XML 24 R11.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Regulatory Matters | 9 Months Ended
--- | ---
Sep. 30, 2022
Regulated Operations [Abstract] |
Regulatory Matters [Text Block] | REGULATORY MATTERS Regulatory matters are summarized in Note 4. Regulatory Matters to the Consolidated Financial Statements in our 2021 Form 10-K, with additional disclosure provided in the following paragraphs. Electric Rates. Entities within our Regulated Operations segment file for periodic rate revisions with the MPUC, PSCW or FERC. As authorized by the MPUC, Minnesota Power also recognizes revenue under cost recovery riders for transmission, renewable, and environmental investments and expenditures. Revenue from cost recovery riders was $19.5 million for the nine months ended September 30, 2022 ($29.2 million for the nine months ended September 30, 2021). 2022 Minnesota General Rate Case. On November 1, 2021, Minnesota Power filed a retail rate increase request with the MPUC seeking an average increase of approximately 18 percent for retail customers. The rate filing seeks a return on equity of 10.25 percent and a 53.81 percent equity ratio. On an annualized basis, the requested final rate increase would generate approximately $108 million in additional revenue. In orders dated December 30, 2021, the MPUC accepted the filing as complete and authorized an annual interim rate increase beginning January 1, 2022, with approximately $80 million expected to be collected in cash and approximately $8 million of interim rates for residential customers deferred with a final determination on recovery at the end of the rate case. On September 1, 2022, the administrative law judge (ALJ) issued a report containing recommendations that if adopted in whole by the MPUC would result in an increase in rates of approximately $76 million on an annualized basis. On September 23, 2022, Minnesota Power filed exceptions totaling approximately $30 million to the ALJ’s report contesting certain recommendations. A final decision by the MPUC is expected in early 2023. Management has evaluated the need for a reserve for interim rate refunds and concluded that a reserve is not necessary as of September 30, 2022. We cannot predict the level of final rates that may be authorized by the MPUC. 2022 Wisconsin General Rate Case. On June 1, 2022, SWL&P refiled its rate increase request with the PSCW seeking an average increase of 3.6 percent for retail customers. The filing seeks an overall return on equity of 10.4 percent and a 55 percent equity ratio. On an annualized basis, the requested final rate increase would generate approximately $4.3 million in additional revenue. Renewable Cost Recovery Rider. Minnesota Power has an approved cost recovery rider in place to charge retail customers on a current basis for the costs of certain renewable investments and expenditures, including a return on the capital invested. Current customer billing rates for the renewable cost recovery rider were approved by the MPUC in a 2020 order. On February 2, 2022, Minnesota Power submitted its 2022 renewable factor filing, which included a request to recover a regulatory asset of $3.8 million related to the recognition of production tax credits due to a metering error at Bison. If the filing is approved, Minnesota Power would be authorized to include updated billing rates on customer bills; any portion disallowed would be charged to earnings. Fuel Adjustment Clause. In 2020, Minnesota Power filed its fuel adjustment forecast for 2021, which was approved by the MPUC in a December 2020 order, subject to the annual prudence review and true-up filing in 2022. During 2021, Minnesota Power incurred higher fuel and purchased power costs than those forecasted in its May 2020 filing, which resulted in the recognition of an approximately $56 million regulatory asset through December 31, 2021. Minnesota Power submitted its annual true-up filing and a significant events filing in March 2022 requesting recovery of these under-collected fuel adjustment clause recoveries. No parties objected to the request; recovery of the regulatory asset began in April 2022 and will continue through mid-2023. The MPUC approved recovery of the regulatory asset in an order dated July 5, 2022. Minnesota Power has also incurred higher fuel and purchased power costs in 2022 than those factored in its fuel adjustment forecast filed in May 2021 for 2022, which resulted in the recognition of an approximately $23 million regulatory asset as of September 30, 2022. Minnesota Power filed a significant events filing in June 2022 requesting recovery of the under-collected fuel adjustment clause recoveries that are expected for 2022 from August 2022 through December 2022. No parties objected to the request and higher rates were implemented in August 2022 to recover the expected under-collection of fuel adjustment clause recoveries, subject to final approval by the MPUC which is expected in 2023. Conservation Improvement Program. On April 1, 2022, Minnesota Power submitted its 2021 consolidated filing detailing Minnesota Power’s CIP program results and requesting a CIP financial incentive of $1.9 million based upon MPUC procedures, which was recognized in the second quarter of 2022 upon approval by the MPUC at a hearing on June 30, 2022. In 2021, a CIP financial incentive of $2.4 million was recognized in the third quarter upon approval by the MPUC of Minnesota Power’s 2020 CIP consolidated filing. CIP financial incentives are recognized in the period in which the MPUC approves the filing. NOTE 2. REGULATORY MATTERS (Continued) 2021 Integrated Resource Plan. On February 1, 2021, Minnesota Power filed its latest IRP with the MPUC, which outlines its clean-energy transition plans through 2035. These plans include expanding its renewable energy supply, achieving coal-free operations at its facilities by 2035, and investing in a resilient and flexible transmission and distribution grid. As part of these plans, Minnesota Power anticipates adding approximately 400 MW of new wind and solar energy resources, retiring Boswell Unit 3 by 2030 and transforming Boswell Unit 4 to be coal-free by 2035. Minnesota Power’s plans recognize that advances in technology will play a significant role in completing its transition to carbon-free energy supply, reliably and affordably. A final decision on the IRP is expected in the fourth quarter of 2022. Regulatory Assets and Liabilities. Our regulated utility operations are subject to accounting guidance for the effect of certain types of regulation. Regulatory assets represent incurred costs that have been deferred as they are probable for recovery in customer rates. Regulatory liabilities represent obligations to make refunds to customers and amounts collected in rates for which the related costs have not yet been incurred. The Company assesses quarterly whether regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. The recovery, refund or credit to rates for these regulatory assets and liabilities will occur over the periods either specified by the applicable regulatory authority or over the corresponding period related to the asset or liability.
Regulatory Assets and Liabilities | September 30, 2022 |  | December 31, 2021 |  |
Millions |  |  |  |  |
Current Regulatory Assets (a) |  |  |  |  |
Fuel Adjustment Clause | $38.7 |  |  | — |  |  |
Total Current Regulatory Assets | 38.7 |  |  | — |  |  |
Non-Current Regulatory Assets |  |  |  |  |
Defined Benefit Pension and Other Postretirement Benefit Plans | 217.0 |  |  | $226.4 |  |  |
Income Taxes | 99.3 |  |  | 104.7 |  |  |
Cost Recovery Riders | 39.6 |  |  | 63.2 |  |  |
Asset Retirement Obligations | 34.9 |  |  | 33.1 |  |  |
Fuel Adjustment Clause | 22.9 |  |  | 56.4 |  |  |
Manufactured Gas Plant | 17.7 |  |  | 17.0 |  |  |
PPACA Income Tax Deferral | 4.2 |  |  | 4.3 |  |  |
Residential Customer Interim Rate Adjustment | 5.9 |  |  | — |  |  |
Other | 5.6 |  |  | 6.7 |  |  |
Total Non-Current Regulatory Assets | 447.1 |  |  | 511.8 |  |  |
Total Regulatory Assets | $485.8 |  |  | $511.8 |  |  |
Current Regulatory Liabilities (b) |  |  |  |  |
Fuel Adjustment Clause | — |  |  | $5.0 |  |  |
Transmission Formula Rates Refund | $5.1 |  |  | 3.1 |  |  |
Other | 0.1 |  |  | 0.5 |  |  |
Total Current Regulatory Liabilities | 5.2 |  |  | 8.6 |  |  |
Non-Current Regulatory Liabilities |  |  |  |  |
Income Taxes | 338.0 |  |  | 353.4 |  |  |
Wholesale and Retail Contra AFUDC | 81.5 |  |  | 83.7 |  |  |
Plant Removal Obligations | 58.8 |  |  | 52.6 |  |  |
North Dakota Investment Tax Credits | 13.4 |  |  | 12.2 |  |  |
Defined Benefit Pension and Other Postretirement Benefit Plans | 23.5 |  |  | 28.1 |  |  |
Boswell Units 1 and 2 Net Plant and Equipment | 5.1 |  |  | 0.4 |  |  |
Regulated Land Sales | 2.2 |  |  | — |  |  |
Other | 4.9 |  |  | 5.7 |  |  |
Total Non-Current Regulatory Liabilities | 527.4 |  |  | 536.1 |  |  |
Total Regulatory Liabilities | $532.6 |  |  | $544.7 |  |  |
(a)Current regulatory assets are presented within Prepayments and Other on the Consolidated Balance Sheet. (b)Current regulatory liabilities are presented within Other Current Liabilities on the Consolidated Balance Sheet.

X
- Definition The entire disclosure for public utilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 980 -URI https://asc.fasb.org/topic&trid=2156578 + Details
Name: | us-gaap_PublicUtilitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_RegulatedOperationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration