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Commitment, Contingencies And Guarantees | 12 Months Ended
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Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract] |
Commitments, Contingencies and Guarantees | (3) COMMITMENTS, CONTINGENCIES AND GUARANTEES Unconditional Purchase Obligations We have various PPAs and transmission service agreements, which extend to 2030, to support our Electric Utilities' capacity and energy needs beyond our regulated power plants' generation. Our Utilities purchase natural gas, including transportation and storage capacity, to meet customers' needs under short-term and long-term purchase contracts. These contracts extend to 2044. The following is a schedule of unconditional purchase obligations required under the power purchase, transmission services and natural gas transportation and storage agreements (in thousands):
|  | PPAs (a) |  |  | Transmission Services Agreements |  |  | Natural gas supply, transportation and storage agreements (b) |
Future commitments for the year ending December 31, |  |  |  |  |  |  |  |  |
2023 |  | $ | 11,175 |  |  | $ | 12,320 |  |  | $ | 130,031 |
2024 |  |  | 2,738 |  |  |  | - |  |  |  | 98,881 |
2025 |  |  | - |  |  |  | - |  |  |  | 72,662 |
2026 |  |  | - |  |  |  | - |  |  |  | 45,102 |
2027 |  |  | - |  |  |  | - |  |  |  | 14,862 |
Thereafter |  |  | - |  |  |  | - |  |  |  | 56,595 |
Total future commitments |  | $ | 13,913 |  |  | $ | 12,320 |  |  | $ | 418,133 |
___________________________ (a) This schedule does not reflect renewable energy PPA future obligations since these agreements vary based on weather conditions. (b) Our Gas Utilities have commitments to purchase physical quantities of natural gas under contracts indexed to various forward natural gas price curves. A portion of our gas purchases are purchased under evergreen contracts and are therefore, for purposes of this disclosure, carried out for 60 days. Lease Agreements Lessee We lease from third parties certain office and operation center facilities, communication tower sites, equipment and materials storage. Our leases have remaining terms ranging from less than one year to 33 years, including options to extend that are reasonably certain to be exercised. Our operating and finance leases were not material to the Company’s Consolidated Financial statements. Lessor We lease to third parties certain generating station ground leases, communication tower sites and a natural gas pipeline. These leases have remaining terms ranging from less than one year to 34 years. Lease revenue was not material for the years ended December 31, 2022, 2021 and 2020. As of December 31, 2022, scheduled maturities of operating lease payments to be received in future years were as follows (in thousands):
|  | Operating Leases |
2023 |  | $ | 2,381 |
2024 |  |  | 2,125 |
2025 |  |  | 2,070 |
2026 |  |  | 1,881 |
2027 |  |  | 1,845 |
Thereafter |  |  | 49,387 |
Total lease receivables |  | $ | 59,689 |
Environmental Matters We are subject to costs resulting from a number of federal, state and local laws and regulations which affect future planning and existing operations. Laws and regulations can result in increased capital expenditures, operating and other costs as a result of compliance, remediation and monitoring obligations. Due to the environmental issues discussed below, we may be required to modify, curtail, replace or cease operating certain facilities or operations to comply with statutes, regulations and other requirements of regulatory bodies. Reclamation Liability For our Pueblo Airport Generation site, we posted a bond of $4.1 million with the State of Colorado to cover the costs of remediation for a waste water containment pond permitted to provide wastewater storage and processing for this zero-discharge facility. The reclamation liability is recorded at the present value of the estimated future cost to reclaim the land. Under our land leases for our wind generation facilities, we are required to reclaim land where we have placed wind turbines. The reclamation liabilities are recorded at the present value of the estimated future cost to reclaim the land. Under its mining permit, WRDC is required to reclaim all land where it has mined reserves. The reclamation liability is recorded at the present value of the estimated future cost to reclaim the land. See Note 7 for additional information. Manufactured Gas Processing In 2008, we acquired whole and partial liabilities for former manufactured gas processing sites in Nebraska and Iowa, which were previously used to convert coal to natural gas. The acquisition provided for an insurance recovery, now valued at $1.3 million recorded in Other assets, non-current on our Consolidated Balance Sheets, which will be used to help offset remediation costs. We also have a $1.3 million regulatory asset for manufactured gas processing sites; see Note 2 for additional information. As of December 31, 2022, we had $2.6 million accrued for remediation of Iowa’s manufactured gas processing site as the landowner. As of December 31, 2022, we had $0.6 million accrued for remediation of Nebraska’s manufactured gas processing site as the land owner. These liabilities are included in Other deferred credits and other liabilities on our Consolidated Balance Sheets. The remediation cost estimate could change materially due to results of further investigations, actions of environmental agencies or the financial viability of other responsible parties. Legal Proceedings In the normal course of business, we are subject to various lawsuits, actions, proceedings, claims and other matters asserted under laws and regulations. We believe the amounts provided in the consolidated financial statements to satisfy alleged liabilities are adequate in light of the probable and estimable contingencies. However, there can be no assurance that the actual amounts required to satisfy alleged liabilities from various legal proceedings, claims and other matters discussed, and to comply with applicable laws and regulations will not exceed the amounts reflected in the consolidated financial statements. We record gain contingencies when realized and expected recoveries under applicable insurance contracts when we are assured of recovery. In the normal course of business, we enter into agreements that include indemnification in favor of third parties, such as information technology agreements, purchase and sale agreements and lease contracts. We have also agreed to indemnify our directors, officers and employees in accordance with our articles of incorporation, as amended. Certain agreements do not contain any limits on our liability and therefore, it is not possible to estimate our potential liability under these indemnifications. In certain cases, we have recourse against third parties with respect to these indemnities. Further, we maintain insurance policies that may provide coverage against certain claims under these indemnities. GT Resources, LLC v. Black Hills Corporation, Case No. 2020CV30751 (U.S. District Court for the City and County of Denver, Colorado) On April 13, 2022, a jury awarded $41 million for claims made by GT Resources, LLC (“GTR”) against BHC and two of its subsidiaries (Black Hills Exploration and Production, Inc. and Black Hills Gas Resources, Inc.), which ceased oil and natural gas operations in 2018 as part of BHC’s decision to exit the exploration and production business. The claims involved a dispute over a 2.3 million-acre concession award in Costa Rica which was acquired by a BHC subsidiary in 2003. GTR retained rights to receive a royalty interest on any hydrocarbon production from the concession upon the occurrence of contingent events. GTR contended that BHC and its subsidiaries failed to adequately pursue the opportunity and failed to transfer the concession to GTR. We believe we have meritorious defenses to the verdict and have appealed the verdict. At this time, we believe that the liability related to this matter, if any, is not reasonably estimable. Guarantees We have entered into various parent company-level guarantees providing financial or performance assurance to third parties on behalf of certain of our subsidiaries. These guarantees do not represent incremental consolidated obligations, but rather, represent guarantees of subsidiary obligations to allow those subsidiaries to conduct business without posting other forms of assurance. The agreements, which are off-balance sheet commitments, include support for business operations, indemnification for reclamation and surety bonds. The guarantees were entered into in the normal course of business. To the extent liabilities are incurred as a result of activities covered by these guarantees, such liabilities are included in our Consolidated Balance Sheets. See Note 8 for additional information on our off-balance sheet Letters of Credit commitment. We had the following guarantees in place as of (in thousands):
|  | Maximum Exposure at |
Nature of Guarantee |  | December 31, 2022 |
Indemnification for reclamation/surety bonds |  | $ | 107,314 |
Guarantees supporting business transactions |  | $ | 484,968 |
|  | $ | 592,282 |

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