REGULATORY ASSETS AND LIABILITIES (Notes)

3 Months Ended

Mar. 31, 2025

SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items]

Schedule of Regulatory Assets and Liabilities

REGULATORY ASSETS AND LIABILITIES

The tables below present a summary of regulatory assets and liabilities, net of amortization, for the periods indicated:

	March 31, 2025
	Current		Noncurrent		Total
	(Thousands of dollars)
Winter weather event costs	$	—	$	979	$	979
Under-recovered purchased-gas costs	7,049		—		7,049
Pension and postemployment benefit costs, net	1,358		224,860		226,218
Reacquired debt costs	723		1,808		2,531
MGP remediation costs	1,000		29,817		30,817
Ad-valorem tax	7,086		—		7,086
WNA	10,938		—		10,938
Customer credit deferrals	—		11,052		11,052
Other, net	8,384		65		8,449
Total regulatory assets	36,538		268,581		305,119
Income tax rate changes	—		(457,126)		(457,126)
Over-recovered purchased-gas costs	(39,665)		—		(39,665)
Total regulatory liabilities	(39,665)		(457,126)		(496,791)
Net regulatory assets and liabilities	$	(3,127)	$	(188,545)	$	(191,672)

	December 31, 2024
	Current		Noncurrent		Total
	(Thousands of dollars)
Winter weather event costs	$	9,051	$	15,938	$	24,989
Under-recovered purchased-gas costs	43,819		—		43,819
Pension and postemployment benefit costs, net	1,358		224,837		226,195
Reacquired debt costs	723		1,989		2,712
MGP remediation costs	1,000		30,067		31,067
Ad-valorem tax	14,066		—		14,066
WNA	26,684		—		26,684
Customer credit deferrals	255		3,639		3,894
Other, net	4,254		1,536		5,790
Total regulatory assets	101,210		278,006		379,216
Income tax rate changes	—		(467,563)		(467,563)
Over-recovered purchased-gas costs	(22,525)		—		(22,525)
Total regulatory liabilities	(22,525)		(467,563)		(490,088)
Net regulatory assets and liabilities	$	78,685	$	(189,557)	$	(110,872)

Regulatory assets in our consolidated balance sheets, as authorized by various regulatory authorities, are probable of recovery. Base rates and certain riders are designed to provide a recovery of costs during the period such rates are in effect, but do not generally provide for a return on investment for amounts we have deferred as regulatory assets. All of our regulatory assets are subject to review by the respective regulatory authorities during future regulatory proceedings.

Other regulatory assets and liabilities - Purchased-gas costs represent the natural gas costs that have been over- or under-recovered from customers through the purchased-gas cost adjustment mechanisms, and includes natural gas utilized in our operations and premiums paid and any cash settlements received from our purchased natural gas call options.

The OCC, KCC and regulatory authorities in Texas have approved the recovery of pension costs and other postemployment benefits costs through rates for Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, respectively. The costs recovered through rates are based on the net periodic benefit cost for defined benefit pension and other postemployment costs. Differences, if any, between the net periodic benefit cost (credit), net of deferrals, and the amount recovered through rates are reflected in earnings. We historically have recovered defined benefit pension and other postemployment benefit costs through rates. We believe it is probable that regulators will continue to include the net periodic pension and other postemployment benefit costs in our cost of service.

We amortize reacquired debt costs in accordance with the accounting guidelines prescribed by the OCC and the KCC.

See Note 12 for additional information regarding our regulatory assets for MGP remediation costs.

Ad-valorem tax represents the difference in Kansas Gas Service’s taxes incurred each year above or below the amount approved in base rates. This difference is deferred as a regulatory asset or liability for a 12-month period. Kansas Gas Service then applies an adjustment to customers’ bills to refund the over-collected revenue or bill the under-collected revenue over the subsequent 12 months.

Weather normalization represents revenue over- or under-recovered through the WNA rider in Kansas. This amount is deferred as a regulatory asset or liability for a 12-month period. Kansas Gas Service then applies an adjustment to customers’ bills for 12 months to refund the over-collected revenue or bill the under-collected revenue.

The customer credit deferrals and the noncurrent regulatory liability for income tax rate changes represent deferral of the effects of enacted federal and state income tax rate changes on our ADIT and the effects of these changes on our rates. See Note 10 for additional information regarding the impact of income tax rate changes.

Recovery through rates resulted in amortization of regulatory assets of approximately $6.0 million and $7.1 million for the three months ended March 31, 2025 and 2024, respectively.