Regulatory Matters:

9 Months Ended

Sep. 30, 2022

Regulatory Assets and Liabilities Disclosure [Abstract]

We had the following regulatory assets and liabilities (in thousands):


	As of		As of
	September 30, 2022		December 31, 2021
Regulatory assets
Winter Storm Uri (a)	$	392,994	$	509,025
Deferred energy and fuel cost adjustments (b)	74,998		59,973
Deferred gas cost adjustments (b)	18,764		9,488
Gas price derivatives (b)	10,776		2,584
Deferred taxes on AFUDC (b)	7,407		7,457
Employee benefit plans and related deferred taxes (c)	86,335		88,923
Environmental (b)	1,346		1,385

Loss on reacquired debt (b)	19,663		21,011

Deferred taxes on flow through accounting (b)	66,039		63,243
Decommissioning costs (b)	4,094		5,961
Other regulatory assets (b)	23,790		27,549
Total regulatory assets	706,206		796,599
Less current regulatory assets	(290,087)		(270,290)
Regulatory assets, non-current	$	416,119	$	526,309

Regulatory liabilities
Deferred energy and gas costs (b)	$	6,283	$	6,113

Employee benefit plan costs and related deferred taxes (c)	31,168		32,241
Cost of removal (b)	174,312		179,976

Excess deferred income taxes (c)	257,282		264,042
Other regulatory liabilities (c)	25,715		20,579
Total regulatory liabilities	494,760		502,951
Less current regulatory liabilities	(24,797)		(17,574)
Regulatory liabilities, non-current	$	469,963	$	485,377

__________

(a) Timing of Winter Storm Uri incremental cost recovery and associated carrying costs vary by jurisdiction. See further information below.

(b) Recovery of costs, but we are not allowed a rate of return.

(c) 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 2021 Annual Report on Form 10-K.

Arkansas Gas

On December 10, 2021, Arkansas Gas filed a rate review with the APSC seeking recovery of significant infrastructure investments in its 7,200-mile natural gas pipeline system. On October 10, 2022, the APSC approved a partial settlement agreement with all intervening parties for a general rate increase and authorized a capital structure of 45% equity and 55% debt and a return on equity of 9.6%. The APSC’s decision shifts approximately $10 million of rider revenue to base rates and is expected to generate $8.8 million of new annual revenue. The APSC also approved a new comprehensive safety and integrity rider which replaces three former riders. New rates were effective on October 21, 2022.

RMNG

On October 7, 2022, RMNG filed a rate review with the CPUC seeking recovery of significant infrastructure investments in its 600-mile natural gas pipeline system. The rate review requests $12.3 million in new annual revenue based on a future test year with a capital structure of 52% equity and 48% debt and a return on equity of 12.3%. The rate review also requests a $7.7 million shift of SSIR revenues to base rates. The request seeks to finalize rates in the third quarter of 2023.

Winter Storm Uri

In February 2021, Winter Storm Uri caused a substantial increase in heating and energy demand and contributed to unforeseeable and unprecedented market prices for natural gas and electricity. As a result, we incurred significant incremental fuel, purchased power and natural gas costs.

Our Utilities submitted Winter Storm Uri cost recovery applications in our state jurisdictions seeking to recover $546 million of these incremental costs through separate tracking mechanisms over a weighted-average recovery period of 3.5 years. In these applications, we sought approval to recover carrying costs. We have received final commission approval for all of our Winter Storm Uri cost recovery applications, which will allow full recovery of our incremental fuel, purchased power and natural gas costs.

On January 27, 2022, Kansas Gas received approval from the KCC for its Winter Storm Uri cost recovery settlement with final rates implemented in February 2022. In March 2022, Colorado Electric and Colorado Gas received approval from the CPUC for their respective Winter Storm Uri cost recovery settlements with final rates implemented in April 2022. In June 2022, Arkansas Gas received approval from the APSC for its Winter Storm Uri cost recovery application. The APSC had previously approved interim cost recovery effective in June 2021. On October 20, 2022, Wyoming Gas received approval from the WPSC for its Winter Storm Uri cost recovery application. The WPSC had previously approved interim cost recovery effective in September 2021.

For three and nine months ended September 30, 2022 and 2021, $3.7 million, $18 million, $1.8 million and $1.8 million, respectively, of carrying costs were accrued and recorded to a regulatory asset. The carrying costs accrued during the nine months ended September 30, 2022 included a one-time, $10 million true-up recorded in the second quarter to reflect Commission authorized rates.

For the nine months ended September 30, 2022, our Utilities collected $125 million of Winter Storm Uri incremental costs and carrying costs from customers. As of September 30, 2022, we estimate that our remaining Winter Storm Uri regulatory asset has a weighted-average recovery period of 2.8 years.

TCJA

As part of Kansas Gas’ 2021 rate review settlement agreement, Kansas Gas will annually deliver $3.0 million of TCJA and state tax reform benefits to customers for three years starting in 2022 (approximately $9.1 million of total benefits expected to be delivered). For the three and nine months ended September 30, 2022, Kansas Gas delivered TCJA and state tax reform bill credits to customers of $0.6 million and $2.1 million, respectively.

These bill credits, which resulted in a reduction of revenue, were offset by a reduction in income tax expense and resulted in an immaterial impact to Net income for the three and nine months ended September 30, 2022.

Wyoming Electric

On June 1, 2022, Wyoming Electric filed a rate review with the WPSC seeking recovery of significant infrastructure investments in its 1,330-mile electric distribution and 59-mile electric transmission systems. The rate review requests $15 million in new annual revenue with a capital structure of 54% equity and 46% debt and a return on equity of 10.3%. The request seeks to finalize rates in the first quarter of 2023.