Regulatory assets and liabilities

3 Months Ended

Mar. 31, 2023

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets and Liabilities

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, 2023	*	March 31, 2023		March 31, 2022		December 31, 2022
			(In thousands)
Regulatory assets:
Current:
Natural gas costs recoverable through rate adjustments	Up to 1 year		$	198,166	$	66,132	$	141,306
Conservation programs	Up to 1 year		8,599		7,567		8,544
Cost recovery mechanisms	Up to 1 year		3,954		3,432		4,019
Other	Up to 1 year		5,599		11,947		11,223
			216,318		89,078		165,092
Noncurrent:
Pension and postretirement benefits	**		143,349		142,681		143,349
Cost recovery mechanisms	Up to 10 years		65,732		67,989		67,171
Plant costs/asset retirement obligations	Over plant lives		44,131		63,325		44,462
Manufactured gas plant site remediation	-		26,605		26,089		26,624
Environmental compliance programs	-		21,942		—		—
Plant to be retired	-		21,072		29,452		21,525
Taxes recoverable from customers	Over plant lives		12,198		12,492		12,330
Long-term debt refinancing costs	Up to 37 years		3,041		3,636		3,188
Other	Up to 16 years		11,430		13,564		11,010
			349,500		359,228		329,659
Total regulatory assets			$	565,818	$	448,306	$	494,751
Regulatory liabilities:
Current:
Electric fuel and purchased power deferral	Up to 1 year		9,630		—		4,929
Natural gas costs refundable through rate adjustments	Up to 1 year		6,331		13,107		955
Conservation programs	Up to 1 year		3,834		144		4,126
Cost recovery mechanisms	Up to 1 year		2,926		2,550		1,977
Taxes refundable to customers	Up to 1 year		1,513		3,470		3,937
Refundable fuel and electric costs	Up to 1 year		1,179		316		3,253
Other	Up to 1 year		18,982		11,599		7,263
			44,395		31,186		26,440
Noncurrent:
Plant removal and decommissioning costs	Over plant lives		214,467		171,485		208,650
Taxes refundable to customers	Over plant lives		200,879		212,472		203,222
Cost recovery mechanisms	Up to 19 years		16,313		9,508		14,025
Accumulated deferred investment tax credit	Up to 19 years		13,996		13,352		13,594
Pension and postretirement benefits	**		7,376		20,434		7,376
Other	Up to 15 years		1,638		6,377		1,587
			454,669		433,628		448,454
Total regulatory liabilities			$	499,064	$	464,814	$	474,894
Net regulatory position			$	66,754	$	(16,508)	$	19,857

*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.

At March 31, 2023 and 2022, and December 31, 2022, approximately $255.6 million, $268.1 million and $242.5 million, respectively, of regulatory assets were not earning a rate of return; 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, accelerated depreciation on plant retirement, the estimated future cost of manufactured gas plant site remediation and the costs associated with environmental compliance.

The Company is subject to environmental compliance regulations in certain states which require natural gas distribution companies to reduce overall GHG emissions to certain thresholds as established by each applicable state. Compliance with these standards may be achieved through increased energy efficiency and conservation measures, purchased emission allowances and offsets,

purchases of community climate investment credits and purchases of low carbon fuels. Emission allowances are allocated by the respective states to the Company at no cost, of which a portion is required to be sold at auction. The Company expects the compliance costs for these regulations and the revenues from the sale of the allocated emissions allowances will be passed through to customers in rates and has, accordingly, deferred the environmental compliance obligation as a regulatory asset.

In the last half of 2021 through 2022, the Company experienced high natural gas costs due to increase in demand outpacing the supply along with the impact of global events. Additionally, in December 2022 and January 2023, natural gas prices significantly increased across the Pacific Northwest from multiple price-pressuring events including wide-spread below-normal temperatures and higher natural gas consumption; reduced natural gas flows due to pipeline constraints, including maintenance in West Texas; and historically low regional natural gas storage levels. This increase in natural gas costs experienced in certain jurisdictions was partially offset by the recovery of prior period natural gas costs being recovered over a period longer than the normal one-year period.

For a discussion of the Company's most recent cases by jurisdiction, see Note 19.

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 reclassified 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. 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 written off and included in the statement of income or accumulated other comprehensive loss in the period in which the discontinuance of regulatory accounting occurs.