Large Accelerated Filer | o | Accelerated Filer | o | |
x | (Do not check if a smaller reporting company) | |||
Smaller Reporting Company | ||||
Emerging Growth Company |
Securities registered pursuant to Section 12(b) of the Act: None |
Page | |||
Item 1. | |||
Item 2. | |||
Item 4. | |||
Item 1. | |||
Item 1A. | |||
Item 6. | |||
AFUDC | Allowance for Funds Used During Construction |
AOCI | Accumulated Other Comprehensive Income |
ASC | Accounting Standards Codification |
ASU | Accounting Standards Update issued by the FASB |
BHC | Black Hills Corporation, the Parent of Black Hills Power, Inc. |
Black Hills Energy | The name used to conduct the business of our utility company as well as our affiliates. |
BHSC | Black Hills Service Company, LLC, a direct, wholly-owned subsidiary of BHC (doing business as Black Hills Energy) |
CARES Act | Coronavirus Aid, Relief, and Economic Security Act, signed on March 27, 2020, which is a tax and spending package intended to provide additional economic relief and address the impact of the COVID-19 pandemic. |
Cooling degree day (CDD) | A cooling degree day is equivalent to each degree that the average of the high and low temperature for a day is above 65 degrees. The warmer the climate, the greater the number of cooling degree days. Cooling degree days are used in the utility industry to measure the relative warmth and to compare relative temperatures between one geographic area and another. Normal degree days are based on the National Weather Service data for selected locations. |
Corriedale | Wind project near Cheyenne, Wyoming, that will be a 52.5 MW wind farm jointly owned by South Dakota Electric and Wyoming Electric and will serve as the dedicated wind energy supply to the Renewable Ready program. |
COVID-19 | The official name for the 2019 novel coronavirus disease, which was announced on February 11, 2020 by the World Health Organization, that is causing a global pandemic. |
CPCN | Certificate of Public Convenience and Necessity |
FASB | Financial Accounting Standards Board |
FERC | United States Federal Energy Regulatory Commission |
Fitch | Fitch Ratings, Inc. |
GAAP | Accounting principles generally accepted in the United States of America |
Happy Jack | Happy Jack Wind Farms, LLC, a subsidiary of Duke Energy Generation Services |
Heating degree day (HDD) | A heating degree day is equivalent to each degree that the average of the high and the low temperatures for a day is below 65 degrees. The colder the climate, the greater the number of heating degree days. Heating degree days are used in the utility industry to measure the relative coldness and to compare relative temperatures between one geographic area and another. Normal degree days are based on the National Weather Service data for selected locations. |
Horizon Point | BHC Corporate headquarters building in Rapid City, South Dakota, which was completed in 2017. |
ICFR | Internal Controls over Financial Reporting |
LIBOR | London Interbank Offered Rate |
Moody’s | Moody’s Investors Service, Inc. |
MW | Megawatts |
MWh | Megawatt-hours |
Parent | Black Hills Corporation |
SDPUC | South Dakota Public Utilities Commission |
SEC | United States Securities and Exchange Commission |
Silver Sage | Silver Sage Windpower, LLC, a subsidiary of Duke Energy Generation Services |
South Dakota Electric | Black Hills Power, Inc., a direct, wholly-owned subsidiary of Black Hills Corporation, providing electric service to customers in Montana, South Dakota and Wyoming (doing business as Black Hills Energy). |
S&P | Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. |
TCJA | Tax Cuts and Jobs Act enacted December 22, 2017 |
WPSC | Wyoming Public Service Commission |
WRDC | Wyodak Resources Development Corp., a direct, wholly-owned subsidiary of Black Hills Non-Regulated Holdings (doing business as Black Hills Energy). |
Wygen III | 110 MW mine-mouth coal-fired power plant in which BHP owns a 52% interest, MDU owns a 25% interest and the City of Gillette owns the remaining 23% interest. BHP operates the plant. |
Wyodak Plant | Wyodak, a 362 MW mine-mouth coal-fired plant in Gillette, Wyoming, owned 80% by Pacificorp and 20% by South Dakota Electric. Our WRDC mine supplies all of the fuel for the plant. |
Wyoming Electric | Cheyenne Light, Fuel and Power Company, a direct, wholly-owned subsidiary of Black Hills Corporations, providing electric service to customers in the Cheyenne, Wyoming area (doing business as Black Hills Energy). |
Three Months Ended March 31, | ||||||
(unaudited) | 2020 | 2019 | ||||
(in thousands) | ||||||
Revenue | $ | $ | ||||
Operating expenses: | ||||||
Fuel and purchased power | ||||||
Operations and maintenance | ||||||
Depreciation and amortization | ||||||
Taxes - property | ||||||
Total operating expenses | ||||||
Operating income | ||||||
Other income (expense): | ||||||
Interest charges - | ||||||
Interest expense incurred net of amounts capitalized (including amortization of debt issuance costs, premiums and discounts) | ( | ) | ( | ) | ||
Interest income | ||||||
Other income (expense), net | ( | ) | ||||
Total other income (expense), net | ( | ) | ( | ) | ||
Income before income taxes | ||||||
Income tax (expense) | ( | ) | ( | ) | ||
Net income | ||||||
Other comprehensive income (loss), net of tax: | ||||||
Reclassification of net realized (gains) losses on settled/amortized interest rate swaps (net of tax of $(3) and $0, respectively) | ||||||
Reclassification adjustment of benefit plan liability - net gain (loss) (net of tax of $(7) and $(4), respectively) | ||||||
Other comprehensive income (loss), net of tax | ||||||
Comprehensive income | $ | $ |
As of | ||||||
(unaudited) | March 31, 2020 | December 31, 2019 | ||||
(in thousands) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash | $ | $ | ||||
Accounts receivable, net | ||||||
Accounts receivable from affiliates | ||||||
Materials, supplies and fuel | ||||||
Regulatory assets, current | ||||||
Other current assets | ||||||
Total current assets | ||||||
Investments | ||||||
Property, plant and equipment | ||||||
Less: accumulated depreciation and amortization | ( | ) | ( | ) | ||
Total property, plant and equipment, net | ||||||
Other assets: | ||||||
Regulatory assets, non-current | ||||||
Other assets, non-current | ||||||
Total other assets, non-current | ||||||
TOTAL ASSETS | $ | $ |
As of | ||||||
(unaudited) | March 31, 2020 | December 31, 2019 | ||||
(in thousands, except share amounts) | ||||||
LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | $ | ||||
Accounts payable to affiliates | ||||||
Accrued liabilities | ||||||
Money pool notes payable | ||||||
Notes payable to Parent | ||||||
Regulatory liabilities, current | ||||||
Total current liabilities | ||||||
Long-term debt | ||||||
Deferred credits and other liabilities: | ||||||
Deferred income tax liabilities, net | ||||||
Regulatory liabilities, non-current | ||||||
Benefit plan liabilities | ||||||
Other deferred credits and other liabilities | ||||||
Total deferred credits and other liabilities | ||||||
Commitments and contingencies (Notes 5, 6 and 9) | ||||||
Stockholder’s equity: | ||||||
Common stock $1 par value; 50,000,000 shares authorized; 23,416,396 shares issued | ||||||
Additional paid-in capital | ||||||
Retained earnings | ||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||
Total stockholder’s equity | ||||||
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | $ | $ |
(unaudited) | Three Months Ended March 31, | |||||
2020 | 2019 | |||||
(in thousands) | ||||||
Operating activities: | ||||||
Net income | $ | $ | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | ||||||
Deferred income tax | ( | ) | ||||
Employee benefits | ||||||
Other adjustments, net | ( | ) | ||||
Change in operating assets and liabilities: | ||||||
Accounts receivable and other current assets | ( | ) | ( | ) | ||
Accounts payable and other current liabilities | ||||||
Regulatory assets - current | ( | ) | ( | ) | ||
Regulatory liabilities - current | ( | ) | ||||
Other operating activities, net | ( | ) | ( | ) | ||
Net cash provided by operating activities | ||||||
Investing activities: | ||||||
Property, plant and equipment additions | ( | ) | ( | ) | ||
Other investing activities | ( | ) | ( | ) | ||
Net cash (used in) investing activities | ( | ) | ( | ) | ||
Financing activities: | ||||||
Change in money pool notes payable, net | ( | ) | ||||
Net borrowings (payments) of Notes payable to Parent | ||||||
Long-term debt - repayments | ( | ) | ||||
Dividend to Parent company | ( | ) | ||||
Other financing activities | ( | ) | ||||
Net cash (used in) financing activities | ( | ) | ( | ) | ||
Net change in cash | ( | ) | ||||
Cash, beginning of period | ||||||
Cash, end of period | $ | $ | ||||
Supplemental cash flow information: | ||||||
Cash (paid) refunded during the period for - | ||||||
Interest (net of amounts capitalized) | $ | ( | ) | $ | ( | ) |
Non-cash investing and financing activities - | ||||||
Accrued property, plant and equipment purchases at March 31 | $ | $ |
(unaudited) | Common Stock | ||||||||||||||||
(in thousands, except share amounts) | Shares | Value | Additional Paid in Capital | Retained Earnings | AOCI | Total | |||||||||||
December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ||||||||||
Net income | — | — | — | — | |||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | |||||||||||||
Dividend to Parent company | — | — | — | ( | ) | — | ( | ) | |||||||||
Implementation of ASU 2016-13 Financial Instruments -- Credit Losses | — | — | — | ( | ) | — | ( | ) | |||||||||
March 31, 2020 | $ | $ | $ | $ | ( | ) | $ |
Common Stock | |||||||||||||||||
(in thousands except share amounts) | Shares | Value | Additional Paid in Capital | Retained Earnings | AOCI | Total | |||||||||||
December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ||||||||||
Net income | — | — | — | — | |||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | |||||||||||||
Implementation of ASU 2016-02 Leases | — | — | — | ( | ) | — | ( | ) | |||||||||
Other adjustments | — | — | — | — | |||||||||||||
March 31, 2019 | $ | $ | $ | $ | ( | ) | $ |
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||
(in thousands) | ||||||
Customer types: | ||||||
Retail | $ | $ | ||||
Wholesale | ||||||
Market - off-system sales | ||||||
Transmission/Other | ||||||
Revenue from contracts with customers | ||||||
Other revenues | ||||||
Total revenues | $ | $ | ||||
Timing of revenue recognition: | ||||||
Services transferred over time | $ | $ | ||||
Revenue from contracts with customers | $ | $ |
(3) | Accounts Receivable |
March 31, 2020 | December 31, 2019 | |||||
Accounts receivable, trade | $ | $ | ||||
Unbilled revenues | ||||||
Less allowance for credit losses | ( | ) | ( | ) | ||
Accounts receivable, net | $ | $ |
(4) | Regulatory Matters |
March 31, 2020 | December 31, 2019 | ||||||
Regulatory assets: | |||||||
Loss on reacquired debt (a) | $ | $ | |||||
Deferred taxes on AFUDC (b) | |||||||
Employee benefit plans and related deferred taxes (c) | |||||||
Deferred energy and fuel cost adjustments (b) | |||||||
Deferred taxes on flow through accounting (c) | |||||||
Decommissioning costs (a) | |||||||
Vegetation management (a) | |||||||
Other regulatory assets (a) | |||||||
Total regulatory assets | $ | $ | |||||
Less current regulatory assets | ( | ) | ( | ) | |||
Regulatory assets, non-current | $ | $ |
Regulatory liabilities: | |||||||
Cost of removal for utility plant (a) | $ | $ | |||||
Employee benefit plan costs and related deferred taxes (c) | |||||||
Excess deferred income taxes (c) | |||||||
TCJA revenue reserve | |||||||
Other regulatory liabilities (c) | |||||||
Total regulatory liabilities | $ | $ | |||||
Less current regulatory liabilities | ( | ) | ( | ) | |||
Regulatory liabilities, non-current | $ | $ |
(a) | We are allowed a recovery of costs, but we are not allowed a rate of return. |
(b) | In addition to recovery of costs, we are allowed a rate of return. |
(c) | In addition to recovery or repayment of costs, we are allowed a return on a portion of this amount or a reduction in rate base. |
(5) | Related-Party Transactions |
March 31, 2020 | December 31, 2019 | |||||
Accounts receivable from affiliates | $ | $ | ||||
Accounts payable to affiliates | $ | $ |
March 31, 2020 | December 31, 2019 | |||||
Money pool notes payable | $ | $ |
Three Months Ended March 31, | ||||||
2020 | 2019 | |||||
Net interest income (expense) | $ | ( | ) | $ | ( | ) |
March 31, 2020 | December 31, 2019 | |||||
Notes payable to Parent | $ | $ |
Three Months Ended March 31, | ||||||
2020 | 2019 | |||||
Net interest income (expense) | $ | ( | ) | $ |
Three Months Ended March 31, | ||||||
2020 | 2019 | |||||
Revenue: | ||||||
Energy sold to Wyoming Electric | $ | $ | ||||
Rent from electric properties | $ | $ | ||||
Horizon Point shared facility revenue | $ | $ | ||||
Fuel and purchased power: | ||||||
Purchases from WRDC mine | $ | $ | ||||
Purchase of excess energy from Wyoming Electric | $ | $ | ||||
Purchase of renewable wind energy from Wyoming Electric - Happy Jack | $ | $ | ||||
Purchase of renewable wind energy from Wyoming Electric - Silver Sage | $ | $ | ||||
Gas transportation service agreement with Wyoming Electric for firm and interruptible gas transportation | $ | $ | ||||
Operations and maintenance: | ||||||
Corporate support services and fees from BHSC | $ | $ | ||||
Wygen III ground lease with WRDC | $ | $ |
(6) | Employee Benefit Plans |
Three Months Ended March 31, | ||||||
2020 | 2019 | |||||
Service cost | $ | $ | ||||
Interest cost | ||||||
Expected return on plan assets | ( | ) | ( | ) | ||
Prior service cost | ||||||
Net loss (gain) | ||||||
Net periodic benefit cost | $ | $ |
Three Months Ended March 31, | ||||||
2020 | 2019 | |||||
Service cost | $ | $ | ||||
Interest cost | ||||||
Prior service cost (benefit) | ( | ) | ( | ) | ||
Net periodic benefit cost | $ | ( | ) | $ |
Three Months Ended March 31, | ||||||
2020 | 2019 | |||||
Interest cost | $ | $ | ||||
Net loss (gain) | ||||||
Net periodic benefit cost | $ | $ |
Contributions | Remaining Anticipated Contributions for | Anticipated Contributions for | |||||||
Three Months Ended March 31, 2020 | 2020 | 2021 | |||||||
Defined Benefit Pension Plan | $ | $ | $ | ||||||
Defined Benefit Postretirement Healthcare Plan | $ | $ | $ | ||||||
Supplemental Non-qualified Defined Benefit Plans | $ | $ | $ |
(7) | Derivatives and Fair Values |
March 31, 2020 | December 31, 2019 | ||||||
MWh | Maximum Term (months) | MWh | Maximum Term (months) | ||||
Wholesale power contracts (a) |
(a) | Volumes exclude contracts that qualify for the normal purchases and normal sales exception. |
Balance Sheet Location | March 31, 2020 | December 31, 2019 | ||||||
Derivatives not designated as hedges: | ||||||||
Asset derivative instruments: | ||||||||
Current commodity derivatives | Other current assets | $ | $ | |||||
Total derivatives not designated as hedges | $ | $ |
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||
Derivatives in Cash Flow Hedging Relationships | Gain/(Loss) Recognized in OCI | Income Statement Location | Amount of Gain/(Loss) Reclassified from AOCI into Income | ||||||||||
(in thousands) | (in thousands) | ||||||||||||
Interest rate swaps | $ | $ | Interest expense | $ | ( | ) | $ | ||||||
Total | $ | $ | $ | ( | ) | $ |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Derivatives Not Designated as Hedging Instruments | Income Statement Location | Amount of Gain/(Loss) on Derivatives Recognized in Income | |||||
(in thousands) | |||||||
Commodity derivatives | Fuel and purchased power | $ | $ | ||||
$ | $ |
As of March 31, 2020 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Cash Collateral and Counterparty Netting | Total | |||||||||||
(in thousands) | |||||||||||||||
Assets: | |||||||||||||||
Commodity derivatives | $ | $ | $ | $ |
As of December 31, 2019 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Cash Collateral and Counterparty Netting | Total | ||||||||||||
(in thousands) | ||||||||||||||||
Assets: | ||||||||||||||||
Commodity derivatives | $ | $ | $ | $ | $ |
March 31, 2020 | December 31, 2019 | |||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||
Long-term debt, including current maturities (a) | $ | $ | $ | $ |
(a) | Long-term debt is valued based on observable inputs available either directly or indirectly for similar liabilities in active markets and therefore is classified in Level 2 in the fair value hierarchy. Carrying amount of long-term debt is net of deferred financing costs. |
(8) | Commitments and Contingencies |
(9) | Long-term Debt |
(10) | Subsequent Events |
• | Increased residential and decreased commercial and industrial load and demand; |
• | Increased allowance for credit losses and bad debt expense as a result of suspending disconnections and delayed or non-payment from customers; |
• | Disruption in our supply chains impacting our ability to timely execute our capital investment and maintenance project plans; |
• | Volatility in cost of sales due to changes in commodity prices; |
• | Rate actions from our regulators; |
• | Decreased training, travel and outside services related expenses; |
• | Increased operation and maintenance costs if we experience a shortage of labor availability which would lead to deferral of capital projects and sequestration costs for employees deemed critical at our generating facilities; and |
• | Increased tax benefits for employee retention tax credits and reduced cash tax payments for the payroll tax deferral provision from the CARES Act |
Three Months Ended March 31, | |||||||||
2020 | 2019 | Variance | |||||||
(in thousands) | |||||||||
Revenue (a) | $ | 71,611 | $ | 79,041 | $ | (7,430 | ) | ||
Fuel and purchased power (a) | 15,987 | 22,733 | (6,746 | ) | |||||
Gross margin (non-GAAP) | 55,624 | 56,308 | (684 | ) | |||||
Operating expenses | 34,431 | 31,666 | 2,765 | ||||||
Operating income | 21,193 | 24,642 | (3,449 | ) | |||||
Interest income (expense), net | (5,798 | ) | (5,432 | ) | (366 | ) | |||
Other income (expense), net | 359 | (375 | ) | 734 | |||||
Income tax (expense) | (2,419 | ) | (3,338 | ) | 919 | ||||
Net income | $ | 13,335 | $ | 15,497 | $ | (2,162 | ) |
(a) | Revenue and purchased power for the three months ended March 31, 2020, as well as associated quantities, for a certain wholesale contract have been presented on a net basis. This resulted in a decrease of $3.6 million to both revenue and fuel and purchased power. Amounts for the three months ended March 31, 2019, were presented on a gross basis and, due to their immaterial nature, were not revised. This presentation change has no impact on Gross margin. |
Electric Revenue | Quantities Sold | |||||||||||
(in thousands) | (MWh) | |||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Residential | $ | 19,681 | $ | 21,190 | 153,037 | 169,936 | ||||||
Commercial | 22,226 | 23,144 | 185,961 | 194,794 | ||||||||
Industrial | 9,086 | 8,357 | 118,558 | 108,196 | ||||||||
Municipal | 771 | 781 | 7,439 | 7,573 | ||||||||
Total retail revenue | 51,764 | 53,472 | 464,995 | 480,499 | ||||||||
Wholesale (a) | 4,382 | 8,343 | 81,737 | 223,020 | ||||||||
Market - off-system sales | 2,377 | 4,670 | 105,744 | 99,572 | ||||||||
Other revenue | 13,088 | 12,556 | — | — | ||||||||
Total Revenue and Energy Sold | 71,611 | 79,041 | 652,476 | 803,091 | ||||||||
Other Uses, Losses or Generation, net (b) | — | — | 32,748 | 41,910 | ||||||||
Total revenue | $ | 71,611 | $ | 79,041 | 685,224 | 845,001 |
(a) | Revenue and purchased power for the three months ended March 31, 2020, as well as associated quantities, for certain wholesale contracts have been presented on a net basis, which resulted in a decrease of $3.6 million, or 135,327 MWh. Amounts for the three months ended March 31, 2019, were presented on a gross basis and, due to their immaterial nature, were not revised. This presentation change has no impact on Gross margin. |
(b) | Includes company uses, line losses, and excess exchange production. |
Quantities Generated and Purchased (MWh) | Three Months Ended March 31, | |||
2020 | 2019 | |||
Coal-fired | 380,495 | 409,666 | ||
Natural Gas and Oil | 92,471 | 47,703 | ||
Total generated | 472,966 | 457,369 | ||
Purchased (a) | 212,258 | 387,632 | ||
Total generated and purchased | 685,224 | 845,001 |
(a) | Purchased power quantities for the three months ended March 31, 2020, for certain wholesale contracts have been presented on a net basis, which resulted in a decrease of 135,327 MWh. Amounts for the three months ended March 31, 2019, were presented on a gross basis and, due to their immaterial nature, were not revised. This presentation change has no impact on Gross margin. |
Contracted Power Plant Fleet Availability (a) | Three Months Ended March 31, | |||
2020 | 2019 | |||
Coal-fired plants (b) | 91.8 | % | 98.2 | % |
Other plants (c) | 98.1 | % | 87.3 | % |
Total availability | 95.1 | % | 92.4 | % |
(a) | Total availability is calculated using a weighted average based on capacity of our generating fleet. |
(b) | 2020 includes a planned outage at Neil Simpson II. |
(c) | 2019 included a planned outage at Lange CT. |
Degree Days | Three Months Ended March 31, | ||||||||
2020 | 2019 | ||||||||
Actual | Variance from Normal | Actual | Variance from Normal | ||||||
Heating degree days | 3,111 | (3 | )% | 3,916 | 22 | % | |||
Cooling degree days | — | — | % | — | — | % |
Rating Agency | Senior Secured Rating |
S&P (a) | A |
Moody’s (b) | A1 |
Fitch (c) | A |
(a) | On April 16, 2020, S&P affirmed A rating. |
(b) | On December 20, 2019, Moody’s affirmed A1 rating. |
(c) | On August 29, 2019, Fitch affirmed A rating. |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
• | Volatility in electricity usage from our residential, commercial and industrial customers resulting in a minimal decrease in total demand; |
• | Delayed payments from an isolated population of our commercial and industrial customers within hard-hit industries; |
• | Minimal disruptions receiving the materials and supplies necessary to maintain operations and continue executing our capital investment plans as planned; |
• | Reduced availability and productivity of our employees; |
• | Minimal impacts to the availability of our third-party resources; |
• | Minimal decline in the funded status of our pension plan; |
• | Increased costs due to sequestration of mission critical and essential employees; and |
• | Reduced training, travel and outside services related expenses. |
• | Adversely impact our strategic business plans, growth strategy and capital investment plans; |
• | Adversely impact electricity demand from our customers, particularly from businesses, commercial and industrial customers; |
• | Reduce the availability and productivity of our employees and third-party resources; |
• | Cause us to experience an increase in costs as a result of our emergency measures; |
• | Result in increased allowance for credit losses and bad debt expense as a result of delayed or non-payment from our customers, both of which could be magnified by Federal or state government legislation that requires us to extend suspensions of disconnections for non-payment; |
• | Cause delays and disruptions in the availability, timely delivery and cost of materials and components used in our operations; |
• | Cause delays and disruptions in the supply chain resulting in disruptions in the commercial operation dates of certain projects impacting qualification criteria for certain tax credits and potential damages in our power purchase agreements; |
• | Cause a deterioration of the credit quality of our counterparties, including power purchase agreement counterparties, contractors or retail customers, that could result in credit losses; |
• | Cause impairment of long-lived assets; |
• | Adversely impact our ability to develop, construct and operate facilities; |
• | Cause a deterioration in our financial metrics or the business environment that adversely impacts our credit ratings; |
• | Cause a delay in the permitting process of certain development projects, affecting the timing of final investment decisions and start dates of construction; |
• | Cause delays in our ability to change rates through regulatory proceedings; and |
• | Cause other risks to impact us, such as the risks described in the “Risk Factors” section of our 2019 Annual Report on Form 10-K, and our ability to meet our financial obligations. |
ITEM 6. | EXHIBITS |
Exhibit 3.1* |
Exhibit 3.2* |
Exhibit 4.1* |
Exhibit 18.1 |
Exhibit 31.1 |
Exhibit 31.2 |
Exhibit 32.1 |
Exhibit 32.2 |
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Previously filed as part of the filing indicated and incorporated by reference herein. |
/s/ Linden R. Evans | ||
Linden R. Evans, Chairman, President and | ||
Chief Executive Officer | ||
/s/ Richard W. Kinzley | ||
Richard W. Kinzley, Senior Vice President and | ||
Chief Financial Officer | ||
Dated: | May 5, 2020 |
1. | I have reviewed this quarterly report on Form 10-Q of Black Hills Power, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | May 5, 2020 | |
/S/ LINDEN R. EVANS | ||
Linden R. Evans | ||
Chairman, President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Black Hills Power, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | May 5, 2020 | |
/S/ RICHARD W. KINZLEY | ||
Richard W. Kinzley | ||
Senior Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13 (a) or |
(2) | The information contained in the Report fairly presents, in all material |
Date: | May 5, 2020 | |
/S/ LINDEN R. EVANS | ||
Linden R. Evans | ||
Chairman, President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13 (a) or |
(2) | The information contained in the Report fairly presents, in all material |
Date: | May 5, 2020 | |
/S/ RICHARD W. KINZLEY | ||
Richard W. Kinzley | ||
Senior Vice President and Chief Financial Officer |
Related-Party Transactions (Tables) |
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Related Party Transaction [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Accounts Receivable and Payable | The balances were as follows (in thousands) as of:
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Schedule of Related Party Notes | We had the following balances with the Utility Money Pool (in thousands) as of:
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Schedule of Related Party Notes Payable to Parent | We had the following balances for our Notes payable to Parent balance (in thousands) as of:
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Schedule of Revenues and Purchases from Related Parties | Other related party activity was as follows (in thousands):
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Subsidiary of Common Parent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Interest Income Expense | Our net interest income (expense) relating to balances with the Utility Money Pool was as follows (in thousands):
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Parent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Related Party Interest Income Expense | Our Net interest income (expense) relating to balances of the Notes Payable to Parent was as follows (in thousands):
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Accounts Receivable (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Accounts receivable, trade | $ 15,577 | $ 14,778 |
Unbilled revenues | 10,059 | 10,914 |
Less allowance for credit losses | (358) | (160) |
Accounts receivable, net | $ 25,278 | $ 25,532 |
Derivatives and Fair Values: Other Fair Value Measures (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt | $ 337,356 | $ 340,176 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | $ 451,419 | $ 458,286 |
Derivatives and Fair Values: Derivatives by Balance Sheet Classification (Details) - Commodity Contract - Designated as Hedging Instrument - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Derivatives, Fair Value [Line Items] | ||
Fair Value Hedges, Net | $ 1,362 | $ 0 |
Derivative Assets, Current | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value Hedge Assets | $ 1,362 | $ 0 |
Management's Statement (Policies) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Accounting Principle - Pension Accounting Asset Method | Change in Accounting Principle - Pension Accounting Asset Method Effective January 1, 2020, we changed our method of accounting for net periodic benefit cost. Prior to the change, the Company used a calculated value for determining market-related value of plan assets which amortized the effects of gains and losses over a five-year period. Effective with the accounting change, the Company will continue to use a calculated value for the return-seeking assets (equities) in the portfolio and change to fair value for the liability-hedging assets (fixed income). See Note 6 for additional information.
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Recently Issued and Adopted Accounting Standards | Recently Issued Accounting Standards Simplifying the Accounting for Income Taxes, ASU 2019-12 In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes as part of its overall simplification initiative to reduce costs and complexity in applying accounting standards while maintaining or improving the usefulness of the information provided to users of the financial statements. Amendments include removal of certain exceptions to the general principles of ASC 740, Income Taxes, and simplification in several other areas such as accounting for a franchise tax (or similar tax) that is partially based on income. The new guidance is effective for interim and annual periods beginning after December 15, 2020 with early adoption permitted. We are currently reviewing this standard to assess the impact on our financial position, results of operations and cash flows. Recently Adopted Accounting Standards Financial Instruments -- Credit Losses: Measurement of Credit Losses on Financial Instruments, ASU 2018-19 In June 2016, the FASB issued ASU 2016-13, Financial Instruments -- Credit Losses: Measurement of Credit Losses on Financial Instruments, which was subsequently amended by ASU 2018-19, ASU 2019-04, 2019-05, 2019-10, and 2019-11. The standard introduces new accounting guidance for credit losses on financial instruments within its scope, including trade receivables. This new guidance adds an impairment model that is based on expected losses rather than incurred losses. We adopted this standard on January 1, 2020, with prior year comparative financial information remaining as previously reported when transitioning to the new standard. On January 1, 2020, we recorded an increase to our allowance for credit losses, primarily associated with the inclusion of expected losses on unbilled revenue. The cumulative effect of the adoption, net of tax impact, was recorded as an adjustment to retained earnings. Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, ASU 2018-15 In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for recording implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. As a result, certain categories of implementation costs that previously would have been charged to expense as incurred are now capitalized as prepayments and amortized over the term of the arrangement. We adopted this standard prospectively on January 1, 2020. Adoption of this guidance did not have a material impact on our financial position, results of operations or cash flows.
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Revenue Recognition | Our revenue contracts generally provide for performance obligations that are: fulfilled and transfer control to customers over time; represent a series of distinct services that are substantially the same; involve the same pattern of transfer to the customer; and provide a right to consideration from our customers in an amount that corresponds directly with the value to the customer for the performance completed to date. Therefore, we recognize revenue in the amount to which we have a right to invoice. The following tables depict the disaggregation of revenue from contracts with customers by customer type and timing of revenue recognition for each of the reporting segments for the three months ended March 31, 2020 and 2019. Sales tax and other similar taxes are excluded from revenues.
Contract Balances The nature of our primary revenue contracts provides an unconditional right to consideration upon service delivery; therefore, no customer contract assets or liabilities exist. The unconditional right to consideration is represented by the balance in our Accounts Receivable and is further discussed in Note 3. We do not typically incur costs that would be capitalized to obtain or fulfill a revenue contract.
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Accounts Receivable: |
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Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable | Accounts Receivable Following is a summary of Accounts receivable, net included in the accompanying Condensed Balance Sheets (in thousands) as of:
The ongoing credit evaluation of our customers during the COVID-19 pandemic is further discussed in the Credit Risk section of Note 7. The Company did not experience material credit losses or customer defaults during the three months ended March 31, 2020.
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Derivatives and Fair Values: |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Fair Value | Derivatives and Fair Values Our activities in the regulated and non-regulated energy sectors expose us to a number of risks in the normal operations of our businesses. Depending on the activity, we are exposed to varying degrees of market risk and credit risk. Market Risk Market risk is the potential loss that may occur as a result of an adverse change in market price, rate or supply. We are exposed to commodity price risk associated with our purchased power costs which include market fluctuations due to unpredictable factors such as weather, market speculation, transmission constraints, and other factors that may impact electric power supply and demand. Credit Risk Credit risk is the risk of financial loss resulting from non-performance of contractual obligations by a counterparty. For production and generation activities, we attempt to mitigate our credit exposure by conducting business primarily with high credit quality entities, setting tenor and credit limits commensurate with counterparty financial strength, obtaining master netting agreements, and mitigating credit exposure with less creditworthy counterparties through parental guarantees, prepayments, letters of credit, and other security agreements. We perform ongoing credit evaluations of our customers and adjust credit limits based on payment history and the customers’ current creditworthiness, as determined by review of their current credit information. We maintain a provision for estimated credit losses based upon historical experience and any specific customer collection issue that is identified. Although we did not experience material credit losses or customer defaults for the three months ended March 31, 2020, we are monitoring COVID-19 impacts and changes to customer load, consistency in customer payments, requests for deferred or discounted payments, and requests for changes to credit limits to quantify future financial impacts to allowance for credit losses. Derivatives We have wholesale power purchase and sale contracts used to manage purchased power costs and customer load requirements associated with serving our electric customers that are considered derivative instruments. Changes in the fair value of these commodity derivatives are recorded in Fuel and purchased power, net of amounts credited to customers under margin-sharing mechanisms. The contract or notional amounts and terms of the derivative commodity instruments held at our utilities are composed of both long and short positions. We were in a net long position as of:
__________
From time to time we utilize risk management contracts including interest rate swaps to fix the interest on variable rate debt or to lock in the Treasury yield component associated with anticipated issuance of senior notes. For swaps that settled in connection with the issuance of senior debt, the effective portion is deferred as a component in AOCI and recognized as interest expense over the life of the senior note. As of March 31, 2020, we had no outstanding interest rate swap agreements. Derivatives by Balance Sheet Classification As required by accounting standards for derivatives and hedges, fair values within the following tables are presented on a gross basis aside from the netting of asset and liability positions. Netting of positions is permitted in accordance with accounting standards for offsetting and under terms of our master netting agreements that allow us to settle positive and negative positions. The following table presents the fair value and balance sheet classification of our derivative instruments (in thousands) as of:
Derivatives Designated as Hedges Derivatives designated as cash flow hedges relate to a treasury lock entered into in August 2002 to hedge $50 million of our First Mortgage Bonds due on August 15, 2032. The treasury lock cash settled on August 8, 2002, the bond pricing date, and resulted in a $1.8 million loss. The treasury lock is treated as a cash flow hedge and the resulting loss is carried in Accumulated other comprehensive loss and is being amortized over the life of the related bonds.
Derivatives Not Designated as Hedges The following table summarizes the impacts of derivative instruments not designated as hedge instruments on our Condensed Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019. Note that this presentation does not reflect gains or losses arising from the underlying physical transactions; therefore, it is not indicative of the economic profit or loss we realized when the underlying physical and financial transactions were settled.
As discussed above, financial instruments used to manage lowest cost resources for our customers are not designated as cash flow hedges. The unrealized gains and losses arising from these derivatives are recognized in the Condensed Statements of Comprehensive Income. Fair Value We use the following fair value hierarchy for determining inputs for our financial instruments. Our assets and liabilities for financial instruments are classified and disclosed in one of the following fair value categories: Level 1 — Unadjusted quoted prices available in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities. Level 1 instruments primarily consist of highly liquid and actively traded financial instruments with quoted pricing information on an ongoing basis. Level 2 — Pricing inputs include quoted prices for identical or similar assets and liabilities in active markets other than quoted prices in Level 1, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 — Pricing inputs are generally less observable from objective sources. These inputs reflect management’s best estimate of fair value using its own assumptions about the assumptions a market participant would use in pricing the asset or liability. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy levels. We record transfers, if necessary, between levels at the end of the reporting period for all of our financial instruments. Transfers into Level 3, if any, occur when significant inputs used to value the derivative instruments become less observable, such as a significant decrease in the frequency and volume in which the instrument is traded, negatively impacting the availability of observable pricing inputs. Transfers out of Level 3, if any, occur when the significant inputs become more observable, such as when the time between the valuation date and the delivery date of a transaction becomes shorter, positively impacting the availability of observable pricing inputs. We currently do not have any Level 3 investments. Recurring Fair Value Measurements Derivatives Our commodity contracts are valued using the market approach and include wholesale power contracts that do not meet the normal purchases and normal sales exception. For these derivative instruments, the fair value is obtained by utilizing a nationally recognized service that obtains observable inputs to compute the fair value.
Pension and Postretirement Plan Assets Fair value measurements also apply to the valuation of our pension and postretirement plan assets. Current accounting guidance requires employers to annually disclose information about the fair value measurements of their assets of a defined benefit pension or other postretirement plan. The fair value of these assets was presented in Note 12 to the Financial Statements included in our 2019 Annual Report on Form 10-K. The Company has concluded that the market volatility associated with COVID-19 does not require interim re-measurement of our pension plan assets or defined benefit obligations. Other fair value measures Financial instruments for which the carrying amount did not equal the fair value were as follows (in thousands) as of:
_________________ (a) Long-term debt is valued based on observable inputs available either directly or indirectly for similar liabilities in active markets and therefore is classified in Level 2 in the fair value hierarchy. Carrying amount of long-term debt is net of deferred financing costs.
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Derivatives and Fair Values: Recurring Fair Value Measurements (Details) - Fair Value, Recurring - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset, Fair Value, Gross Liability and Obligation to Return Cash, Offset | $ 0 | $ 0 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset | 1,362 | 0 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset | 0 | 0 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset | $ 1,362 | $ 0 |
Derivatives and Fair Values: Derivatives (Details) - Electricity - Wholesale power contracts - mW |
3 Months Ended | 12 Months Ended |
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Mar. 31, 2020 |
Dec. 31, 2019 |
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Derivative [Line Items] | ||
Derivative, Nonmonetary Notional Amount | 195,825 | 0 |
Derivative, Remaining Maturity | 9 months | 0 months |
Regulatory Accounting: |
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Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Accounting | Regulatory Matters We had the following regulatory assets and liabilities (in thousands) as of:
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Regulatory Activity There have been no significant changes to our Regulatory Matters from those previously disclosed in Note 7 of the Notes to the Financial Statements in our 2019 Annual Report on Form 10-K.
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Commitment and Contingencies: |
3 Months Ended |
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Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies There have been no significant changes to commitments and contingencies from those previously disclosed in Note 11 of our Notes to the Financial Statements in our 2019 Annual Report on Form 10-K.
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Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue |
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Condensed Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Income Statement [Abstract] | ||
Reclassification adjustment of cash flow hedges settled, (tax) benefit | $ (3) | $ 0 |
Reclassification adjustment of benefit and other postretirement plans included in net income, (tax) benefit | $ (7) | $ (4) |
Employee Benefit Plans (Tables) |
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Defined Benefit Plan [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The components of net periodic benefit cost for the Defined Benefit Pension Plan were as follows (in thousands):
Defined Benefit Postretirement Healthcare Plan The components of net periodic benefit cost for the Defined Benefit Postretirement Healthcare Plan were as follows (in thousands):
Supplemental Non-qualified Defined Benefit Plans The components of net periodic benefit cost for the Supplemental Non-qualified Defined Benefit Plans were as follows (in thousands):
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Schedule of Defined Benefit Plans Contributions | Contributions made for 2020 and anticipated contributions for 2020 and 2021 are as follows (in thousands):
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Employee Benefit Plans: |
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Defined Benefit Plan [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans Change in Accounting Principle - Pension Accounting Asset Method Effective January 1, 2020, the Company changed its method of accounting for net periodic benefit cost. Prior to the change, the Company used a calculated value for determining market-related value of plan assets which amortized the effects of gains and losses over a five-year period. Effective with the accounting change, the Company will continue to use a calculated value for the return-seeking assets (equities) in the portfolio and fair value for the liability-hedging assets (fixed income). The Company considers the fair value method for determining market-related value of liability-hedging assets to be a preferable method of accounting because asset-related gains and losses are subject to amortization into pension cost immediately. Additionally, the fair value for liability-hedging assets allows for the impact of gains and losses on this portion of the asset portfolio to be reflected in tandem with changes in the liability which is linked to changes in the discount rate assumption for remeasurement. We evaluated the effect of this change in accounting method and deemed it immaterial to the historical and current financial statements and therefore did not account for the change retrospectively. Accordingly, the Company calculated the cumulative difference using a calculated value versus fair value to determine market-related value for liability-hedging assets of the portfolio. The cumulative effect of this change, as of January 1, 2020, resulted in a $0.1 million decrease to prior service costs, as recorded in Other income (expense), net within the accompanying Condensed Statements of Comprehensive Income for the three months ended March 31, 2020. Defined Benefit Pension Plan The components of net periodic benefit cost for the Defined Benefit Pension Plan were as follows (in thousands):
Defined Benefit Postretirement Healthcare Plan The components of net periodic benefit cost for the Defined Benefit Postretirement Healthcare Plan were as follows (in thousands):
Supplemental Non-qualified Defined Benefit Plans The components of net periodic benefit cost for the Supplemental Non-qualified Defined Benefit Plans were as follows (in thousands):
Contributions Contributions to the Defined Benefit Pension Plan are cash contributions made directly to the Pension Plan Trust account. Contributions to the Postretirement Healthcare and Supplemental Plans are made in the form of benefit payments. Contributions made for 2020 and anticipated contributions for 2020 and 2021 are as follows (in thousands):
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Subsequent Events: |
3 Months Ended |
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Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events We evaluated all subsequent event activity and concluded that no subsequent events have occurred that would require recognition in the condensed financial statements or disclosures. There are many uncertainties regarding the COVID-19 pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its customers, employees, suppliers, vendors, and business partners. We are unable to predict the impact that COVID-19 will have on our financial position and operating results due to numerous uncertainties. The Company expects to continue to assess the evolving impact of COVID-19 and intends to make adjustments to its responses accordingly.
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Employee Benefit Plans: Change in Accounting Principle - Pension Accounting Asset Method (Details) $ in Millions |
3 Months Ended |
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Mar. 31, 2020
USD ($)
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Other Nonoperating Income (Expense) | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 0.1 |
Long-term Debt: Long-term Debt (Details) $ in Millions |
Mar. 24, 2020
USD ($)
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Bonds Due 2024 | |
Extinguishment of Debt, Amount | $ 2.9 |
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