Regulatory Matters

12 Months Ended

Dec. 31, 2023

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets and Liabilities

The following presents our current and long-term regulatory assets and liabilities as of December 31, 2023 and 2022 and the period we expect to recover or refund such amounts:


	Period of	2023				2022
(in thousands)	Recovery/Refund	Current		Long-Term		Current		Long-Term

Regulatory Assets
Pension and Other Postretirement Benefit Plans1	See below	$	154	$	86,134	$	—	$	88,354
Alternative Revenue Program Riders2	Up to 2 years	3,719		158		5,679		2,508
Asset Retirement Obligations1	Asset lives	—		87		—		1,467
Deferred Income Taxes	Asset lives	—		6,940		—		—
Fuel Clause Adjustments1	Up to 1 year	7,294		—		10,893		—
Derivative Instruments1	Up to 1 year	4,210		—		7,130		—
Other1	Various	750		2,396		1,297		2,326
Total Regulatory Assets		16,127		95,715		24,999		94,655
Regulatory Liabilities
Deferred Income Taxes	Asset lives	—		136,022		—		131,480
Plant Removal Obligations	Asset lives	—		117,030		8,509		105,733
Fuel Clause Adjustments	Up to 1 year	11,350		—		365		—
Alternative Revenue Program Riders	Up to 1 year	6,885		—		2,504		—
North Dakota PTC Refunds	Asset lives	—		12,011		—		7,136
Pension and Other Postretirement Benefit Plans	See below	6,138		11,307		5,589		—



Other	Various	1,035		177		333		148
Total Regulatory Liabilities		$	25,408	$	276,547	$	17,300	$	244,497

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

Pension and Other Postretirement Benefit Plans represent benefit costs and actuarial losses and gains subject to recovery or refund through rates as they are expensed or amortized. These unrecognized benefit costs and actuarial losses and gains are eligible for treatment as regulatory assets or liabilities based on their probable inclusion in future electric rates.

Alternative Revenue Program Riders regulatory assets and liabilities are revenues not yet collected from customers or amounts subject to refund, respectively, primarily due to investments in qualifying transmission, conservation, renewable resource, environmental and other generation assets, and the impact of decoupling.

Asset Retirement Obligations represent the difference in timing of recognition of expense arising from these obligations and the amount recovered from customers.

Fuel Clause Adjustments represent the under- or over-collection of fuel costs relative to the estimated cost of fuel included in customer rates, which will be collected from or returned to customers.

Derivative Instruments represent unrealized gains and losses recognized on derivative instruments. On final settlement of such instruments, any realized gains or losses are paid to or recovered from customers.

Deferred Income Taxes represent the revaluation of accumulated deferred income taxes arising from the change in the federal income tax rate in 2017. This amount is being refunded to customers over the estimated lives of the property assets from which the deferred income taxes originated.

Plant Removal Obligations represent amounts collected from customers to be used to cover actual removal costs as incurred.

North Dakota PTC Refunds represent PTCs earned from the Merricourt Wind Energy Center. These amounts are being allocated to customers over the life of the asset.

Other regulatory assets and liabilities include other amounts that we expect to recover from, or return to, customers in future periods, such as

the cost of abandoned projects, costs incurred in connection with recent rate cases, and other items.

North Dakota Rate Case

On November 2, 2023, OTP filed a request with the NDPSC for an increase in revenue recoverable under general rates in North Dakota. In its filing, OTP requested a net increase in annual revenue of $17.4 million, or 8.4%, based on an allowed rate of return on rate base of 7.85% and an allowed rate of return on equity of 10.6% on an equity ratio of 53.5% of total capital. Through this proceeding, OTP has proposed changes to the mechanism of cost and investment recovery, with recovery moving from riders into base rates. The filing also includes a proposal to implement a sales adjustment mechanism to address potential significant load additions or losses. The filing included an interim rate request of a net increase in annual revenue of $12.4 million, or 6.0%, which was approved by the NDPSC on December 13, 2023, and interim rates went into effect on January 1, 2024. These interim rate revenues, when collected, are subject to potential refund until the finalization of the rate case.