Regulatory assets and liabilities

3 Months Ended

Mar. 31, 2021

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory assets and liabilities

The following table summarizes the individual components of unamortized regulatory assets and liabilities:


	Estimated Recovery or Refund Period as of March 31, 2021	*	March 31, 2021		March 31, 2020		December 31, 2020
			(In thousands)
Regulatory assets:
Current:
Natural gas costs recoverable through rate adjustments	Up to 1 year		$	76,782	$	39,805	$	42,481
Cost recovery mechanisms	Up to 1 year		7,130		6,686		10,645
Conservation programs	Up to 1 year		6,679		6,303		7,117
Other	Up to 1 year		7,861		2,412		8,284
			98,452		55,206		68,527
Noncurrent:
Pension and postretirement benefits	**		155,924		157,051		155,942
Plant retirement	-		73,498		41,080		65,919
Plant costs/asset retirement obligations	Over plant lives		72,250		67,475		71,740
Manufactured gas plant site remediation	-		26,002		15,699		26,429
Cost recovery mechanisms	Up to 10 years		15,508		11,891		16,245
Natural gas costs recoverable through rate adjustments	Up to 3 years		15,158		33,027		21,539
Taxes recoverable from customers	Over plant lives		10,800		11,082		10,785
Long-term debt refinancing costs	Up to 39 years		4,268		4,133		4,426
Other	Up to 18 years		6,509		6,751		6,356
			379,917		348,189		379,381
Total regulatory assets			$	478,369	$	403,395	$	447,908
Regulatory liabilities:
Current:
Natural gas costs refundable through rate adjustments	Up to 1 year		$	16,344	$	32,181	$	18,565
Taxes refundable to customers	Up to 1 year		3,092		4,002		3,557
Electric fuel and purchased power deferral	Up to 1 year		2,001		7,188		3,667
Other	Up to 1 year		12,829		16,701		5,661
			34,266		60,072		31,450
Noncurrent:
Taxes refundable to customers	Over plant lives		224,795		240,148		227,850
Plant removal and decommissioning costs	Over plant lives		169,430		174,120		167,171
Pension and postretirement benefits	**		16,965		18,040		16,989
Other	Up to 21 years		17,870		10,897		16,065
			429,060		443,205		428,075
Total regulatory liabilities			$	463,326	$	503,277	$	459,525
Net regulatory position			$	15,043	$	(99,882)	$	(11,617)

*Estimated recovery or refund period for amounts currently being recovered or refunded in rates charged to customers.

** Recovered as expense is incurred or cash contributions are made.

At March 31, 2021 and 2020, and December 31, 2020, approximately $361.4 million, $285.8 million and $332.5 million, respectively, of regulatory assets were not earning a rate of return; however, these regulatory assets are expected to be recovered from customers in future rates. These assets are largely comprised of the unfunded portion of pension and postretirement benefits, asset retirement obligations, accelerated depreciation on plant to be retired and the estimated future cost of manufactured gas plant site remediation.

In February 2021, a prolonged period of unseasonably cold temperatures in the central United States significantly increased the demand for electric and natural gas services and contributed to increased market prices. Overall, Montana-Dakota and Great Plains incurred approximately $44.0 million in increased natural gas costs in February 2021 in order to maintain services for its customers. The Company has filed out-of-cycle purchased gas adjustment requests in four out of five jurisdictions affected by this cold-weather event, as discussed in Note 19, and will continue to engage with its regulators to determine the appropriate recovery periods over which to recover the associated natural gas costs.

In 2019, the Company experienced increased natural gas costs in Washington from the rupture of the Enbridge pipeline in Canada in late 2018. As a result, the Company requested, and the WUTC approved, recovery of the balance of natural gas costs recoverable related to this period of time over three years rather than its normal one-year recovery period.

In February 2019, the Company announced the retirement of three aging coal-fired electric generating units. The Company has accelerated the depreciation related to these facilities in property, plant and equipment and has recorded the difference between the accelerated depreciation, in accordance with GAAP, and the depreciation approved for rate-making purposes as regulatory assets. The first unit ceased operations on March 31, 2021, and as discussed in Note 19, requests have been filed with the NDPSC and SDPUC to offset the savings associated with the cessation of operations of this unit with the amortization of the deferred regulatory assets. The remaining two units are expected to be retired in early 2022. The Company expects to recover the regulatory assets related to the plant retirements in future rates.

If, for any reason, the Company's regulated businesses cease to meet the criteria for application of regulatory accounting for all or part of their operations, the regulatory assets and liabilities relating to those portions ceasing to meet such criteria would be removed from the balance sheet and included in the statement of income or accumulated other comprehensive income (loss) in the period in which the discontinuance of regulatory accounting occurs.