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Employee Benefits Plans:
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Employee Benefit Plans EMPLOYEE BENEFIT PLANS
Defined Contribution Plans

We sponsor a 401(k) retirement savings plan (the 401(k) Plan). Participants in the 401(k) Plan may elect to invest a portion of their eligible compensation in the 401(k) Plan up to the maximum amounts established by the IRS. The 401(k) Plan provides employees the opportunity to invest up to 50% of their eligible compensation on a pre-tax or after-tax basis.

The 401(k) Plan provides a Company matching contribution for all eligible participants. Certain eligible participants who are not currently accruing a benefit in the Pension Plan also receive a Company retirement contribution based on the participant’s age and years of service. Vesting of all Company and matching contributions occurs at 20% per year with 100% vesting when the participant has 5 years of service with the Company.

Defined Benefit Pension Plan

We have one defined benefit pension plan, the Black Hills Retirement Plan (Pension Plan). The Pension Plan covers certain eligible employees of the Company. The benefits for the Pension Plan are based on years of service and calculations of average earnings during a specific time period prior to retirement. The Pension Plan is closed to new employees and frozen for certain employees who did not meet age and service based criteria.
The Pension Plan assets are held in a Master Trust. Our Board of Directors has approved the Pension Plan’s investment policy. The objective of the investment policy is to manage assets in such a way that will allow the eventual settlement of our obligations to the Pension Plan’s beneficiaries. To meet this objective, our pension assets are managed by an outside adviser using a portfolio strategy that will provide liquidity to meet the Pension Plan’s benefit payment obligations. The Pension Plan’s assets consist primarily of equity, fixed income and hedged investments.

The expected rate of return on the Pension Plan assets is determined by reviewing the historical and expected returns of both equity and fixed income markets, taking into account asset allocation, the correlation between asset class returns and the mix of active and passive investments. The Pension Plan utilizes a dynamic asset allocation where the target range to return-seeking and liability-hedging assets is determined based on the funded status of the Plan. As of December 31, 2021, the expected rate of return on pension plan assets was based on the targeted asset allocation range of 22% to 30% return-seeking assets and 70% to 78% liability-hedging assets.

Our Pension Plan is funded in compliance with the federal government’s funding requirements.

Plan Assets

The percentages of total plan asset by investment category for our Pension Plan at December 31 were as follows:
20212020
Equity15%21%
Real estate73
Fixed income7469
Cash13
Hedge funds34
Total100%100%

Supplemental Non-qualified Defined Benefit Plans

We have various supplemental retirement plans for key executives of the Company. The plans are non-qualified defined benefit and defined contribution plans (Supplemental Plans). The Supplemental Plans are subject to various vesting schedules and are funded on a cash basis as benefits are paid.

Non-pension Defined Benefit Postretirement Healthcare Plan

BHC sponsors a retiree healthcare plan (Healthcare Plan) for employees who meet certain age and service requirements at retirement. Healthcare Plan benefits are subject to premiums, deductibles, co-payment provisions and other limitations. A portion of the Healthcare Plan for participating business units are pre-funded via VEBA trusts. Pre-65 retirees as well as a grandfathered group of post-65 retirees receive their retiree medical benefits through the Black Hills self-insured retiree medical plans. Healthcare coverage for post-65 Medicare-eligible retirees is provided through an individual market healthcare exchange.

We fund the Healthcare Plan on a cash basis as benefits are paid. The Healthcare Plan provides for partial pre-funding via VEBA trusts. Assets related to this pre-funding are held in trust and are for the benefit of the union and non-union employees located in the states of Arkansas, Iowa and Kansas. We do not pre-fund the Healthcare Plan for those employees outside Arkansas, Iowa and Kansas.

Plan Contributions

Contributions to the Pension Plan are cash contributions made directly to the Master Trust. Healthcare and Supplemental Plan contributions are made in the form of benefit payments. Healthcare benefits include company and participant paid premiums. Contributions for the years ended December 31 were as follows (in thousands):
20212020
Defined Contribution Plan
Company retirement contributions$11,332 $10,455 
Company matching contributions$15,938 $15,240 
20212020
Defined Benefit Plans
Defined Benefit Pension Plan$— $12,700 
Non-Pension Defined Benefit Postretirement Healthcare Plan$6,432 $6,058 
Supplemental Non-Qualified Defined Benefit Plans$2,576 $2,674 

While we do not have required contributions, we expect to make $3.9 million in contributions to our Pension Plan in 2022.

Fair Value Measurements

The following tables set forth, by level within the fair value hierarchy, the assets that were accounted for at fair value on a recurring basis (in thousands):
Pension PlanDecember 31, 2021
Level 1Level 2Level 3Total Investments Measured at Fair Value
NAV (a)
Total Investments
Common Collective Trust - Cash and Cash Equivalents$— $6,009 $— $6,009 $— $6,009 
Common Collective Trust - Equity— 70,262 — 70,262 — 70,262 
Common Collective Trust - Fixed Income— 339,219 — 339,219 — 339,219 
Common Collective Trust - Real Estate— — — — 30,407 30,407 
Hedge Funds— — — — 12,490 12,490 
Total investments measured at fair value$— $415,490 $— $415,490 $42,897 $458,387 

Pension PlanDecember 31, 2020
Level 1Level 2Level 3Total Investments Measured at Fair Value
NAV (a)
Total Investments
Common Collective Trust - Cash and Cash Equivalents— 16,810 — 16,810 — 16,810 
Common Collective Trust - Equity— 100,311 — 100,311 — 100,311 
Common Collective Trust - Fixed Income— 324,845 — 324,845 — 324,845 
Common Collective Trust - Real Estate— — — — 14,301 14,301 
Hedge Funds— — — — 17,454 17,454 
Total investments measured at fair value$— $441,966 $— $441,966 $31,755 $473,721 
____________________
(a)    Certain investments that are measured at fair value using NAV per share (or its equivalent) for practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in these tables for these investments are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the reconciliation of changes in the plan’s benefit obligations and fair value of plan assets above.

Non-pension Defined Benefit Postretirement Healthcare PlanDecember 31, 2021
Level 1Level 2Level 3Total Investments Measured at Fair ValueTotal Investments
Cash and Cash Equivalents$7,972 $— $— $7,972 $7,972 
Total investments measured at fair value$7,972 $— $— $7,972 $7,972 
Non-pension Defined Benefit Postretirement Healthcare PlanDecember 31, 2020
Level 1Level 2Level 3Total Investments Measured at Fair ValueTotal Investments
Cash and Cash Equivalents$8,165 $— $— $8,165 $8,165 
Total investments measured at fair value$8,165 $— $— $8,165 $8,165 

Additional information about assets of the benefit plans, including methods and assumptions used to estimate the fair value of these assets, is as follows:

Pension Plan

Common Collective Trust Funds: These funds are valued based upon the redemption price of units held by the Pension Plan, which is based on the current fair value of the common collective trust funds’ underlying assets. Unit values are determined by the financial institution sponsoring such funds by dividing the fund’s net assets at fair value by its units outstanding at the valuation dates. The Pension Plan’s investments in common collective trust funds, with the exception of shares of the common collective trust-real estate are categorized as Level 2.
Common Collective Trust-Real Estate Funds: These funds are valued based on various factors of the underlying real estate properties, including market rent, market rent growth, occupancy levels, etc. As part of the trustee’s valuation process, properties are externally appraised generally on an annual basis. The appraisals are conducted by reputable independent appraisal firms and signed by appraisers that are members of the Appraisal Institute, with professional designation of Member, Appraisal Institute. All external appraisals are performed in accordance with the Uniform Standards of Professional Appraisal Practices. We receive monthly statements from the trustee, along with the annual schedule of investments and rely on these reports for pricing the units of the fund. Some of the funds without participant withdrawal limitations are categorized as Level 2.
The following investments are measured at NAV and are not classified in the fair value hierarchy, in accordance with accounting guidance:
Common Collective Trust-Real Estate Fund: This is the same fund as above except that certain of the funds’ assets contain participant withdrawal policies with restrictions on redemption and are therefore not included in the fair value hierarchy.
Hedge Funds: These funds represent investments in other investment funds that seek a return utilizing a number of diverse investment strategies. The strategies, when combined, aim to reduce volatility and risk while attempting to deliver positive returns under all market conditions. Amounts are reported on a one-month lag. The fair value of hedge funds is determined using net asset value per share based on the fair value of the hedge fund’s underlying investments. 10% of the shares may be redeemed at the end of each month with a 15-day notice and full redemptions are available at the end of each quarter with 60-day notice and is limited to a percentage of the total net assets value of the fund. The net asset values are based on the fair value of each fund’s underlying investments. There are no unfunded commitments related to these hedge funds.
Non-pension Defined Benefit Postretirement Healthcare Plan

Cash and Cash Equivalents: This represents an investment in Northern Institutional Government Assets Portfolio, which is a government money market fund. As shares held reflect quoted prices in an active market, they are categorized as Level 1.
Other Plan Information

The following tables provide a reconciliation of the employee benefit plan obligations and fair value of employee benefit plan assets, amounts recognized in the Consolidated Balance Sheets, accumulated benefit obligation, and reconciliation of components of the net periodic expense and elements of AOCI (in thousands):

Employee Benefit Plan Obligations
Defined Benefit Pension PlanSupplemental Non-qualified Defined
Benefit Plans		Non-pension Defined Benefit Postretirement Healthcare Plan
As of December 31,202120202021202020212020
Change in benefit obligation:
Projected benefit obligation at beginning of year$514,008 $485,376 $55,054 $54,088 $70,238 $65,277 
Service cost (a)
5,038 5,411 3,149 1,579 2,237 2,056 
Interest cost9,313 13,426 706 1,099 1,058 1,649 
Actuarial (gain) loss(14,037)47,064 (1,073)962 (5,165)5,804 
Amendments(561)— — — — — 
Benefits paid (35,499)(37,269)(2,576)(2,674)(6,432)(6,058)
Plan participants’ contributions— — — — 1,548 1,510 
Projected benefit obligation at end of year$478,262 $514,008 $55,260 $55,054 $63,484 $70,238 
____________________
(a)    For the year ended December 31, 2020, Service Cost for the Supplemental Non-qualified Defined Benefit Plans includes a $1.4 million correction of a prior year overstatement of Projected benefit obligation.

Fair Value Employee Benefit Plan Assets
Defined Benefit
Pension Plan		Supplemental Non-qualified Defined
Benefit Plans
Non-pension Defined Benefit Postretirement Healthcare Plan (a)
As of December 31,202120202021202020212020
Change in fair value of plan assets:
Beginning fair value of plan assets$473,721 $434,284 $— $— $8,165 $8,305 
Investment income (loss)20,165 64,006 — — (35)33 
Employer contributions— 12,700 2,576 2,674 4,726 4,374 
Retiree contributions— — — — 1,548 1,511 
Benefits paid(35,499)(37,269)(2,576)(2,674)(6,432)(6,058)
Ending fair value of plan assets$458,387 $473,721 $— $— $7,972 $8,165 
____________________
(a)    Assets of VEBA trusts.

In 2012, we froze our Pension Plan and closed it to new participants. Since then, we have implemented various de-risking strategies including lump sum buyouts, the purchase of annuities and the reduction of return-seeking assets over time to a more liability-hedged portfolio. As a result, capital markets volatility driven by the COVID-19 pandemic did not materially affect our unfunded status.

Amounts Recognized in the Consolidated Balance Sheets
Defined Benefit
Pension Plan		Supplemental
Non-qualified Defined Benefit Plans		Non-pension Defined Benefit Postretirement Healthcare Plan
As of December 31,202120202021202020212020
Regulatory assets$67,403 $86,677 $— $— $11,660 $16,102 
Current liabilities$— $— $2,156 $1,927 $4,584 $4,931 
Non-current liabilities$19,872 $40,287 $53,104 $53,127 $50,949 $57,142 
Regulatory liabilities$3,830 $3,607 $— $— $2,447 $2,140 
Accumulated Benefit Obligation
Defined Benefit
Pension Plan		Supplemental
Non-qualified Defined Benefit Plans		Non-pension Defined Benefit Postretirement Healthcare Plan
As of December 31,202120202021202020212020
Accumulated Benefit Obligation$466,505 $498,815 $55,260 $54,779 $63,484 $70,238 

Components of Net Periodic Expense
Defined Benefit
Pension Plan		Supplemental
Non-qualified Defined Benefit Plans		Non-pension Defined Benefit Postretirement Healthcare Plan
For the years ended December 31,202120202019202120202019202120202019
Service cost (a)
$5,038 $5,411 $5,383 $3,149 $1,579 $4,995 $2,237 $2,056 $1,815 
Interest cost9,313 13,426 17,374 706 1,099 1,295 1,058 1,649 2,247 
Expected return on assets(20,876)(22,591)(24,401)— — — (136)(182)(230)
Net amortization of prior service cost— — 26 — 2 2 (434)(546)(398)
Recognized net actuarial loss (gain)7,315 8,372 3,763 1,754 1,702 535 466 20 — 
Net periodic expense$790 $4,618 $2,145 $5,609 $4,382 $6,827 $3,191 $2,997 $3,434 
____________________
(a)    For the year ended December 31, 2020, Service Cost for the Supplemental Non-qualified Defined Benefit Plans includes a $1.4 million correction of a prior year overstatement of Projected benefit obligation.

For the years ended December 31, 2021, 2020 and 2019, Service costs were recorded in Operations and maintenance expense while non service costs were recorded in Other expense on the Consolidated Statements of Income.

AOCI Amounts (After-Tax)
Defined Benefit
Pension Plan		Supplemental
Non-qualified Defined Benefit Plans		Non-pension Defined Benefit Postretirement Healthcare Plan
As of December 31,202120202021202020212020
Net (gain) loss$4,398 $5,511 $7,159 $9,323 $(308)$100 
Prior service cost (gain)(46)— — — (27)(144)
Total amounts included in AOCI, after-tax not yet recognized as components of net periodic expense$4,352 $5,511 $7,159 $9,323 $(335)$(44)

Assumptions
Defined Benefit
Pension Plan		Supplemental
Non-qualified Defined Benefit Plans		Non-pension Defined Benefit Postretirement Healthcare Plan
Weighted-average assumptions used to determine benefit obligations:202120202019202120202019202120202019
Discount rate2.88 %2.56 %3.27 %2.77 %2.41 %3.14 %2.79 %2.41 %3.15 %
Rate of increase in compensation levels3.08 %3.34 %3.49 %5.00 %5.00 %5.00 %N/AN/AN/A
Defined Benefit
Pension Plan		Supplemental
Non-qualified Defined Benefit Plans		Non-pension Defined Benefit Postretirement Healthcare Plan
Weighted-average assumptions used to determine net periodic benefit cost for plan year:202120202019202120202019202120202019
Discount rate (a)
2.56 %3.27 %4.40 %2.41 %3.14 %4.34 %2.41 %3.15 %4.28 %
Expected long-term rate of return on assets (b)
4.50 %5.25 %6.00 %N/AN/AN/A1.80 %2.35 %3.00 %
Rate of increase in compensation levels3.34 %3.49 %3.52 %5.00 %5.00 %5.00 %N/AN/AN/A
____________________
(a)    The estimated discount rate for the Defined Benefit Pension Plan is 2.88% for the calculation of the 2022 net periodic pension costs.
(b)    The expected rate of return on plan assets is 4.25% for the calculation of the 2022 net periodic pension cost.

The healthcare benefit obligation at December 31 was determined as follows:
20212020
Trend Rate - Medical
Pre-65 for next year - All Plans6.05%6.10%
Pre-65 Ultimate trend rate - Black Hills Corp4.50%4.50%
Trend Year20302027
Post-65 for next year - All Plans5.10%4.92%
Post-65 Ultimate trend rate - Black Hills Corp4.50%4.50%
Trend Year20302029

The following benefit payments to employees, which reflect future service, are expected to be paid (in thousands):
Defined Benefit Pension PlanSupplemental Non-qualified Defined Benefit PlansNon-pension Defined Benefit Postretirement Healthcare Plan
2022$26,249 $2,156 $5,806 
2023$27,133 $2,224 $5,334 
2024$27,683 $2,410 $5,042 
2025$28,650 $2,757 $4,865 
2026$28,968 $2,782 $4,752 
2027-2031$144,422 $12,553 $21,615