Regulatory Matters

9 Months Ended

Sep. 30, 2025

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, 2025 and December 31, 2024 and the period we expect to recover or refund such amounts:


	Period of	September 30, 2025				December 31, 2024
(in thousands)	Recovery/Refund	Current		Long-Term		Current		Long-Term

Regulatory Assets
Pension and Other Postretirement Benefit Plans1	Various	$	—	$	87,182	$	—	$	88,161
Alternative Revenue Program Riders2	Up to 2 years	4,610		146		4,257		195
Deferred Income Taxes1	Asset lives	—		9,070		—		8,944
Fuel Clause Adjustments1	Up to 1 year	3,229		—		2,218		—
Derivative Instruments1	Up to 2 years	795		512		1,989		—
Other1	Various	799		1,026		1,498		1,373
Total Regulatory Assets		$	9,433	$	97,936	$	9,962	$	98,673
Regulatory Liabilities
Deferred Income Taxes	Asset lives	$	—	$	124,832	$	—	$	130,387
Plant Removal Obligations	Asset lives	—		132,438		—		126,263
Fuel Clause Adjustments	Up to 1 year	5,197		—		11,432		—
Alternative Revenue Program Riders	Up to 1 year	10,888		—		14,255		—
North Dakota PTC Refunds	Asset lives	—		26,348		—		20,099
Pension and Other Postretirement Benefit Plans	Various	2,547		10,350		2,547		10,758



Other	Various	3,121		2,248		1,073		1,421
Total Regulatory Liabilities		$	21,753	$	296,216	$	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. If the SDPUC does not issue its decision on OTP's request 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.

Minnesota Rate Case

On October 31, 2025, OTP filed a request with the Minnesota Public Utilities Commission (MPUC) for an increase in revenue recoverable under general rates in Minnesota. In its filing, OTP requested a net increase in annual revenue of $44.8 million, or 17.7%, based on an allowed rate of return on rate base of 7.92% and an allowed ROE of 10.65% on an equity ratio of 53.5% of total capital. The request includes, among other items, accelerated recovery of the remaining investment of the jurisdictionally allocated share of Coyote Station. The accelerated recovery request is equal to $4.3 million annually. The request is driven by the MPUC’s order in OTP’s most recent Integrated Resource Plan to discontinue serving Minnesota customers with capacity and energy from Coyote Station by December 2031. If this part of the request is granted, we anticipate the amounts collected would be deferred and recognized over the remaining estimated useful life of the plant, which extends until 2041.

The filing also included an interim rate request for a net increase in annual revenue of $31.8 million, or 12.6%. We anticipate interim rates will commence on January 1, 2026, and will be subject to potential refund until the finalization of the rate case.