Regulatory assets and liabilities

3 Months Ended

Mar. 31, 2022

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory assets and liabilities

The following table summarizes the individual components of unamortized regulatory assets and liabilities:


	Estimated Recovery or Refund Period as of March 31, 2022	*	March 31, 2022		March 31, 2021		December 31, 2021
			(In thousands)
Regulatory assets:
Current:
Natural gas costs recoverable through rate adjustments	Up to 1 year		$	66,132	$	76,782	$	86,371
Decoupling	Up to 1 year		7,609		4,180		9,131
Conservation programs	Up to 1 year		7,567		6,679		8,225
Cost recovery mechanisms	Up to 1 year		3,432		7,130		4,536
Other	Up to 1 year		4,338		3,681		10,428
			89,078		98,452		118,691
Noncurrent:
Pension and postretirement benefits	**		142,681		155,924		142,681
Cost recovery mechanisms	Up to 10 years		67,989		15,508		44,870
Plant costs/asset retirement obligations	Over plant lives		63,325		72,250		63,116
Plant to be retired	-		29,452		73,498		50,070
Manufactured gas plant site remediation	-		26,089		26,002		26,053
Taxes recoverable from customers	Over plant lives		12,492		10,800		12,339
Long-term debt refinancing costs	Up to 38 years		3,636		4,268		3,794
Natural gas costs recoverable through rate adjustments	Up to 2 years		3,246		15,158		5,186
Other	Up to 17 years		10,318		6,509		9,742
			359,228		379,917		357,851
Total regulatory assets			$	448,306	$	478,369	$	476,542
Regulatory liabilities:
Current:
Natural gas costs refundable through rate adjustments	Up to 1 year		$	13,107	$	16,344	$	6,700
Taxes refundable to customers	Up to 1 year		3,470		3,092		3,841
Electric fuel and purchased power deferral	Up to 1 year		—		2,001		—
Other	Up to 1 year		14,609		12,829		5,762
			31,186		34,266		16,303
Noncurrent:
Taxes refundable to customers	Over plant lives		212,472		224,795		215,421
Plant removal and decommissioning costs	Over plant lives		171,485		169,430		168,152
Pension and postretirement benefits	**		20,434		16,965		20,434
Accumulated deferred investment tax credit	Up to 20 years		13,352		11,428		12,696
Other	Up to 20 years		15,885		6,442		12,087
			433,628		429,060		428,790
Total regulatory liabilities			$	464,814	$	463,326	$	445,093
Net regulatory position			$	(16,508)	$	15,043	$	31,449

*Estimated recovery or refund period for amounts currently being recovered or refunded in rates to customers.

** Recovered as expense is incurred or cash contributions are made.

Regulatory assets not earning a rate of return were approximately $268.1 million and $361.4 million at March 31, 2022 and 2021, respectively, and $296.6 million at December 31, 2021; however, these regulatory assets are expected to be recovered from customers in future rates. These assets are largely comprised of the unfunded portion of pension and postretirement benefits, asset retirement obligations, accelerated depreciation on plant retirement and the estimated future cost of manufactured gas plant site remediation.

In February 2021, a prolonged period of unseasonably cold temperatures in the central United States significantly increased the demand for electric and natural gas services and contributed to increased market prices. Overall, Montana-Dakota and Great Plains incurred approximately $44.0 million in increased natural gas costs in order to maintain services for its customers. These extraordinary gas costs were recorded as regulatory assets as they are expected to be recovered from customers. Montana-Dakota and Great Plains have received approval for the recovery of purchased gas adjustments related to the cold-weather event in all

jurisdictions impacted, including out-of-cycle purchased gas adjustment requests in most jurisdictions. For a discussion of the Company's most recent cases by jurisdiction, see Note 19.

In 2019, the Company experienced increased natural gas costs in Washington from the rupture of the Enbridge pipeline in Canada in late 2018. As a result, the Company requested, and the WUTC approved, recovery through 2022 of the balance of natural gas costs recoverable related to this period of time, which was over three years rather than its normal one-year recovery period.

In February 2019, the Company announced the retirement of three aging coal-fired electric generating units. The Company accelerated the depreciation related to these facilities in property, plant and equipment and recorded the difference between the accelerated depreciation, in accordance with GAAP, and the depreciation approved for rate-making purposes as regulatory assets. Requests were filed with the NDPSC and SDPUC, and subsequently approved, to offset the savings associated with the cessation of operations of these units with the amortization of the deferred regulatory assets. The Company ceased operations of Lewis & Clark Station in March 2021 and Units 1 and 2 at Heskett Station in February 2022. The Company subsequently moved the costs being recovered for these facilities from plant retirement to cost recovery mechanisms in the previous table and began amortizing the associated plant retirement and closure costs in the jurisdictions where requests were filed, as previously discussed. The Company expects to recover the regulatory assets related to the plant retirements in future rates.

If, for any reason, the Company's regulated businesses cease to meet the criteria for application of regulatory accounting for all or part of their operations, the regulatory assets and liabilities relating to those portions ceasing to meet such criteria would be removed from the balance sheet and included in the statement of income or accumulated other comprehensive loss in the period in which the discontinuance of regulatory accounting occurs.