Regulatory Matters

6 Months Ended

Jun. 30, 2022

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets and Liabilities

The following presents our current and long-term regulatory assets and liabilities as of June 30, 2022 and December 31, 2021 and the period we expect to recover or refund such amounts:


	Period of	June 30, 2022				December 31, 2021
(in thousands)	Recovery/Refund	Current		Long-Term		Current		Long Term

Regulatory Assets
Pension and Other Postretirement Benefit Plans1	Various	$	7,791	$	112,011	$	7,791	$	114,961
Alternative Revenue Program Riders2	Up to 2 years	4,695		5,370		11,889		5,564
Asset Retirement Obligations1	Asset lives	—		1,238		—		742

ISO Cost Recovery Trackers1	Up to 2 years	440		726		—		1,342
Unrecovered Project Costs1	Up to 5 years	356		1,136		2,136		1,455
Deferred Rate Case Expenses1	Various	477		943		607		1,131
Debt Reacquisition Premiums1	Up to 11 years	35		228		100		240
Fuel Clause Adjustments1	Up to 1 year	6,797		—		4,819		—
Other1	Various	84		302		—		73
Total Regulatory Assets		$	20,675	$	121,954	$	27,342	$	125,508
Regulatory Liabilities
Deferred Income Taxes	Asset lives	$	—	$	128,836	$	—	$	129,437
Plant Removal Obligations	Asset lives	8,544		101,458		8,306		101,595
Fuel Clause Adjustments	Up to 1 year	1,554		—		1,554		—
Alternative Revenue Program Riders	Various	3,371		5,104		5,772		3,336
Pension and Other Postretirement Benefit Plans	Up to 1 year	2,603		—		2,603		—


Derivative Instruments	Various	3,120		—		6,214		—
Other	Various	266		58		395		62
Total Regulatory Liabilities		$	19,458	$	235,456	$	24,844	$	234,430

1Costs subject to recovery without a rate of return.
2Amount eligible for recovery includes an incentive or rate of return.

Minnesota Rate Case

On November 2, 2020, OTP filed an initial request with the MPUC for an increase in revenue recoverable through base rates in Minnesota, and on December 3, 2020, the MPUC approved an interim annual rate increase of $6.9 million, or 3.2%, effective January 1, 2021.

On February 1, 2022, the MPUC issued its written order on final rates. The key provisions of the order included a revenue requirement of $209.0 million, based on a return on rate base of 7.18% and an allowed return on equity of 9.48% on an equity ratio of 52.5%. The order also authorized recovery of our remaining Hoot Lake Plant net asset over a five-year period and approved the requested decoupling mechanism for most residential and commercial customer rate groups with a cap of 4% of annual base revenues.

On May 12, 2022, OTP's final rate case compliance filing was approved by the MPUC. The filing included final revenue calculations, rate design and resulting tariff revisions, along with a determination of the interim rate refund, which resulted in an increase in revenues during the second quarter of 2022 of $4.1 million. Final rates took effect on July 1, 2022, and we anticipate interim rate refunds will be applied to customer bills in the third quarter of 2022.