Regulatory assets and liabilities

9 Months Ended

Sep. 30, 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 September 30, 2023	*	September 30, 2023		September 30, 2022		December 31, 2022
			(In thousands)
Regulatory assets:
Current:
Natural gas costs recoverable through rate adjustments	Up to 1 year		$	107,101	$	112,079	$	141,306
Electric fuel and purchased power deferral	Up to 1 year		17,775		2,328		2,656
Conservation programs	Up to 1 year		14,411		9,363		8,544
Cost recovery mechanisms	Up to 1 year		9,461		3,354		4,019
Other	Up to 1 year		20,500		21,036		8,567
			169,248		148,160		165,092
Noncurrent:
Pension and postretirement benefits	**		144,448		137,582		143,349
Cost recovery mechanisms	Up to 10 years		68,539		67,094		67,171
Natural gas costs recoverable through rate adjustments	Up to 2 years		64,914		462		—
Plant costs/asset retirement obligations	Over plant lives		43,520		61,941		44,462
Environmental compliance programs	-		36,605		—		—
Manufactured gas plant site remediation	-		24,577		25,963		26,624
Plant to be retired	-		19,947		24,740		21,525
Taxes recoverable from customers	Over plant lives		12,266		12,394		12,330
Long-term debt refinancing costs	Up to 37 years		2,747		3,335		3,188
Other	Up to 16 years		11,406		10,931		11,010
			428,969		344,442		329,659
Total regulatory assets			$	598,217	$	492,602	$	494,751
Regulatory liabilities:
Current:
Natural gas costs refundable through rate adjustments	Up to 1 year		20,445		873		955
Electric fuel and purchased power deferral	Up to 1 year		—		3,763		4,929
Cost recovery mechanisms	Up to 1 year		5,754		2,674		1,977
Conservation programs	Up to 1 year		1,976		325		4,126
Taxes refundable to customers	Up to 1 year		1,513		4,264		3,937
Refundable fuel and electric costs	Up to 1 year		18		1,812		3,253
Other	Up to 1 year		15,307		4,888		7,263
			45,013		18,599		26,440
Noncurrent:
Plant removal and decommissioning costs	Over plant lives		220,499		174,481		208,650
Taxes refundable to customers	Over plant lives		194,804		205,517		203,222
Environmental compliance programs	-		36,126		—		—
Cost recovery mechanisms	Up to 19 years		20,012		12,535		14,025
Accumulated deferred investment tax credit	Up to 19 years		14,800		14,665		13,594
Pension and postretirement benefits	**		7,120		19,687		7,376
Other	Up to 15 years		1,751		6,327		1,587
			495,112		433,212		448,454
Total regulatory liabilities			$	540,125	$	451,811	$	474,894
Net regulatory position			$	58,092	$	40,791	$	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 September 30, 2023 and 2022, and December 31, 2022, approximately $211.8 million, $264.4 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, the estimated future cost of manufactured gas plant site remediation, accelerated depreciation on plant retirement, certain pipeline integrity costs 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 and proceeds from the sale of allowances as a regulatory liability.

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.

For a discussion of the Company's most recent cases by jurisdiction, see Note 21.

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.