Leases

12 Months Ended

Dec. 31, 2020

LEASES

We have entered into lease arrangements for office space, land, equipment, pipeline facilities and warehouses. These lease arrangements enable us to better conduct business operations in the regions in which we operate. Office space is leased to provide adequate workspace for all our employees in several locations throughout the Mid-Atlantic, Mid-West and in Florida. We lease land at various locations throughout our service territories to enable us to inject natural gas into underground storage and distribution systems, for bulk storage capacity, for our propane operations and for storage of equipment used in repairs and maintenance of our infrastructure. We lease natural gas compressors to ensure timely and reliable transportation of natural gas to our customers. Additionally, we lease a pipeline to deliver natural gas to an industrial customer in Polk County, Florida. We also lease warehouses to store equipment and materials used in repairs and maintenance for our businesses.

Some of our leases are subject to annual changes in the Consumer Price Index (“CPI”). While lease liabilities are not re-measured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. A 100-basis-point increase in CPI would not have resulted in material additional annual lease costs. Most of our leases include options to renew, with renewal terms that can extend the lease term from one to 25 years or more. The exercise of lease renewal options is at our sole discretion. The amounts disclosed in our consolidated balance sheet at December 31, 2020, pertaining to the right-of-use assets and lease liabilities, are measured based on our current expectations of exercising our available renewal options. Our existing leases are not subject to any restrictions or covenants which preclude our ability to pay dividends, obtain financing or enter into additional leases. As of December 31, 2020, we have not entered into any leases, which have not yet commenced, that would entitle us to significant rights or create additional obligations. The following table presents information related to our total lease cost included in our consolidated statements of income:


		Year Ended
		December 31,
( in thousands)	Classification	2020		2019
Operating lease cost (1)	Operations expense	$	2,029	$	2,577
Finance lease cost:
Amortization of lease assets	Depreciation and amortization	—		650
Interest on lease liabilities	Interest expense	—		5
Net lease cost		$	2,029	$	3,232

(1) Includes short-term leases and variable lease costs, which are immaterial.

The following table presents the balance and classifications of our right-of-use assets and lease liabilities included in our consolidated balance sheet at December 31, 2020 and 2019:


(in thousands)	Balance sheet classification	December 31, 2020		December 31, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	11,194	$	11,563


Liabilities
Current
Operating lease liabilities	Other accrued liabilities	$	1,747	$	1,705

Noncurrent
Operating lease liabilities	Operating lease - liabilities	9,872		9,896

Total lease liabilities		$	11,619	$	11,601

The following table presents our weighted-average remaining lease term and weighted-average discount rate for our operating leases at December 31, 2020 and 2019:


	December 31, 2020		December 31, 2019
Weighted-average remaining lease term (in years)
Operating leases	8.70		8.88

Weighted-average discount rate
Operating leases	3.8	%	3.8	%

The following table presents additional information related to cash paid for amounts included in the measurement of lease liabilities included in our consolidated statements of cash flows at December 31, 2020 and 2019:


	Year Ended December 31,
(in thousands)	2020		2019
Operating cash flows from operating leases	$	1,956	$	2,230
Operating cash flows from finance leases	$	—	$	5
Financing cash flows from finance leases	$	—	$	650

The following table presents the future undiscounted maturities of our operating leases at December 31, 2020 and for each of the next five years and thereafter:


(in thousands)	Operating Leases (1)

2021	$	2,027
2022	1,984
2023	1,923
2024	1,657
2025	1,395
Thereafter	4,419
Total lease payments	13,405
Less: Interest	1,786
Present value of lease liabilities	$	11,619

(1) Operating lease payments include $2.1 million related to options to extend lease terms that are reasonably certain of being exercised.