Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 30, 2017 | |
Document Information [Line Items] | ||
Entity Registrant Name | BLACK HILLS POWER INC | |
Entity Central Index Key | 12,400 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Document Fiscal Year End Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 23,416,396 |
Condensed Statements of Income
Condensed Statements of Income and Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 73,794 | $ 68,642 |
Operating expenses: | ||
Fuel and purchased power | 23,149 | 20,730 |
Operations and maintenance | 16,954 | 17,031 |
Depreciation and amortization | 8,694 | 8,612 |
Taxes - property | 1,621 | 1,489 |
Total operating expenses | 50,418 | 47,862 |
Operating income | 23,376 | 20,780 |
Other income (expense): | ||
Interest expense | (6,336) | (5,454) |
AFUDC - borrowed | 192 | 223 |
Interest income | 707 | 202 |
AFUDC - equity | 471 | 423 |
Other income (expense), net | (53) | 74 |
Total other income (expense) | (5,019) | (4,532) |
Income from continuing operations before income taxes | 18,357 | 16,248 |
Income tax expense | (5,787) | (5,062) |
Net income | 12,570 | 11,186 |
Other comprehensive income (loss): | ||
Reclassification adjustments of cash flow hedges settled and included in net income (net of tax (expense) benefit of $(6) and $(6) for the three months ended March 31, 2017 and 2016, respectively) | 10 | 10 |
Reclassification adjustment of benefit plan liability - net gain (loss) (net of tax (expense) benefit of $(8) and $(7) for the three months ended March 31, 2017 and 2016, respectively) | 14 | 14 |
Other comprehensive income | 24 | 24 |
Comprehensive income | $ 12,594 | $ 11,210 |
Condensed Statements of Income3
Condensed Statements of Income and Comprehensive Income OCI Parenthetical - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Reclassification adjustment of cash flow hedges settled, (tax) benefit | $ (6) | $ (6) |
Reclassification adjustment of benefit and other postretirement plans included in net income, (tax) benefit | $ (8) | $ (7) |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 1,127 | $ 234 |
Receivables - customers, net | 27,457 | 30,614 |
Receivables - affiliates | 5,390 | 9,526 |
Other receivables, net | 420 | 351 |
Money pool notes receivable, net | 32,949 | 28,409 |
Materials, supplies and fuel | 23,244 | 22,389 |
Regulatory assets, current | 20,536 | 18,119 |
Other, current assets | 3,286 | 3,876 |
Total current assets | 114,409 | 113,518 |
Investments | 4,849 | 4,841 |
Property, plant and equipment | 1,254,710 | 1,236,387 |
Less accumulated depreciation and amortization | (342,400) | (338,828) |
Total property, plant and equipment, net | 912,310 | 897,559 |
Other assets: | ||
Regulatory assets, non-current | 73,445 | 74,015 |
Other, non-current assets | 3,545 | 3,816 |
Total other assets | 76,990 | 77,831 |
TOTAL ASSETS | 1,108,558 | 1,093,749 |
Current liabilities: | ||
Accounts payable | 16,809 | 14,158 |
Accounts payable - affiliates | 27,289 | 31,799 |
Accrued liabilities | 44,891 | 37,436 |
Regulatory liabilities, current | 0 | 84 |
Total current liabilities | 88,989 | 83,477 |
Long-term debt | 339,791 | 339,756 |
Deferred credits and other liabilities: | ||
Deferred income tax liability, net, non-current | 214,657 | 211,443 |
Regulatory liabilities, non-current | 53,896 | 53,866 |
Benefit plan liabilities | 19,617 | 19,544 |
Other, non-current liabilities | 1,351 | 1,001 |
Total deferred credits and other liabilities | 289,521 | 285,854 |
Commitments and contingencies (Notes 4, 5 and 8) | ||
Stockholder’s equity: | ||
Common stock $1 par value; 50,000,000 shares authorized; 23,416,396 shares issued | 23,416 | 23,416 |
Additional paid-in capital | 39,575 | 39,575 |
Retained earnings | 328,504 | 322,933 |
Accumulated other comprehensive loss | (1,238) | (1,262) |
Total stockholder’s equity | 390,257 | 384,662 |
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | $ 1,108,558 | $ 1,093,749 |
Balance Sheet Parentheticals
Balance Sheet Parentheticals - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common Stock, Par Value (usd per share) | $ 1 | $ 1 |
Common Stock, Shares authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares Issued | 23,416,396 | 23,416,396 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating activities: | ||
Net income | $ 12,570 | $ 11,186 |
Adjustments to reconcile net income to net cash provided by operating activities- | ||
Depreciation and amortization | 8,694 | 8,612 |
Deferred income tax | 2,704 | 18,076 |
Employee benefits | 205 | 443 |
AFUDC - equity | (471) | (423) |
Other adjustments, net | 559 | 296 |
Change in operating assets and liabilities - | ||
Accounts receivable and other current assets | 7,908 | (3,409) |
Accounts payable and other current liabilities | (380) | (7,656) |
Regulatory assets - current | (2,170) | (4,193) |
Regulatory liabilities - current | (84) | 0 |
Other operating activities, net | (152) | 481 |
Net cash provided by (used in) operating activities | 29,383 | 23,413 |
Investing activities: | ||
Property, plant and equipment additions | (16,976) | (18,928) |
Change in money pool notes receivable, net | (11,540) | 13,683 |
Other investing activities | 26 | (27) |
Net cash provided by (used in) investing activities | (28,490) | (5,272) |
Financing activities: | ||
Net cash provided by (used in) financing activities | 0 | 0 |
Net change in cash and cash equivalents | 893 | 18,141 |
Cash and cash equivalents, beginning of period | 234 | 297 |
Cash and cash equivalents, end of period | $ 1,127 | $ 18,438 |
Management's Statement_
Management's Statement: | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Management's Statement | MANAGEMENT’S STATEMENT The unaudited condensed financial statements included herein have been prepared by Black Hills Power, Inc. (the “Company,” “we,” “us,” or “our”), pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, we believe that the footnotes adequately disclose the information presented. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto, included in our 2016 Annual Report on Form 10-K filed with the SEC. The information furnished in the accompanying condensed financial statements reflects certain estimates required and all adjustments, including accruals, which are, in the opinion of management, necessary for a fair presentation of the March 31, 2017 , December 31, 2016 and March 31, 2016 financial information and are of a normal recurring nature. The results of operations for the three months ended March 31, 2017 and March 31, 2016 , and our financial condition as of March 31, 2017 and December 31, 2016 are not necessarily indicative of the results of operations and financial condition to be expected as of or for any other period. Revisions Certain revisions have been made to prior years’ financial information to conform to the current year presentation. We revised our presentation of cash and certain cash transactions processed on behalf of affiliates. We have banking arrangements at certain financial institutions whereby if required, payments of one account are cleared with cash from other accounts at the same financial institution; therefore, book overdrafts are presented on a combined basis by bank as cash and cash equivalents. Cash collected or disbursed on behalf of affiliates is presented as Receivables - affiliates or Accounts Payable - affiliates. Prior year amounts were corrected to conform to the current year presentation, which decreased cash and cash equivalents by $11 million as of March 31, 2016. It also decreased net cash flows provided by operations by $3.3 million for the three months ended March 31, 2016. We assessed the materiality of these changes, taking into account quantitative and qualitative factors, and determined them to be immaterial to the balance sheet as of March 31, 2016 and to the Statements of Cash Flows for the three months ended March 31, 2016. There is no impact to the Statements of Income or Statements of Comprehensive Income (Loss) for any period reported. Recently Issued and Adopted Accounting Standards Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost, ASU 2017-07 In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost” . The changes to the standard require employers to report the service cost component in the same line item(s) as other compensation costs, and require the other components of net periodic pension and post-retirement benefit costs to be separately presented in the income statement outside of income from operations. Additionally, only the service cost component may be eligible for capitalization, when applicable. However, all cost components remain eligible for capitalization under FERC regulations. ASU 2017-07 will be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension and post-retirement benefit costs in the income statement. The capitalization of the service cost component of net period pension and post-retirement benefit costs in assets will be applied on a prospective basis. ASU 2017-07 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. We are currently assessing the changes to the standard. The presentation changes required for net periodic pension and post-retirement costs will result in offsetting changes to Operating income and Other income and are not expected to be material. Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, ASU 2016-15 In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). This ASU requires changes in the presentation of certain items including but not limited to debt prepayment or debt extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies and distributions received from equity method investees. The ASU will be effective for fiscal years beginning after December 15 , 2017. We will use the retrospective transition method to adopt this standard with fiscal years beginning after December 15, 2017. The adoption of this standard will not have a material impact on our financial position, results of operations or cash flows. Leases, ASU 2016-02 In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes ASC 840, Leases . This ASU requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of 12 months or less. The ASU does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows from the previous accounting standard. Lessors’ accounting under the ASC is largely unchanged from the previous accounting standard. In addition, the ASU expands the disclosure requirements of lease arrangements. Lessees and lessors will use a modified retrospective transition approach, which includes a number of practical expedients. The guidance is effective for us beginning after December 15, 2018. Early adoption is permitted. We are currently assessing the impact that adoption of ASU 2016-02 will have on our financial position, results of operations or cash flows. Revenue from Contracts with Customers, ASU 2014-09 In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . The standard provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer. The new disclosure requirements will provide information about the nature, amount, timing and uncertainty of revenue and cash flows from revenue contracts with customers. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017 with early adoption on January 1, 2017 permitted. Entities will have the option of using either a full retrospective or modified retrospective approach to adopting this guidance. Under the modified approach, an entity would recognize the cumulative effect of initially applying the guidance with an adjustment to the opening balance of retained earnings in the period of adoption. We will adopt this standard for annual and interim reporting periods beginning after December 15, 2017. We continue to actively assess all of our sources of revenue to determine the impact that adoption of the new standard will have on our financial position, results of operations and cash flows. Our evaluation includes identifying revenue streams by like contracts to allow for ease of implementation. A majority of our revenues are from regulated tariff offerings that provide electricity with a defined contractual term. For such arrangements, we expect that the revenue from contracts with the customer will be equivalent to the electricity delivered in that period. Therefore, we do not expect that there will be a significant shift in the timing or pattern of revenue recognition for regulated tariff-based sales. The evaluation of other revenue streams is ongoing, including those tied to longer term contractual commitments. However, a number of industry-specific implementation issues are still unresolved and the final resolution of these issues could impact our current accounting policies and/or patterns for revenue recognition, as well as the transition method selected. |
Accounts Receivable and Allowan
Accounts Receivable and Allowance For Doubtful Accounts: | 3 Months Ended |
Mar. 31, 2017 | |
Accounts Receivable, Net [Abstract] | |
Accounts Receivable and Allowance for Doubtful Accounts | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS Following is a summary of Receivables - customers, net included in the accompanying Condensed Balance Sheets (in thousands) as of: March 31, 2017 December 31, 2016 Accounts receivable trade $ 16,197 $ 16,972 Unbilled revenues 11,524 13,799 Allowance for doubtful accounts (264 ) (157 ) Receivables - customers, net $ 27,457 $ 30,614 |
Regulatory Accounting_
Regulatory Accounting: | 3 Months Ended |
Mar. 31, 2017 | |
Regulated Operations [Abstract] | |
Regulatory Accounting | REGULATORY ACCOUNTING Our regulated electric operations are subject to regulation by various state and federal agencies. The accounting policies followed are generally subject to the Uniform System of Accounts of the FERC. Our regulatory assets and liabilities were as follows (in thousands) as of: Recovery/Amortization Period (in years) March 31, 2017 December 31, 2016 Regulatory assets: Unamortized loss on reacquired debt (a) 8 $ 1,745 $ 1,815 Deferred taxes on AFUDC (b) 45 9,607 9,367 Employee benefit plans (c) 12 20,100 20,100 Deferred energy and fuel cost adjustments - current (a) Less than 1 year 23,075 23,016 Deferred taxes on flow through accounting (a) 35 12,802 12,545 Decommissioning costs, net of amortization (b) 8 12,025 12,456 Other regulatory assets (a) (d) 2 14,627 12,835 Total regulatory assets $ 93,981 $ 92,134 Regulatory liabilities: Cost of removal for utility plant (a) 61 $ 41,592 $ 41,541 Employee benefit plan costs and related deferred taxes (c) 12 12,304 12,304 Other regulatory liabilities 13 — 105 Total regulatory liabilities $ 53,896 $ 53,950 ____________________ (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, respectively. (d) Includes approximately $14 million and $12 million of vegetation management expenses at March 31, 2017 and December 31, 2016 , respectively, for which we are allowed a rate of return. |
Related Party Transactions_
Related Party Transactions: | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | RELATED-PARTY TRANSACTIONS Receivables and Payables We have accounts receivable and accounts payable balances related to transactions with other BHC subsidiaries. The balances were as follows (in thousands) as of: March 31, 2017 December 31, 2016 Receivables - affiliates $ 5,390 $ 9,526 Accounts payable - affiliates $ 27,289 $ 31,799 Money Pool Notes Receivable and Notes Payable We have entered into a Utility Money Pool Agreement (the “Agreement”) with BHC, Black Hills Service Company and the utility companies conducting business as Black Hills Energy. We are the administrator of the Money Pool. Under the Agreement, we may borrow from BHC; however the Agreement restricts us from loaning funds to BHC or to any of BHC’s non-utility subsidiaries. The Agreement does not restrict us from paying dividends to BHC. Borrowings and advances under the Agreement bear interest at the weighted average daily cost of our parent company’s external borrowings as defined under the Agreement, or if there are no external funds outstanding on that date, then the rate will be the daily one-month LIBOR plus 1.0% . At March 31, 2017 , the average cost of borrowing under the Utility Money Pool was 1.47% . We had the following balances with the Utility Money Pool (in thousands) as of: March 31, 2017 December 31, 2016 Money pool notes receivable, net $ 32,949 $ 28,409 Our net interest income (expense) relating to balances with the Utility Money Pool was as follows (in thousands): Three Months Ended March 31, 2017 2016 Net interest income (expense) $ 126 $ 278 Other related party activity was as follows (in thousands): Three Months Ended March 31, 2017 2016 Revenue: Energy sold to Cheyenne Light $ 878 $ 661 Rent from electric properties $ 1,272 $ 1,213 Fuel and purchased power : Purchases of coal from WRDC $ 4,280 $ 4,796 Purchase of excess energy from Cheyenne Light $ 40 $ 55 Purchase of renewable wind energy from Cheyenne Light - Happy Jack $ 606 $ 664 Purchase of renewable wind energy from Cheyenne Light - Silver Sage $ 1,019 $ 1,127 Gas transportation service agreement: Gas transportation service agreement with Cheyenne Light for firm and interruptible gas transportation $ 99 $ 136 Corporate support: Corporate support services and fees from Parent, Black Hills Service Company and Black Hills Utility Holdings $ 6,611 $ 6,721 |
Employee Benefit Plans_
Employee Benefit Plans: | 3 Months Ended |
Mar. 31, 2017 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS The components of net periodic benefit cost for the Defined Benefit Pension Plan were as follows (in thousands): Three Months Ended March 31, 2017 2016 Service cost $ 136 $ 151 Interest cost 585 625 Expected return on plan assets (897 ) (908 ) Prior service cost 11 11 Net loss (gain) 307 499 Net periodic benefit cost $ 142 $ 378 Defined Benefit Postretirement Healthcare Plan The components of net periodic benefit cost for the Defined Benefit Postretirement Healthcare Plan were as follows (in thousands): Three Months Ended March 31, 2017 2016 Service cost $ 52 $ 51 Interest cost 44 47 Prior service cost (benefit) (84 ) (84 ) Net periodic benefit cost $ 12 $ 14 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): Three Months Ended March 31, 2017 2016 Interest cost $ 29 $ 30 Net loss (gain) 22 21 Net periodic benefit cost $ 51 $ 51 Contributions Contributions to the Defined Benefit Pension Plan are cash contributions made directly to the Pension Plan Trust. Contributions to the Healthcare and Supplemental Plans are made in the form of benefit payments. Contributions made for 2017 and anticipated contributions for 2017 and 2018 are as follows (in thousands): Contributions Three Months Ended March 31, 2017 Remaining Anticipated Contributions for 2017 Anticipated Contributions for 2018 Defined Benefit Pension Plan $ — $ 1,305 $ 660 Defined Benefit Postretirement Healthcare Plan $ 135 $ 406 $ 565 Supplemental Non-qualified Defined Benefit Plans $ 62 $ 185 $ 246 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments: | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance on fair value measurements establishes a hierarchy for grouping assets and liabilities, based on significance of inputs. For additional information see Note 1 included in our 2016 Annual Report on Form 10-K filed with the SEC. The estimated fair values of our financial instruments were as follows (in thousands) as of: March 31, 2017 December 31, 2016 Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents (a) $ 1,127 $ 1,127 $ 234 $ 234 Long-term debt, including current maturities (b) $ 339,791 $ 424,453 $ 339,756 $ 410,466 _________________ (a) Carrying value approximates fair value due to either short-term length of maturity or variable interest rates that approximate prevailing market rates and therefore is classified in Level 1 in the fair value hierarchy. (b) Long-term debt is valued using the market approach based on observable inputs of quoted market prices and yields available for debt instruments either directly or indirectly for similar maturities and debt ratings in active markets and therefore is classified in Level 2 in the fair value hierarchy. The carrying amount of our variable rate debt approximates fair value due to the variable interest rates with short reset periods. |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information: | 3 Months Ended |
Mar. 31, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Disclosure of Cash Flow Information | SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Three months ended March 31, 2017 2016 (in thousands) Non-cash investing and financing activities - Property, plant and equipment acquired with accrued liabilities $ 10,998 $ 5,087 Non-cash (decrease) to money pool notes receivable, net $ (7,000 ) $ (12,500 ) Non-cash dividend to Parent $ 7,000 $ 12,500 Cash (paid) refunded during the period for - Interest (net of amounts capitalized) $ (3,014 ) $ (2,989 ) |
Commitment and Contingencies_
Commitment and Contingencies: | 3 Months Ended |
Mar. 31, 2017 | |
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 2016 Annual Report on Form 10-K. |
Management's Statement_ (Polici
Management's Statement: (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revisions | Revisions Certain revisions have been made to prior years’ financial information to conform to the current year presentation. We revised our presentation of cash and certain cash transactions processed on behalf of affiliates. We have banking arrangements at certain financial institutions whereby if required, payments of one account are cleared with cash from other accounts at the same financial institution; therefore, book overdrafts are presented on a combined basis by bank as cash and cash equivalents. Cash collected or disbursed on behalf of affiliates is presented as Receivables - affiliates or Accounts Payable - affiliates. Prior year amounts were corrected to conform to the current year presentation, which decreased cash and cash equivalents by $11 million as of March 31, 2016. It also decreased net cash flows provided by operations by $3.3 million for the three months ended March 31, 2016. We assessed the materiality of these changes, taking into account quantitative and qualitative factors, and determined them to be immaterial to the balance sheet as of March 31, 2016 and to the Statements of Cash Flows for the three months ended March 31, 2016. There is no impact to the Statements of Income or Statements of Comprehensive Income (Loss) for any period reported. |
Recently Issued and Adopted Accounting Standards | Recently Issued and Adopted Accounting Standards Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost, ASU 2017-07 In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost” . The changes to the standard require employers to report the service cost component in the same line item(s) as other compensation costs, and require the other components of net periodic pension and post-retirement benefit costs to be separately presented in the income statement outside of income from operations. Additionally, only the service cost component may be eligible for capitalization, when applicable. However, all cost components remain eligible for capitalization under FERC regulations. ASU 2017-07 will be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension and post-retirement benefit costs in the income statement. The capitalization of the service cost component of net period pension and post-retirement benefit costs in assets will be applied on a prospective basis. ASU 2017-07 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. We are currently assessing the changes to the standard. The presentation changes required for net periodic pension and post-retirement costs will result in offsetting changes to Operating income and Other income and are not expected to be material. Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, ASU 2016-15 In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). This ASU requires changes in the presentation of certain items including but not limited to debt prepayment or debt extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies and distributions received from equity method investees. The ASU will be effective for fiscal years beginning after December 15 , 2017. We will use the retrospective transition method to adopt this standard with fiscal years beginning after December 15, 2017. The adoption of this standard will not have a material impact on our financial position, results of operations or cash flows. Leases, ASU 2016-02 In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes ASC 840, Leases . This ASU requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of 12 months or less. The ASU does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows from the previous accounting standard. Lessors’ accounting under the ASC is largely unchanged from the previous accounting standard. In addition, the ASU expands the disclosure requirements of lease arrangements. Lessees and lessors will use a modified retrospective transition approach, which includes a number of practical expedients. The guidance is effective for us beginning after December 15, 2018. Early adoption is permitted. We are currently assessing the impact that adoption of ASU 2016-02 will have on our financial position, results of operations or cash flows. Revenue from Contracts with Customers, ASU 2014-09 In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . The standard provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer. The new disclosure requirements will provide information about the nature, amount, timing and uncertainty of revenue and cash flows from revenue contracts with customers. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017 with early adoption on January 1, 2017 permitted. Entities will have the option of using either a full retrospective or modified retrospective approach to adopting this guidance. Under the modified approach, an entity would recognize the cumulative effect of initially applying the guidance with an adjustment to the opening balance of retained earnings in the period of adoption. We will adopt this standard for annual and interim reporting periods beginning after December 15, 2017. We continue to actively assess all of our sources of revenue to determine the impact that adoption of the new standard will have on our financial position, results of operations and cash flows. Our evaluation includes identifying revenue streams by like contracts to allow for ease of implementation. A majority of our revenues are from regulated tariff offerings that provide electricity with a defined contractual term. For such arrangements, we expect that the revenue from contracts with the customer will be equivalent to the electricity delivered in that period. Therefore, we do not expect that there will be a significant shift in the timing or pattern of revenue recognition for regulated tariff-based sales. The evaluation of other revenue streams is ongoing, including those tied to longer term contractual commitments. However, a number of industry-specific implementation issues are still unresolved and the final resolution of these issues could impact our current accounting policies and/or patterns for revenue recognition, as well as the transition method selected. |
Accounts Receivable and Allow16
Accounts Receivable and Allowance For Doubtful Accounts: (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accounts Receivable, Net [Abstract] | |
Schedule of Accounts Receivable | Following is a summary of Receivables - customers, net included in the accompanying Condensed Balance Sheets (in thousands) as of: March 31, 2017 December 31, 2016 Accounts receivable trade $ 16,197 $ 16,972 Unbilled revenues 11,524 13,799 Allowance for doubtful accounts (264 ) (157 ) Receivables - customers, net $ 27,457 $ 30,614 |
Regulatory Accounting_ (Tables)
Regulatory Accounting: (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Regulated Operations [Abstract] | |
Schedule of Regulatory Assets | Our regulatory assets and liabilities were as follows (in thousands) as of: Recovery/Amortization Period (in years) March 31, 2017 December 31, 2016 Regulatory assets: Unamortized loss on reacquired debt (a) 8 $ 1,745 $ 1,815 Deferred taxes on AFUDC (b) 45 9,607 9,367 Employee benefit plans (c) 12 20,100 20,100 Deferred energy and fuel cost adjustments - current (a) Less than 1 year 23,075 23,016 Deferred taxes on flow through accounting (a) 35 12,802 12,545 Decommissioning costs, net of amortization (b) 8 12,025 12,456 Other regulatory assets (a) (d) 2 14,627 12,835 Total regulatory assets $ 93,981 $ 92,134 |
Schedule of Regulatory Liabilities | Regulatory liabilities: Cost of removal for utility plant (a) 61 $ 41,592 $ 41,541 Employee benefit plan costs and related deferred taxes (c) 12 12,304 12,304 Other regulatory liabilities 13 — 105 Total regulatory liabilities $ 53,896 $ 53,950 ____________________ (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, respectively. (d) Includes approximately $14 million and $12 million of vegetation management expenses at March 31, 2017 and December 31, 2016 , respectively, for which we are allowed a rate of return. |
Related Party Transactions_ (Ta
Related Party Transactions: (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Accounts Receivable and Payable | The balances were as follows (in thousands) as of: March 31, 2017 December 31, 2016 Receivables - affiliates $ 5,390 $ 9,526 Accounts payable - affiliates $ 27,289 $ 31,799 |
Schedule of Related Party Notes | We had the following balances with the Utility Money Pool (in thousands) as of: March 31, 2017 December 31, 2016 Money pool notes receivable, net $ 32,949 $ 28,409 |
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): Three Months Ended March 31, 2017 2016 Net interest income (expense) $ 126 $ 278 |
Schedule of Revenues and Purchases from Related Parties | Other related party activity was as follows (in thousands): Three Months Ended March 31, 2017 2016 Revenue: Energy sold to Cheyenne Light $ 878 $ 661 Rent from electric properties $ 1,272 $ 1,213 Fuel and purchased power : Purchases of coal from WRDC $ 4,280 $ 4,796 Purchase of excess energy from Cheyenne Light $ 40 $ 55 Purchase of renewable wind energy from Cheyenne Light - Happy Jack $ 606 $ 664 Purchase of renewable wind energy from Cheyenne Light - Silver Sage $ 1,019 $ 1,127 Gas transportation service agreement: Gas transportation service agreement with Cheyenne Light for firm and interruptible gas transportation $ 99 $ 136 Corporate support: Corporate support services and fees from Parent, Black Hills Service Company and Black Hills Utility Holdings $ 6,611 $ 6,721 |
Employee Benefit Plans_ (Tables
Employee Benefit Plans: (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Schedule of Net Benefit Costs | The components of net periodic benefit cost for the Defined Benefit Pension Plan were as follows (in thousands): Three Months Ended March 31, 2017 2016 Service cost $ 136 $ 151 Interest cost 585 625 Expected return on plan assets (897 ) (908 ) Prior service cost 11 11 Net loss (gain) 307 499 Net periodic benefit cost $ 142 $ 378 Defined Benefit Postretirement Healthcare Plan The components of net periodic benefit cost for the Defined Benefit Postretirement Healthcare Plan were as follows (in thousands): Three Months Ended March 31, 2017 2016 Service cost $ 52 $ 51 Interest cost 44 47 Prior service cost (benefit) (84 ) (84 ) Net periodic benefit cost $ 12 $ 14 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): Three Months Ended March 31, 2017 2016 Interest cost $ 29 $ 30 Net loss (gain) 22 21 Net periodic benefit cost $ 51 $ 51 |
Schedule of Defined Benefit Plans Contributions | Contributions made for 2017 and anticipated contributions for 2017 and 2018 are as follows (in thousands): Contributions Three Months Ended March 31, 2017 Remaining Anticipated Contributions for 2017 Anticipated Contributions for 2018 Defined Benefit Pension Plan $ — $ 1,305 $ 660 Defined Benefit Postretirement Healthcare Plan $ 135 $ 406 $ 565 Supplemental Non-qualified Defined Benefit Plans $ 62 $ 185 $ 246 |
Fair Value of Financial Instr20
Fair Value of Financial Instruments: (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Financial Instruments | The estimated fair values of our financial instruments were as follows (in thousands) as of: March 31, 2017 December 31, 2016 Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents (a) $ 1,127 $ 1,127 $ 234 $ 234 Long-term debt, including current maturities (b) $ 339,791 $ 424,453 $ 339,756 $ 410,466 _________________ (a) Carrying value approximates fair value due to either short-term length of maturity or variable interest rates that approximate prevailing market rates and therefore is classified in Level 1 in the fair value hierarchy. (b) Long-term debt is valued using the market approach based on observable inputs of quoted market prices and yields available for debt instruments either directly or indirectly for similar maturities and debt ratings in active markets and therefore is classified in Level 2 in the fair value hierarchy. The carrying amount of our variable rate debt approximates fair value due to the variable interest rates with short reset periods. |
Supplemental Disclosure of Ca21
Supplemental Disclosure of Cash Flow Information: (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | Three months ended March 31, 2017 2016 (in thousands) Non-cash investing and financing activities - Property, plant and equipment acquired with accrued liabilities $ 10,998 $ 5,087 Non-cash (decrease) to money pool notes receivable, net $ (7,000 ) $ (12,500 ) Non-cash dividend to Parent $ 7,000 $ 12,500 Cash (paid) refunded during the period for - Interest (net of amounts capitalized) $ (3,014 ) $ (2,989 ) |
Management's Statement_ Revisio
Management's Statement: Revision (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Prior Period Adjustments Restatement [Line Items] | ||
Net Cash Provided by (Used in) Operating Activities | $ 29,383 | $ 23,413 |
Restatement Adjustment | ||
Prior Period Adjustments Restatement [Line Items] | ||
Net Cash Provided by (Used in) Operating Activities | 3,300 | |
Cash and Cash Equivalents | ||
Prior Period Adjustments Restatement [Line Items] | ||
Prior Period Reclassification Adjustment | $ 11,000 |
Accounts Receivable and Allow23
Accounts Receivable and Allowance For Doubtful Accounts: (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Accounts Receivable, Net [Abstract] | ||
Accounts receivable, trade | $ 16,197 | $ 16,972 |
Unbilled Receivables, Current | 11,524 | 13,799 |
Allowance for doubtful accounts | (264) | (157) |
Receivables - customers, net | $ 27,457 | $ 30,614 |
Regulatory Accounting_ Regulato
Regulatory Accounting: Regulatory Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Regulatory Assets [Line Items] | ||
Regulatory Assets | $ 93,981 | $ 92,134 |
Loss on Reacquired Debt | ||
Regulatory Assets [Line Items] | ||
Recovery/Amortization Period (in years) | 8 years | |
Regulatory Assets | $ 1,745 | 1,815 |
Allowance For Funds Used During Construction | ||
Regulatory Assets [Line Items] | ||
Recovery/Amortization Period (in years) | 45 years | |
Regulatory Assets | $ 9,607 | 9,367 |
Pension and Other Postretirement Plans Costs | ||
Regulatory Assets [Line Items] | ||
Recovery/Amortization Period (in years) | 12 years | |
Regulatory Assets | $ 20,100 | 20,100 |
Deferred Fuel Costs | ||
Regulatory Assets [Line Items] | ||
Recovery/Amortization Period (in years) | 1 year | |
Regulatory Assets | $ 23,075 | 23,016 |
Flow Through Accounting | ||
Regulatory Assets [Line Items] | ||
Recovery/Amortization Period (in years) | 35 years | |
Regulatory Assets | $ 12,802 | 12,545 |
Environmental Restoration Costs | ||
Regulatory Assets [Line Items] | ||
Recovery/Amortization Period (in years) | 8 years | |
Regulatory Assets | $ 12,025 | 12,456 |
Other Regulatory Assets | ||
Regulatory Assets [Line Items] | ||
Recovery/Amortization Period (in years) | 2 years | |
Regulatory Assets | $ 14,627 | 12,835 |
Vegetation Management | ||
Regulatory Assets [Line Items] | ||
Regulatory Assets | $ 14,000 | $ 12,000 |
Regulatory Accounting_ Regula25
Regulatory Accounting: Regulatory Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Regulatory Liabilities [Line Items] | ||
Regulatory Liabilities | $ 53,896 | $ 53,950 |
Cost Of Removal | ||
Regulatory Liabilities [Line Items] | ||
Recovery/Amortization Period (in years) | 61 years | |
Regulatory Liabilities | $ 41,592 | 41,541 |
Pension and Other Postretirement Plans Costs | ||
Regulatory Liabilities [Line Items] | ||
Recovery/Amortization Period (in years) | 12 years | |
Regulatory Liabilities | $ 12,304 | 12,304 |
Other Regulatory Liabilities | ||
Regulatory Liabilities [Line Items] | ||
Recovery/Amortization Period (in years) | 13 years | |
Regulatory Liabilities | $ 0 | $ 105 |
Regulatory Accounting_ Recovery
Regulatory Accounting: Recovery Period (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Deferred Fuel Costs | |
Regulatory Assets [Line Items] | |
Regulatory Assets Amortization Period, Unclassified (less than) | 1 year |
Related Party Transactions_ (De
Related Party Transactions: (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||
Receivables - affiliates | $ 5,390 | $ 9,526 | |
Accounts payable - affiliates | $ 27,289 | 31,799 | |
Related Party Transaction, Utility Money Pool Interest Rate | 1.47% | ||
Money pool notes receivable, net | $ 32,949 | $ 28,409 | |
Parent | |||
Related Party Transaction [Line Items] | |||
Commitment fee percentage | 1.00% | ||
Utility Money Pool | |||
Related Party Transaction [Line Items] | |||
Net interest income (expense) | $ 126 | $ 278 | |
Subsidiary of Common Parent | Corporate support services and fees from Parent, Black Hills Service Company and Black Hills Utility Holdings | |||
Related Party Transaction [Line Items] | |||
Fuel and purchased power | 6,611 | 6,721 | |
Subsidiary of Common Parent | Gas transportation service agreement with Cheyenne Light for firm and interruptible gas transportation | |||
Related Party Transaction [Line Items] | |||
Fuel and purchased power | 99 | 136 | |
Subsidiary of Common Parent | Purchases of coal from WRDC | |||
Related Party Transaction [Line Items] | |||
Fuel and purchased power | 4,280 | 4,796 | |
Subsidiary of Common Parent | Purchase of excess energy from Cheyenne Light | |||
Related Party Transaction [Line Items] | |||
Fuel and purchased power | 40 | 55 | |
Subsidiary of Common Parent | Purchase of renewable wind energy from Cheyenne Light - Happy Jack | |||
Related Party Transaction [Line Items] | |||
Fuel and purchased power | 606 | 664 | |
Subsidiary of Common Parent | Purchase of renewable wind energy from Cheyenne Light - Silver Sage | |||
Related Party Transaction [Line Items] | |||
Fuel and purchased power | 1,019 | 1,127 | |
Subsidiary of Common Parent | Energy sold to Cheyenne Light | |||
Related Party Transaction [Line Items] | |||
Revenue | 878 | 661 | |
Subsidiary of Common Parent | Rent from electric properties | |||
Related Party Transaction [Line Items] | |||
Revenue | $ 1,272 | $ 1,213 |
Employee Benefit Plans_ (Detail
Employee Benefit Plans: (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Defined Benefit Pension Plan | ||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||
Service cost | $ 136 | $ 151 |
Interest cost | 585 | 625 |
Expected return on plan assets | (897) | (908) |
Prior service cost (benefit) | 11 | 11 |
Net loss (gain) | 307 | 499 |
Net periodic benefit cost | 142 | 378 |
Pension and Other Postretirement Benefit Contributions [Abstract] | ||
Contributions made by Employer | 0 | |
Remaining Anticipated Contributions for Current Year | 1,305 | |
Anticipated Contributions for Next Year | 660 | |
Defined Benefit Postretirement Healthcare Plan | ||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||
Service cost | 52 | 51 |
Interest cost | 44 | 47 |
Prior service cost (benefit) | (84) | (84) |
Net periodic benefit cost | 12 | 14 |
Pension and Other Postretirement Benefit Contributions [Abstract] | ||
Contributions made by Employer | 135 | |
Remaining Anticipated Contributions for Current Year | 406 | |
Anticipated Contributions for Next Year | 565 | |
Supplemental Non-qualified Defined Benefit Plans | ||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||
Interest cost | 29 | 30 |
Net loss (gain) | 22 | 21 |
Net periodic benefit cost | 51 | $ 51 |
Pension and Other Postretirement Benefit Contributions [Abstract] | ||
Contributions made by Employer | 62 | |
Remaining Anticipated Contributions for Current Year | 185 | |
Anticipated Contributions for Next Year | $ 246 |
Fair Value of Financial Instr29
Fair Value of Financial Instruments: (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Cash and cash equivalents, carrying amount | $ 1,127 | $ 234 | $ 18,438 | $ 297 |
Carrying Amount | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Cash and cash equivalents, carrying amount | 1,127 | 234 | ||
Long-term debt, including current maturities, carrying amount | 339,791 | 339,756 | ||
Fair Value | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Cash and cash equivalents, fair value | 1,127 | 234 | ||
Long-term debt, including current maturities, fair value | $ 424,453 | $ 410,466 |
Supplemental Disclosure of Ca30
Supplemental Disclosure of Cash Flow Information: (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Noncash Investing and Financing Items [Abstract] | ||
Property, plant and equipment acquired with accrued liabilities | $ 10,998 | $ 5,087 |
Interest and Income Taxes Paid Net [Abstract] | ||
Interest (net of amounts capitalized) | (3,014) | (2,989) |
Subsidiary of Common Parent | ||
Noncash Investing and Financing Items [Abstract] | ||
Non-cash (decrease) to money pool notes receivable, net | (7,000) | (12,500) |
Parent | ||
Noncash Investing and Financing Items [Abstract] | ||
Non-cash dividend to Parent | $ 7,000 | $ 12,500 |