Leases

9 Months Ended

Sep. 30, 2019

Note 17 – Leases

The Company leases land, office facilities, office equipment, and vehicles for use in its operations, which are accounted for as operating leases. Leases with a remaining term of 12 months or less are not recorded on the balance sheet; rather, lease expense is recognized on a straight-line basis over the lease term. Our leases have remaining lives of 1 year to 76 years.

Some of the Company’s leases can be extended on a month-to-month basis, which allow us to terminate the lease at any given month without penalty while others include options to extend the leases for up to 50 years. The renewal of a month-to-month lease is at our sole discretion.

The Company accounts for lease and non-lease components of lease arrangements separately. For calculating lease liabilities, we may deem lease terms to include options to extend or terminate the lease

when it’s reasonably certain that we will exercise that option. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants.

Lease liabilities and corresponding right-of-use assets are recorded based on the present value of the lease payments over the expected lease term, including leases with variable payments that are based on a market rate or an index. All other variable payments are expensed as incurred. Since the Company’s lease agreements do not provide an implicit interest rate, we utilize our incremental borrowing rate to determine the discount rate used to present value the lease payments.

For the Company’s regulated utility operations, we utilize the FASB’s accounting guidance for leases for entities with regulated operations, which allows, for rate-making purposes, a lease to be accounted for as an operating lease even though the lease may be classified as a finance lease, since the amount of the lease payment is included in allowable costs as rental expense in the period it covers.


	Three Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2019
Components of lease expense were as follows:
Operating lease cost	$	529	$	1,634

Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	338	$	1,631


		September 30,
		2019
Supplemental balance sheet information related to leases was as follows:
Operating leases:
Operating lease right-of-use assets	$	12,883

Other accrued liabilities	$	1,183
Operating lease liabilities		11,700
Total operating lease liabilities	$	12,883


	September 30,
	2019
Weighted average remaining lease term:
Operating leases	27 years

Weighted average discount rate:
Operating leases		4.09%

Maturities of operating lease liabilities and a reconciliation of the operating lease liabilities reported on our Consolidated Balance Sheets as of September 30, 2019 are as follows:


	Operating Leases
2019	$	285
2020		1,614
2021		1,375
2022		1,146
2023		771
Thereafter		16,430
Total operating lease payments	$	21,621

Total operating lease payments	$	21,621
Less operating lease liabilities		12,883
Present value adjustment	$	8,738

The future annual minimum lease payments due for the Company’s leases as of December 31, 2018 were as follows:


2019	$	2,221
2020		1,682
2021		1,443
2022		1,221
2023		848
Thereafter		16,170
Total	$	23,585