The Company funds a portion of its operations through the issuance of long-term debt, and short-term borrowings under its revolving Credit Facility. The Company’s subsidiaries conduct a portion of their operations in leased facilities and lease some of their machinery, vehicles and office equipment.

Long-Term Debt Structure and Covenants - The debt agreements for Unitil and its utility subsidiaries, Unitil Energy, Fitchburg, Northern Utilities, and Granite State, contain various covenants and restrictions. These agreements do not contain any covenants or restrictions pertaining to the maintenance of financial ratios or the issuance of short-term debt. These agreements do contain covenants relating to, among other things, the issuance of additional long-term debt, cross-default provisions and business combinations.

The long-term debt of Unitil is issued under Unsecured Promissory Notes with negative pledge provisions. The long-term debt’s negative pledge provisions contain restrictions which, among other things, limit the incursion of additional long-term debt. Accordingly, in order for Unitil to issue new long-term debt, the covenants of the existing long-term agreement(s) must be satisfied, including that Unitil has total funded indebtedness less than 70% of total capitalization, and earnings available for interest equal to at least two times the interest charges for funded indebtedness. Each future senior long-term debt issuance of Unitil will rank pari passu with all other senior unsecured long-term debt issuances. The Unitil long-term debt agreement requires that if Unitil defaults on any other future long-term debt agreement(s), it would constitute a default under Unitil’s present long-term debt agreement. Furthermore, the default provisions are triggered by the defaults of certain Unitil subsidiaries or certain other actions against Unitil subsidiaries.

Substantially all of the property of Unitil Energy is subject to liens of indenture under which First Mortgage Bonds (FMB) have been issued. In order to issue new FMB, the customary covenants of the existing Unitil Energy Indenture Agreement must be met, including that Unitil Energy have sufficient available net bondable plant to issue the securities and earnings available for interest charges equal to at least two times the annual interest requirement. The Unitil Energy agreements further require that if Unitil Energy defaults on any Unitil Energy FMB, it would constitute a default for all Unitil Energy FMB. The Unitil Energy default provisions are not triggered by the actions or defaults of Unitil or its other subsidiaries.

All of the long-term debt of Fitchburg, Northern Utilities and Granite State are issued under Unsecured Promissory Notes with negative pledge provisions. Each issue of long-term debt ranks pari passu with its other senior unsecured long-term debt within that subsidiary. The long-term debt’s negative pledge provisions contain restrictions which, among other things, limit the incursion of additional long-term debt. Accordingly, in order for Fitchburg, Northern Utilities or Granite State to issue new long-term debt, the covenants of the existing long-term agreements of that subsidiary must be satisfied, including that the subsidiary have total funded indebtedness less than 65% of total capitalization. Additionally, to issue new long-term debt, Fitchburg must maintain earnings available for interest equal to at least two times the interest charges for funded indebtedness. As with the Unitil Energy agreements, the Fitchburg, Northern Utilities and Granite State long-term debt agreements each require that if that subsidiary defaults on any of its own long-term debt agreements, it would constitute a default under all of that subsidiary’s long-term debt agreements. None of the Fitchburg, Northern Utilities and Granite State default provisions are triggered by the actions or defaults of Unitil or any of its other subsidiaries.

The Unitil, Unitil Energy, Fitchburg, Northern Utilities and Granite State long-term debt instruments and agreements contain covenants restricting the ability of each company to incur liens and to enter into sale and leaseback transactions, and restricting the ability of each company to consolidate with, to merge with or into, or to sell or otherwise dispose of all or substantially all of its assets.

Unitil Energy, Fitchburg, Northern Utilities and Granite State pay common dividends to their sole common shareholder, Unitil Corporation and these common dividends are the primary source of cash for the payment of dividends to Unitil’s common shareholders. The long-term debt issued by the Company and its subsidiaries contains certain covenants that determine the amount that the Company and each of these subsidiary companies has available to pay for dividends. As of December 31, 2023, in accordance with the covenants, these subsidiary companies had a combined amount of $ 409.9 million available for the payment of dividends and Unitil Corporation had $ 204.3 million available for the payment of dividends. As of December 31, 2023, the Company’s balance in Retained Earnings was $151.5 million. Therefore, there were no restrictions on the Company’s Retained Earnings at December 31, 2023 for the payment of dividends.

Issuance of Long-Term Debt - On July 6, 2023, Fitchburg issued $12.0 million of Notes due July 2, 2033 at 5.70% and $13.0 million of Notes due July 2, 2053 at 5.96%. Fitchburg used the net proceeds from these offerings to refinance existing debt and for general corporate purposes. Approximately $0.2 million of costs associated with this issuance were recorded as a reduction of Long-Term Debt for presentation purposes on the Consolidated Balance Sheet in the third quarter of 2023.

Debt Repayment -The total aggregate amount of debt repayments relating to bond issues and normal scheduled long-term debt repayments amounted to $6.9 million, $10.4 million and $25.8 million in 2023, 2022, and 2021, respectively.

The aggregate amount of bond repayment requirements and normal scheduled long-term debt repayments for each of the five years following 2023 is: 2024 – $4.9 million; 2025 – $4.9 million; 2026 – $37.9 million; 2027 – $55.7 million; 2028 – $10.7 million and thereafter $403.1 million.

Fair Value of Long-Term Debt - Currently, the Company believes that there is no active market in the Company’s debt securities, which have all been sold through private placements. If there were an active market for the Company’s debt securities, the fair value of the Company’s long-term debt would be estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities. The fair value of the Company’s long-term debt is estimated using Level 2 inputs (valuations based on quoted prices available in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are directly observable, and inputs derived principally from market data). In estimating the fair value of the Company’s long-term debt, the assumed market yield reflects the Moody’s Baa Utility Bond Average Yield. Costs, including prepayment costs, associated with the early settlement of long-term debt are not taken into consideration in determining fair value.

Details on long-term debt at December 31, 2023 and 2022 are shown below:


	December 31,
Long-Term Debt (millions)	2023		2022
Unitil Corporation:
3.70% Senior Notes, Due August 1, 2026	$	30.0	$	30.0
3.43% Senior Notes, Due December 18, 2029		30.0		30.0
Unitil Energy First Mortgage Bonds:
6.96% Senior Secured Notes, Due September 1, 2028		10.0		12.0
8.00% Senior Secured Notes, Due May 1, 2031		12.0		13.5
6.32% Senior Secured Notes, Due September 15, 2036		15.0		15.0
3.58% Senior Secured Notes, Due September 15, 2040		27.5		27.5
4.18% Senior Secured Notes, Due November 30, 2048		30.0		30.0
Fitchburg:
6.79% Senior Notes, Due October 15, 2025		—		2.0
3.52% Senior Notes, Due November 1, 2027		10.0		10.0
7.37% Senior Notes, Due January 15, 2029		7.2		8.4
5.90% Senior Notes, Due December 15, 2030		15.0		15.0
7.98% Senior Notes, Due June 1, 2031		14.0		14.0
5.70% Senior Notes, Due July 2, 2033		12.0		—
3.78% Senior Notes, Due September 15, 2040		27.5		27.5
4.32% Senior Notes, Due November 1, 2047		15.0		15.0
5.96% Senior Notes, Due July 2, 2053		13.0		—
Northern Utilities:
3.52% Senior Notes, Due November 1, 2027		20.0		20.0
7.72% Senior Notes, Due December 3, 2038		50.0		50.0
3.78% Senior Notes, Due September 15, 2040		40.0		40.0
4.42% Senior Notes, Due October 15, 2044		50.0		50.0
4.32% Senior Notes, Due November 1, 2047		30.0		30.0
4.04% Senior Notes, Due September 12, 2049		40.0		40.0
Granite State:
3.72% Senior Notes, Due November 1, 2027		15.0		15.0
Unitil Realty Corp.:
2.64% Senior Secured Notes, Due December 18, 2030		4.0		4.2
Total Long-Term Debt		517.2		499.1
Less: Unamortized Debt Issuance Costs		3.2		3.3
Total Long-Term Debt, net of Unamortized Debt Issuance Costs		514.0		495.8
Less: Current Portion(1)		4.9		6.7
Total Long-Term Debt, Less Current Portion	$	509.1	$	489.1

Interest Expense, Net—Interest expense is presented in the financial statements net of interest income. Interest expense is mainly comprised of interest on long-term debt and short-term borrowings. In addition, certain reconciling rate mechanisms

used by the Company’s distribution operating utilities give rise to regulatory assets and regulatory liabilities on which interest is calculated.

Unitil’s utility subsidiaries operate a number of reconciling rate mechanisms to recover specifically identified costs on a pass-through basis. These reconciling rate mechanisms track costs and revenue on a monthly basis. In any given month, this monthly tracking and reconciling process will produce either an under-collected or an over-collected balance of costs. In accordance with the distribution utilities’ rate tariffs, interest is accrued on these balances and will produce either interest income or interest expense.

Consistent with regulatory precedent, interest income is recorded on an under-collection of costs, which creates a regulatory asset to be recovered in future periods when rates are reset. Interest expense is recorded on an over-collection of costs, which creates a regulatory liability to be refunded in future periods when rates are reset. A summary of interest expense and interest income is provided in the following table:


Interest Expense, Net (millions)	2023			2022			2021
Interest Expense
Long-Term Debt	$	24.7		$	24.7		$	26.0
Short-Term Debt		9.2			3.0			0.8
Regulatory Liabilities & Other		1.0			0.6			0.4
Subtotal Interest Expense		34.9			28.3			27.2
Interest Income
Regulatory Assets		(3.3	)		(1.0	)		(0.5	)
AFUDC(1) and Other		(2.9	)		(1.8	)		(1.1	)
Subtotal Interest Income		(6.2	)		(2.8	)		(1.6	)
Total Interest Expense, Net	$	28.7		$	25.5		$	25.6

(1)

AFUDC—Allowance for Funds Used During Construction

On September 29, 2022, the Company entered into a Third Amended and Restated Credit Agreement with a syndicate of lenders (collectively, the “Credit Facility”), which amended and restated in its entirety the prior credit facility. Unitil may borrow under the Credit Facility until September 29, 2027, subject to two one-year extensions under certain circumstances. The Credit Facility terminates and all amounts outstanding thereunder are due and payable on September 29, 2027, subject to the potential extension discussed in the prior sentence.

The Credit Facility has a borrowing limit of $200 million, which includes a $25 million sublimit for the issuance of standby letters of credit. Unitil may increase the borrowing limit under the Credit Facility by up to $75 million under certain circumstances. The Credit Facility generally provides Unitil with the ability to elect that borrowings under the Credit Facility bear interest under several options, including a daily fluctuating rate equal to (a) the forward-looking secured overnight financing rate (as administered by the Federal Reserve Bank of New York) term rate with a term equivalent to one month beginning on that date, plus (b) 0.1000%, plus (c) a margin of 1.125% to 1.375% (based on Unitil’s credit rating).

The Company utilizes the Credit Facility for cash management purposes related to its short-term operating activities. Total gross borrowings were $ 327.2 million and $295.9 million for the years ended December 31, 2023 and December 31, 2022, respectively. Total gross repayments were $281.2 million and $ 244.0 million for the years ended December 31, 2023 and December 31, 2022, respectively. The following table details the borrowing limits, amounts outstanding and amounts available under the revolving Credit Facility as of December 31, 2023 and December 31, 2022:

The Credit Facility contains customary terms and conditions for credit facilities of this type, including affirmative and negative covenants. There are restrictions on, among other things, Unitil’s and its subsidiaries’ ability to permit liens or incur

indebtedness, and restrictions on Unitil’s ability to merge or consolidate with another entity or change its line of business. The affirmative and negative covenants under the Credit Facility shall apply to Unitil until the Credit Facility terminates and all amounts borrowed under the Credit Facility are paid in full (or with respect to letters of credit, they are cash collateralized). The only financial covenant in the Credit Facility provides that Unitil’s Funded Debt to Capitalization (as each term is defined in the Credit Facility) cannot exceed 65%, tested on a quarterly basis. At December 31, 2023 and December 31, 2022, the Company was in compliance with the covenants contained in the Credit Facility in effect on that date. The Company believes it has sufficient sources of working capital to fund its operations.

The weighted average interest rates on all short-term borrowings were 6.4%, 3.3%, and 1.2 % during 2023, 2022, and 2021, respectively.

Unitil Corporation and its utility subsidiaries, Fitchburg, Unitil Energy, Northern Utilities, and Granite State are currently rated “BBB+” by Standard & Poor’s Ratings Services. Unitil Corporation and Granite State are currently rated “Baa2”, and Fitchburg, Unitil Energy and Northern Utilities are currently rated “Baa1” by Moody’s Investors Services.

Northern Utilities enters into asset management agreements under which Northern Utilities releases certain natural gas pipeline and storage assets, resells the natural gas storage inventory to an asset manager and subsequently repurchases the inventory over the course of the natural gas heating season at the same price at which it sold the natural gas inventory to the asset manager. There was $10.9 million of natural gas storage inventory and corresponding obligations at December 31, 2023 related to these asset management agreements. The amount of natural gas inventory released in December 2023, which was payable in January 2024, was $2.2 million and was recorded in Accounts Payable at December 31, 2023.

The following table lists the Company’s contractual obligations for long-term debt as of December 31, 2023.


			Payments Due by Period
Long-Term Debt Contractual Obligations (millions) as of December 31, 2022	Total		2024		2025		2026		2027		2028		2029 & Beyond
Long-Term Debt	$	517.2	$	4.9	$	4.9	$	37.9	$	55.7	$	10.7	$	403.1
Interest on Long-Term Debt		342.1		24.7		24.4		24.0		22.3		19.9		226.8
Total	$	859.3	$	29.6	$	29.3	$	61.9	$	78.0	$	30.6	$	629.9

Unitil’s subsidiaries lease some of their vehicles, machinery and office equipment under both capital and operating lease arrangements.

Total rental expense under operating leases charged to operations for the years ended December 31, 2023, 2022 and 2021 amounted to $2.1 million, $1.8 million and $1.9 million respectively. The balance sheet classification of the Company’s lease obligations was as follows:


	December 31,
Lease Obligations (millions)	2023		2022
Operating Lease Obligations:
Operating Lease Obligations (current portion)	$	1.9	$	1.5
Operating Lease Obligations (long-term portion)		3.7		2.8
Total Operating Lease Obligations		5.6		4.3
Capital Lease Obligations:
Other Current Liabilities (current portion)		0.1		0.1
Other Noncurrent Liabilities (long-term portion)		0.4		0.1
Total Capital Lease Obligations		0.5		0.2
Total Lease Obligations	$	6.1	$	4.5

Cash paid for amounts included in the measurement of operating lease obligations for the twelve months ended December 31, 2023 and 2022 was $2.1 million and $1.8 million, respectively and was included in Cash Provided by Operating Activities on the Consolidated Statements of Cash Flows.

Assets under capital leases amounted to approximately $0.7 million and $0.6 million as of December 31, 2023 and 2022, respectively, less accumulated amortization of $0.2 million and $0.4 million, respectively and are included in Net Utility Plant on the Company’s Consolidated Balance Sheets.

The following table is a schedule of future operating lease payment obligations and future minimum lease payments under capital leases as of December 31, 2023. The payments for operating leases consist of $1.9 million of current operating lease obligations and $3.7 million of noncurrent operating lease obligations on the Company’s Consolidated Balance Sheets as of December 31, 2023. The payments for capital leases consist of $0.1 million of current Capital Lease Obligations, which are included in Other Current Liabilities, and $0.4 million of noncurrent Capital Lease Obligations, which are included in Other Noncurrent Liabilities, on the Company’s Consolidated Balance Sheets as of December 31, 2023.


Lease Payments ($000’s) Year Ending December 31,	Operating Leases		Capital Leases
2024	$	2,063	$	152
2025		1,502		120
2026		1,171		107
2027		898		104
2028		336		19
2029-2033		84		—
Total Payments		6,054		502
Less: Interest		493		26
Amount of Lease Obligations Recorded on Consolidated Balance Sheets	$	5,561	$	476

Operating lease obligations are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used the interest rate stated in each lease agreement. As of December 31, 2023, the weighted average remaining lease term is 3.7 years and the weighted average operating discount rate used to determine the operating lease obligations was 4.4%. As of December 31, 2022, the weighted average remaining lease term was 3.4 years and the weighted average operating discount rate used to determine the operating lease obligations was 3.9%.

The Company provides limited guarantees on certain energy and natural gas storage management contracts entered into by the distribution utilities. The Company’s policy is to limit the duration of these guarantees. As of December 31, 2023 there were no guarantees outstanding.