information in effective tax rate reconciliation disclosures and additional disaggregated information about income taxes paid. The updated standard is effective for our annual periods beginning in 2025. The amended guidance is to be applied on a prospective basis with the option to apply the standard retrospectively. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Schedule of Inventories

Inventories consist of the following as of December 31, 2023 and 2022:

(in thousands)	2023		2022
Finished Goods	$	47,614	$	43,812
Work in Process	26,354		31,766
Raw Material, Fuel and Supplies	75,733		70,374
Total Inventories	$	149,701	$	145,952

Schedule of Investments

The following is a summary of our investments at December 31, 2023 and 2022:

(in thousands)	2023		2022
Corporate-Owned Life Insurance Policies	$	42,287	$	38,991
Corporate and Government Debt Securities	9,303		8,761
Mutual Funds	7,771		5,503
Money Market Funds	3,125		1,560
Other Investments	30		30
Total Investments	$	62,516	$	54,845

Schedule of Estimated Service Lives for Rate-Regulated and Nonelectric Assets

The estimated service lives for rate-regulated electric assets and nonelectric assets are included below:

	Service Life Range
(years)	Low	High
Electric Assets:
Production Plant	21	114
Transmission Plant	51	75
Distribution Plant	10	70
General Plant	5	56
Nonelectric Assets:
Equipment	2	20
Buildings and Leasehold Improvements	2	40

Schedule of Capitalized Cost and Related Accumulated Amortization

Below are the amounts of capitalized cost and related accumulated amortization as of December 31, 2023 and 2022:

(in thousands)	2023		2022
Cloud Computing Costs	$	12,782	$	9,024
Accumulated Amortization	$	(1,505)	$	(897)
Cloud Computing Costs, net	$	11,277	$	8,127

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Information for each segment and our unallocated corporate costs for the years ended December 31, 2023, 2022 and 2021 are as follows:

(in thousands)	2023		2022		2021
Operating Revenue
Electric	$	528,359	$	549,699	$	480,321
Manufacturing	402,781		397,983		336,294
Plastics	418,026		512,527		380,229
Total	1,349,166		1,460,209		1,196,844
Depreciation and Amortization
Electric	75,330		72,050		71,343
Manufacturing	18,495		16,202		15,436
Plastics	4,027		4,205		4,354
Corporate	102		140		225
Total	97,954		92,597		91,358
Operating Income (Loss)
Electric	106,521		113,138		106,964
Manufacturing	29,140		29,065		24,114
Plastics	254,402		264,578		132,760
Corporate	(12,144)		(16,342)		(14,130)
Total	377,919		390,439		249,708
Interest Expense
Electric	33,864		31,950		33,043
Manufacturing	2,295		2,796		2,239
Plastics	602		585		587
Corporate	916		685		1,902
Total	37,677		36,016		37,771
Income Tax Expense (Benefit)
Electric	1,648		5,065		1,663
Manufacturing	5,390		5,321		4,704
Plastics	66,066		68,688		34,374
Corporate	(3,806)		(5,723)		(4,689)
Total	69,298		73,351		36,052
Net Income (Loss)
Electric	84,424		79,974		72,458
Manufacturing	21,454		20,950		17,186
Plastics	187,748		195,374		97,823
Corporate	565		(12,114)		(10,698)
Total	294,191		284,184		176,769
Capital Expenditures
Electric	240,695		147,869		140,031
Manufacturing	23,284		17,954		20,690
Plastics	23,029		5,245		11,040
Corporate	126		66		68
Total	$	287,134	$	171,134	$	171,829

The following provides the identifiable assets by segment and corporate assets as of December 31, 2023 and 2022:

(in thousands)	2023		2022
Identifiable Assets
Electric	$	2,533,831	$	2,351,961
Manufacturing	251,343		245,869
Plastics	164,179		126,318
Corporate	293,215		177,513
Total	$	3,242,568	$	2,901,661

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Revenue (Tables)

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

We present our operating revenues from external customers, in total and by amounts arising from contracts with customers and ARP arrangements, disaggregated by revenue source and segment for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023		2022		2021
Operating Revenues
Electric Segment
Retail: Residential	$	135,570	$	143,888	$	135,361
Retail: Commercial and Industrial	312,551		318,494		262,408
Retail: Other	7,719		7,918		7,715
Total Retail	455,840		470,300		405,484
Transmission	52,555		52,213		48,835
Wholesale	12,459		18,539		17,936
Other	7,505		8,647		8,066
Total Electric Segment	528,359		549,699		480,321
Manufacturing Segment
Metal Parts and Tooling	351,267		338,865		283,527
Plastic Products and Tooling	41,395		49,080		40,231
Scrap Metal	10,119		10,038		12,536
Total Manufacturing Segment	402,781		397,983		336,294
Plastics Segment
PVC Pipe	418,026		512,527		380,229
Total Operating Revenue	1,349,166		1,460,209		1,196,844
Less: Noncontract Revenues Included Above
Electric Segment - ARP Revenues	(4,310)		(9,266)		(791)
Total Operating Revenues from Contracts with Customers	$	1,353,476	$	1,469,475	$	1,197,635

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Receivables (Tables)

12 Months Ended

Dec. 31, 2023

Receivables [Abstract]

Schedule of Accounts Receivable

Receivables as of December 31, 2023 and 2022 are as follows:

(in thousands)	2023		2022
Receivables
Trade	$	129,257	$	112,126
Other	9,084		9,983
Unbilled Receivables	21,324		23,932
Total Receivables	159,665		146,041
Less Allowance for Credit Losses	2,522		1,648
Receivables, net of allowance for credit losses	$	157,143	$	144,393

Schedule of Activity in the Allowance for Credit Losses

The following is a summary of activity in the allowance for credit losses for the years ended December 31, 2023 and 2022:

(in thousands)	2023		2022
Beginning Balance	$	1,648	$	1,836
Additions Charged to Expense	2,014		909
Reductions for Amounts Written Off, Net of Recoveries	(1,140)		(1,097)
Ending Balance	$	2,522	$	1,648

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Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2023

Regulatory Assets and Liabilities Disclosure [Abstract]

Schedule of Regulatory Assets and Liabilities

The following presents our current and long-term regulatory assets and liabilities as of December 31, 2023 and 2022 and the period we expect to recover or refund such amounts:

	Period of	2023				2022
(in thousands)	Recovery/Refund	Current		Long-Term		Current		Long-Term
Regulatory Assets
Pension and Other Postretirement Benefit Plans1	See below	$	154	$	86,134	$	—	$	88,354
Alternative Revenue Program Riders2	Up to 2 years	3,719		158		5,679		2,508
Asset Retirement Obligations1	Asset lives	—		87		—		1,467
Deferred Income Taxes	Asset lives	—		6,940		—		—
Fuel Clause Adjustments1	Up to 1 year	7,294		—		10,893		—
Derivative Instruments1	Up to 1 year	4,210		—		7,130		—
Other1	Various	750		2,396		1,297		2,326
Total Regulatory Assets		16,127		95,715		24,999		94,655
Regulatory Liabilities
Deferred Income Taxes	Asset lives	—		136,022		—		131,480
Plant Removal Obligations	Asset lives	—		117,030		8,509		105,733
Fuel Clause Adjustments	Up to 1 year	11,350		—		365		—
Alternative Revenue Program Riders	Up to 1 year	6,885		—		2,504		—
North Dakota PTC Refunds	Asset lives	—		12,011		—		7,136
Pension and Other Postretirement Benefit Plans	See below	6,138		11,307		5,589		—
Other	Various	1,035		177		333		148
Total Regulatory Liabilities		$	25,408	$	276,547	$	17,300	$	244,497
1Costs subject to recovery without a rate of return.
2Amount eligible for recovery includes an incentive or rate of return.

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Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Major classes of property, plant and equipment as of December 31, 2023 and 2022 include:

(in thousands)	2023		2022
Electric Plant in Service
Production	$	1,412,826	$	1,343,097
Transmission	777,613		756,848
Distribution	654,704		612,716
General	144,738		131,718
Electric Plant in Service	2,989,881		2,844,379
Construction Work in Progress	137,212		113,932
Total Gross Electric Plant	3,127,093		2,958,311
Less Accumulated Depreciation and Amortization	851,148		859,988
Net Electric Plant	2,275,945		2,098,323
Nonelectric Property, Plant and Equipment
Equipment	233,571		218,770
Buildings and Leasehold Improvements	64,753		61,506
Land	13,600		13,652
Nonelectric Property, Plant and Equipment	311,924		293,928
Construction Work in Progress	38,062		15,170
Total Gross Nonelectric Property, Plant and Equipment	349,986		309,098
Less Accumulated Depreciation and Amortization	207,556		194,704
Net Nonelectric Property, Plant and Equipment	142,430		114,394
Net Property, Plant and Equipment	$	2,418,375	$	2,212,717

Schedule of Jointly Owned Utility Plants

The following table provides OTP’s ownership percentages and amounts included in the December 31, 2023 and 2022 consolidated balance sheets for OTP’s share of each of these jointly owned facilities:

(dollars in thousands)	Ownership Percentage		Electric Plant in Service		Construction Work in Progress		Accumulated Depreciation		Net Plant
December 31, 2023
Big Stone Plant	53.9	%	$	341,683	$	820	$	(126,904)	$	215,599
Coyote Station	35.0	%	188,656		104		(115,306)		73,454
Big Stone South–Ellendale 345 kV line	50.0	%	106,185		—		(7,181)		99,004
Fargo–Monticello 345 kV line	14.2	%	78,184		—		(11,238)		66,946
Big Stone South–Brookings 345 kV line	50.0	%	53,170		—		(5,207)		47,963
Brookings–Southeast Twin Cities 345 kV line	4.8	%	26,409		83		(3,617)		22,875
Bemidji–Grand Rapids 230 kV line	14.8	%	16,331		—		(3,568)		12,763
Jamestown– Ellendale 345 kV line	50.0	%	—		1,121		—		1,121
Big Stone South–Alexandria 345 kV line	40.0	%	—		555		—		555
Alexandria–Big Oaks 345 kV line	14.2	%	—		343		—		343
December 31, 2022
Big Stone Plant	53.9	%	$	338,411	$	557	$	(118,044)	$	220,924
Coyote Station	35.0	%	183,461		2,315		(111,666)		74,110
Big Stone South–Ellendale 345 kV line	50.0	%	106,185		—		(5,587)		100,598
Fargo–Monticello 345 kV line	14.2	%	78,184		—		(10,095)		68,089
Big Stone South–Brookings 345 kV line	50.0	%	53,041		—		(4,406)		48,635
Brookings–Southeast Twin Cities 345 kV line	4.8	%	26,291		—		(3,211)		23,080
Bemidji–Grand Rapids 230 kV line	14.8	%	16,331		—		(3,318)		13,013

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Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill by Segment

The following table summarizes our goodwill by segment as of December 31, 2023 and 2022: 

(in thousands)	2023		2022
Manufacturing	$	18,270	$	18,270
Plastics	19,302		19,302
Total Goodwill	$	37,572	$	37,572

Schedule of Components of Intangible Assets

The following table summarizes the components of our intangible assets at December 31, 2023 and 2022:

(in thousands)	Gross Amount		Accumulated Amortization		Net Carrying Amount
December 31, 2023
Customer Relationships	$	22,491	$	15,667	$	6,824
Other	26		7		19
Total	22,517		15,674		6,843
December 31, 2022
Customer Relationships	22,491		14,568		7,923
Other	26		6		20
Total	$	22,517	$	14,574	$	7,943

Schedule of Intangible Assets Future Amortization Expenses

Annual amortization expense for these intangible assets for the next five years is: 

(in thousands)	2024		2025		2026		2027		2028
Amortization Expense	$	1,100	$	1,100	$	1,092	$	1,090	$	554

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Leases (Tables)

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Schedule of Lease Costs

The components of lease cost and lease cash flows for the years ended December 31, 2023, 2022, and 2021 are as follows:

(in thousands)	2023		2022		2021
Lease Cost
Operating Lease Cost	$	6,309	$	5,606	$	5,298
Variable Lease Cost	1,433		1,386		1,020
Short-Term Lease Cost	2,525		1,517		1,465
Total Lease Cost	10,267		8,509		7,783
Lease Cash Flows
Operating Cash Flows from Operating Leases	$	6,424	$	5,592	$	5,642

Schedule of Assets And Liabilities, Lessee

A summary of operating lease right-of-use lease assets and lease liabilities as of December 31, 2023 and 2022 is as follows: 

(in thousands)	2023		2022
Right of Use Lease Assets1	$	16,788	$	18,610
Lease Liabilities
Current2	5,756		5,071
Long-Term3	11,258		13,876
Total Lease Liabilities	$	17,014	$	18,947
1Included in Other Noncurrent Assets in the consolidated balance sheets.
2Included in Other Current Liabilities in the consolidated balance sheets.
3Included in Other Noncurrent Liabilities in the consolidated balance sheets.

The weighted-average remaining lease term and the weighted-average discount rate as of December 31, 2023 and 2022 are as follows:

	2023		2022
Weighted-Average Remaining Lease Term (in years)	3.4		4.2
Weighted-Average Discount Rate	5.40	%	4.73	%

Schedule of Lessee, Operating Lease, Liability, Maturity

Maturities of lease liabilities as of December 31, 2023 for each of the next five years and in the aggregate thereafter are as follows:

(in thousands)	Operating Leases
2024	$	6,473
2025	5,357
2026	3,068
2027	2,196
2028	1,059
Thereafter	368
Total Lease Payments	18,521
Less: Interest	1,507
Present Value of Lease Liabilities	$	17,014

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Short-Term and Long-Term Borrowings (Tables)

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Schedule of Debt

The following is a summary of our outstanding short- and long-term borrowings by borrower, OTC or OTP, as of December 31, 2023 and 2022:

	2023						2022
(in thousands)	OTC		OTP		Total		OTC		OTP		Total
Short-Term Debt	$	—	$	81,422	$	81,422	$	—	$	8,204	$	8,204
Current Maturities of Long-Term Debt	—		—		—		—		—		—
Long-Term Debt, net of current maturities	79,849		744,210		824,059		79,798		744,023		823,821
Total	$	79,849	$	825,632	$	905,481	$	79,798	$	752,227	$	832,025

The following is a summary of outstanding long-term debt by borrower as of December 31, 2023 and 2022: 

					(in thousands)
Entity		Debt Instrument	Rate	Maturity	2023		2022
OTC		Guaranteed Senior Notes	3.55%	12/15/26	$	80,000	$	80,000
OTP		Series 2007C Senior Unsecured Notes	6.37%	08/02/27	42,000		42,000
OTP		Series 2013A Senior Unsecured Notes	4.68%	02/27/29	60,000		60,000
OTP		Series 2019A Senior Unsecured Notes	3.07%	10/10/29	10,000		10,000
OTP		Series 2020A Senior Unsecured Notes	3.22%	02/25/30	10,000		10,000
OTP		Series 2020B Senior Unsecured Notes	3.22%	08/20/30	40,000		40,000
OTP		Series 2021A Senior Unsecured Notes	2.74%	11/29/31	40,000		40,000
OTP		Series 2007D Senior Unsecured Notes	6.47%	08/20/37	50,000		50,000
OTP		Series 2019B Senior Unsecured Notes	3.52%	10/10/39	26,000		26,000
OTP		Series 2020C Senior Unsecured Notes	3.62%	02/25/40	10,000		10,000
OTP		Series 2013B Senior Unsecured Notes	5.47%	02/27/44	90,000		90,000
OTP		Series 2018A Senior Unsecured Notes	4.07%	02/07/48	100,000		100,000
OTP		Series 2019C Senior Unsecured Notes	3.82%	10/10/49	64,000		64,000
OTP		Series 2020D Senior Unsecured Notes	3.92%	02/25/50	15,000		15,000
OTP		Series 2021B Senior Unsecured Notes	3.69%	11/29/51	100,000		100,000
OTP		Series 2022A Senior Unsecured Notes	3.77%	05/20/52	90,000		90,000
Total					827,000		827,000
Less:	Unamortized Long-Term Debt Issuance Costs				2,941		3,179
Total Long-Term Debt Net of Unamortized Debt Issuance Costs					$	824,059	$	823,821

Schedule of Line of Credit Facilities

The following is a summary of our lines of credit as of December 31, 2023 and 2022:

			2023						2022
(in thousands)	Line Limit		Amount Outstanding		Letters of Credit		Amount Available		Amount Available
OTC Credit Agreement	$	170,000	$	—	$	—	$	170,000	$	170,000
OTP Credit Agreement	170,000		81,422		9,132		79,446		152,223
Total	$	340,000	$	81,422	$	9,132	$	249,446	$	322,223

Schedule of Maturities of Long-Term Debt

Aggregate maturities of long-term debt obligations at December 31, 2023 for each of the next five years are as follows:

(in thousands)	2024		2025		2026		2027		2028
Debt Maturities	$	—	$	—	$	80,000	$	42,000	$	—

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Employee Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Schedule of Target and Tactical Allocation of Plan Assets

The following table presents our target asset allocation permitted range along with the actual asset allocation as of December 31, 2023 and 2022:

	Permitted			Actual Allocation
Asset Class	Range			2023		2022
Return Enhancement	35	–	60%	48	%	48	%
Risk Management	40	–	80%	51		51
Alternatives	0	–	20%	1		1
Total				100	%	100	%

Schedule of Allocation of Plan Assets

The following presents the fair value inputs classified within the fair value hierarchy used to measure Pension Plan assets at December 31, 2023 and 2022 and assets measured using the net asset value (NAV) practical expedient:

(in thousands)	Level 1		Level 2		Level 3		NAV		Total
December 31, 2023
Equity Funds	$	127,159	$	—	$	—	$	—	$	127,159
Fixed Income Funds	167,604		—		—		—		167,604
Hybrid Funds	10,980		—		—		—		10,980
U.S. Treasury Securities	23,218		—		—		—		23,218
SEI Energy Debt Collective Fund	—		—		—		1,518		1,518
Total	328,961		—		—		1,518		330,479
December 31, 2022
Equity Funds	124,327		—		—		—		124,327
Fixed Income Funds	156,424		—		—		—		156,424
Hybrid Funds	9,756		—		—		—		9,756
U.S. Treasury Securities	19,587		—		—		—		19,587
SEI Energy Debt Collective Fund	—		—		—		3,703		3,703
Total	$	310,094	$	—	$	—	$	3,703	$	313,797

Schedule of Changes in Projected Benefit Obligations and Changes in Plan Assets

The following table provides a reconciliation of the changes in the fair value of plan assets and the actuarially computed benefit obligation for the years ended December 31, 2023 and 2022 and the funded status of the plans as of December 31, 2023 and 2022:

	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
(in thousands)	2023		2022		2023		2022		2023		2022
Change in Fair Value of Plan Assets:
Fair Value of Plan Assets at January 1	$	313,797	$	387,212	$	—	$	—	$	—	$	—
Actual Return on Plan Assets	34,196		(76,485)		—		—		—		—
Company Contributions	—		20,000		2,197		2,205		3,167		2,294
Benefit Payments	(17,514)		(16,930)		(2,197)		(2,205)		(8,900)		(8,173)
Participant Premium Payments	—		—		—		—		5,733		5,879
Fair Value of Plan Assets at December 31	330,479		313,797		—		—		—		—
Change in Benefit Obligation:
Benefit Obligation at January 1	308,055		416,697		35,624		46,840		49,947		69,311
Service Cost	3,698		6,576		72		195		565		1,338
Interest Cost	16,436		12,344		1,889		1,341		2,416		2,041
Benefit Payments	(17,514)		(16,930)		(2,197)		(2,205)		(8,900)		(8,172)
Participant Premium Payments	—		—		—		—		5,733		5,879
Plan Amendments	—		—		—		—		(17,493)		—
Actuarial (Gain) Loss	8,126		(110,632)		392		(10,547)		(2,123)		(20,450)
Benefit Obligation at December 31	318,801		308,055		35,780		35,624		30,145		49,947
Funded Status	$	11,678	$	5,742	$	(35,780)	$	(35,624)	$	(30,145)	$	(49,947)
Amounts Recognized in Consolidated Balance Sheets at December 31:
Noncurrent Assets	$	11,678	$	5,742	$	—	$	—	$	—	$	—
Current Liabilities	—		—		(2,679)		(2,414)		(2,469)		(2,970)
Noncurrent Liabilities and Deferred Credits	—		—		(33,101)		(33,210)		(27,676)		(46,977)
Net Asset (Liability)	$	11,678	$	5,742	$	(35,780)	$	(35,624)	$	(30,145)	$	(49,947)

Schedule of Assumptions Used in Calculating Net Periodic Benefit Cost

The following assumptions were used to determine benefit obligations as of December 31, 2023 and 2022:

	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
	2023		2022		2023		2022		2023		2022
Discount Rate	5.57	%	5.51	%	5.53	%	5.51	%	5.53	%	5.52	%
Long-Term Rate of Compensation Increase	n/a		n/a		3.00	%	3.00	%	n/a		n/a
Participants up to Age 39(1)	4.50	%	4.50	%	n/a		n/a		n/a		n/a
Participants Ages 40 to 49(2)	4.50	%	3.50	%	n/a		n/a		n/a		n/a
Participants Age 50 and Older(3)	3.75	%	2.75	%	n/a		n/a		n/a		n/a
Healthcare Cost Immediate Trend Rate	n/a		n/a		n/a		n/a		6.97	%	7.50	%
Healthcare Cost Ultimate Trend Rate	n/a		n/a		n/a		n/a		4.00	%	4.00	%
Year the Rate Reaches the Ultimate Trend Rate	n/a		n/a		n/a		n/a		2048		2048
(1) Amount reflects rate of compensation increases for both union and non-union employees.
(2) Amount reflects rate of compensation increases for union employees. The rate of compensation increases for non-union employees is 3.50%.
(3) Amount reflects rate of compensation increases for union employees. The rate of compensation increases for non-union employees is 3.00%.

The following assumptions were used to determine net periodic benefit cost for the years ended December 31, 2023, 2022 and 2021:

	Pension Benefits (Pension Plan)						Pension Benefits (ESSRP)						Postretirement Benefits
	2023		2022		2021		2023		2022		2021		2023		2022		2021
Discount Rate	5.51	%	3.03	%	2.78	%	5.51	%	2.93	%	2.61	%	5.52	%	3.01	%	2.75	%
Long-Term Rate of Return on Plan Assets	7.00	%	6.30	%	6.51	%	n/a		n/a		n/a		n/a		n/a		n/a
Long-Term Rate of Compensation Increase	n/a		n/a		n/a		3.00	%	3.00	%	3.00	%	n/a		n/a		n/a
Participants to Age 39	4.50	%	4.50	%	4.50	%	n/a		n/a		n/a		n/a		n/a		n/a
Participants Ages 40 to 49	3.50	%	3.50	%	3.50	%	n/a		n/a		n/a		n/a		n/a		n/a
Participants Age 50 and Older	2.75	%	2.75	%	2.75	%	n/a		n/a		n/a		n/a		n/a		n/a

Schedule of Net Benefit Costs

The following table lists the components of net periodic benefit cost of our defined benefit pension plans and other postretirement benefits for the years ended December 31, 2023, 2022 and 2021:

	Pension Benefits (Pension Plan)						Pension Benefits (ESSRP)						Postretirement Benefits
(in thousands)	2023		2022		2021		2023		2022		2021		2023		2022		2021
Service Cost	$	3,698	$	6,576	$	7,462	$	72	$	195	$	187	$	565	$	1,338	$	1,722
Interest Cost	16,436		12,344		11,660		1,889		1,341		1,228		2,416		2,041		1,891
Expected Return on Assets	(25,914)		(23,684)		(22,359)		—		—		—		—		—		—
Amortization of Prior Service Cost	—		—		—		—		—		—		(6,649)		(5,733)		(5,733)
Amortization of Net Actuarial Loss	—		7,865		10,914		—		567		620		—		3,063		3,774
Net Periodic Benefit Cost	$	(5,780)	$	3,101	$	7,677	$	1,961	$	2,103	$	2,035	$	(3,668)	$	709	$	1,654

The following table includes the impact of regulation on the recognition of periodic benefit cost arising from pension and other postretirement benefits for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023		2022		2021
Net Periodic Benefit Cost	$	(7,487)	$	5,913	$	11,366
Net Amount Amortized Due to the Effect of Regulation	1,225		1,121		21
Net Periodic Benefit Cost Recognized	$	(6,262)	$	7,034	$	11,387

Schedule of Amounts Recognized in Balance Sheet

The following table presents the amounts not yet recognized as components of net periodic benefit cost as of December 31, 2023 and 2022:

	Pension Benefits (Pension Plan)				Pension Benefits (ESSRP)				Postretirement Benefits
(in thousands)	2023		2022		2023		2022		2023		2022
Regulatory Assets (Liabilities):
Unrecognized Prior Service Cost	$	—	$	—	$	—	$	—	$	(18,845)	$	(8,400)
Unrecognized Actuarial Loss	85,227		85,367		1,061		979		1,759		3,993
Net Regulatory Assets (Liabilities)	85,227		85,367		1,061		979		(17,086)		(4,407)
Accumulated Other Comprehensive Income (Loss):
Unrecognized Prior Service Cost	—		—		—		—		498		99
Unrecognized Actuarial Gain (Loss)	1,994		1,978		(1,403)		(1,093)		707		818
Total Accumulated Other Comprehensive Income (Loss)	$	1,994	$	1,978	$	(1,403)	$	(1,093)	$	1,205	$	917

Schedule of Expected Benefit Payments

The following reflects anticipated benefit payments to be paid in each of the next five years and in the aggregate for the five year period thereafter under our pension plans and postretirement healthcare plan:

(in thousands)	2024		2025		2026		2027		2028		2029-2033
Projected Pension Plan Benefit Payments	$	18,851	$	19,274	$	19,828	$	20,318	$	20,882	$	110,291
Projected ESSRP Benefit Payments	2,747		2,697		2,823		2,994		2,938		14,437
Projected Postretirement Benefit Payments	2,469		2,497		2,544		2,547		2,476		12,045
Total	$	24,067	$	24,468	$	25,195	$	25,859	$	26,296	$	136,773

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Asset Retirement Obligations (Tables)

12 Months Ended

Dec. 31, 2023

Asset Retirement Obligation Disclosure [Abstract]

Schedule of Change in Asset Retirement Obligation

A reconciliation of the carrying amounts of AROs for the years ended December 31, 2023 and 2022 is as follows: 

(in thousands)	2023		2022
Beginning Balance	$	25,182	$	24,191
New Obligations Recognized	4,506		—
Adjustments Due to Revisions in Cash Flow Estimates	8,394		—
Accrued Accretion	1,191		991
Settlements	(2,796)		—
Ending Balance	$	36,477	$	25,182

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense

The provision for income taxes charged to income for the years ended December 31, 2023, 2022 and 2021 consisted of the following:

(in thousands)	2023		2022		2021
Current
Federal Income Taxes	$	41,253	$	31,949	$	6,806
State Income Taxes	15,126		9,568		939
Deferred
Federal Income Taxes	9,832		22,480		18,180
State Income Taxes	3,676		9,943		10,716
Tax Credits
North Dakota Wind Tax Credit Amortization, Net of Federal Tax	(586)		(586)		(586)
Investment Tax Credit Amortization	(3)		(3)		(3)
Total	$	69,298	$	73,351	$	36,052

Schedule of Effective Income Tax Rate Reconciliation

The reconciliation of the statutory federal income tax rate to our effective tax rate for each of the years ended December 31, 2023, 2022 and 2021 is as follows:

	2023				2022				2021
Income Taxes at Federal Statutory Rate	$	76,332	21.0	%	$	75,082	21.0	%	$	44,692	21.0	%
Increases (Decreases) in Tax from:
State Taxes on Income, Net of Federal Tax	14,429		4.0		15,049		4.2		9,962		4.7
Production Tax Credits (PTCs)	(17,394)		(4.8)		(14,985)		(4.2)		(12,503)		(5.9)
Amortization of Excess Deferred Income Taxes	(2,205)		(0.6)		(1,625)		(0.5)		(4,262)		(2.0)
North Dakota Wind Tax Credit Amortization, Net of Federal Tax	(586)		(0.2)		(586)		(0.2)		(586)		(0.3)
Other, Net	(1,278)		(0.3)		416		0.2		(1,251)		(0.6)
Income Taxes at Effective Tax Rate	$	69,298	19.1	%	$	73,351	20.5	%	$	36,052	16.9	%

PTCs, North Dakota wind tax credits, and excess deferred income taxes related to the federal tax rate reduction in the 2017 Tax Cuts and Jobs Act are returned to customers as a reduction of the rates they are charged and result in a reduction of operating revenues.

Schedule of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities were composed of the following on December 31, 2023 and 2022:

(in thousands)	2023		2022
Deferred Tax Assets
Employee Benefits	$	39,959	$	39,216
Regulatory Liabilities	56,479		57,353
Tax Credit Carryforwards	21,836		20,209
Cost of Removal	32,993		37,360
Asset Retirement Obligations	9,494		6,557
Net Operating Loss Carryforward	2,336		1,853
Other	11,310		5,550
Total Deferred Tax Assets	174,407		168,098
Deferred Tax Liabilities
Differences Related to Property	(347,885)		(334,201)
Retirement Benefits Regulatory Asset	(22,458)		(22,789)
Pension Expense	(24,875)		(24,269)
Other	(16,462)		(8,141)
Total Deferred Tax Liabilities	(411,680)		(389,400)
Deferred Income Taxes	$	(237,273)	$	(221,302)

Schedule of Expiration of Operating Loss Carryforwards and Tax Credit Carryforwards

The following is a schedule of tax credits and tax net operating losses available as of December 31, 2023 and the respective periods of expiration:

(in thousands)	Amount		2024-2029		2030-2037		2038-2043
State Net Operating Losses	$	2,336	$	211	$	2,125	$	—
State Tax Credits	21,836		—		—		21,836

Schedule of Income Tax Contingencies

The following table summarizes the activity for unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023		2022		2021
Balance on January 1	$	923	$	827	$	771
Increases for tax positions taken during a prior period	596		44		11
Increases for tax positions taken during the current period	163		260		189
Decreases due to settlements with taxing authorities	—		—		—
Decreases as a result of a lapse of applicable statutes of limitations	(193)		(208)		(144)
Balance on December 31	$	1,489	$	923	$	827

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Commitments Contractual Obligation Maturities

Our future commitments as of December 31, 2023 were as follows:

(in thousands)	Construction Program and Other Commitments		Capacity and Energy Requirements		Coal Purchase Commitments		Land  Easement Payments
2024	$	4,374	$	245	$	24,691	$	1,804
2025	4,051		217		24,593		1,840
2026	1,377		197		25,374		1,845
2027	594		197		25,786		1,882
2028	550		197		25,344		1,921
Beyond 2028	6,165		3,939		359,610		53,107
Total	$	17,111	$	4,992	$	485,398	$	62,399

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Accumulated Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Income (Loss)

The following table shows the changes in accumulated other comprehensive Income (loss) for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	Pension and Other Postretirement Benefits			Net Unrealized Gain (Losses) on Available-for-Sale Securities			Total
Balance, December 31, 2020	$	(8,716)		$	209		$	(8,507)
Other Comprehensive Income (Loss) Before Reclassifications, net of tax	1,638			(132)			1,506
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	541		(1)	(64)		(2)	477
Total Other Comprehensive Income (Loss)	2,179			(196)			1,983
Balance, December 31, 2021	(6,537)			13			(6,524)
Other Comprehensive Income (Loss) Before Reclassifications, net of tax	7,331			(433)			6,898
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	540		(1)	1		(2)	541
Total Other Comprehensive Income (Loss)	7,871			(432)			7,439
Balance, December 31, 2022	1,334			(419)			915
Other Comprehensive Income Before Reclassifications, net of tax	59			180			239
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(18)		(1)	12		(2)	(6)
Total Other Comprehensive Income	41			192			233
Balance, December 31, 2023	$	1,375		$	(227)		$	1,148
(1) Included in the computation of net periodic pension and other postretirement benefit costs. See Note 10 for further information.
(2) Included in other income (expense), net on the accompanying consolidated statements of income.

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Share-Based Payments (Tables)

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Nonvested Restricted Stock Shares Activity

The following is a summary of restricted stock award activity for the year ended December 31, 2023:

	Shares	Weighted-Average Grant-Date Fair Value
Nonvested, Beginning of Year	141,551	$	49.83
Granted	55,205	68.03
Vested	(45,493)	50.02
Forfeited	(2,350)	52.02
Nonvested, End of Year	148,913	$	56.48

Schedule of Share-Based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions

The grant-date fair value of the TSR component of the stock performance awards granted during the years ended December 31, 2023, 2022 and 2021 was determined using a Monte Carlo fair value simulation model incorporating the following assumptions:

	2023		2022		2021
Risk-free interest rate	4.15	%	1.52	%	0.18	%
Expected term (in years)	3.00		3.00		3.00
Expected volatility	34.00	%	32.00	%	32.00	%
Dividend yield	2.50	%	2.90	%	3.60	%

Schedule of Share-based Compensation Arrangements by Share-based Payment Award

The following is a summary of stock performance award activity for the year ended December 31, 2023 (share amounts reflect awards at target):

	Shares	Weighted-Average Grant-Date Fair Value
Nonvested, Beginning of Year	189,800	$	45.95
Granted	59,400	61.97
Vested	(55,000)	47.79
Forfeited	—	—
Nonvested, End of Year	194,200	$	50.33

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2023

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following includes the computation of the denominator for basic and diluted weighted-average shares outstanding for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	2023	2022	2021
Weighted Average Common Shares Outstanding – Basic	41,668	41,586	41,491
Effect of Dilutive Securities:
Stock Performance Awards	269	248	226
Restricted Stock Awards	100	95	87
Employee Stock Purchase Plan Shares and Other	2	2	14
Dilutive Effect of Potential Common Shares	371	345	327
Weighted Average Common Shares Outstanding – Diluted	42,039	41,931	41,818

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets Measured on Recurring Basis

The following tables present our assets measured at fair value on a recurring basis as of December 31, 2023 and 2022 classified by the input method used to measure fair value:

	Level 1		Level 2		Level 3
December 31, 2023
Assets
Investments:
Money Market Funds	$	3,125	$	—	$	—
Mutual Funds	7,771		—		—
Corporate Debt Securities	—		1,579		—
Government Debt Securities	—		7,724		—
Total Assets	10,896		9,303		—
Liabilities
Derivative Instruments	—		4,210		—
Total Liabilities	$	—	$	4,210	$	—
December 31, 2022
Assets
Investments:
Money Market Funds	$	1,560	$	—	$	—
Mutual Funds	5,503		—		—
Corporate Debt Securities	—		1,434		—
Government Debt Securities	—		7,327		—
Total Assets	$	7,063	$	8,761	$	—
Liabilities
Derivative Instruments	—		7,130		—
Total Liabilities	$	—	$	7,130	$	—

Schedule of Fair Value of Assets and Liabilities

The following reflects the carrying value and estimated fair value of these assets and liabilities as of December 31, 2023 and 2022:

	December 31, 2023				December 31, 2022
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and Cash Equivalents	$	230,373	$	230,373	$	118,996	$	118,996
Total	230,373		230,373		118,996		118,996
Liabilities:
Short-Term Debt	81,422		81,422		8,204		8,204
Long-Term Debt	824,059		710,839		823,821		681,615
Total	$	905,481	$	792,261	$	832,025	$	689,819

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Schedule I - Condensed Financial Information of Registrant (Tables)

12 Months Ended

Dec. 31, 2023

Condensed Financial Information Disclosure [Abstract]

Condensed Balance Sheet

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED BALANCE SHEETS

	December 31,
(in thousands)	2023		2022
Assets
Current Assets
Cash and Cash Equivalents	$	228,137	$	119,246
Accounts Receivable from Subsidiaries	2,555		3,278
Interest Receivable from Subsidiaries	117		117
Other	977		1,045
Total Current Assets	231,786		123,686
Investments in Subsidiaries	1,725,584		1,463,998
Notes Receivable from Subsidiaries	78,900		78,900
Deferred Income Taxes	65,244		64,802
Other Assets	50,795		43,779
Total Assets	$	2,152,309	$	1,775,165
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable to Subsidiaries	$	7	$	7
Notes Payable to Subsidiaries	568,672		420,363
Other	15,320		15,994
Total Current Liabilities	583,999		436,364
Other Noncurrent Liabilities	45,455		41,686
Commitments and Contingencies
Capitalization
Long-Term Debt	79,849		79,798
Common Stockholders' Equity	1,443,006		1,217,317
Total Capitalization	1,522,855		1,297,115
Total Liabilities and Stockholders' Equity	$	2,152,309	$	1,775,165

Condensed Income Statement

OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED STATEMENTS OF INCOME

	Years Ended December 31,
(in thousands)	2023		2022		2021
Income
Equity Income in Earnings of Subsidiaries	$	294,467	$	296,833	$	188,375
Interest Income from Subsidiaries	2,898		3,382		2,826
Other Income	10,496		466		1,290
Total Income	307,861		300,681		192,491
Expense
Nonelectric Selling, General, and Administrative Expenses	12,816		17,269		14,825
Interest Expense	3,813		4,066		4,727
Interest Expense from Subsidiaries	6		5		3
Nonservice Cost Components of Postretirement Benefits	1,063		1,023		1,097
Total Expense	17,698		22,363		20,652
Income Before Income Taxes	290,163		278,318		171,839
Income Tax Benefit	4,028		5,866		4,930
Net Income	$	294,191	$	284,184	$	176,769

Condensed Cash Flow Statement

OTTER TAIL CORPORATION (PARENT COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
(in thousands)	2023		2022		2021
Cash Flows from Operating Activities
Net Cash Provided by Operating Activities	$	77,139	$	28,807	$	60,695
Cash Flows from Investing Activities
Investment in Subsidiaries	(40,000)		(50,000)		—
Debt Repaid by Subsidiaries	—		—		169
Other, net	(68)		(1,695)		(884)
Net Cash Used in Investing Activities	(40,068)		(51,695)		(715)
Cash Flows from Financing Activities
Net (Repayments) Borrowings on Short-Term Debt	—		(22,637)		(42,529)
Borrowings from Subsidiaries	148,308		236,926		49,085
Proceeds from Issuance of Common Stock	—		—		696
Payments for Shares Withheld for Employee Tax Obligations	(3,088)		(2,942)		(1,507)
Payments for Retirement of Long-Term Debt	—		—		(169)
Dividends Paid	(73,061)		(68,755)		(64,864)
Other, net	(339)		(461)		(689)
Net Cash Provided by (Used in) Financing Activities	71,820		142,131		(59,977)
Net Change in Cash and Cash Equivalents	108,891		119,243		3
Cash and Cash Equivalents at Beginning of Period	119,246		3		—
Cash and Cash Equivalents at End of Period	$	228,137	$	119,246	$	3

Schedule of Related Party Transactions

Outstanding receivables from and payables to OTC's subsidiaries as of December 31, 2023 and 2022 are as follows:

(in thousands)	Accounts Receivable		Interest Receivable		Long-Term Notes Receivable		Accounts Payable		Current Notes Payable
December 31, 2023
Otter Tail Power Company	$	2,415	$	—	$	—	$	7	$	—
Northern Pipe Products, Inc.	—		7		5,000		—		56,917
Vinyltech Corporation	14		17		11,500		—		98,016
BTD Manufacturing, Inc.	—		78		52,000		—		6,291
T.O. Plastics, Inc.	36		15		10,400		—		980
Varistar Corporation	—		—		—		—		406,468
Otter Tail Assurance Limited	90		—		—		—		—
	$	2,555	$	117	$	78,900	$	7	$	568,672
December 31, 2022
Otter Tail Power Company	$	3,016	$	—	$	—	$	7	$	—
Northern Pipe Products, Inc.	—		7		5,000		—		77,182
Vinyltech Corporation	—		18		11,500		—		90,425
BTD Manufacturing, Inc.	—		77		52,000		—		693
T.O. Plastics, Inc.	20		15		10,400		—		5,855
Varistar Corporation	—		—		—		—		246,208
Otter Tail Assurance Limited	242		—		—		—		—
	$	3,278	$	117	$	78,900	$	7	$	420,363

Cash Dividends Paid to Parent by Subsidiaries

Dividends paid to OTC (the Parent) from its subsidiaries were as follows:

(in thousands)	2023		2022		2021
Cash Dividends Paid to Parent by Subsidiaries	$	72,982	$	68,680	$	64,790

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Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($) segment foundation plant reportingUnit plan line	Dec. 31, 2022 USD ($) foundation	Dec. 31, 2021 USD ($) foundation
Property, Plant and Equipment [Line Items]
Number of operating segments | segment	3
Investments gain (loss)	$ 7,222	$ (3,296)	$ 4,524
Allowance for equity funds used during construction		1,700	800
Number of jointly owned electric generation plants | plant	2
Number of jointly owned major transmission lines | line	5
Number of reporting units | reportingUnit	3
Amortization period	10 years
Amortization expense	$ 1,300	1,400	500
Number of plans offered | plan	2
Deferred compensation liability, company contributions	$ 24,600	20,600
Deferred compensation arrangement, contributions by employer	1,200	900	1,100
Deferred compensation liability, gain (loss) due to payment obligations	(3,300)	3,100	$ (2,200)
Contribution Obligation | Related Party
Property, Plant and Equipment [Line Items]
Related party transaction, amounts of transaction	$ 5,500	$ 4,300
Number of foundations transacting with | foundation	2	2	2
Contribution Obligation Paid | Related Party
Property, Plant and Equipment [Line Items]
Related party transaction, amounts of transaction	$ 4,300	$ 4,500	$ 3,800
Number of foundations transacting with | foundation	2	2	2
OTP | Coyote Creek Mining Company, L.L.C. (CCMC) | Lignite Sales Agreement
Property, Plant and Equipment [Line Items]
Variable interest entity, reporting entity involvement, maximum loss exposure, amount	$ 40,000
Variable interest entity, reporting entity involvement, maximum loss exposure (as a percent)	35.00%
Minimum
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	15 years
Operating lease, term	1 year
Maximum
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	20 years
Operating lease, term	10 years
Electric Plant in Service
Property, Plant and Equipment [Line Items]
Interest costs capitalized	$ 1,900	$ 900	$ 600

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Summary of Significant Accounting Policies - Summary of Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Finished Goods	$ 47,614	$ 43,812
Work in Process	26,354	31,766
Raw Material, Fuel and Supplies	75,733	70,374
Total Inventories	$ 149,701	$ 145,952

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Summary of Significant Accounting Policies - Summary of Investments (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Corporate-Owned Life Insurance Policies	$ 42,287	$ 38,991
Corporate and Government Debt Securities	9,303	8,761
Mutual Funds	7,771	5,503
Money Market Funds	3,125	1,560
Other Investments	30	30
Total Investments	$ 62,516	$ 54,845

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Summary of Significant Accounting Policies - Summary of Estimated Service Lives (Details)	12 Months Ended
	Dec. 31, 2023
Minimum | Equipment | Electric Plant in Service
Public Utility, Property, Plant and Equipment [Line Items]
Production, useful life	21 years
Transmission, useful life	51 years
Distribution, useful life	10 years
General, useful life	5 years
Minimum | Equipment | Nonelectric Property, Plant and Equipment
Public Utility, Property, Plant and Equipment [Line Items]
Useful life	2 years
Minimum | Buildings and Leasehold Improvements | Nonelectric Property, Plant and Equipment
Public Utility, Property, Plant and Equipment [Line Items]
Useful life	2 years
Maximum | Equipment | Electric Plant in Service
Public Utility, Property, Plant and Equipment [Line Items]
Production, useful life	114 years
Transmission, useful life	75 years
Distribution, useful life	70 years
General, useful life	56 years
Maximum | Equipment | Nonelectric Property, Plant and Equipment
Public Utility, Property, Plant and Equipment [Line Items]
Useful life	20 years
Maximum | Buildings and Leasehold Improvements | Nonelectric Property, Plant and Equipment
Public Utility, Property, Plant and Equipment [Line Items]
Useful life	40 years

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Summary of Significant Accounting Policies - Summary of Capitalized Cost and Related Accumulated Amortization (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Cloud Computing Costs	$ 12,782	$ 9,024
Accumulated Amortization	(1,505)	(897)
Cloud Computing Costs, net	$ 11,277	$ 8,127

XML

Segment Information - Narrative (Details)	12 Months Ended
	Dec. 31, 2023 segment
Segment Reporting [Abstract]
Number of operating segments	3
Number of reportable segments	3

XML

Segment Information - Summary of Business Segments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Segment Reporting Information [Line Items]
Operating Revenue	$ 1,349,166	$ 1,460,209	$ 1,196,844
Depreciation and Amortization	97,954	92,597	91,358
Operating Income (Loss)	377,919	390,439	249,708
Interest Expense	37,677	36,016	37,771
Income Tax Expense (Benefit)	69,298	73,351	36,052
Net Income (Loss)	294,191	284,184	176,769
Capital Expenditures	287,134	171,134	171,829
Identifiable Assets	3,242,568	2,901,661
Corporate
Segment Reporting Information [Line Items]
Depreciation and Amortization	102	140	225
Operating Income (Loss)	(12,144)	(16,342)	(14,130)
Interest Expense	916	685	1,902
Income Tax Expense (Benefit)	(3,806)	(5,723)	(4,689)
Net Income (Loss)	565	(12,114)	(10,698)
Capital Expenditures	126	66	68
Identifiable Assets	293,215	177,513
Electric
Segment Reporting Information [Line Items]
Operating Revenue	528,359	549,699	480,321
Electric | Operating Segments
Segment Reporting Information [Line Items]
Operating Revenue	528,359	549,699	480,321
Depreciation and Amortization	75,330	72,050	71,343
Operating Income (Loss)	106,521	113,138	106,964
Interest Expense	33,864	31,950	33,043
Income Tax Expense (Benefit)	1,648	5,065	1,663
Net Income (Loss)	84,424	79,974	72,458
Capital Expenditures	240,695	147,869	140,031
Identifiable Assets	2,533,831	2,351,961
Manufacturing
Segment Reporting Information [Line Items]
Operating Revenue	402,781	397,983	336,294
Manufacturing | Operating Segments
Segment Reporting Information [Line Items]
Operating Revenue	402,781	397,983	336,294
Depreciation and Amortization	18,495	16,202	15,436
Operating Income (Loss)	29,140	29,065	24,114
Interest Expense	2,295	2,796	2,239
Income Tax Expense (Benefit)	5,390	5,321	4,704
Net Income (Loss)	21,454	20,950	17,186
Capital Expenditures	23,284	17,954	20,690
Identifiable Assets	251,343	245,869
Plastics
Segment Reporting Information [Line Items]
Operating Revenue	418,026	512,527	380,229
Plastics | Operating Segments
Segment Reporting Information [Line Items]
Operating Revenue	418,026	512,527	380,229
Depreciation and Amortization	4,027	4,205	4,354
Operating Income (Loss)	254,402	264,578	132,760
Interest Expense	602	585	587
Income Tax Expense (Benefit)	66,066	68,688	34,374
Net Income (Loss)	187,748	195,374	97,823
Capital Expenditures	23,029	5,245	$ 11,040
Identifiable Assets	$ 164,179	$ 126,318

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Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Total Operating Revenues	$ 1,349,166	$ 1,460,209	$ 1,196,844
Total Operating Revenues from Contracts with Customers	1,353,476	1,469,475	1,197,635
Electric
Disaggregation of Revenue [Line Items]
Total Operating Revenues	528,359	549,699	480,321
Electric Segment - ARP Revenues	(4,310)	(9,266)	(791)
Manufacturing
Disaggregation of Revenue [Line Items]
Total Operating Revenues	402,781	397,983	336,294
Plastics
Disaggregation of Revenue [Line Items]
Total Operating Revenues	418,026	512,527	380,229
Total Retail | Electric
Disaggregation of Revenue [Line Items]
Total Operating Revenues	455,840	470,300	405,484
Retail: Residential | Electric
Disaggregation of Revenue [Line Items]
Total Operating Revenues	135,570	143,888	135,361
Retail: Commercial and Industrial | Electric
Disaggregation of Revenue [Line Items]
Total Operating Revenues	312,551	318,494	262,408
Retail: Other | Electric
Disaggregation of Revenue [Line Items]
Total Operating Revenues	7,719	7,918	7,715
Transmission | Electric
Disaggregation of Revenue [Line Items]
Total Operating Revenues	52,555	52,213	48,835
Wholesale | Electric
Disaggregation of Revenue [Line Items]
Total Operating Revenues	12,459	18,539	17,936
Other | Electric
Disaggregation of Revenue [Line Items]
Total Operating Revenues	7,505	8,647	8,066
Metal Parts and Tooling | Manufacturing
Disaggregation of Revenue [Line Items]
Total Operating Revenues	351,267	338,865	283,527
Plastic Products and Tooling | Manufacturing
Disaggregation of Revenue [Line Items]
Total Operating Revenues	41,395	49,080	40,231
Scrap Metal | Manufacturing
Disaggregation of Revenue [Line Items]
Total Operating Revenues	$ 10,119	$ 10,038	$ 12,536

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Receivables - Summary of Receivables (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Receivables [Abstract]
Trade	$ 129,257	$ 112,126
Other	9,084	9,983
Unbilled Receivables	21,324	23,932
Total Receivables	159,665	146,041
Less Allowance for Credit Losses	2,522	1,648	$ 1,836
Receivables, net of allowance for credit losses	$ 157,143	$ 144,393

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Receivables - Summary of Allowance for Credit Loss (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	$ 1,648	$ 1,836
Additions Charged to Expense	2,014	909
Reductions for Amounts Written Off, Net of Recoveries	(1,140)	(1,097)
Ending Balance	$ 2,522	$ 1,648

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Regulatory Matters - Summary of Regulatory Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory assets - current	$ 16,127	$ 24,999
Regulatory assets, long-term	95,715	94,655
Regulatory liabilities, current	25,408	17,300
Regulatory liabilities, long -term	276,547	244,497
Deferred Income Taxes
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory liabilities, current	0	0
Regulatory liabilities, long -term	136,022	131,480
Plant Removal Obligations
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory liabilities, current	0	8,509
Regulatory liabilities, long -term	117,030	105,733
Fuel Clause Adjustments
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory liabilities, current	11,350	365
Regulatory liabilities, long -term	$ 0	0
Regulatory liabilities - remaining recovery/refund period	1 year
Alternative Revenue Program Riders
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory liabilities, current	$ 6,885	2,504
Regulatory liabilities, long -term	$ 0	0
Regulatory liabilities - remaining recovery/refund period	1 year
North Dakota PTC Refunds
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory liabilities, current	$ 0	0
Regulatory liabilities, long -term	12,011	7,136
Pension and Other Postretirement Benefit Plans
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory liabilities, current	6,138	5,589
Regulatory liabilities, long -term	11,307	0
Other
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory liabilities, current	1,035	333
Regulatory liabilities, long -term	177	148
Pension and Other Postretirement Benefit Plans
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory assets - current	154	0
Regulatory assets, long-term	86,134	88,354
Alternative Revenue Program Riders
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory assets - current	3,719	5,679
Regulatory assets, long-term	$ 158	2,508
Regulatory assets - Remaining recovery/refund period	2 years
Asset Retirement Obligations
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory assets - current	$ 0	0
Regulatory assets, long-term	87	1,467
Deferred Income Taxes
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory assets - current	0	0
Regulatory assets, long-term	6,940	0
Fuel Clause Adjustments
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory assets - current	7,294	10,893
Regulatory assets, long-term	$ 0	0
Regulatory assets - Remaining recovery/refund period	1 year
Derivative Instruments
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory assets - current	$ 4,210	7,130
Regulatory assets, long-term	$ 0	0
Regulatory assets - Remaining recovery/refund period	1 year
Other
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory assets - current	$ 750	1,297
Regulatory assets, long-term	$ 2,396	$ 2,326

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Regulatory Matters - Narrative (Details) - North Dakota Rate Case - NDPSC $ in Millions	Nov. 02, 2023 USD ($)
Schedule of Regulatory Assets and Liabilities [Line Items]
Requested rate increase, amount	$ 17.4
Requested rate increase, percent (as a percent)	8.40%
Requested return on base rate, percent (as a percent)	7.85%
Requested equity ratio, percent (as a percent)	10.60%
Requested return on equity, percent (as a percent)	53.50%
Revenue, interim rate increase, amount	$ 12.4
Revenue, interim rate increase, percentage (as a percent)	6.00%

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Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, net of accumulated depreciation	$ 2,418,375	$ 2,212,717
Electric Plant in Service
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	3,127,093	2,958,311
Less Accumulated Depreciation and Amortization	851,148	859,988
Property, Plant and Equipment, net of accumulated depreciation	2,275,945	2,098,323
Nonelectric Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	349,986	309,098
Less Accumulated Depreciation and Amortization	207,556	194,704
Property, Plant and Equipment, net of accumulated depreciation	142,430	114,394
Production | Electric Plant in Service
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	1,412,826	1,343,097
Transmission | Electric Plant in Service
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	777,613	756,848
Distribution | Electric Plant in Service
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	654,704	612,716
General | Electric Plant in Service
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	144,738	131,718
Electric Plant in Service | Electric Plant in Service
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	2,989,881	2,844,379
Construction Work in Progress | Electric Plant in Service
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	137,212	113,932
Construction Work in Progress | Nonelectric Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	38,062	15,170
Equipment | Nonelectric Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	233,571	218,770
Buildings and Leasehold Improvements | Nonelectric Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	64,753	61,506
Land | Nonelectric Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	13,600	13,652
Nonelectric Property, Plant and Equipment | Nonelectric Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 311,924	$ 293,928

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Property, Plant and Equipment - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 90.8	$ 84.4	$ 85.8

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Property, Plant and Equipment - Summary of Jointly Owned Utility Plants (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Big Stone Plant
Jointly Owned Utility Plant Interests [Line Items]
Electric Plant in Service	$ 341,683	$ 338,411
Construction Work in Progress	820	557
Accumulated Depreciation	(126,904)	(118,044)
Net Plant	$ 215,599	$ 220,924
Big Stone Plant | OTP
Jointly Owned Utility Plant Interests [Line Items]
Ownership Percentage	53.90%	53.90%
Coyote Station
Jointly Owned Utility Plant Interests [Line Items]
Electric Plant in Service	$ 188,656	$ 183,461
Construction Work in Progress	104	2,315
Accumulated Depreciation	(115,306)	(111,666)
Net Plant	$ 73,454	$ 74,110
Coyote Station | OTP
Jointly Owned Utility Plant Interests [Line Items]
Ownership Percentage	35.00%	35.00%
Big Stone South–Ellendale 345 kV line
Jointly Owned Utility Plant Interests [Line Items]
Electric Plant in Service	$ 106,185	$ 106,185
Construction Work in Progress	0	0
Accumulated Depreciation	(7,181)	(5,587)
Net Plant	$ 99,004	$ 100,598
Big Stone South–Ellendale 345 kV line | OTP
Jointly Owned Utility Plant Interests [Line Items]
Ownership Percentage	50.00%	50.00%
Fargo–Monticello 345 kV line
Jointly Owned Utility Plant Interests [Line Items]
Electric Plant in Service	$ 78,184	$ 78,184
Construction Work in Progress	0	0
Accumulated Depreciation	(11,238)	(10,095)
Net Plant	$ 66,946	$ 68,089
Fargo–Monticello 345 kV line | OTP
Jointly Owned Utility Plant Interests [Line Items]
Ownership Percentage	14.20%	14.20%
Big Stone South–Brookings 345 kV line
Jointly Owned Utility Plant Interests [Line Items]
Electric Plant in Service	$ 53,170	$ 53,041
Construction Work in Progress	0	0
Accumulated Depreciation	(5,207)	(4,406)
Net Plant	$ 47,963	$ 48,635
Big Stone South–Brookings 345 kV line | OTP
Jointly Owned Utility Plant Interests [Line Items]
Ownership Percentage	50.00%	50.00%
Brookings–Southeast Twin Cities 345 kV line
Jointly Owned Utility Plant Interests [Line Items]
Electric Plant in Service	$ 26,409	$ 26,291
Construction Work in Progress	83	0
Accumulated Depreciation	(3,617)	(3,211)
Net Plant	$ 22,875	$ 23,080
Brookings–Southeast Twin Cities 345 kV line | OTP
Jointly Owned Utility Plant Interests [Line Items]
Ownership Percentage	4.80%	4.80%
Bemidji–Grand Rapids 230 kV line
Jointly Owned Utility Plant Interests [Line Items]
Electric Plant in Service	$ 16,331	$ 16,331
Construction Work in Progress	0	0
Accumulated Depreciation	(3,568)	(3,318)
Net Plant	$ 12,763	$ 13,013
Bemidji–Grand Rapids 230 kV line | OTP
Jointly Owned Utility Plant Interests [Line Items]
Ownership Percentage	14.80%	14.80%
Jamestown– Ellendale 345 kV line
Jointly Owned Utility Plant Interests [Line Items]
Electric Plant in Service	$ 0
Construction Work in Progress	1,121
Accumulated Depreciation	0
Net Plant	$ 1,121
Jamestown– Ellendale 345 kV line | OTP
Jointly Owned Utility Plant Interests [Line Items]
Ownership Percentage	50.00%
Big Stone South–Alexandria 345 kV line
Jointly Owned Utility Plant Interests [Line Items]
Electric Plant in Service	$ 0
Construction Work in Progress	555
Accumulated Depreciation	0
Net Plant	$ 555
Big Stone South–Alexandria 345 kV line | OTP
Jointly Owned Utility Plant Interests [Line Items]
Ownership Percentage	40.00%
Alexandria–Big Oaks 345 kV line
Jointly Owned Utility Plant Interests [Line Items]
Electric Plant in Service	$ 0
Construction Work in Progress	343
Accumulated Depreciation	0
Net Plant	$ 343
Alexandria–Big Oaks 345 kV line | OTP
Jointly Owned Utility Plant Interests [Line Items]
Ownership Percentage	14.20%

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Intangible Assets - Summary of Goodwill by Segment (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Goodwill [Line Items]
Goodwill	$ 37,572	$ 37,572
Manufacturing
Goodwill [Line Items]
Goodwill	18,270	18,270
Plastics
Goodwill [Line Items]
Goodwill	$ 19,302	$ 19,302

XML

Intangible Assets - Summary of Components of Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Gross Amount	$ 22,517	$ 22,517
Accumulated Amortization	15,674	14,574
Net Carrying Amount	6,843	7,943
Customer Relationships
Finite-Lived Intangible Assets [Line Items]
Gross Amount	22,491	22,491
Accumulated Amortization	15,667	14,568
Net Carrying Amount	6,824	7,923
Other
Finite-Lived Intangible Assets [Line Items]
Gross Amount	26	26
Accumulated Amortization	7	6
Net Carrying Amount	$ 19	$ 20

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Intangible Assets - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 1.1	$ 1.1	$ 1.1

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Intangible Assets - Summary of Intangible Assets Future Amortization Expenses (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2024	$ 1,100
2025	1,100
2026	1,092
2027	1,090
2028	$ 554

XML

Leases - Summary of Lease Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Lease Cost
Operating Lease Cost	$ 6,309	$ 5,606	$ 5,298
Variable Lease Cost	1,433	1,386	1,020
Short-Term Lease Cost	2,525	1,517	1,465
Total Lease Cost	10,267	8,509	7,783
Lease Cash Flows
Operating Cash Flows from Operating Leases	$ 6,424	$ 5,592	$ 5,642

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Leases - Summary of Supplemental Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Right of Use Lease Asset	$ 16,788	$ 18,610
Lease Liabilities
Current	5,756	5,071
Long-Term	11,258	13,876
Total Lease Liabilities	$ 17,014	$ 18,947
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other Noncurrent Assets	Other Noncurrent Assets
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other Current Liabilities	Other Current Liabilities
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other Noncurrent Liabilities	Other Noncurrent Liabilities

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Leases - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Right-of-use asset obtained in exchange for operating lease liability	$ 3.6	$ 3.7

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Leases - Summary of Operating Lease Liability Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
2024	$ 6,473
2025	5,357
2026	3,068
2027	2,196
2028	1,059
Thereafter	368
Total Lease Payments	18,521
Less: Interest	1,507
Present Value of Lease Liabilities	$ 17,014	$ 18,947

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Leases - Summary of Weighted-Average Remaining Lease Term and Discount Rate (Details)	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Weighted-Average Remaining Lease Term (in years)	3 years 4 months 24 days	4 years 2 months 12 days
Weighted-Average Discount Rate	5.40%	4.73%

XML

Short-Term and Long-Term Borrowings - Summary of Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Short-Term Debt	$ 81,422	$ 8,204
Current Maturities of Long-Term Debt	0	0
Long-Term Debt	824,059	823,821
Total	905,481	832,025
OTC
Debt Instrument [Line Items]
Short-Term Debt	0	0
Current Maturities of Long-Term Debt	0	0
Long-Term Debt	79,849	79,798
Total	79,849	79,798
OTP
Debt Instrument [Line Items]
Short-Term Debt	81,422	8,204
Current Maturities of Long-Term Debt	0	0
Long-Term Debt	744,210	744,023
Total	$ 825,632	$ 752,227

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Short-Term and Long-Term Borrowings - Summary of Lines of Credit (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Line of Credit Facility [Line Items]
Line Limit	$ 340,000,000
Amount Outstanding	81,422,000	$ 8,204,000
Letters of Credit	9,132,000
Amount Available	249,446,000	322,223,000
OTC Credit Agreement
Line of Credit Facility [Line Items]
Line Limit	170,000,000
Amount Outstanding	0
Letters of Credit	0
Amount Available	170,000,000	170,000,000
OTP Credit Agreement
Line of Credit Facility [Line Items]
Line Limit	170,000,000
Amount Outstanding	81,422,000
Letters of Credit	9,132,000
Amount Available	$ 79,446,000	$ 152,223,000

XML

Short-Term and Long-Term Borrowings - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 340,000,000
Debt, weighted average interest rate (as a percent)	6.70%	5.61%
Debt instrument, redemption price, percentage	100.00%
Minimum
Debt Instrument [Line Items]
Interest and dividend coverage ratio	1.50
Minimum | Benchmark rate
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate (as a percent)	0.00%
Maximum
Debt Instrument [Line Items]
Debt to total capitalization ratio	60.00%
Maximum | Benchmark rate
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate (as a percent)	2.00%
OTP Credit Agreement
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 170,000,000
Line of credit facility, increased current borrowing capacity, accordion provision	250,000,000
OTC Credit Agreement
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	170,000,000
Line of credit facility, increased current borrowing capacity, accordion provision	290,000,000
Revolving Credit Facility | OTP Credit Agreement
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	170,000,000
Revolving Credit Facility | OTC Credit Agreement
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	170,000,000
Letter of Credit | OTP Credit Agreement
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	50,000,000
Letter of Credit | OTC Credit Agreement
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 40,000,000

XML

Short-Term and Long-Term Borrowings - Summary of Outstanding Long-term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Long-term debt	$ 827,000	$ 827,000
Unamortized Long-Term Debt Issuance Costs	2,941	3,179
Total Long-Term Debt Net of Unamortized Debt Issuance Costs	$ 824,059	823,821
Guaranteed Senior Notes
Debt Instrument [Line Items]
Rate (as a percent)	3.55%
Long-term debt	$ 80,000	80,000
Series 2007C Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	6.37%
Long-term debt	$ 42,000	42,000
Series 2013A Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	4.68%
Long-term debt	$ 60,000	60,000
Series 2019A Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	3.07%
Long-term debt	$ 10,000	10,000
Series 2020A Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	3.22%
Long-term debt	$ 10,000	10,000
Series 2020B Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	3.22%
Long-term debt	$ 40,000	40,000
Series 2021A Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	2.74%
Long-term debt	$ 40,000	40,000
Series 2007D Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	6.47%
Long-term debt	$ 50,000	50,000
Series 2019B Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	3.52%
Long-term debt	$ 26,000	26,000
Series 2020C Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	3.62%
Long-term debt	$ 10,000	10,000
Series 2013B Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	5.47%
Long-term debt	$ 90,000	90,000
Series 2018A Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	4.07%
Long-term debt	$ 100,000	100,000
Series 2019C Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	3.82%
Long-term debt	$ 64,000	64,000
Series 2020D Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	3.92%
Long-term debt	$ 15,000	15,000
Series 2021B Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	3.69%
Long-term debt	$ 100,000	100,000
Series 2022A Senior Unsecured Notes
Debt Instrument [Line Items]
Rate (as a percent)	3.77%
Long-term debt	$ 90,000	$ 90,000

XML

Short-Term and Long-Term Borrowings - Summary of Maturities of Long-term Debt (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Debt Disclosure [Abstract]
2024	$ 0
2025	0
2026	80,000
2027	42,000
2028	$ 0

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Employee Postretirement Benefits - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($) year	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Payment for pension benefits	$ 0	$ 20,000	$ 10,000
Defined contribution plan, cost	$ 7,800	6,700	$ 6,500
Pension Benefits (Pension Plan)
Defined Benefit Plan Disclosure [Line Items]
Age for compensation | year	65
Age below which compensation is reduced | year	62
Vesting period	5 years
Investment redemption, notice period	95 days
Subscriptions, lock-up period	3 years
Accumulated benefit obligation	$ 288,800	$ 283,200
Discount rate (as a percent)	5.57%	5.51%
Decrease in benefit obligation for change in discount rate	$ 2,200	$ 117,100
Increase in benefit obligation for change in expected future compensation	7,900
Increase from plan participant census data	3,100
Actual returns	34,200
Expected returns	25,900
Obligation impact	$ 8,300
Other Postretirement Benefits Plan
Defined Benefit Plan Disclosure [Line Items]
Health insurance benefits, requisite age	55 years
Health insurance benefits, requisite service period	10 years
Reduction from plan amendment	$ 20,100
Reduction attributable to increase in discount rate to measurement plan liability	$ 2,600
Discount rate during time of amendment (as a percent)	6.06%
Discount rate (as a percent)	5.53%	5.52%
Savings attributable to the plan change	$ 17,500
Expected remaining service period (in years)	4 years 9 months 18 days
Decrease in benefit obligation for change in discount rate	$ 1,300	$ 17,900
Increase in benefit obligation for change in expected healthcare cost trends	1,100
Executive Survivor and Supplemental Retirement Plan
Defined Benefit Plan Disclosure [Line Items]
Accumulated benefit obligation	$ 35,800	$ 35,600
Discount rate (as a percent)	5.53%	5.51%
Decrease in benefit obligation for change in discount rate	$ 100	$ 10,200

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Employee Postretirement Benefits - Summary of Asset Allocation Ranges By Asset Class and PBO Funded Status (Details) - Pension Benefits (Pension Plan)	Dec. 31, 2023	Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	100.00%	100.00%
Return Enhancement
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	48.00%	48.00%
Return Enhancement | 35 - 60% | Minimum
Defined Benefit Plan Disclosure [Line Items]
Permitted Range	35.00%
Return Enhancement | 35 - 60% | Maximum
Defined Benefit Plan Disclosure [Line Items]
Permitted Range	60.00%
Risk Management
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	51.00%	51.00%
Risk Management | 40 - 80% | Minimum
Defined Benefit Plan Disclosure [Line Items]
Permitted Range	40.00%
Risk Management | 40 - 80% | Maximum
Defined Benefit Plan Disclosure [Line Items]
Permitted Range	80.00%
Alternatives
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	1.00%	1.00%
Alternatives | 0 - 20% | Minimum
Defined Benefit Plan Disclosure [Line Items]
Permitted Range	0.00%
Alternatives | 0 - 20% | Maximum
Defined Benefit Plan Disclosure [Line Items]
Permitted Range	20.00%

XML

Employee Postretirement Benefits - Summary of Allocation of Plan Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	$ 330,479	$ 313,797
Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	328,961	310,094
Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
NAV
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	1,518	3,703
Equity Funds
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	127,159	124,327
Equity Funds | Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	127,159	124,327
Equity Funds | Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
Equity Funds | Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
Equity Funds | NAV
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
Fixed Income Funds
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	167,604	156,424
Fixed Income Funds | Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	167,604	156,424
Fixed Income Funds | Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
Fixed Income Funds | Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
Fixed Income Funds | NAV
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
Hybrid Funds
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	10,980	9,756
Hybrid Funds | Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	10,980	9,756
Hybrid Funds | Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
Hybrid Funds | Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
Hybrid Funds | NAV
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
U.S. Treasury Securities
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	23,218	19,587
U.S. Treasury Securities | Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	23,218	19,587
U.S. Treasury Securities | Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
U.S. Treasury Securities | Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
U.S. Treasury Securities | NAV
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
SEI Energy Debt Collective Fund
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	1,518	3,703
SEI Energy Debt Collective Fund | Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
SEI Energy Debt Collective Fund | Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
SEI Energy Debt Collective Fund | Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	0	0
SEI Energy Debt Collective Fund | NAV
Defined Benefit Plan Disclosure [Line Items]
Plan Assets	$ 1,518	$ 3,703

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Employee Postretirement Benefits - Summary of Changes in Fair Value of Plan Assets and Plan's Benefit Obligations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Change in Fair Value of Plan Assets:
Fair Value of Plan Assets, beginning balance	$ 313,797
Fair Value of Plan Assets, ending balance	330,479	$ 313,797
Pension Benefits (Pension Plan)
Change in Fair Value of Plan Assets:
Fair Value of Plan Assets, beginning balance	313,797	387,212
Actual Return on Plan Assets	34,196	(76,485)
Company Contributions	0	20,000
Benefit Payments	(17,514)	(16,930)
Participant Premium Payments	0	0
Fair Value of Plan Assets, ending balance	330,479	313,797	$ 387,212
Change in Benefit Obligation:
Projected Benefit Obligation, beginning balance	308,055	416,697
Service Cost	3,698	6,576	7,462
Interest Cost	16,436	12,344	11,660
Benefit Payments	(17,514)	(16,930)
Participant Premium Payments	0	0
Plan Amendments	0	0
Actuarial (Gain) Loss	8,126	(110,632)
Projected Benefit Obligation, ending balance	318,801	308,055	416,697
Funded Status	11,678	5,742
Amounts Recognized in Consolidated Balance Sheets at December 31:
Noncurrent Assets	11,678	5,742
Current Liabilities	0	0
Noncurrent Liabilities and Deferred Credits	0	0
Net Asset (Liability)	11,678	5,742
Pension Benefits (ESSRP)
Change in Fair Value of Plan Assets:
Fair Value of Plan Assets, beginning balance	0	0
Actual Return on Plan Assets	0	0
Company Contributions	2,197	2,205
Benefit Payments	(2,197)	(2,205)
Participant Premium Payments	0	0
Fair Value of Plan Assets, ending balance	0	0	0
Change in Benefit Obligation:
Projected Benefit Obligation, beginning balance	35,624	46,840
Service Cost	72	195	187
Interest Cost	1,889	1,341	1,228
Benefit Payments	(2,197)	(2,205)
Participant Premium Payments	0	0
Plan Amendments	0	0
Actuarial (Gain) Loss	392	(10,547)
Projected Benefit Obligation, ending balance	35,780	35,624	46,840
Funded Status	(35,780)	(35,624)
Amounts Recognized in Consolidated Balance Sheets at December 31:
Noncurrent Assets	0	0
Current Liabilities	(2,679)	(2,414)
Noncurrent Liabilities and Deferred Credits	(33,101)	(33,210)
Net Asset (Liability)	(35,780)	(35,624)
Postretirement Benefits
Change in Fair Value of Plan Assets:
Fair Value of Plan Assets, beginning balance	0	0
Actual Return on Plan Assets	0	0
Company Contributions	3,167	2,294
Benefit Payments	(8,900)	(8,173)
Participant Premium Payments	5,733	5,879
Fair Value of Plan Assets, ending balance	0	0	0
Change in Benefit Obligation:
Projected Benefit Obligation, beginning balance	49,947	69,311
Service Cost	565	1,338	1,722
Interest Cost	2,416	2,041	1,891
Benefit Payments	(8,900)	(8,172)
Participant Premium Payments	5,733	5,879
Plan Amendments	(17,493)	0
Actuarial (Gain) Loss	(2,123)	(20,450)
Projected Benefit Obligation, ending balance	30,145	49,947	$ 69,311
Funded Status	(30,145)	(49,947)
Amounts Recognized in Consolidated Balance Sheets at December 31:
Noncurrent Assets	0	0
Current Liabilities	(2,469)	(2,970)
Noncurrent Liabilities and Deferred Credits	(27,676)	(46,977)
Net Asset (Liability)	$ (30,145)	$ (49,947)

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Employee Postretirement Benefits - Summary of Assumptions Used to Determine Benefit Obligations (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Participants Age 40 to 49, Non-Union
Defined Benefit Plan Disclosure [Line Items]
Long-Term Rate of Compensation Increase	3.50%
Participants Age 50 and Older, Non-Union
Defined Benefit Plan Disclosure [Line Items]
Long-Term Rate of Compensation Increase	3.00%
Pension Benefits (Pension Plan)
Defined Benefit Plan Disclosure [Line Items]
Discount Rate	5.57%	5.51%
Pension Benefits (Pension Plan) | Participants to Age 39
Defined Benefit Plan Disclosure [Line Items]
Long-Term Rate of Compensation Increase	4.50%	4.50%
Pension Benefits (Pension Plan) | Participants Ages 40 to 49
Defined Benefit Plan Disclosure [Line Items]
Long-Term Rate of Compensation Increase	4.50%	3.50%
Pension Benefits (Pension Plan) | Participants Age 50 and Older
Defined Benefit Plan Disclosure [Line Items]
Long-Term Rate of Compensation Increase	3.75%	2.75%
Pension Benefits (ESSRP)
Defined Benefit Plan Disclosure [Line Items]
Discount Rate	5.53%	5.51%
Long-Term Rate of Compensation Increase	3.00%	3.00%
Postretirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Discount Rate	5.53%	5.52%
Healthcare Cost Immediate Trend Rate	6.97%	7.50%
Healthcare Cost Ultimate Trend Rate	4.00%	4.00%
Year the Rate Reaches the Ultimate Trend Rate	2048	2048

XML

Employee Postretirement Benefits - Summary of Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Defined Benefit Plan Disclosure [Line Items]
Net Periodic Benefit Cost	$ (7,487)	$ 5,913	$ 11,366
Pension Benefits (Pension Plan)
Defined Benefit Plan Disclosure [Line Items]
Service Cost	3,698	6,576	7,462
Interest Cost	16,436	12,344	11,660
Expected Return on Assets	(25,914)	(23,684)	(22,359)
Amortization of Prior Service Cost	0	0	0
Amortization of Net Actuarial Loss	0	7,865	10,914
Net Periodic Benefit Cost	(5,780)	3,101	7,677
Pension Benefits (ESSRP)
Defined Benefit Plan Disclosure [Line Items]
Service Cost	72	195	187
Interest Cost	1,889	1,341	1,228
Expected Return on Assets	0	0	0
Amortization of Prior Service Cost	0	0	0
Amortization of Net Actuarial Loss	0	567	620
Net Periodic Benefit Cost	1,961	2,103	2,035
Postretirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Service Cost	565	1,338	1,722
Interest Cost	2,416	2,041	1,891
Expected Return on Assets	0	0	0
Amortization of Prior Service Cost	(6,649)	(5,733)	(5,733)
Amortization of Net Actuarial Loss	0	3,063	3,774
Net Periodic Benefit Cost	$ (3,668)	$ 709	$ 1,654

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Employee Postretirement Benefits - Summary of Composition of Periodic Benefit Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Retirement Benefits [Abstract]
Net Periodic Benefit Cost	$ (7,487)	$ 5,913	$ 11,366
Net Amount Amortized Due to the Effect of Regulation	1,225	1,121	21
Net Periodic Benefit Cost Recognized	$ (6,262)	$ 7,034	$ 11,387

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Employee Postretirement Benefits - Summary of Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Pension Benefits (Pension Plan)
Defined Benefit Plan Disclosure [Line Items]
Discount Rate	5.51%	3.03%	2.78%
Long-Term Rate of Return on Plan Assets	7.00%	6.30%	6.51%
Pension Benefits (Pension Plan) | Participants to Age 39
Defined Benefit Plan Disclosure [Line Items]
Long-Term Rate of Compensation Increase	4.50%	4.50%	4.50%
Pension Benefits (Pension Plan) | Participants Ages 40 to 49
Defined Benefit Plan Disclosure [Line Items]
Long-Term Rate of Compensation Increase	3.50%	3.50%	3.50%
Pension Benefits (Pension Plan) | Participants Age 50 and Older
Defined Benefit Plan Disclosure [Line Items]
Long-Term Rate of Compensation Increase	2.75%	2.75%	2.75%
Pension Benefits (ESSRP)
Defined Benefit Plan Disclosure [Line Items]
Discount Rate	5.51%	2.93%	2.61%
Long-Term Rate of Compensation Increase	3.00%	3.00%	3.00%
Postretirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Discount Rate	5.52%	3.01%	2.75%

XML

Employee Postretirement Benefits - Summary of Amounts Recognized in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Pension Benefits (Pension Plan)
Regulatory Assets (Liabilities):
Unrecognized Prior Service Cost	$ 0	$ 0
Unrecognized Actuarial Loss	85,227	85,367
Net Regulatory Assets (Liabilities)	85,227	85,367
Accumulated Other Comprehensive Income (Loss):
Unrecognized Prior Service Cost	0	0
Unrecognized Actuarial Gain (Loss)	1,994	1,978
Total Accumulated Other Comprehensive Income (Loss)	1,994	1,978
Pension Benefits (ESSRP)
Regulatory Assets (Liabilities):
Unrecognized Prior Service Cost	0	0
Unrecognized Actuarial Loss	1,061	979
Net Regulatory Assets (Liabilities)	1,061	979
Accumulated Other Comprehensive Income (Loss):
Unrecognized Prior Service Cost	0	0
Unrecognized Actuarial Gain (Loss)	(1,403)	(1,093)
Total Accumulated Other Comprehensive Income (Loss)	(1,403)	(1,093)
Postretirement Benefits
Regulatory Assets (Liabilities):
Unrecognized Prior Service Cost	(18,845)	(8,400)
Unrecognized Actuarial Loss	1,759	3,993
Net Regulatory Assets (Liabilities)	(17,086)	(4,407)
Accumulated Other Comprehensive Income (Loss):
Unrecognized Prior Service Cost	498	99
Unrecognized Actuarial Gain (Loss)	707	818
Total Accumulated Other Comprehensive Income (Loss)	$ 1,205	$ 917

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Employee Postretirement Benefits - Summary of Benefit Payments, Which Reflect Expected Future Service, As Appropriate, Expected to Be Paid Out From Plan Assets (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Defined Benefit Plan Disclosure [Line Items]
2024	$ 24,067
2025	24,468
2026	25,195
2027	25,859
2028	26,296
2029-2033	136,773
Pension Benefits (Pension Plan)
Defined Benefit Plan Disclosure [Line Items]
2024	18,851
2025	19,274
2026	19,828
2027	20,318
2028	20,882
2029-2033	110,291
Pension Benefits (ESSRP)
Defined Benefit Plan Disclosure [Line Items]
2024	2,747
2025	2,697
2026	2,823
2027	2,994
2028	2,938
2029-2033	14,437
Postretirement Benefits
Defined Benefit Plan Disclosure [Line Items]
2024	2,469
2025	2,497
2026	2,544
2027	2,547
2028	2,476
2029-2033	$ 12,045

XML

Asset Retirement Obligations - Narrative (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Asset Retirement Obligation Disclosure [Abstract]
Asset retirement obligation, legally restricted assets, fair value	$ 0
Asset retirement obligation, current	100,000	$ 2,700,000
Asset retirement obligations, noncurrent	$ 36,400,000	$ 22,500,000

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Asset Retirement Obligations - Summary of Change in Asset Retirement Obligation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
Beginning Balance	$ 25,182	$ 24,191
New Obligations Recognized	4,506	0
Adjustments Due to Revisions in Cash Flow Estimates	8,394	0
Accrued Accretion	1,191	991
Settlements	(2,796)	0
Ending Balance	$ 36,477	$ 25,182

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Income Taxes - Summary of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Current
Federal Income Taxes	$ 41,253	$ 31,949	$ 6,806
State Income Taxes	15,126	9,568	939
Deferred
Federal Income Taxes	9,832	22,480	18,180
State Income Taxes	3,676	9,943	10,716
Tax Credits
North Dakota Wind Tax Credit Amortization, Net of Federal Tax	(586)	(586)	(586)
Investment Tax Credit Amortization	(3)	(3)	(3)
Income Tax Expense (Benefit)	$ 69,298	$ 73,351	$ 36,052

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Income Taxes - Summary of Effective Income Tax Rate (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Income Taxes at Federal Statutory Rate	$ 76,332	$ 75,082	$ 44,692
Increases (Decreases) in Tax from:
State Taxes on Income, Net of Federal Tax	14,429	15,049	9,962
Production Tax Credits (PTCs)	(17,394)	(14,985)	(12,503)
Amortization of Excess Deferred Income Taxes	(2,205)	(1,625)	(4,262)
North Dakota Wind Tax Credit Amortization, Net of Federal Tax	(586)	(586)	(586)
Other, Net	(1,278)	416	(1,251)
Income Tax Expense (Benefit)	$ 69,298	$ 73,351	$ 36,052
Increases (Decreases) in Tax from:
Income Taxes at Federal Statutory Rate	21.00%	21.00%	21.00%
State Taxes on Income, Net of Federal Tax	4.00%	4.20%	4.70%
Production Tax Credits (PTCs)	(4.80%)	(4.20%)	(5.90%)
Amortization of Excess Deferred Income Taxes	(0.60%)	(0.50%)	(2.00%)
North Dakota Wind Tax Credit Amortization, Net of Federal Tax	(0.20%)	(0.20%)	(0.30%)
Other, Net	(0.30%)	0.20%	(0.60%)
Income Taxes at Effective Tax Rate	19.10%	20.50%	16.90%

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Income Taxes - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Deferred Tax Assets
Employee Benefits	$ 39,959	$ 39,216
Regulatory Liabilities	56,479	57,353
Tax Credit Carryforwards	21,836	20,209
Cost of Removal	32,993	37,360
Asset Retirement Obligations	9,494	6,557
Net Operating Loss Carryforward	2,336	1,853
Other	11,310	5,550
Total Deferred Tax Assets	174,407	168,098
Deferred Tax Liabilities
Differences Related to Property	(347,885)	(334,201)
Retirement Benefits Regulatory Asset	(22,458)	(22,789)
Pension Expense	(24,875)	(24,269)
Other	(16,462)	(8,141)
Total Deferred Tax Liabilities	(411,680)	(389,400)
Deferred Income Taxes	$ (237,273)	$ (221,302)

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Income Taxes - Summary of Expiration of Tax Net Operating Losses and Tax Credits Available (Details) - State and Local Jurisdiction $ in Thousands	Dec. 31, 2023 USD ($)
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 2,336
Tax credit carryforward, amount	21,836
2024-2029
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	211
Tax credit carryforward, amount	0
2030-2037
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	2,125
Tax credit carryforward, amount	0
2038-2043
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	0
Tax credit carryforward, amount	$ 21,836

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Income Taxes - Summary of Unrecognized Tax Benefit Activity (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance on January 1	$ 923	$ 827	$ 771
Increases for tax positions taken during a prior period	596	44	11
Increases for tax positions taken during the current period	163	260	189
Decreases due to settlements with taxing authorities	0	0	0
Decreases as a result of a lapse of applicable statutes of limitations	(193)	(208)	(144)
Balance on December 31	$ 1,489	$ 923	$ 827

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Income Taxes - Narrative (Details)	12 Months Ended
	Dec. 31, 2023
Income Tax Disclosure [Abstract]
Period for unrecognized tax benefits not expected change	12 months

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Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Other Commitments [Line Items]
Capacity and energy requirement costs	$ 5.6	$ 13.1	$ 11.5
Coal purchase commitment costs	43.7	45.1	40.4
Land easement non-lease payments expense	1.8	$ 1.4	$ 1.3
OTP | Federal Energy Regulatory Commission
Other Commitments [Line Items]
Estimated liability of refund obligation	2.8
OTP | Construction Programs
Other Commitments [Line Items]
Long-term purchase commitment, amount	17.1
OTP | OTP Land Easements
Other Commitments [Line Items]
Long-term purchase commitment, amount	$ 62.4
Long-term purchase commitment, period	99 years

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Commitments and Contingencies - Summary of Commitments Contractual Obligation Maturities (Details) $ in Thousands	Dec. 31, 2023 USD ($)
OTP
Land Easement Payments
2024	$ 1,804
2025	1,840
2026	1,845
2027	1,882
2028	1,921
Beyond 2028	53,107
Land easement payments, total	62,399
Construction Program and Other Commitments | Subsidiaries
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract]
2024	4,374
2025	4,051
2026	1,377
2027	594
2028	550
Beyond 2028	6,165
Commitments other than operating leases, total	17,111
Capacity and Energy Requirements | OTP
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract]
2024	245
2025	217
2026	197
2027	197
2028	197
Beyond 2028	3,939
Commitments other than operating leases, total	4,992
Coal Purchase Commitments | OTP
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract]
2024	24,691
2025	24,593
2026	25,374
2027	25,786
2028	25,344
Beyond 2028	359,610
Commitments other than operating leases, total	$ 485,398

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Stockholders' Equity (Details) - USD ($) $ in Thousands		12 Months Ended
	May 03, 2021	Dec. 31, 2023	Dec. 31, 2022
Class of Stock [Line Items]
Total capitalization		$ 2,267,065	$ 2,041,138
OTP
Class of Stock [Line Items]
Equity to total capitalization ratio		54.20%
Net assets restricted from distribution		$ 771,300
Minimum | Minnesota Public Utilities Commission | OTP
Class of Stock [Line Items]
Public utilities, requested equity capital structure (as a percent)		48.30%
Maximum | OTP
Class of Stock [Line Items]
Total capitalization		$ 2,000,000
Maximum | Minnesota Public Utilities Commission | OTP
Class of Stock [Line Items]
Public utilities, requested equity capital structure (as a percent)		59.10%
Second Shelf Registration
Class of Stock [Line Items]
Shelf registration (in shares)	1,500,000
Number of shares issued (in shares)		105,663
Number of shares available for grant (in shares)		1,145,330
Cumulative Preferred Shares
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)		1,500,000
Preferred stock, shares outstanding (in shares)		0	0
Cumulative Preference Shares
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)		1,000,000
Preferred stock, shares outstanding (in shares)		0

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ 1,217,317	$ 990,777	$ 870,966
Other Comprehensive Income (Loss) Before Reclassifications, net of tax	239	6,898	1,506
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(6)	541	477
Total Other Comprehensive Income	233	7,439	1,983
Ending balance	1,443,006	1,217,317	990,777
Pension and Other Postretirement Benefits
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	1,334	(6,537)	(8,716)
Other Comprehensive Income (Loss) Before Reclassifications, net of tax	59	7,331	1,638
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(18)	540	541
Total Other Comprehensive Income	41	7,871	2,179
Ending balance	1,375	1,334	(6,537)
Net Unrealized Gain (Losses) on Available-for-Sale Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(419)	13	209
Other Comprehensive Income (Loss) Before Reclassifications, net of tax	180	(433)	(132)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	12	1	(64)
Total Other Comprehensive Income	192	(432)	(196)
Ending balance	(227)	(419)	13
Accumulated Other Comprehensive Income (Loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	915	(6,524)	(8,507)
Total Other Comprehensive Income	233	7,439	1,983
Ending balance	$ 1,148	$ 915	$ (6,524)

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Share-Based Payments - Narrative (Details)	1 Months Ended	12 Months Ended
	Apr. 30, 2023 shares	Dec. 31, 2023 USD ($) measure $ / shares shares	Dec. 31, 2022 USD ($) $ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award cliff vesting period		4 years
Granted (in dollars per share) | $ / shares		$ 68.03	$ 59.95	$ 43.55
Fair value of awards vested		$ 3,100,000	$ 3,000,000	$ 2,100,000
Unrecognized compensation costs		$ 3,400,000
Unrecognized compensation costs, period of recognition		1 year 8 months 12 days
Restricted Stock Awards | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		3 years
Restricted Stock Awards | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		4 years
Stock Performance Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		3 years
Granted (in dollars per share) | $ / shares		$ 61.97	$ 54.91	$ 38.34
Fair value of awards vested		$ 5,300,000	$ 5,100,000	$ 2,500,000
Unrecognized compensation costs		$ 400,000
Unrecognized compensation costs, period of recognition		8 months 1 day
Number of performance measures | measure		2
Expected volatility rate measurement period		5 years
Stock Performance Awards | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target amount as actual payment (as a percent)		0.00%
Stock Performance Awards | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target amount as actual payment (as a percent)		150.00%
The 1999 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment awards, number of shares authorized (in shares) | shares		1,400,000
Discount from market price rate (as a percent)		15.00%
Maximum number of shares available to be purchased per participant (in shares) | shares		2,000
Purchase period		6 months
Maximum employee subscription amount		$ 25,000
Shares holding period		18 months
Share-based payment arrangement, expense		$ 300,000	$ 300,000	$ 200,000
Shares issued under the plan (in shares) | shares		26,348	26,420	27,975
Number of shares available for grant (in shares) | shares		237,367
The 1999 Employee Stock Purchase Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee monthly withholding amounts		$ 10
The 1999 Employee Stock Purchase Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee monthly withholding amounts		2,000
The 2023 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment awards, number of shares authorized (in shares) | shares	979,891
Share-based payment arrangement, expense		$ 7,400,000	$ 6,600,000	$ 6,700,000
Number of additional shares authorized (in shares) | shares	500,000
Number of shares available for grant (in shares) | shares		943,192,000
Share-based payment arrangement, expense, tax benefit		$ 1,600,000	$ 1,700,000	$ 1,800,000

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Share-Based Payments - Summary of Restricted Stock Awards and Stock Performance Awards (Details) - $ / shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Restricted Stock Awards
Shares
Beginning of year (in shares)	141,551
Granted (in shares)	55,205
Vested (in shares)	(45,493)
Forfeited (in shares)	(2,350)
End of year (in shares)	148,913	141,551
Weighted-Average Grant-Date Fair Value
Beginning of year (in dollars per share)	$ 49.83
Granted (in dollars per share)	68.03	$ 59.95	$ 43.55
Vested (in dollars per share)	50.02
Forfeited (in dollars per share)	52.02
End of year (in dollars per share)	$ 56.48	$ 49.83
Stock Performance Awards
Shares
Beginning of year (in shares)	189,800
Granted (in shares)	59,400
Vested (in shares)	(55,000)
Forfeited (in shares)	0
End of year (in shares)	194,200	189,800
Weighted-Average Grant-Date Fair Value
Beginning of year (in dollars per share)	$ 45.95
Granted (in dollars per share)	61.97	$ 54.91	$ 38.34
Vested (in dollars per share)	47.79
Forfeited (in dollars per share)	0
End of year (in dollars per share)	$ 50.33	$ 45.95

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Share-Based Payments - Summary of Weighted-Average Assumptions (Details) - Stock Performance Awards	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	4.15%	1.52%	0.18%
Expected term (in years)	3 years	3 years	3 years
Expected volatility	34.00%	32.00%	32.00%
Dividend yield	2.50%	2.90%	3.60%

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Earnings Per Share (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Weighted Average Common Shares Outstanding - Basic (in shares)	41,668	41,586	41,491
Effect of Dilutive Securities:
Total Dilutive Shares (in shares)	371	345	327
Weighted Average Common Shares Outstanding – Diluted (in shares)	42,039	41,931	41,818
Stock Performance Awards
Effect of Dilutive Securities:
Effect of Dilutive Securities (in shares)	269	248	226
Restricted Stock Awards
Effect of Dilutive Securities:
Effect of Dilutive Securities (in shares)	100	95	87
Employee Stock Purchase Plan Shares and Other
Effect of Dilutive Securities:
Effect of Dilutive Securities (in shares)	2	2	14

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Derivative Instruments (Details) $ in Millions	12 Months Ended
	Dec. 31, 2023 USD ($) MWh	Dec. 31, 2022 USD ($) MWh
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of outstanding swap agreements | MWh	187,400	295,000
Derivative liability	$ 4.2	$ 7.1
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Other Current Liabilities	Other Current Liabilities
Swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Gain (loss) on derivatives, net	$ 16.5	$ 1.0

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Fair Value Measurements - Summary of Fair Value Measurements, Recurring and Nonrecurring (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Assets:
Debt securities	$ 9,303	$ 8,761
Level 1 | Fair Value, Recurring
Assets:
Money Market Funds	3,125	1,560
Mutual Funds	7,771	5,503
Total Assets	10,896	7,063
Liabilities:
Derivative Instruments	0	0
Total	0	0
Level 1 | Fair Value, Recurring | Corporate Debt Securities
Assets:
Debt securities	0	0
Level 1 | Fair Value, Recurring | Government Debt Securities
Assets:
Debt securities	0	0
Level 2 | Fair Value, Recurring
Assets:
Money Market Funds	0	0
Mutual Funds	0	0
Total Assets	9,303	8,761
Liabilities:
Derivative Instruments	4,210	7,130
Total	4,210	7,130
Level 2 | Fair Value, Recurring | Corporate Debt Securities
Assets:
Debt securities	1,579	1,434
Level 2 | Fair Value, Recurring | Government Debt Securities
Assets:
Debt securities	7,724	7,327
Level 3 | Fair Value, Recurring
Assets:
Money Market Funds	0	0
Mutual Funds	0	0
Total Assets	0	0
Liabilities:
Derivative Instruments	0	0
Total	0	0
Level 3 | Fair Value, Recurring | Corporate Debt Securities
Assets:
Debt securities	0	0
Level 3 | Fair Value, Recurring | Government Debt Securities
Assets:
Debt securities	$ 0	$ 0

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Fair Value Measurements - Summary of Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Carrying Amount
Assets:
Cash and Cash Equivalents	$ 230,373	$ 118,996
Total Assets	230,373	118,996
Liabilities:
Short-Term Debt	81,422	8,204
Long-Term Debt	824,059	823,821
Total	905,481	832,025
Fair Value
Assets:
Cash and Cash Equivalents	230,373	118,996
Total Assets	230,373	118,996
Liabilities:
Short-Term Debt	81,422	8,204
Long-Term Debt	710,839	681,615
Total	$ 792,261	$ 689,819

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Schedule I - Condensed Financial Information of Registrant - CONDENSED BALANCE SHEETS, PARENT COMPANY (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Current Assets
Cash and Cash Equivalents	$ 230,373	$ 118,996
Accounts Receivable from Subsidiaries	157,143	144,393
Other	16,826	18,412
Total Current Assets	570,170	452,752
Investments in Subsidiaries	62,516	54,845
Other Noncurrent Assets	51,377	41,177
Total Assets	3,242,568	2,901,661
Current Liabilities
Accounts Payable to Subsidiaries	94,428	104,400
Other	43,775	56,065
Total Current Liabilities	309,757	237,636
Other Noncurrent Liabilities	75,977	60,985
Commitments and Contingencies (Note 13)
Capitalization
Long-Term Debt	824,059	823,821
Total Shareholders' Equity	1,443,006	1,217,317	$ 990,777	$ 870,966
Total Capitalization	2,267,065	2,041,138
Total Liabilities and Shareholders' Equity	3,242,568	2,901,661
OTC
Current Assets
Cash and Cash Equivalents	228,137	119,246
Other	977	1,045
Total Current Assets	231,786	123,686
Deferred Income Taxes	65,244	64,802
Other Noncurrent Assets	50,795	43,779
Total Assets	2,152,309	1,775,165
Current Liabilities
Other	15,320	15,994
Total Current Liabilities	583,999	436,364
Other Noncurrent Liabilities	45,455	41,686
Commitments and Contingencies (Note 13)
Capitalization
Long-Term Debt	79,849	79,798
Total Shareholders' Equity	1,443,006	1,217,317
Total Capitalization	1,522,855	1,297,115
Total Liabilities and Shareholders' Equity	2,152,309	1,775,165
OTC | Subsidiaries
Current Assets
Accounts Receivable from Subsidiaries	2,555	3,278
Interest Receivable from Subsidiaries	117	117
Investments in Subsidiaries	1,725,584	1,463,998
Notes Receivable from Subsidiaries	78,900	78,900
Current Liabilities
Accounts Payable to Subsidiaries	7	7
Notes Payable to Subsidiaries	$ 568,672	$ 420,363

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Schedule I - Condensed Financial Information of Registrant - CONDENSED STATEMENTS OF INCOME, PARENT COMPANY (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Income
Other Income	$ 12,650	$ 2,037	$ 2,900
Expense
Nonelectric Selling, General, and Administrative Expenses	72,663	69,718	65,394
Interest Expense	37,677	36,016	37,771
Nonservice Cost Components of Postretirement Benefits	(10,597)	(1,075)	2,016
Income Before Income Taxes	363,489	357,535	212,821
Income Tax Benefit	(69,298)	(73,351)	(36,052)
Net Income	294,191	284,184	176,769
OTC
Income
Other Income	10,496	466	1,290
Total Income	307,861	300,681	192,491
Expense
Nonelectric Selling, General, and Administrative Expenses	12,816	17,269	14,825
Nonservice Cost Components of Postretirement Benefits	1,063	1,023	1,097
Total Expense	17,698	22,363	20,652
Income Before Income Taxes	290,163	278,318	171,839
Income Tax Benefit	4,028	5,866	4,930
Net Income	294,191	284,184	176,769
OTC | Subsidiaries
Income
Equity Income in Earnings of Subsidiaries	294,467	296,833	188,375
Interest Income from Subsidiaries	2,898	3,382	2,826
Expense
Interest Expense	6	5	3
OTC | Nonrelated Party
Expense
Interest Expense	$ 3,813	$ 4,066	$ 4,727

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Schedule I - Condensed Financial Information of Registrant - CONDENSED STATEMENTS OF CASH FLOWS , PARENT COMPANY (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Cash Flows from Operating Activities
Net Cash Provided by Operating Activities	$ 404,499	$ 389,309	$ 231,243
Cash Flows from Investing Activities
Investment in Subsidiaries	(8,378)	(8,283)	(9,383)
Net Cash Used in Investing Activities	(289,287)	(175,071)	(171,510)
Cash Flows from Financing Activities
Net (Repayments) Borrowings on Short-Term Debt	73,218	(82,959)	10,166
Proceeds from Issuance of Common Stock	0	0	696
Payments for Shares Withheld for Employee Tax Obligations	(3,088)	(2,942)	(1,507)
Payments for Retirement of Long-Term Debt	0	(30,000)	(140,169)
Dividends Paid	(73,061)	(68,755)	(64,864)
Other, net	(904)	(2,123)	(3,681)
Net Cash Used in Financing Activities	(3,835)	(96,779)	(59,359)
Net Change in Cash and Cash Equivalents	111,377	117,459	374
Cash and Cash Equivalents at Beginning of Period	118,996	1,537	1,163
Cash and Cash Equivalents at End of Period	230,373	118,996	1,537
OTC
Cash Flows from Operating Activities
Net Cash Provided by Operating Activities	77,139	28,807	60,695
Cash Flows from Investing Activities
Other, net	(68)	(1,695)	(884)
Net Cash Used in Investing Activities	(40,068)	(51,695)	(715)
Cash Flows from Financing Activities
Net (Repayments) Borrowings on Short-Term Debt	0	(22,637)	(42,529)
Borrowings from Subsidiaries	148,308	236,926	49,085
Proceeds from Issuance of Common Stock	0	0	696
Payments for Shares Withheld for Employee Tax Obligations	(3,088)	(2,942)	(1,507)
Payments for Retirement of Long-Term Debt	0	0	(169)
Dividends Paid	(73,061)	(68,755)	(64,864)
Other, net	(339)	(461)	(689)
Net Cash Used in Financing Activities	71,820	142,131	(59,977)
Net Change in Cash and Cash Equivalents	108,891	119,243	3
Cash and Cash Equivalents at Beginning of Period	119,246	3	0
Cash and Cash Equivalents at End of Period	228,137	119,246	3
OTC | Subsidiaries
Cash Flows from Investing Activities
Investment in Subsidiaries	(40,000)	(50,000)	0
Debt Repaid by Subsidiaries	$ 0	$ 0	$ 169

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Schedule I - Condensed Financial Information of Registrant - Summary of Related Party Transactions (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
Accounts Receivable	$ 157,143	$ 144,393
Accounts Payable	94,428	104,400
Otter Tail Corporation | Subsidiaries
Related Party Transaction [Line Items]
Accounts Receivable	2,555	3,278
Interest Receivable	117	117
Long-Term Notes Receivable	78,900	78,900
Accounts Payable	7	7
Current Notes Payable	568,672	420,363
Otter Tail Corporation | Subsidiaries | Otter Tail Power Company
Related Party Transaction [Line Items]
Accounts Receivable	2,415	3,016
Interest Receivable	0	0
Long-Term Notes Receivable	0	0
Accounts Payable	7	7
Current Notes Payable	0	0
Otter Tail Corporation | Subsidiaries | Northern Pipe Products, Inc.
Related Party Transaction [Line Items]
Accounts Receivable	0	0
Interest Receivable	7	7
Long-Term Notes Receivable	5,000	5,000
Accounts Payable	0	0
Current Notes Payable	56,917	77,182
Otter Tail Corporation | Subsidiaries | Vinyltech Corporation
Related Party Transaction [Line Items]
Accounts Receivable	14	0
Interest Receivable	17	18
Long-Term Notes Receivable	11,500	11,500
Accounts Payable	0	0
Current Notes Payable	98,016	90,425
Otter Tail Corporation | Subsidiaries | BTD Manufacturing, Inc.
Related Party Transaction [Line Items]
Accounts Receivable	0	0
Interest Receivable	78	77
Long-Term Notes Receivable	52,000	52,000
Accounts Payable	0	0
Current Notes Payable	6,291	693
Otter Tail Corporation | Subsidiaries | T.O. Plastics, Inc.
Related Party Transaction [Line Items]
Accounts Receivable	36	20
Interest Receivable	15	15
Long-Term Notes Receivable	10,400	10,400
Accounts Payable	0	0
Current Notes Payable	980	5,855
Otter Tail Corporation | Subsidiaries | Varistar Corporation
Related Party Transaction [Line Items]
Accounts Receivable	0	0
Interest Receivable	0	0
Long-Term Notes Receivable	0	0
Accounts Payable	0	0
Current Notes Payable	406,468	246,208
Otter Tail Corporation | Subsidiaries | Otter Tail Assurance Limited
Related Party Transaction [Line Items]
Accounts Receivable	90	242
Interest Receivable	0	0
Long-Term Notes Receivable	0	0
Accounts Payable	0	0
Current Notes Payable	$ 0	$ 0

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Schedule I - Condensed Financial Information of Registrant - Summary of Dividends (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Condensed Financial Information Disclosure [Abstract]
Cash Dividends Paid to Parent by Subsidiaries	$ 72,982	$ 68,680	$ 64,790

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Schedule II - Valuation and Qualifying Accounts and Reserves (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Allowance for Credit Losses
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]
Balance, January 1	$ 1,648	$ 1,836	$ 3,215
Charged to Cost and Expenses	2,014	909	93
Deductions	(1,140)	(1,097)	(1,472)
Balance, December 31	2,522	1,648	1,836
Deferred Tax Asset Valuation Allowance
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]
Balance, January 1	0	0	800
Charged to Cost and Expenses	0	0	0
Deductions	0	0	(800)
Balance, December 31	$ 0	$ 0	$ 0