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Regulatory Matters: | 3 Months Ended
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Mar. 31, 2021
Regulatory Assets and Liabilities Disclosure [Abstract] |
Regulatory Matters | Regulatory Matters We had the following regulatory assets and liabilities (in thousands) as of:
| As of | As of
| March 31, 2021 | December 31, 2020
Regulatory assets |  |
Winter Storm Uri (a) | $ | 480,842 |  | $ | — |
Deferred energy and fuel cost adjustments (a) (b) | 68,402 |  | 39,035 |
Deferred gas cost adjustments (a) (b) | 17,066 |  | 3,200 |
Gas price derivatives (b) | 324 |  | 2,226 |
Deferred taxes on AFUDC (c) | 7,469 |  | 7,491 |
Employee benefit plans and related deferred taxes (d) | 117,886 |  | 116,598 |
Environmental (b) | 1,413 |  | 1,413 |
Loss on reacquired debt (b) | 22,386 |  | 22,864 |
Deferred taxes on flow through accounting (d) | 51,823 |  | 47,515 |
Decommissioning costs (c) | 7,827 |  | 8,988 |
Gas supply contract termination (b) | 1,013 |  | 2,524 |
Other regulatory assets (b) | 25,806 |  | 26,404 |
Total regulatory assets | 802,257 |  | 278,258 |
Less current regulatory assets | (129,951) |  | (51,676) |
Regulatory assets, non-current | $ | 672,306 |  | $ | 226,582 |
Regulatory liabilities |  |
Deferred energy and gas costs (b) | $ | 426 |  | $ | 13,253 |
Employee benefit plan costs and related deferred taxes (d) | 40,471 |  | 40,256 |
Cost of removal (b) | 177,003 |  | 172,902 |
Excess deferred income taxes (d) | 271,492 |  | 285,259 |
Other regulatory liabilities (d) | 21,998 |  | 21,050 |
Total regulatory liabilities | 511,390 |  | 532,720 |
Less current regulatory liabilities | (13,580) |  | (25,061) |
Regulatory liabilities, non-current | $ | 497,810 |  | $ | 507,659 |
__________ (a) We are in discussions with our regulators regarding the timing of Winter Storm Uri incremental cost recovery. See further information below. (b) Recovery of costs, but we are not allowed a rate of return. (c) In addition to recovery of costs, we are allowed a rate of return. (d) In addition to recovery or repayment of costs, we are allowed a return on a portion of this amount or a reduction in rate base. Regulatory Activity Except as discussed below, there have been no other significant changes to our Regulatory Matters from those previously disclosed in Note 2 of the Notes to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K. Winter Storm Uri In February 2021, a prolonged period of historic cold temperatures across the central United States, which covered all of our Utilities’ service territories, caused a significant increase in heating and energy demand and contributed to unforeseeable and unprecedented market prices for natural gas and electricity. As a result of Winter Storm Uri, our net pre-tax incremental fuel, purchased power and natural gas costs during the three months ended March 31, 2021 were approximately $571 million. This amount does not include potential pipeline transportation charges for certain suppliers who have requested and received approval from FERC to delay billings. Our Utilities have regulatory mechanisms to recover approximately $559 million of incremental costs from Winter Storm Uri. However, given the extraordinary impact of these higher costs to our customers, our regulators are performing a heightened review. We are engaged with our regulators to identify appropriate periods over which to recover incremental costs with consideration of the impacts to our customers’ bills. We expect to recover most of the Winter Storm Uri incremental costs through a separately tracked regulatory mechanism but we also anticipate recovery of a portion of the costs through existing mechanisms. For the three months ended March 31, 2021, we expensed $12.5 million of Winter Storm Uri net incremental costs as a result of negative impacts to our Utilities and financing costs partially offset by favorable impacts to our Power Generation segment. Our Electric Utilities incurred a $3.2 million negative impact to our regulated wholesale power margins due to higher fuel costs and $2.1 million of incremental fuel costs that are not recoverable through our fuel cost recovery mechanisms. Black Hills Energy Services offers fixed contract pricing for non-regulated gas supply services to our regulated natural gas customers and the $8.2 million increase in cost of natural gas sold during Winter Storm Uri is not recoverable through the regulatory construct. Additionally, we incurred $0.7 million of interest expense for the three months ended March 31, 2021, related to our $800 million term loan which is discussed in Note 5. Our non-regulated Power Generation segment benefited from a $1.7 million favorable impact to operating income from Winter Storm Uri. Winter Storm Uri Costs by Jurisdiction As of March 31, 2021, our estimate of incremental costs from Winter Storm Uri which was recorded to a regulatory asset is shown below by jurisdiction. This information is based on anticipated filings that we expect to complete in the second quarter of 2021 and is subject to adjustments as applications are submitted and final decisions are issued.
Costs by Jurisdiction | (in thousands) |  |  |
Gas Utilities: |  |  |  |
Arkansas Gas | $ | 137,500 |  |  |  |
Colorado Gas | 77,850 |  |  |  |
Iowa Gas | 95,450 |  |  |  |
Kansas Gas | 87,900 |  |  |  |
Nebraska Gas | 79,750 |  |  |  |
Wyoming Gas | 29,409 |  |  |  |
Gas Utilities Total | $ | 507,859 |  |  |  |
Electric Utilities: |  |  |  |
Colorado Electric | $ | 25,500 |  |  |  |
South Dakota Electric | 22,200 |  |  |  |
Wyoming Electric | 3,266 |  |  |  |
Electric Utilities Total | $ | 50,966 |  |  |  |
Total Winter Storm Uri Incremental Costs Recorded to Regulatory Asset | $ | 558,825 |  |  |  |
Costs by Regulatory Asset |  |  |  |
Winter Storm Uri (a) | $ | 480,842 |  |  |  |
Deferred energy and fuel cost adjustments | 27,166 |  |  |  |
Deferred gas cost adjustments (b) | 50,817 |  |  |  |
| $ | 558,825 |  |  |  |
__________ (a) We expect to recover most of the Winter Storm Uri incremental costs through a separately tracked regulatory mechanism but also expect to recover a portion through our existing mechanisms. (b) Incremental natural gas costs from Winter Storm Uri are reflected as an increase in the Deferred gas cost adjustments regulatory asset, net of existing Deferred energy and gas cost regulatory liabilities, for the three months ended March 31, 2021. TCJA On December 30, 2020, an administrative law judge approved a settlement of Colorado Electric’s plan to provide $9.3 million of TCJA-related bill credits to its customers. The bill credits, which represent a disposition of excess deferred income tax benefits resulting from the TCJA, were delivered to customers in February 2021. These bill credits, which resulted in a reduction in revenue, were offset by a reduction in income tax expense and resulted in a minimal impact to Net Income for the three months ended March 31, 2021. On January 26, 2021, the NPSC approved Nebraska Gas’s plan to provide $2.9 million of TCJA-related bill credits to its customers. The bill credits, which represent a disposition of excess deferred income tax benefits resulting from the TCJA, are expected to be delivered to customers in the second quarter of 2021. These bill credits, which will result in a reduction in revenue, will be offset by a reduction in income tax expense and will result in a minimal impact to Net income. Colorado Gas Rate Review On September 11, 2020, Colorado Gas filed a rate review with the CPUC seeking recovery on significant infrastructure investments in its 7,000-mile natural gas pipeline system. On January 6, 2021, the CPUC issued an Order dismissing the rate review. Colorado Gas plans to file a rate review in the second quarter of 2021. On September 11, 2020, in accordance with the final order from the earlier rate review filed February 1, 2019, Colorado Gas filed a SSIR proposal with the CPUC that would recover safety and integrity focused investments in its system for five years. A decision from the CPUC is expected by mid-2021. Nebraska Gas Jurisdictional Consolidation and Rate Review On January 26, 2021, Nebraska Gas received approval from the NPSC to consolidate rate schedules into a new, single statewide structure and recover infrastructure investments in its 13,000-mile natural gas pipeline system. Final rates were enacted on March 1, 2021, which replaced interim rates effective September 1, 2020. The approval shifted $4.6 million of SSIR revenue to base rates and is expected to generate $6.5 million in new annual revenue with a capital structure of 50% equity and 50% debt and an authorized return on equity of 9.5%. The approval also includes an extension of the SSIR for five years and an expansion of this mechanism across the consolidated jurisdictions.

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- Definition The entire disclosure for detailed information about regulatory assets and liabilities, including current and noncurrent assets created when regulatory agencies permit the deferral of costs to the balance sheet that would otherwise be required to appear on the company's income statement and would be charged against current expenses or revenues, as well as current and noncurrent liabilities created when regulatory agencies permit. + References No definition available. + Details
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