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Financing
 12 Months Ended
Dec. 31, 2022
Debt Disclosure [Abstract]  
Financing
(8)
FINANCING

 

Short-term debt

 

Revolving Credit Facility and CP Program

 

On July 19, 2021, we amended and restated our corporate Revolving Credit Facility, maintaining total commitments of $750 million and extending the term through July 19, 2026 with two one year extension options (subject to consent from lenders). This Revolving Credit Facility is similar to the former revolving credit facility, which includes an accordion feature that allows us to increase total commitments up to $1.0 billion with the consent of the administrative agent, the issuing agents and each bank increasing or providing a new commitment. Borrowings continue to be available under a base rate or various Eurodollar rate options. The interest costs associated with the letters of credit or borrowings and the commitment fee under the Revolving Credit Facility are determined based upon our Corporate credit rating from S&P, Fitch and Moody's for our senior unsecured long-term debt. Based on our current credit ratings, the margins for base rate borrowings, Eurodollar borrowings and letters of credit were 0.125%, 1.125% and 1.125%, respectively, at December 31, 2022. Based on our credit ratings, a 0.175% commitment fee was charged on the unused amount at December 31, 2022.

 

We have a $750 million, unsecured CP Program that is backstopped by the Revolving Credit Facility. Amounts outstanding under the Revolving Credit Facility and the CP Program, either individually or in the aggregate, cannot exceed $750 million. The notes issued under the CP Program may have maturities not to exceed 397 days from the date of issuance and bear interest (or are sold at par less a discount representing an interest factor) based on, among other things, the size and maturity date of the note, the frequency of the issuance and our credit ratings. Under the CP Program, any borrowings rank equally with our unsecured debt. Notes under the CP Program are not registered and are offered and issued pursuant to a registration exemption.

 

Our Revolving Credit Facility and CP Program, which are classified as Notes payable on the Consolidated Balance Sheets, had the following borrowings, outstanding letters of credit, and available capacity at December 31 (dollars in thousands):

 

 

 

2022

 

 

2021

 

Amount outstanding

 

$

535,600

 

 

$

420,180

 

Letters of credit (a)

 

 

24,626

 

 

 

27,209

 

Available capacity

 

 

189,774

 

 

 

302,611

 

Weighted average interest rates

 

 

4.88

%

 

 

0.30

%

 

(a)
Letters of credit are off-balance sheet commitments that reduce the borrowing capacity available on our corporate Revolving Credit Facility.

 

Revolving Credit Facility and CP Program borrowing activity for the years ended December 31 was as follows (in thousands):

 

 

 

2022

 

 

2021

 

Maximum amount outstanding (based on daily outstanding balances)

 

$

572,300

 

 

$

440,000

 

Average amount outstanding (based on daily outstanding balances)

 

 

390,653

 

 

 

258,392

 

Weighted average interest rates

 

 

2.11

%

 

 

0.22

%

 

Deferred Financing Costs on the Revolving Credit Facility

 

Total accumulated deferred financing costs on the Revolving Credit Facility of $8.9 million are being amortized over its estimated useful life and were included in Interest expense on the accompanying Consolidated Statements of Income. See below for additional details.

 

Term Loan

 

On February 24, 2021, we entered into a nine-month, $800 million unsecured term loan to provide additional liquidity and to meet our cash needs related to the incremental fuel, purchased power and natural gas costs from Winter Storm Uri. The term loan carried no prepayment penalty and was subject to the same covenant requirements as our Revolving Credit Facility. We repaid $200 million of this term loan in the first quarter of 2021. Proceeds from the August 26, 2021 public debt offering (discussed below) were used to repay the remaining balance on this term loan.

 

Long-term debt

 

Long-term debt outstanding was as follows (dollars in thousands):

 

 

 

 

 

Interest Rate at

 

Balance Outstanding

 

 

 

Due Date

 

December 31, 2022

 

December 31, 2022

 

 

December 31, 2021

 

Corporate

 

 

 

 

 

 

 

 

 

 

Senior unsecured notes due 2023

 

November 30, 2023

 

4.25%

 

$

525,000

 

 

$

525,000

 

Senior unsecured notes due 2024

 

August 23, 2024

 

1.04%

 

 

600,000

 

 

 

600,000

 

Senior unsecured notes due 2026

 

January 15, 2026

 

3.95%

 

 

300,000

 

 

 

300,000

 

Senior unsecured notes due 2027

 

January 15, 2027

 

3.15%

 

 

400,000

 

 

 

400,000

 

Senior unsecured notes, due 2029

 

October 15, 2029

 

3.05%

 

 

400,000

 

 

 

400,000

 

Senior unsecured notes, due 2030

 

June 15, 2030

 

2.50%

 

 

400,000

 

 

 

400,000

 

Senior unsecured notes due 2033

 

May 1, 2033

 

4.35%

 

 

400,000

 

 

 

400,000

 

Senior unsecured notes, due 2046

 

September 15, 2046

 

4.20%

 

 

300,000

 

 

 

300,000

 

Senior unsecured notes, due 2049

 

October 15, 2049

 

3.88%

 

 

300,000

 

 

 

300,000

 

Total Corporate debt

 

 

 

 

 

 

3,625,000

 

 

 

3,625,000

 

Less unamortized debt discount

 

 

 

 

 

 

(5,259

)

 

 

(6,125

)

Total Corporate debt, net

 

 

 

 

 

 

3,619,741

 

 

 

3,618,875

 

South Dakota Electric

 

 

 

 

 

 

 

 

 

 

First Mortgage Bonds due 2032

 

August 15, 2032

 

7.23%

 

 

75,000

 

 

 

75,000

 

First Mortgage Bonds due 2039

 

November 1, 2039

 

6.13%

 

 

180,000

 

 

 

180,000

 

First Mortgage Bonds due 2044

 

October 20, 2044

 

4.43%

 

 

85,000

 

 

 

85,000

 

Total South Dakota Electric debt

 

 

 

 

 

 

340,000

 

 

 

340,000

 

Less unamortized debt discount

 

 

 

 

 

 

(69

)

 

 

(74

)

Total South Dakota Electric debt, net

 

 

 

 

 

 

339,931

 

 

 

339,926

 

Wyoming Electric

 

 

 

 

 

 

 

 

 

 

Industrial development revenue bonds due 2027(a) (b)

 

March 1, 2027

 

3.68%

 

 

10,000

 

 

 

10,000

 

First Mortgage Bonds due 2037

 

November 20, 2037

 

6.67%

 

 

110,000

 

 

 

110,000

 

First Mortgage Bonds due 2044

 

October 20, 2044

 

4.53%

 

 

75,000

 

 

 

75,000

 

Total Wyoming Electric debt

 

 

 

 

 

 

195,000

 

 

 

195,000

 

Less unamortized debt discount

 

 

 

 

 

 

—

 

 

 

—

 

Total Wyoming Electric debt, net

 

 

 

 

 

 

195,000

 

 

 

195,000

 

Total long-term debt

 

 

 

 

 

 

4,154,672

 

 

 

4,153,801

 

Less current maturities

 

 

 

 

 

 

(525,000

)

 

 

—

 

Less unamortized deferred financing costs (c)

 

 

 

 

 

 

(22,332

)

 

 

(26,878

)

Long-term debt, net of current maturities and deferred financing costs

 

 

 

 

 

$

3,607,340

 

 

$

4,126,923

 

 

(a)
Variable interest rate.
(b)
A reimbursement agreement is in place with Wells Fargo on behalf of Wyoming Electric for the 2009A bonds of $10 million due March 1, 2027. In the case of default, we hold the assumption of liability for drawings on Wyoming Electric’s Letter of Credit attached to these bonds.
(c)
Includes deferred financing costs associated with our Revolving Credit Facility of $1.8 million and $2.5 million as of December 31, 2022 and December 31, 2021, respectively.

 

Scheduled maturities of long-term debt and associated interest payments by year are shown below (in thousands):

 

 

 

Payments Due by Period

 

 

 

2023

 

 

2024

 

 

2025

 

 

2026

 

 

2027

 

 

Thereafter

 

 

Total

 

Principal payments on Long-term debt including current maturities (a)

 

$

525,000

 

 

$

600,000

 

 

$

—

 

 

$

300,000

 

 

$

410,000

 

 

$

2,325,000

 

 

$

4,160,000

 

Interest payments on Long-term debt (a)

 

 

148,125

 

 

 

125,813

 

 

 

119,591

 

 

 

113,666

 

 

 

101,134

 

 

 

994,804

 

 

 

1,603,133

 

 

(a)
Long-term debt amounts do not include deferred financing costs or discounts or premiums on debt. Estimated interest payments on variable rate debt are calculated by utilizing the applicable rates as of December 31, 2022.

 

We plan to re-finance our $525 million, 4.25%, senior unsecured notes due November 30, 2023, at or before maturity date. In the event we are unable to refinance these senior unsecured notes, we have sufficient alternative measures available to manage cash flows such that our current plans to manage liquidity would be sufficient to meet our obligations in the foreseeable future.

 

Our debt securities contain certain restrictive financial covenants, all of which the Company and its subsidiaries were in compliance with at December 31, 2022. See below for additional information.

 

Substantially all of the tangible utility property of South Dakota Electric and Wyoming Electric is subject to the lien of indentures securing their first mortgage bonds. First mortgage bonds of South Dakota Electric and Wyoming Electric may be issued in amounts limited by property, earnings and other provisions of the mortgage indentures.

 

Debt Transactions

 

On August 26, 2021, we completed a public debt offering which consisted of $600 million, 1.037% three-year senior unsecured notes due August 23, 2024. The notes include an optional redemption provision and may be redeemed, in whole or in part, without premium, on or after February 23, 2022. The proceeds from the offering, which were net of $3.7 million of deferred financing costs, were used to repay amounts outstanding under our term loan entered into on February 24, 2021.

 

On June 17, 2020, we completed a public debt offering which consisted of $400 million of 2.50% 10-year senior unsecured notes due June 15, 2030. The proceeds were used to repay short-term debt and for working capital and general corporate purposes.

 

Amortization of Deferred Financing Costs

 

Our deferred financing costs and associated amortization expense included in Interest expense on the accompanying Consolidated Statements of Income were as follows (in thousands):

 

Deferred Financing Costs Remaining at

 

 

Amortization Expense for the years ended December 31,

 

December 31, 2022

 

 

2022

 

 

2021

 

 

2020

 

$

22,332

 

 

$

4,549

 

 

$

3,769

 

 

$

3,272

 

 

Debt Covenants

 

Revolving Credit Facility

 

Under our Revolving Credit Facility, we are required to maintain a Consolidated Indebtedness to Capitalization Ratio not to exceed 0.65 to 1.00. Subject to applicable cure periods, a violation of any of these covenants would constitute an event of default that entitles the lenders to terminate their remaining commitments and accelerate all principal and interest outstanding.

We were in compliance with our covenants at December 31, 2022 as shown below:

 

 

 

As of December 31, 2022

 

 

Covenant Requirement

 

Consolidated Indebtedness to Capitalization Ratio

 

 

60.9

%

 

Less than

 

 

65

%

 

Wyoming Electric

 

Covenants within Wyoming Electric's financing agreements require Wyoming Electric to maintain a debt to capitalization ratio of no more than 0.60 to 1.00. As of December 31, 2022, we were in compliance with these financial covenants.

 

Dividend Restrictions

 

Our Revolving Credit Facility and other debt obligations contain restrictions on the payment of cash dividends when a default or event of default occurs.

 

Due to our holding company structure, substantially all of our operating cash flows are provided by dividends paid or distributions made by our subsidiaries. The cash to pay dividends to our shareholders is derived from these cash flows. As a result, certain statutory limitations or regulatory or financing agreements could affect the levels of distributions allowed to be made by our subsidiaries.

 

Our Utilities are generally limited to the amount of dividends allowed to be paid to our utility holding company under the Federal Power Act and settlement agreements with state regulatory jurisdictions. As of December 31, 2022, the amount of restricted net assets at our Utilities that may not be distributed to our utility holding company in the form of a loan or dividend was approximately $155 million.

 

South Dakota Electric and Wyoming Electric are generally limited to the amount of dividends allowed to be paid to our utility holding company under certain financing agreements.

 

Equity

 

At-the-Market Equity Offering Program

 

On August 3, 2020, we filed a shelf registration and DRSPP with the SEC. In conjunction with these shelf filings, we renewed the ATM. The renewed ATM program, which allows us to sell shares of our common stock, is the same as the prior program other than the aggregate value increased from $300 million to $400 million and a forward sales option was incorporated. This forward sales option allows us to sell our shares through the ATM program at the current trading price without actually issuing any shares to satisfy the sale until a future date. Under the ATM, shares may be offered from time to time pursuant to a sales agreement dated August 3, 2020. Shares of common stock are offered pursuant to our shelf registration statement filed with the SEC.

 

ATM activity for the years ended December 31 was as follows (net proceeds and issuance costs in millions):

 

 

 

December 31, 2022

 

 

December 31, 2021

 

 

December 31, 2020

 

Number of shares issued

 

 

1,307,755

 

 

 

1,812,197

 

 

 

-

 

Average price per share

 

$

69.74

 

 

$

66.18

 

 

$

-

 

Proceeds, (net of issuance costs of $(0.9), $(1.1) and $0 respectively)

 

$

90.3

 

 

$

118.8

 

 

$

-

 

 

February 2020 Equity Issuance

 

On February 27, 2020, we issued 1.2 million shares of common stock to a single investor through an underwritten registered transaction at a price of $81.77 per share for proceeds of $99 million, net of $1.0 million of issuance costs. The shares of common stock were offered pursuant to our shelf registration statement filed with the SEC.

 

Shareholder Dividend Reinvestment and Stock Purchase Plan

 

We have a DRSPP under which shareholders may purchase additional shares of common stock through dividend reinvestment and/or optional cash payments at 100% of the recent average market price. We have the option of issuing new shares or purchasing the shares on the open market. We issued new shares until March 1, 2018, after which we began purchasing shares on the open market. At December 31, 2022, there were 74,198 shares of unissued stock available for future offering under the DRSPP.

 

Preferred Stock

 

Our articles of incorporation authorize the issuance of 25 million shares of preferred stock of which we had no shares of preferred stock outstanding as of December 31, 2022 and 2021.