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Regulatory Matters

6 Months Ended

Jun. 30, 2025

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Matters

Regulatory Matters

Regulatory Assets and Liabilities

The following presents our current and long-term regulatory assets and liabilities as of June 30, 2025 and December 31, 2024 and the period we expect to recover or refund such amounts:

			Period of						June 30, 2025												December 31, 2024
(in thousands)			Recovery/Refund						Current						Long-Term						Current						Long-Term
Regulatory Assets
Pension and Other Postretirement Benefit Plans1			Various						$	—					$	87,508					$	—					$	88,161
Alternative Revenue Program Riders2			Up to 2 years						4,982						98						4,257						195
Deferred Income Taxes1			Asset lives						—						9,299						—						8,944
Fuel Clause Adjustments1			Up to 1 year						2,036						—						2,218						—
Derivative Instruments1			Up to 2 years						902						822						1,989						—
Other1			Various						1,026						1,283						1,498						1,373
Total Regulatory Assets									$	8,946					$	99,010					$	9,962					$	98,673
Regulatory Liabilities
Deferred Income Taxes			Asset lives						$	—					$	126,602					$	—					$	130,387
Plant Removal Obligations			Asset lives						—						126,522						—						126,263
Fuel Clause Adjustments			Up to 1 year						4,971						—						11,432						—
Alternative Revenue Program Riders			Up to 1 year						14,724						—						14,255						—
North Dakota PTC Refunds			Asset lives						—						24,766						—						20,099
Pension and Other Postretirement Benefit Plans			Various						2,547						9,977						2,547						10,758
Other			Various						2,338						1,679						1,073						1,421
Total Regulatory Liabilities									$	24,580					$	289,546					$	29,307					$	288,928
1Costs subject to recovery without a rate of return.
2Amounts eligible for recovery includes an incentive or rate of return.

South Dakota Rate Case

On June 4, 2025, Otter Tail Power (OTP) filed a request with the South Dakota Public Utilities Commission (SDPUC) for an increase in revenue recoverable under general rates in South Dakota. In its filing, OTP requested a net increase in annual revenue of $5.7 million, or 12.50%, based on an allowed rate of return on rate base of 8.29% and an allowed rate of return on equity (ROE) of 10.80% on an equity ratio of 53.54% of total capital. Through this proceeding, OTP has proposed changes to the mechanism of

certain cost and investment recovery, with recovery moving from riders into base rates. The SDPUC will establish a schedule for making its decision on the company’s request. If the SDPUC does not issue its decision within 180 days, OTP can increase rates on an interim basis beginning December 1, 2025. These interim rate revenues, when collected, are subject to potential refund until the finalization of the rate case.

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The entire disclosure for detailed information about regulatory assets and liabilities, including current and noncurrent assets created when regulatory agencies permit the deferral of costs to the balance sheet that would otherwise be required to appear on the company's income statement and would be charged against current expenses or revenues, as well as current and noncurrent liabilities created when regulatory agencies permit.

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