Regulatory Matters

9 Months Ended

Sep. 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 September 30, 2022 and December 31, 2021 and the period we expect to recover or refund such amounts:


	Period of	September 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	$	110,183	$	7,791	$	114,961
Alternative Revenue Program Riders2	Up to 2 years	7,528		1,988		11,889		5,564
Asset Retirement Obligations1	Asset lives	—		1,323		—		742

ISO Cost Recovery Trackers1	Up to 2 years	660		740		—		1,342
Unrecovered Project Costs1	Up to 5 years	320		1,063		2,136		1,455
Deferred Rate Case Expenses1	Various	412		848		607		1,131
Debt Reacquisition Premiums1	10 years	25		222		100		240
Fuel Clause Adjustments1	Up to 1 year	13,185		—		4,819		—
Other1	Various	—		226		—		73
Total Regulatory Assets		$	29,921	$	116,593	$	27,342	$	125,508
Regulatory Liabilities
Deferred Income Taxes	Asset lives	$	—	$	128,397	$	—	$	129,437
Plant Removal Obligations	Asset lives	8,526		106,008		8,306		101,595
Fuel Clause Adjustments	Up to 1 year	—		—		1,554		—
Alternative Revenue Program Riders	Various	4,178		6,048		5,772		3,336
Pension and Other Postretirement Benefit Plans	Up to 1 year	2,603		—		2,603		—


Derivative Instruments	Various	5,532		—		6,214		—
Other	Various	275		92		395		62
Total Regulatory Liabilities		$	21,114	$	240,545	$	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, Otter Tail Power Company (OTP) filed an initial request with the Minnesota Public Utilities Commission (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 interim rate refunds of $15.3 million were applied to customer accounts in the third quarter of 2022.