NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Unitil Corporation (Unitil or the Company) is a public
utility holding company. Unitil and its subsidiaries are subject to regulation as a holding company system by the Federal Energy Regulatory Commission (FERC) under the Energy Policy Act of 2005. The following companies are wholly-owned subsidiaries
of Unitil: Unitil Energy Systems, Inc. (Unitil Energy), Fitchburg Gas and Electric Light Company (Fitchburg), Northern Utilities, Inc. (Northern Utilities), Granite State Gas Transmission, Inc. (Granite State), Unitil Power Corp. (Unitil Power),
Unitil Realty Corp. (Unitil Realty), Unitil Service Corp. (Unitil Service) and its non-regulated business unit Unitil Resources, Inc. (Unitil Resources). Usource Inc. and Usource L.L.C. are subsidiaries of Unitil Resources.
The Companys earnings are seasonal and are typically higher in the first and fourth quarters when customers use natural gas for heating purposes.
Unitils principal business is the local distribution of electricity in the southeastern seacoast and state capital regions of New
Hampshire and the greater Fitchburg area of north central Massachusetts, and the local distribution of natural gas in southeastern New Hampshire, portions of southern and central Maine and in the greater Fitchburg area of north central
Massachusetts. Unitil has three distribution utility subsidiaries, Unitil Energy, which operates in New Hampshire, Fitchburg, which operates in Massachusetts and Northern Utilities, which operates in New Hampshire and Maine (collectively referred to
as the distribution utilities).
Granite State is a natural gas transportation pipeline, operating 86 miles of underground gas transmission
pipeline primarily located in Maine and New Hampshire. Granite State provides Northern Utilities with interconnection to three major natural gas pipelines and access to domestic natural gas supplies in the south and Canadian natural gas supplies in
the north. Granite State derives its revenues principally from the transportation services provided to Northern Utilities and, to a lesser extent, third-party marketers.
A fifth utility subsidiary, Unitil Power, formerly functioned as the full requirements wholesale power supply provider for Unitil Energy. In connection with the implementation of electric industry
restructuring in New Hampshire, Unitil Power ceased being the wholesale supplier of Unitil Energy on May 1, 2003 and divested of its long-term power supply contracts through the sale of the entitlements to the electricity associated with
various electric power supply contracts it had acquired to serve Unitil Energys customers.
Unitil also has three other wholly-owned
subsidiaries: Unitil Service; Unitil Realty; and Unitil Resources. Unitil Service provides, at cost, a variety of administrative and professional services, including regulatory, financial, accounting, human resources, engineering, operations,
technology, energy management and management services on a centralized basis to its affiliated Unitil companies. Unitil Realty owns and manages the Companys corporate office in Hampton, New Hampshire and leases this facility to Unitil Service
under a long-term lease arrangement. Unitil Resources is the Companys wholly-owned non-regulated subsidiary. Usource, Inc. and Usource L.L.C. (collectively, Usource) are wholly-owned subsidiaries of Unitil Resources. Usource provides brokering
and advisory services to large commercial and industrial customers in the northeastern United States.
22
Basis of Presentation
The accompanying unaudited consolidated financial statements of Unitil
have been prepared in accordance with the instructions to Form 10-Q and include all of the information and footnotes required by generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of results to be expected for the year ending December 31, 2017. For further information, please refer to
Note 1 of Part II to the Consolidated Financial Statements Summary of Significant Accounting Policies of the Companys Form 10-K for the year ended December 31, 2016, as filed with the Securities and Exchange Commission
(SEC) on February 2, 2017, for a description of the Companys Basis of Presentation.
Income Taxes
The Company is
subject to Federal and State income taxes as well as various other business taxes. This process involves estimating the Companys current tax liabilities as well as assessing temporary and permanent differences resulting from the timing of the
deductions of expenses and recognition of taxable income for tax and book accounting purposes. These temporary differences result in deferred tax assets and liabilities, which are included in the Companys Consolidated Balance Sheets. The
Company accounts for income tax assets, liabilities and expenses in accordance with the FASB Codification guidance on Income Taxes. The Company classifies penalty and interest expense related to income tax liabilities as income tax expense and
interest expense, respectively, in the Consolidated Statements of Earnings.
Provisions for income taxes are calculated in each of the
jurisdictions in which the Company operates for each period for which a statement of earnings is presented. The Company accounts for income taxes in accordance with the FASB Codification guidance on Income Taxes, which requires an asset and
liability approach for the financial accounting and reporting of income taxes. Significant judgments and estimates are required in determining the current and deferred tax assets and liabilities. The Companys current and deferred tax assets
and liabilities reflect its best assessment of estimated future taxes to be paid. In accordance with the FASB Codification, the Company periodically assesses the realization of its deferred tax assets and liabilities and adjusts the income tax
provision, the current tax liability and deferred taxes in the period in which the facts and circumstances which gave rise to the revision become known.
Cash and Cash Equivalents
Cash and Cash Equivalents includes all cash and cash equivalents to which the Company has legal title. Cash equivalents include short-term investments with original
maturities of three months or less and interest bearing deposits. The Companys cash and cash equivalents are held at financial institutions and at times may exceed federally insured limits. The Company has not experienced any losses in such
accounts. Under the Independent System OperatorNew England (ISO-NE) Financial Assurance Policy (Policy), Unitils subsidiaries Unitil Energy, Fitchburg and Unitil Power are required to provide assurance of their ability to satisfy their
obligations to ISO-NE. Under this Policy, Unitils subsidiaries provide cash deposits covering approximately 2-1/2 months of outstanding obligations, less credit amounts that are based on the Companys credit rating. As of March 31,
2017, March 31, 2016 and December 31, 2016, the Unitil subsidiaries had deposited $2.6 million, $2.1 million and $2.8 million, respectively to satisfy their ISO-NE obligations. In addition, Northern Utilities has cash margin deposits
to satisfy requirements for its natural gas hedging program. There were no cash margin deposits at Northern Utilities as of March 31, 2017, March 31, 2016 and December 31, 2016.
Allowance for Doubtful Accounts
The Company recognizes a provision for doubtful accounts each month based upon the Companys
experience in collecting electric and gas utility service accounts receivable in prior years. At the end of each month, an analysis of the delinquent receivables is performed which takes into account an assumption about the cash recovery of
delinquent receivables. The analysis also calculates the amount of written-off receivables that are
23
recoverable through regulatory rate reconciling mechanisms. The Companys distribution utilities are authorized by regulators to recover the costs of their energy commodity portion of bad
debts through rate mechanisms. Also, the electric and gas divisions of Fitchburg are authorized to recover through rates past due amounts associated with hardship accounts that are protected from shut-off. Evaluating the adequacy of the Allowance
for Doubtful Accounts requires judgment about the assumptions used in the analysis. It has been the Companys experience that the assumptions it has used in evaluating the adequacy of the Allowance for Doubtful Accounts have proven to be
reasonably accurate.
The Allowance for Doubtful Accounts as of March 31, 2017, March 31, 2016 and December 31, 2016,
which are included in Accounts Receivable, net on the accompanying unaudited consolidated balance sheets, was as follows:
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|
|
|
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|
|
($ millions)
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Allowance for Doubtful Accounts
|
|
$
|
1.0
|
|
|
$
|
1.5
|
|
|
$
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Revenue
Accrued Revenue includes the current portion of Regulatory Assets and unbilled revenues.
The following table shows the components of Accrued Revenue as of March 31, 2017, March 31, 2016 and December 31, 2016.
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|
|
|
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|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
Accrued Revenue ($ millions)
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Regulatory Assets Current
|
|
$
|
32.0
|
|
|
$
|
33.7
|
|
|
$
|
37.9
|
|
Unbilled Revenues
|
|
|
9.3
|
|
|
|
8.4
|
|
|
|
11.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Accrued Revenue
|
|
$
|
41.3
|
|
|
$
|
42.1
|
|
|
$
|
49.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Gas Receivable
Northern Utilities and Fitchburg have gas exchange and storage agreements whereby
natural gas purchases during the months of April through October are delivered to a third party. The third party delivers natural gas back to the Company during the months of November through March. The exchange and storage gas volumes are recorded
at weighted average cost. The following table shows the components of Exchange Gas Receivable as of March 31, 2017, March 31, 2016 and December 31, 2016.
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|
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|
|
|
|
|
|
March 31,
|
|
|
December 31,
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|
Exchange Gas Receivable ($ millions)
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|
2017
|
|
|
2016
|
|
|
2016
|
|
Northern Utilities
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|
$
|
1.9
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|
|
$
|
6.3
|
|
|
$
|
7.8
|
|
Fitchburg
|
|
|
0.2
|
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Exchange Gas Receivable
|
|
$
|
2.1
|
|
|
$
|
6.8
|
|
|
$
|
8.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Inventory
The Company uses the weighted average cost methodology to value natural gas inventory. The
following table shows the components of Gas Inventory as of March 31, 2017, March 31, 2016 and December 31, 2016.
24
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|
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|
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|
|
March 31,
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|
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December 31,
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Gas Inventory ($ millions)
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Natural Gas
|
|
$
|
|
|
|
$
|
0.1
|
|
|
$
|
0.3
|
|
Propane
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.2
|
|
Liquefied Natural Gas & Other
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gas Inventory
|
|
$
|
0.3
|
|
|
$
|
0.4
|
|
|
$
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility Plant
The cost of additions to Utility Plant and the cost of renewals and betterments are
capitalized. Cost consists of labor, materials, services and certain indirect construction costs, including an allowance for funds used during construction (AFUDC). The costs of current repairs and minor replacements are charged to appropriate
operating expense accounts. The original cost of utility plant retired or otherwise disposed of is charged to the accumulated provision for depreciation. The Company includes in its mass asset depreciation rates, which are periodically reviewed as
part of its ratemaking proceedings, cost of removal amounts to provide for future negative salvage value. At March 31, 2017, March 31, 2016 and December 31, 2016, the Company estimates that the cost of removal amounts, which are
recorded on the Consolidated Balance Sheets in Cost of Removal Obligations are $79.7 million, $72.3 million, and $77.0 million, respectively.
Regulatory Accounting
The Companys principal business is the distribution of electricity and natural gas by the three distribution
utilities: Unitil Energy, Fitchburg and Northern Utilities. Unitil Energy and Fitchburg are subject to regulation by the FERC. Fitchburg is also regulated by the Massachusetts Department of Public Utilities (MDPU), Unitil Energy is regulated by the
New Hampshire Public Utilities Commission (NHPUC) and Northern Utilities is regulated by the Maine Public Utilities Commission (MPUC) and NHPUC. Granite State, the Companys natural gas transmission pipeline, is regulated by the FERC.
Accordingly, the Company uses the Regulated Operations guidance as set forth in the FASB Codification. The Company has recorded Regulatory Assets and Regulatory Liabilities which will be recovered from customers, or applied for customer benefit, in
accordance with rate provisions approved by the applicable public utility regulatory commission.
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|
|
|
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|
|
March 31,
|
|
|
December 31,
|
|
Regulatory Assets consist of the following ($ millions)
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Retirement Benefits
|
|
$
|
75.7
|
|
|
$
|
64.4
|
|
|
$
|
75.9
|
|
Energy Supply & Other Regulatory Tracker Mechanisms
|
|
|
27.7
|
|
|
|
28.2
|
|
|
|
32.7
|
|
Deferred Storm Charges
|
|
|
8.6
|
|
|
|
13.8
|
|
|
|
9.6
|
|
Environmental
|
|
|
10.7
|
|
|
|
11.9
|
|
|
|
10.8
|
|
Income Taxes
|
|
|
7.3
|
|
|
|
8.3
|
|
|
|
7.3
|
|
Other
|
|
|
5.5
|
|
|
|
5.3
|
|
|
|
5.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Regulatory Assets
|
|
|
135.5
|
|
|
|
131.9
|
|
|
|
142.0
|
|
Less: Current Portion of Regulatory Assets
(1)
|
|
|
32.0
|
|
|
|
33.7
|
|
|
|
37.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory Assets noncurrent
|
|
$
|
103.5
|
|
|
$
|
98.2
|
|
|
$
|
104.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects amounts included in Accrued Revenue, discussed above, on the Companys Consolidated Balance Sheets.
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25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
Regulatory Liabilities consist of the following ($ millions)
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Regulatory Tracker Mechanisms
|
|
$
|
9.2
|
|
|
$
|
12.0
|
|
|
$
|
6.2
|
|
Gas Pipeline Refund (Note 6)
|
|
|
4.3
|
|
|
|
10.1
|
|
|
|
6.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Regulatory Liabilities
|
|
|
13.5
|
|
|
|
22.1
|
|
|
|
13.0
|
|
Less: Current Portion of Regulatory Liabilities
|
|
|
12.8
|
|
|
|
18.8
|
|
|
|
10.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory Liabilities noncurrent
|
|
$
|
0.7
|
|
|
$
|
3.3
|
|
|
$
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Generally, the Company receives a return on investment on its regulated assets for which a cash outflow has been made.
Included in Regulatory Assets as of March 31, 2017 are $2.5 million of deferred storm charges to be recovered over the next one and a half years and $8.0 million of environmental costs, rate case costs and other expenditures to be recovered
over varying periods in the next seven years. Regulators have authorized recovery of these expenditures, but without a return. Regulatory commissions can reach different conclusions about the recovery of costs, which can have a material impact on
the Companys Consolidated Financial Statements. The Company believes it is probable that its regulated distribution and transmission utilities will recover their investments in long-lived assets, including regulatory assets. If the Company, or
a portion of its assets or operations, were to cease meeting the criteria for application of these accounting rules, accounting standards for businesses in general would become applicable and immediate recognition of any previously deferred costs,
or a portion of deferred costs, would be required in the year in which the criteria are no longer met, if such deferred costs were not recoverable in the portion of the business that continues to meet the criteria for application of the FASB
Codification topic on Regulated Operations. If unable to continue to apply the FASB Codification provisions for Regulated Operations, the Company would be required to apply the provisions for the Discontinuation of Rate-Regulated Accounting included
in the FASB Codification. In the Companys opinion, its regulated operations will be subject to the FASB Codification provisions for Regulated Operations for the foreseeable future.
Derivatives
The Companys regulated energy subsidiaries enter into energy supply contracts to serve their electric and gas customers. The Company follows a procedure for determining
whether each contract qualifies as a derivative instrument under the guidance provided by the FASB Codification on Derivatives and Hedging. For each contract, the Company reviews and documents the key terms of the contract. Based on those terms and
any additional relevant components of the contract, the Company determines and documents whether the contract qualifies as a derivative instrument as defined in the FASB Codification. The Company has determined that none of its energy supply
contracts, other than the regulatory approved hedging program, described below, qualifies as a derivative instrument under the guidance set forth in the FASB Codification.
The Company has a regulatory approved hedging program for Northern Utilities designed to fix or cap a portion of its gas supply costs for the coming years of service. The Company purchases call option
contracts on NYMEX natural gas futures contracts for future winter period months.
Any gains or losses resulting from the change in the fair
value of these derivatives are passed through to ratepayers directly through Northern Utilities Cost of Gas Clause. The fair value of these derivatives is determined using Level 2 inputs (valuations based on quoted prices in markets that are
not active or for which all significant inputs are observable, either directly or indirectly), specifically based on the NYMEX closing prices for outstanding contracts as of the balance sheet date. As a result of the ratemaking process, the Company
records gains and losses resulting from the change in fair value of the derivatives as regulatory liabilities or assets, then reclassifies these gains or losses into Cost of Gas Sales when the gains and losses are passed through to customers through
the Cost of Gas Clause.
26
As of March 31, 2017, March 31, 2016 and December 31, 2016 the Company had 1.2 billion,
1.8 billion and 2.0 billion cubic feet (BCF), respectively, outstanding in natural gas futures and options contracts under its hedging program.
As of March 31, 2017 and 2016, the Companys derivatives that are not designated as hedging instruments under FASB ASC 815-20 have a fair value
of $0.3 million and less than $0.1 million, respectively.
Investments in Marketable Securities
The Company has a trust through
which it invests in a variety of equity and fixed income mutual funds. These funds are intended to satisfy obligations under the Companys Supplemental Executive Retirement Plan (SERP) (See further discussion of the SERP in Note 9.
At March 31, 2017, March 31, 2016 and December 31, 2016, the fair value of the Companys investments in these
trading securities, which are recorded on the Consolidated Balance Sheets in Other Assets, were $3.3 million, $0.7 and $1.9 million, respectively, as shown in the table below. These investments are valued based on quoted prices from active markets
and are categorized in Level 1 as they are actively traded and no valuation adjustments have been applied. Changes in the fair value of these investments are recorded in Other Expense, net.
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|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
Fair Value of Marketable Securities ($ millions)
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Equity Funds
|
|
$
|
1.1
|
|
|
$
|
0.4
|
|
|
$
|
1.1
|
|
Fixed Income Funds
|
|
|
0.9
|
|
|
|
0.3
|
|
|
|
0.8
|
|
Cash and Equivalents
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Marketable Securities
|
|
$
|
3.3
|
|
|
$
|
0.7
|
|
|
$
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Supply Obligations
The following discussion and table summarize the nature and amounts of the items
recorded as Energy Supply Obligations (current portion) and Other Noncurrent Liabilities (noncurrent portion) on the Companys Consolidated Balance Sheets.
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|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
Energy Supply Obligations ($ millions)
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Gas Obligation
|
|
$
|
1.9
|
|
|
$
|
6.3
|
|
|
$
|
7.8
|
|
Renewable Energy Portfolio Standards
|
|
|
6.8
|
|
|
|
7.3
|
|
|
|
3.9
|
|
Power Supply Contract Divestitures
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Energy Supply Obligations Current
|
|
|
9.0
|
|
|
|
13.9
|
|
|
|
12.0
|
|
Long-Term:
|
|
|
|
|
|
|
|
|
|
|
|
|
Power Supply Contract Divestitures
|
|
|
1.2
|
|
|
|
1.5
|
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Energy Supply Obligations
|
|
$
|
10.2
|
|
|
$
|
15.4
|
|
|
$
|
13.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Exchange Gas Obligation Northern Utilities enters into gas exchange agreements under which Northern
Utilities releases certain natural gas pipeline and storage assets, resells the natural gas storage inventory to an asset manager and subsequently repurchases the inventory over the course of the natural gas heating season at the same price at which
it sold the natural gas inventory to the asset manager. The gas inventory related to these agreements is recorded in Exchange Gas Receivable on the Companys Consolidated Balance Sheets while the corresponding obligations are recorded in Energy
Supply Obligations.
Renewable Energy Portfolio Standards Renewable Energy Portfolio Standards (RPS) require retail electricity
suppliers, including public utilities, to demonstrate that required percentages of their sales are met with power generated from certain types of resources or technologies. Compliance is demonstrated by purchasing and retiring Renewable Energy
Certificates (REC) generated by facilities approved by the state as qualifying for REC treatment. Unitil Energy and Fitchburg purchase RECs in compliance with RPS legislation in New Hampshire and Massachusetts for supply provided to default service
customers. RPS compliance costs are a supply cost that is recovered in customer default service rates. Unitil Energy and Fitchburg collect RPS compliance costs from customers throughout the year and demonstrate compliance for each calendar year on
the following July 1. Due to timing differences between collection of revenue from customers and payment of REC costs to suppliers, Unitil Energy and Fitchburg typically maintain accrued revenue for RPS compliance which is recorded in Accrued
Revenue with a corresponding liability in Energy Supply Obligations on the Companys Consolidated Balance Sheets.
Fitchburg has entered
into long-term renewable contracts for electric energy and/or renewable energy credits pursuant to Massachusetts legislation, specifically, the Act Relative to Green Communities of 2008 and the Act Relative to Competitively Priced Electricity
(2012) in the Commonwealth, and the MDPUs regulations implementing the legislation. The generating facilities associated with three of these contracts have been constructed and are operating. A recent round of long-term renewable energy
procurements was conducted during 2016 and several contracts are expected to be finalized and submitted to MDPU for approval in 2017. Additional procurements are expected in compliance with the Act to Promote Energy Diversity (2016). Fitchburg
recovers the costs associated with long-term renewable contracts on a fully reconciling basis through a MDPU-approved cost recovery mechanism.
Power Supply Contract Divestitures Unitil Energys and Fitchburgs customers are entitled to purchase their electric or natural gas
supplies from third-party suppliers. In connection with the implementation of retail choice, Unitil Power, which formerly functioned as the wholesale power supply provider for Unitil Energy, and Fitchburg divested their long-term power supply
contracts through the sale of the entitlements to the electricity sold under those contracts. Unitil Energy and Fitchburg recover in their rates all the costs associated with the divestiture of their power supply portfolios and have secured
regulatory approval from the NHPUC and MDPU, respectively, for the recovery of power supply-related stranded costs. The obligations related to these divestitures are recorded in Energy Supply Obligations (current portion) and Other Noncurrent
Liabilities (noncurrent portion) on the Companys Consolidated Balance Sheets with corresponding regulatory assets recorded in Accrued Revenue (current portion) and Regulatory Assets (noncurrent portion).
Recently Issued Pronouncements
In March 2017, the FASB issued Accounting Standards Update (ASU) No. 2017-07, Compensation
Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU requires an employer to report the service cost component in the same line item or items as other
compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a
subtotal of income from
28
operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a
separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The amendments also allow only the service cost component to be eligible for
capitalization when applicable. The amendments are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company is evaluating the impact that
this new guidance will have on the Companys Consolidated Financial Statements.
In April and March 2016, the FASB issued ASU 2016-10 and
ASU 2016-08, respectively. ASU 2016-10 clarifies the implementation guidance on licensing and the identification of performance obligations considerations included in ASU 2014-09. ASU 2016-08 provides amendments to clarify the implementation
guidance on principal versus agent considerations included in ASU 2014-09. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09. ASU 2014-09 outlines a single comprehensive model for entities to use in
accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The effective date of this pronouncement is for fiscal years beginning after
December 15, 2017 with early adoption permitted as of the original effective date. The Company will implement the standard in the first quarter of 2018 on a modified retrospective basis and it is not expected to have a material impact on the
Companys Consolidated Financial Statements.
In March 2016, the FASB issued ASU 2016-09, which provides for improvements to employee
share-based payment accounting. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment
transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company adopted this new guidance in the first quarter of 2017 and it did
not have an impact on the Companys Consolidated Financial Statements.
In February 2016, the FASB issued ASU 2016-02, which replaces the
existing guidance in Accounting Standard Codification 840, Leases. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. ASU 2016-02 requires a dual approach for lessee accounting
under which a lessee would account for leases as finance (also referred to as capital) leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and corresponding lease liability.
For finance leases the lessee would recognize interest expense and amortization of the right-of-use asset and for operating leases the lessee would recognize straight-line total lease expense. The Company is evaluating the impact that this new
guidance will have on the Companys Consolidated Financial Statements.
In January 2016, the FASB issued Accounting Standards Update
(ASU) 2016-01 which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. A financial instrument is defined as cash, evidence of ownership interest in a company or other entity, or a contract
that both: (i) imposes on one entity a contractual obligation either to deliver cash or another financial instrument to a second entity or to exchange other financial instruments on potentially unfavorable terms with the second entity and
(ii) conveys to that second entity a contractual right either to receive cash or another financial instruments from the first entity or to exchange other financial instruments on potentially favorable terms with the first entity. This
pronouncement is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those annual periods with earlier application permitted as of the beginning of the fiscal year of
adoption. The Company is evaluating the impact that this new guidance will have on the Companys Consolidated Financial Statements.
29
Other than the pronouncements discussed above, there are no recently issued pronouncements that the Company
has not already adopted or that have a material impact on the Company.
Subsequent Events
The Company evaluates all events or
transactions through the date of the related filing. During the period through the date of this filing, the Company did not have any material subsequent events, other than the pricing of debt discussed below, that would result in adjustment to or
disclosure in its Consolidated Financial Statements.
On April 21, 2017, Northern Utilities, Fitchburg and Granite State, priced $90
million collectively of Senior Unsecured Notes (Notes) through a private placement marketing process to institutional investors. Northern Utilities priced $20 million of Notes due 2027 at 3.52% and $30 million of Notes due 2047 at 4.32%. Fitchburg
priced $10 million of Notes due 2027 at 3.52% and $15 million of Notes due 2047 at 4.32%. Granite State priced $15 million of Notes due 2027 at 3.72%.
Northern Utilities, Fitchburg and Granite State plan to use the net proceeds from the offering to repay short-term debt and for general corporate purposes. Northern Utilities, Fitchburg and Granite State
anticipate closing this long-term financing in the fourth quarter of 2017.
Northern Utilities, Fitchburg and Granite State have received
initial commitments from the expected purchasers of the Notes. However, the issuance of the Notes is subject to execution of the definitive documentation and funding of the commitments.
The Notes offered have not been and will not be registered under the Securities Act of 1933 (Act), or any state securities laws, and may not be offered or sold in the United States absent registration or
an applicable exemption from the registration requirements of the Act and applicable state securities laws.
NOTE 2 DIVIDENDS
DECLARED PER SHARE
|
|
|
|
|
|
|
Declaration
Date
|
|
Date
Paid (Payable)
|
|
Shareholder of
Record Date
|
|
Dividend
Amount
|
04/26/17
|
|
05/30/17
|
|
05/16/17
|
|
$ 0.360
|
01/25/17
|
|
02/28/17
|
|
02/14/17
|
|
$ 0.360
|
|
|
|
|
10/19/16
|
|
11/28/16
|
|
11/14/16
|
|
$ 0.355
|
07/20/16
|
|
08/26/16
|
|
08/12/16
|
|
$ 0.355
|
04/20/16
|
|
05/27/16
|
|
05/13/16
|
|
$ 0.355
|
01/27/16
|
|
02/26/16
|
|
02/12/16
|
|
$ 0.355
|
30
NOTE 3 SEGMENT INFORMATION
The following table provides significant segment financial data for the three months ended March 31, 2017 and March 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2017 ($ millions)
|
|
Gas
|
|
|
Electric
|
|
|
Non-
Regulated
|
|
|
Other
|
|
|
Total
|
|
Revenues
|
|
$
|
74.8
|
|
|
$
|
49.5
|
|
|
$
|
1.7
|
|
|
$
|
|
|
|
$
|
126.0
|
|
Segment Profit (Loss)
|
|
|
9.9
|
|
|
|
2.1
|
|
|
|
0.4
|
|
|
|
|
|
|
|
12.4
|
|
Identifiable Segment Assets
|
|
|
641.8
|
|
|
|
442.8
|
|
|
|
7.0
|
|
|
|
42.8
|
|
|
|
1,134.4
|
|
Capital Expenditures
|
|
|
5.7
|
|
|
|
8.3
|
|
|
|
|
|
|
|
3.5
|
|
|
|
17.5
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2016 ($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
73.1
|
|
|
$
|
51.1
|
|
|
$
|
1.6
|
|
|
$
|
|
|
|
$
|
125.8
|
|
Segment Profit
|
|
|
9.4
|
|
|
|
1.3
|
|
|
|
0.3
|
|
|
|
(0.1
|
)
|
|
|
10.9
|
|
Identifiable Segment Assets
|
|
|
596.9
|
|
|
|
420.8
|
|
|
|
6.8
|
|
|
|
28.4
|
|
|
|
1,052.9
|
|
Capital Expenditures
|
|
|
3.1
|
|
|
|
5.7
|
|
|
|
|
|
|
|
2.5
|
|
|
|
11.3
|
|
|
|
|
|
|
|
As of December 31, 2016 ($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable Segment Assets
|
|
$
|
645.2
|
|
|
$
|
441.1
|
|
|
$
|
6.8
|
|
|
$
|
35.1
|
|
|
$
|
1,128.2
|
|
31
NOTE 4 DEBT AND FINANCING ARRANGEMENTS
Details on long-term debt at March 31, 2017, March 31, 2016 and December 31, 2016 are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Unitil Corporation Senior Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
6.33% Notes, Due May 1, 2022
|
|
$
|
20.0
|
|
|
$
|
20.0
|
|
|
$
|
20.0
|
|
3.70% Notes, Due August 1, 2026
|
|
|
30.0
|
|
|
|
|
|
|
|
30.0
|
|
|
|
|
|
Unitil Energy Systems, Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
|
First Mortgage Bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
5.24% Series, Due March 2, 2020
|
|
|
15.0
|
|
|
|
15.0
|
|
|
|
15.0
|
|
8.49% Series, Due October 14, 2024
|
|
|
9.0
|
|
|
|
12.0
|
|
|
|
9.0
|
|
6.96% Series, Due September 1, 2028
|
|
|
20.0
|
|
|
|
20.0
|
|
|
|
20.0
|
|
8.00% Series, Due May 1, 2031
|
|
|
15.0
|
|
|
|
15.0
|
|
|
|
15.0
|
|
6.32% Series, Due September 15, 2036
|
|
|
15.0
|
|
|
|
15.0
|
|
|
|
15.0
|
|
|
|
|
|
Fitchburg Gas and Electric Light Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
6.75% Notes, Due November 30, 2023
|
|
|
9.5
|
|
|
|
11.4
|
|
|
|
9.5
|
|
6.79% Notes, Due October 15, 2025
|
|
|
10.0
|
|
|
|
10.0
|
|
|
|
10.0
|
|
7.37% Notes, Due January 15, 2029
|
|
|
12.0
|
|
|
|
12.0
|
|
|
|
12.0
|
|
5.90% Notes, Due December 15, 2030
|
|
|
15.0
|
|
|
|
15.0
|
|
|
|
15.0
|
|
7.98% Notes, Due June 1, 2031
|
|
|
14.0
|
|
|
|
14.0
|
|
|
|
14.0
|
|
|
|
|
|
Northern Utilities Senior Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
6.95% Senior Notes, Series A, Due December 3, 2018
|
|
|
20.0
|
|
|
|
30.0
|
|
|
|
20.0
|
|
5.29% Senior Notes, Due March 2, 2020
|
|
|
25.0
|
|
|
|
25.0
|
|
|
|
25.0
|
|
7.72% Senior Notes, Series B, Due December 3, 2038
|
|
|
50.0
|
|
|
|
50.0
|
|
|
|
50.0
|
|
4.42% Senior Notes, Due October 15, 2044
|
|
|
50.0
|
|
|
|
50.0
|
|
|
|
50.0
|
|
|
|
|
|
Granite State Senior Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
7.15% Senior Notes, Due December 15, 2018
|
|
|
6.7
|
|
|
|
10.0
|
|
|
|
6.7
|
|
|
|
|
|
Unitil Realty Corp.:
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
8.00% Notes, Due Through August 1, 2017
|
|
|
0.2
|
|
|
|
0.9
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-Term Debt
|
|
|
336.4
|
|
|
|
325.3
|
|
|
|
336.6
|
|
Less: Unamortized Debt Issuance Costs
|
|
|
2.9
|
|
|
|
2.8
|
|
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-Term Debt, net of Unamortized Debt Issuance Costs
|
|
|
333.5
|
|
|
|
322.5
|
|
|
|
333.6
|
|
Less: Current Portion
|
|
|
30.0
|
|
|
|
17.1
|
|
|
|
16.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-term Debt, Less Current Portion
|
|
$
|
303.5
|
|
|
$
|
305.4
|
|
|
$
|
316.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
Fair Value of Long-Term Debt
Currently, the Company believes that there is no active market in
the Companys debt securities, which have all been sold through private placements. If there were an active market for the Companys debt securities, the fair value of the Companys long-term debt would be estimated based on the
quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities. The fair value of the Companys long-term debt is estimated using Level 2 inputs (valuations based on
quoted prices available in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are directly observable, and inputs derived
principally from market data.) In estimating the fair value of the Companys long-term debt, the assumed market yield reflects the Moodys Baa Utility Bond Average Yield. Costs, including prepayment costs, associated with the early
settlement of long-term debt are not taken into consideration in determining fair value.
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Estimated Fair Value of Long-Term Debt
|
|
$
|
374.3
|
|
|
$
|
355.7
|
|
|
$
|
370.3
|
|
Credit Arrangements
On October 4, 2013, the Company entered into an Amended and Restated Credit Agreement (as further amended, restated, amended and restated, modified or supplemented from time to time, the Credit
Facility). The Credit Facility terminates October 4, 2020 and provides for a borrowing limit of $120 million which includes a $25 million sublimit for the issuance of standby letters of credit. The Credit Facility provides Unitil with the
ability to elect that borrowings under the Credit Facility bear interest under several options, including at a daily fluctuating rate of interest per annum equal to one-month London Interbank Offered Rate (LIBOR) plus 1.25%. Provided there is no
event of default under the Credit Facility, the Company may on a one-time basis request an increase in the aggregate commitments under the Credit Facility by an aggregate additional amount of up to $30 million.
The Company utilizes the Credit Facility for cash management purposes related to its short-term operating activities. Total gross borrowings were $55.7
million for the three months ended March 31, 2017. Total gross repayments were $61.0 million for the three months ended March 31, 2017. The following table details the borrowing limits, amounts outstanding and amounts available under the
revolving Credit Facility as of March 31, 2017, March 31, 2016 and December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving Credit Facility ($ millions)
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
Limit
|
|
$
|
120.0
|
|
|
$
|
120.0
|
|
|
$
|
120.0
|
|
Short-Term Borrowings Outstanding
|
|
$
|
76.6
|
|
|
$
|
47.9
|
|
|
$
|
81.9
|
|
Letters of Credit Outstanding
|
|
$
|
1.1
|
|
|
$
|
|
|
|
$
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available
|
|
$
|
42.3
|
|
|
$
|
72.1
|
|
|
$
|
37.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
The Credit Facility contains customary terms and conditions for credit facilities of this type, including
affirmative and negative covenants. There are restrictions on, among other things, Unitils and its subsidiaries ability to permit liens or incur indebtedness, and restrictions on Unitils ability to merge or consolidate with another
entity or change its line of business. The affirmative and negative covenants under the Credit Facility shall apply to Unitil until the Credit Facility terminates and all amounts borrowed under the Credit Facility are paid in full (or with respect
to letters of credit, they are cash collateralized). The only financial covenant in the Credit Facility provides that Unitils Funded Debt to Capitalization (as each term is defined in the Credit Facility) cannot exceed 65%, tested on a
quarterly basis. At March 31, 2017, March 31, 2016 and December 31, 2016, the Company was in compliance with the covenants contained in the Credit Facility in effect on that date.
The weighted average interest rates on all short-term borrowings and intercompany money pool transactions were 2.1% and 1.7% for the three months ended
March 31, 2017 and March 31, 2016, respectively. The weighted average interest rate on all short-term borrowings for the twelve months ended December 31, 2016 was 1.8%.
Unitil Corporation and its utility subsidiaries, Fitchburg, Unitil Energy, Northern Utilities, and Granite State are currently rated BBB+ by Standard & Poors Ratings Services.
On April 21, 2017, Northern Utilities, Fitchburg and Granite State, priced $90 million collectively of Senior Unsecured Notes (Notes)
through a private placement marketing process to institutional investors. (See also Subsequent Events in Note 1.)
In April 2014,
Unitil Service Corp. entered into a financing arrangement, structured as a capital lease obligation, for various information systems and technology equipment. Final funding under this capital lease occurred on October 30, 2015, resulting in
total funding of $13.4 million. The capital lease matures on September 30, 2020. As of March 31, 2017, there are $2.6 million of current and $7.1 million of noncurrent obligations under this capital lease on the Companys Consolidated
Balance Sheets.
Northern Utilities enters into asset management agreements under which Northern Utilities releases certain natural gas
pipeline and storage assets, resells the natural gas storage inventory to an asset manager and subsequently repurchases the inventory over the course of the natural gas heating season at the same price at which it sold the natural gas inventory to
the asset manager. There was $3.8 million, $6.7 million and $9.9 million of natural gas storage inventory at March 31, 2017, March 31, 2016 and December 31, 2016, respectively, related to these asset management agreements. The amount
of natural gas inventory released in March 2017 and payable in April 2017 is $2.0 million and is recorded in Accounts Payable at March 31, 2017. The amount of natural gas inventory released in March 2016 and payable in April 2016 was $0.4
million and was recorded in Accounts Payable at March 31, 2016. The amount of natural gas inventory released in December 2016 and payable in January 2017 was $2.1 million and was recorded in Accounts Payable at December 31, 2016.
Guarantees
The Company
provides limited guarantees on certain energy and natural gas storage management contracts entered into by the distribution utilities. The Companys policy is to limit the duration of these guarantees. As of March 31, 2017, there were
approximately $23.9 million of guarantees outstanding and the longest term guarantee extends through August 2017.
The Company also guarantees
the payment of principal, interest and other amounts payable on the notes issued by Unitil Realty and Granite State. As of March 31, 2017, the principal amount outstanding for the 8% Unitil Realty notes was $0.2 million, and the principal
amount outstanding for the 7.15% Granite State notes was $6.7 million.
34
NOTE 5 COMMON STOCK AND PREFERRED STOCK
Common Stock
The Companys common
stock trades on the New York Stock Exchange under the symbol, UTL.
The Company had 14,043,280, 14,065,230 and 14,107,741 shares of
common stock outstanding at March 31, 2016, December 31, 2016 and March 31, 2017, respectively.
Dividend Reinvestment
and Stock Purchase Plan
During the first quarter of 2017, the Company sold 7,581 shares of its common stock, at an average price of $44.64 per share, in connection with its Dividend Reinvestment and Stock Purchase Plan (DRP) and its
401(k) plans resulting in net proceeds of approximately $338,400. The DRP provides participants in the plan a method for investing cash dividends on the Companys common stock and cash payments in additional shares of the Companys common
stock.
Stock Plan
The Company maintains the Unitil Corporation Second Amended and Restated 2003 Stock Plan (the Stock Plan).
Participants in the Stock Plan are selected by the Compensation Committee of the Board of Directors to receive awards under the Stock Plan, including awards of restricted shares (Restricted Shares), or of restricted stock units (Restricted Stock
Units). The Compensation Committee has the authority to determine the sizes of awards; determine the terms and conditions of awards in a manner consistent with the Stock Plan; construe and interpret the Stock Plan and any agreement or instrument
entered into under the Stock Plan as they apply to participants; establish, amend, or waive rules and regulations for the Stock Plans administration as they apply to participants; and, subject to the provisions of the Stock Plan, amend the
terms and conditions of any outstanding award to the extent such terms and conditions are within the discretion of the Compensation Committee as provided for in the Stock Plan. On April 19, 2012, the Companys shareholders approved an
amendment to the Stock Plan to, among other things, increase the maximum number of shares of common stock available for awards to plan participants.
The maximum number of shares available for awards to participants under the Stock Plan is 677,500. The maximum number of shares that may be awarded in any one calendar year to any one participant is
20,000. In the event of any change in capitalization of the Company, the Compensation Committee is authorized to make an equitable adjustment to the number and kind of shares of common stock that may be delivered under the Stock Plan and, in
addition, may authorize and make an equitable adjustment to the Stock Plans annual individual award limit.
Restricted Shares
Outstanding awards of Restricted Shares fully vest over a period of four years at a rate of 25% each year. During the vesting period,
dividends on Restricted Shares underlying the award may be credited to a participants account. The Company may deduct or withhold, or require a participant to remit to the Company, an amount sufficient to satisfy any taxes required by federal,
state, or local law or regulation to be withheld with respect to any taxable event arising in connection with an Award. For purposes of compensation expense, Restricted Shares vest immediately upon a participant becoming eligible for retirement, as
defined in the Stock Plan. Prior to the end of the vesting period, the restricted shares are subject to forfeiture if the participant ceases to be employed by the Company other than due to the participants death.
35
On January 30, 2017, 34,930 Restricted Shares were issued in conjunction with the Stock Plan with an
aggregate market value at the date of issuance of approximately $1.6 million. There were 94,880 and 94,706 non-vested shares under the Stock Plan as of March 31, 2017 and 2016, respectively. The weighted average grant date fair value of these
shares was $39.55 and $35.24, respectively. The compensation expense associated with the issuance of shares under the Stock Plan is being recognized over the vesting period and was $1.7 million and $1.6 million for the three months ended
March 31, 2017 and 2016, respectively. At March 31, 2017, there was approximately $1.8 million of total unrecognized compensation cost under the Stock Plan which is expected to be recognized over approximately 2.8 years. There were no
forfeitures or cancellations under the Stock Plan during the three months ended March 31, 2017.
Restricted Stock Units
Restricted Stock Units earn dividend equivalents and will generally be settled by payment to each Director as soon as practicable
following the Directors separation from service to the Company. The Restricted Stock Units will be paid such that the Director will receive (i) 70% of the shares of the Companys common stock underlying the restricted stock units and
(ii) cash in an amount equal to the fair market value of 30% of the shares of the Companys common stock underlying the Restricted Stock Units. The equity portion of Restricted Stock Units activity during the three months ended
March 31, 2017 in conjunction with the Stock Plan are presented in the following table:
|
|
|
|
|
|
|
|
|
Restricted Stock Units (Equity
Portion)
|
|
|
|
Units
|
|
|
Weighted
Average
Stock
Price
|
|
Restricted Stock Units as of December 31, 2016
|
|
|
43,345
|
|
|
$
|
33.40
|
|
Restricted Stock Units Granted
|
|
|
|
|
|
|
|
|
Dividend Equivalents Earned
|
|
|
351
|
|
|
$
|
44.59
|
|
Restricted Stock Units Settled
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units as of March 31, 2017
|
|
|
43,696
|
|
|
$
|
33.49
|
|
|
|
|
|
|
|
|
|
|
There were 33,892 Restricted Stock Units outstanding as of March 31, 2016 with a weighted average stock price of
$31.89. Included in Other Noncurrent Liabilities on the Companys Consolidated Balance Sheets as of March 31, 2017, March 31, 2016 and December 31, 2016 is $0.8 million, $0.6 million and $0.8 million, respectively,
representing the fair value of liabilities associated with the portion of fully vested RSUs that will be settled in cash.
Preferred Stock
There was $0.2 million, or 1,893 shares, of Unitil Energys 6.00% Series Preferred Stock outstanding as of March 31, 2017 and
December 31, 2016. There was $0.2 million, or 1,898 shares, of Unitil Energys 6.00% Series Preferred Stock outstanding as of March 31, 2016. There were less than $0.1 million of total dividends declared on Preferred Stock in each of
the three month periods ended March 31, 2017 and March 31, 2016, respectively.
NOTE 6 REGULATORY MATTERS
UNITILS REGULATORY MATTERS ARE DESCRIBED IN NOTE 8 TO THE FINANCIAL STATEMENTS IN ITEM 8 OF PART II OF UNITIL CORPORATIONS FORM 10-K
FOR DECEMBER 31, 2016 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 2, 2017.
36
Rate Case Activity
Unitil Energy Base Rates
On April 29, 2016 Unitil Energy filed for a $6.3 million or 3.6 percent increase in distribution base rates with the NHPUC. The Company also
requested a long-term rate plan for the annual recovery in future years of the costs associated with utility plant additions. The Company was initially provided a temporary increase of $2.4 million effective July 1, 2016, subject to
reconciliation with the permanent rates when approved by the NHPUC. On April 20, 2017 the NHPUC issued its final order approving a settlement between the Company, Commission Staff and the Office of Consumer Advocate which provides for a
permanent increase of $4.1 million, and a three year rate plan with the first rate step adjustment in May 2017 of $0.9 million, followed by rate step adjustments in May of 2018 and 2019 for 80% of capital expenditures.
Fitchburg Base Rates Electric
On April 29, 2016 the MDPU issued an order approving a $2.1 million increase in
Fitchburgs electric base revenue decoupling target, effective May 1, 2016. The MDPU also approved a capital cost recovery mechanism, providing for annual adjustments to target revenues to account for capital spending. In 2016, Fitchburg
made its first capital cost adjustment filing documenting its capital investments for calendar year 2015 which provided approximately $0.2 million to $0.3 million of annual revenue. On December 27, 2016 the MDPU approved this filing subject to
further investigation and reconciliation. On a prospective basis, Fitchburg expects annual revenue adjustments of approximately $0.3 million.
Fitchburg Base Rates Gas
On April 29, 2016, the MDPU issued an order approving a $1.6 million increase in
Fitchburgs gas base revenue decoupling target, effective May 1, 2016.
Fitchburg Gas Operations
On
October 31, 2016, Fitchburg submitted its annual filing under its gas system enhancement plan program to recover the estimated cost to be incurred in 2017. The filing seeks approval to collect an additional $0.9 million, over and above the
$0.9 million already reflected in rates, to recover the cumulative cost of investments in the program through the end of 2017. In addition, the Company seeks a waiver of the 1.5 percent cap on annual changes in the revenue requirement eligible
for recovery. The MDPUs decision on this request is pending and is expected by the end of April, 2017, for rates effective May 1, 2017. On a prospective basis, Fitchburg expects annual revenue adjustments of approximately $0.6 million
Northern Utilities Base Rates Maine
On March 31, 2017, Northern Utilities issued a 60 day Notice of Intent
to file a rate case with the MPUC to increase gas base distribution rates by approximately $5.5 million.
Northern Utilities
Targeted Infrastructure Replacement Adjustment
The settlement in Northern Utilities Maine divisions last rate case allowed the Company to implement a Targeted Infrastructure Replacement Adjustment (TIRA) rate mechanism to
adjust base distribution rates annually to recover the revenue requirements associated with targeted investments in gas distribution system infrastructure replacement and upgrade projects. The TIRA has an initial term of four years and covers
targeted capital expenditures in 2013 through 2016. The 2017 TIRA, for 2016 expenditures, approved by the MPUC on April 25, 2017, provides for an annual increase in distribution base revenue of $1.1 million, effective May 1, 2017.
Northern Utilities Targeted Area Build-out Program Maine
On December 22, 2015, the MPUC approved a Targeted
Area Build-out (TAB) program and associated rate surcharge mechanism. This program is designed to allow the economic extension of natural gas mains to new, targeted service areas in Maine and is being initially piloted in the City of Saco. It allows
customers in the targeted area the ability to pay a rate surcharge, instead of a large upfront payment or capital contribution to connect to the natural gas delivery system. The City of Saco TAB program, being built out over a period of three years,
has the potential to add 1,000 new customers and approximately $1 million in annual distribution revenue in the Saco area. On February 28, 2017, the Company filed for approval of its second TAB program, for the Town of Sanford, ME. The
second TAB program has the potential to add 2,000 new customers and approximately $2 million in annual distribution revenue in the Sanford area. This matter remains pending.
37
Northern Utilities Base Rates New Hampshire
On April 24, 2017, Northern
Utilities issued a 60 day Notice of Intent to file a rate case with the NHPUC to increase gas base distribution rates by approximately $5.0 million.
Northern Utilities Pipeline Refund
On February 19, 2015, the FERC issued Opinion No. 524-A, the final order in Portland Natural Gas Transmissions (PNGTS)
Section 4 rate case, requiring PNGTS to issue refunds to shippers. Northern Utilities received a pipeline refund of $22.0 million on April 15, 2015. As a gas supply-related refund, the entire amount refunded will be credited to
Northern Utilities customers and marketers over three years as directed by the NHPUC and MPUCMPUC. The Company has recorded current and noncurrent Regulatory Liabilities related to these refunds of $3.6 million and $0.7 million,
respectively, on its Consolidated Balance Sheets as of March 31, 2017.
Granite State Base Rates
Granite State has
in place a FERC-approved second amended settlement agreement under which it is permitted to file annually, each June, for a rate adjustment to recover the revenue requirements associated with specified capital investments in gas transmission
projects up to a specific cost cap. On June 24, 2016 Granite State filed for an annual revenue and rate increase under this provision of $0.3 million, effective August 1, 2016. This filing was approved by the FERC on July 13,
2016. In the second quarter of 2017, the Company expects to file for an annual rate and revenue increase between $0.3 million and $0.4 million, effective August 1, 2017.
Other Matters
NHPUC Energy Efficiency Resource Standard Proceeding
In May
2015, the NHPUC opened a proceeding to establish an Energy Efficiency Resource Standard (EERS), an energy efficiency policy with specific targets or goals for energy savings that New Hampshire electric and gas utilities must meet. On
April 27, 2016, a comprehensive settlement agreement was filed by the parties, including Unitil Energy and Northern Utilities, which was approved by the NHPUC on August 2, 2016. The settlement provides for: extending the 2014-2016 Core
program an additional year (through 2017); establishing an EERS; establishing a recovery mechanism to compensate the utilities for lost-revenue related to the EERS programs; and approving the performance incentives and processes for stakeholder
involvement, evaluation, measurement and verification, and oversight of the EERS programs.
Unitil Energy Electric Grid
Modernization
In July 2015, the NHPUC opened an investigation into Grid Modernization to address a variety of issues related to Distribution System Planning, Customer Engagement with Distributed Energy Resources, and Utility Cost Recovery
and Financial Incentives. The NHPUC engaged a consultant to direct a Working Group to investigate these issues and to prepare a final report with recommendations for the Commission. The final report was filed on March 20, 2017. This matter
remains pending.
Unitil Energy Net Metering
Pursuant to legislation that became effective in May 2016, the NHPUC opened
a proceeding to consider alternatives to the net metering tariffs currently in place. The legislation requires that a decision on this matter must be issued by the NHPUC by March 2, 2017. The NHPUC approved an extension of the current net
metering tariffs on an interim basis until it issues its final decision on June 2, 2017. Hearings on two differing settlement proposals were held the week of March 27, 2017. This matter remains pending.
Fitchburg Electric Operations
On November 17, 2016, Fitchburg submitted its 2016 annual reconciliation of costs and revenues
for transition and transmission under its restructuring plan, including the reconciliation of costs and revenues for a number of other surcharges and cost factors, for review and approval by the MDPU. All of the rates were given final approval by
the MDPU on December 29, 2016, effective January 1, 2017.
38
Fitchburg Service Quality
On February 28, 2017, Fitchburg submitted its 2016
Service Quality Reports for both its gas and electric divisions in accordance with new Service Quality Guidelines issued by the MDPU in December 2015. Fitchburg reported that it met or exceeded its benchmarks for service quality performance in all
metrics for both its gas and electric divisions.
Fitchburg Solar Generation
On August 19, 2016, Fitchburg filed a
petition with the MDPU seeking approval to develop a 1.3 MW solar generation facility located on Company property in Fitchburg, Massachusetts. The proposal includes a cost recovery mechanism that would share the costs and benefits of the project
among all Fitchburg customers. On November 9, 2016, the MDPU approved a Settlement Agreement supporting the proposal, which was reached between the Company, the Attorney General of Massachusetts, and the Low-Income Weatherization and Fuel
Assistance Program Network. Construction of the solar generating facility is expected to be completed by the end of November 2017.
Fitchburg Energy Diversity
Governor Baker signed into law H4568 An Act to Promote Energy Diversity on August 8,
2016. Among many sections in the bill, the primary provision adds new sections 83c and 83d to the 2008 Green Communities Act. Section 83c requires every electric distribution company (EDC) to jointly and competitively solicit proposals for at
least 400 MWs of offshore wind energy generation by June 30, 2017, as part of a total of 1,600 MW of offshore wind the EDCs are directed to procure by June 30, 2027. The procurement requirement is subject to a determination by the
MDPU that the proposed long-term contracts are cost-effective. Section 83d further requires the EDCs to jointly seek proposals for cost effective clean energy (hydro and other) long-term contracts via one or more staggered solicitations, the
first of which shall be issued not later than April 1, 2017, for a total of 9,450,000 megawatt-hours by December 31, 2022. Emergency regulations implementing these new provisions, 220 C.M.R. § 23.00 et seq. and 220 C.M.R. § 24.00
et seq. were adopted by the MDPU on December 29, 2016, and adopted as final regulations on March 8, 2017. On February 2, 2017, the EDCs filed for approval of the RFP process pursuant to Section 83d, which was approved by the MDPU
on March 27, 2017. On March 31, 2017, the EDCs issued the RFP for Long-Term Contracts for Clean Energy Projects, pursuant to Section 83d.
Fitchburg Clean Energy RFP
Pursuant to Section 83a of the Green Communities Act in Massachusetts and similar clean energy directives established in Connecticut and Rhode Island,
state agencies and the electric distribution companies in the three states, including Fitchburg, issued an RFP for clean energy resources (including Class I renewable generation and large hydroelectric generation) in November 2015. The RFP
sought proposals for clean energy and transmission projects that can deliver new renewable energy to the three states. Project proposals were received in January 2016 and joint evaluation activities are ongoing. Selection of contracts concluded
during the fourth quarter of 2016 and contract negotiations have been ongoing for several proposed projects. Fitchburgs final contracts will be subject to review and approval of the MDPU.
Fitchburg Other
On January 31, 2017, the Massachusetts Department of Energy Resources (DOER) presented its final
solar incentive program design, called Solar Massachusetts Renewable Target (SMART) in accordance with Chapter 75 of the Acts of 2016 which directed the DOER to develop a statewide solar incentive program to encourage the continued
development of solar renewable energy generating sources by residential, commercial, governmental and industrial electricity customers throughout the commonwealth. The program would replace the states expiring solar incentive program, which
uses solar renewable energy credits (SRECs) and is known as SREC-2, with a tariff program. The tariff would provide for incentive payments which would be net of energy value (i.e., total tariff rate minus value of
39
energy). The program also includes a variety of tariff adders, including incentives for location, such as landfill site, for off-takers, such as a community aggregation program, and for other
technologies, such as behind-the-meter storage. Cost recovery of tariff payments and administrative costs may be made through a fixed, non-bypassable monthly charge to all distribution customers. The DOERs implementation schedule during 2017
includes filing emergency regulations, conducting a rulemaking to permanently promulgate emergency regulation, MDPU review of model tariffs, and final program implementation in January 2018.
On May 11, 2016, the MDPU issued an Order commencing a rulemaking proceeding to adopt emergency regulations amending 220 C.M.R. § 18.00 et seq. (Net Metering Regulations).
Specifically, the MDPU amended its Net Metering Regulations to implement the net metering provisions of An Act Relative to Solar Energy, St. 2016, c. 75, §§ 3-9, and to make additional clerical changes to the Net Metering Regulations. On
July 15, 2016, the MDPU issued an order approving Final Net Metering Regulations. Fitchburgs tariff, filed in compliance with the new regulations, was approved on February 7, 2017.
In December 2013, the MDPU opened an investigation into Modernization of the Electric Grid. The stated objective of the Grid Modernization
proceeding is to ensure that the electric distribution companies adopt grid modernization policies and practices. In June 2014, the MDPU issued its first Grid Modernization order, setting forth a requirement that each electric
distribution company submit a ten-year strategic Grid Modernization Plan (GMP). As part of the GMP, each company must include a five-year Short-Term Investment Plan (STIP), which must include an approach to achieving advanced metering functionality
within five years of the Departments approval of the GMP. The filing of a GMP is a recurring obligation and must be updated as part of subsequent base distribution rate cases, which by statute must occur no less often than every five years.
Capital investments contained in the STIP are eligible for pre-authorization, meaning that the MDPU will not revisit in later filings whether the Company should have proceeded with these investments. Fitchburg and the Commonwealths three other
electric distribution companies filed their initial GMPs on August 19, 2015. These filings are currently under MDPU review and remain pending.
On January 28, 2016 the MDPU approved Fitchburgs Three-Year Energy Efficiency Plan for 2016-2018, subject to limited modifications and directives in the Order. The Department found that the
savings goals included in each Three-Year Plan are reasonable and are consistent with the achievement of all available cost-effective energy efficiency; approved each Program Administrators program implementation cost budget for the Three-Year
Plans; approved the performance incentive pool, mechanism, and payout rates; found that all proposed energy efficiency programs are cost-effective; found that funding sources are reasonable and that each Program Administrator may recover the funds
to implement its energy efficiency plan through its Energy Efficiency Surcharge; and found that each Program Administrators Three-Year Plan is consistent with the Green Communities Act, the Guidelines, and Department precedent.
FERC Transmission Formula Rate Proceedings
Pursuant to Section 206 of the Federal Power Act, there are several pending proceedings
before the FERC concerning the justness and reasonableness of the Return on Equity (ROE) component of the ISO-New England, Inc. Participating Transmission Owners Regional Network Service and Local Network Service formula rates. On
April 14, 2017, the U.S. Court of Appeals for the D.C. Circuit issued an opinion vacating a decision of the FERC with respect to these formula rates, and remanded it for further proceedings. The FERC had found that the Transmission Owners
existing ROE was unlawful, and had set a new ROE. The Court found that the FERC had failed to articulate a satisfactory explanation for its orders. It is not certain at this time whether the remand of the decision by the Court will result in the
setting by FERC of a new ROE at a level higher, lower or equal to the existing ROE. Fitchburg and Unitil Energy are Participating Transmission Owners, although Unitil Energy does not own transmission plant. To the extent that these proceedings
result in any
40
changes to the rates being charged, a retroactive reconciliation may be required. The Company does not believe that these proceedings will have a material adverse impact on the Companys
financial condition or results of operations.
Legal Proceedings
The Company is involved in legal and administrative proceedings and claims of various types, which arise in the ordinary course of business. The Company believes, based upon information furnished by
counsel and others, that the ultimate resolution of these claims will not have a material impact on its financial position, operating results or cash flows.
In early 2009, a putative class action complaint was filed against Unitils Massachusetts based utility, Fitchburg, in Massachusetts Worcester Superior Court (the Court), (captioned
Bellermann et al v. Fitchburg Gas and Electric Light Company). The Complaint seeks an unspecified amount of damages, including the cost of temporary housing and alternative fuel sources, emotional and physical pain and suffering and property damages
allegedly incurred by customers in connection with the loss of electric service during the ice storm in Fitchburgs service territory in December 2008. The Massachusetts Supreme Judicial Court issued an order denying class certification status
in July 2016, though the plaintiffs individual claims remain pending. The Company continues to believe that this suit is without merit and will continue to defend itself vigorously. The Town of Lunenburg filed a separate action in the Court
arising out of the December 2008 ice storm. The Court granted the Companys Motion for Summary Judgment on all counts in December 2016 and dismissed the Towns complaint. The Courts decision remains subject to a potential motion for
reconsideration and appeal. The Company believes, based upon information furnished by counsel and others, that the ultimate resolution of these suits will not have a material impact on its financial position, operating results or cash flows.
NOTE 7 ENVIRONMENTAL MATTERS
UNITILS ENVIRONMENTAL MATTERS ARE DESCRIBED IN NOTE 8 TO THE FINANCIAL STATEMENTS IN ITEM 8 OF PART II OF UNITIL CORPORATIONS FORM 10-K FOR DECEMBER 31, 2016 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 2, 2017.
The Companys past and present operations include activities that are
generally subject to extensive and complex federal and state environmental laws and regulations. The Company is in material compliance with applicable environmental and safety laws and regulations and, as of March 31, 2017, has not identified
any material losses reasonably likely to be incurred in excess of recorded amounts. However, we cannot assure that significant costs and liabilities will not be incurred in the future. It is possible that other developments, such as increasingly
stringent federal, state or local environmental laws and regulations could result in increased environmental compliance costs. Based on the Companys current assessment of its environmental responsibilities, existing legal requirements and
regulatory policies, the Company does not believe that these environmental costs will have a material adverse effect on the Companys consolidated financial position or results of operations.
Northern Utilities Manufactured Gas Plant Sites
Northern Utilities has an extensive program to identify, investigate and remediate former
manufactured gas plant (MGP) sites, which were operated from the mid-1800s through the mid-1900s. In New Hampshire, MGP sites were identified in Dover, Exeter, Portsmouth, Rochester and Somersworth. In Maine, Northern Utilities has documented the
presence of MGP sites in Lewiston and Portland, and a former MGP disposal site in Scarborough.
41
Northern Utilities has worked with the Maine Department of Environmental Protection (ME DEP) and New
Hampshire Department of Environmental Services (NH DES) to address environmental concerns with these sites. Northern Utilities or others have substantially completed remediation of the Exeter, Rochester, Dover, Somersworth, Portsmouth, Lewiston,
Portland and Scarborough sites, though on site monitoring continues and it is possible that future activities may be required.
The NHPUC and
MPUC have approved regulatory mechanisms for the recovery of MGP environmental costs. For Northern Utilities New Hampshire division, the NHPUC has approved the recovery of MGP environmental costs over succeeding seven-year periods. For
Northern Utilities Maine division, the MPUC has authorized the recovery of environmental remediation costs over succeeding five-year periods.
The Environmental Obligations table below shows the amounts accrued for Northern Utilities related to estimated future cleanup costs associated with Northern Utilities environmental remediation
obligations for former MGP sites. Corresponding Regulatory Assets were recorded to reflect that the future recovery of these environmental remediation costs is expected based on regulatory precedent and established practices.
Fitchburgs Manufactured Gas Plant Site
Fitchburg has worked with the Massachusetts Department of Environmental Protection (MA DEP) to
address environmental concerns with the former MGP site at Sawyer Passway, and has substantially completed remediation activities, though on site monitoring will continue and it is possible that future activities may be required.
The Environmental Obligations table below shows the amounts accrued for Fitchburg related to estimated future cleanup costs for permanent remediation of
the Sawyer Passway site with a corresponding Regulatory Asset recorded to reflect that the recovery of these environmental remediation costs are probable through the regulatory process. The amounts recorded do not assume any amounts are recoverable
from insurance companies or other third parties. Fitchburg recovers the environmental response costs incurred at this former MGP site in gas rates pursuant to the terms of a cost recovery agreement approved by the MDPU. Pursuant to this agreement,
Fitchburg is authorized to amortize and recover environmental response costs from gas customers over succeeding seven-year periods.
The
following table sets forth a summary of changes in the Companys liability for Environmental Obligations for the three months ended March 31, 2017 and 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental Obligations
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
Fitchburg
|
|
|
Northern
Utilities
|
|
|
Total
|
|
|
|
Three months ended March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Total Balance at Beginning of Period
|
|
$
|
0.1
|
|
|
$
|
1.2
|
|
|
$
|
1.9
|
|
|
$
|
1.6
|
|
|
$
|
2.0
|
|
|
$
|
2.8
|
|
Additions
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
|
|
1.0
|
|
|
|
0.4
|
|
|
|
1.0
|
|
Less: Payments / Reductions
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
1.1
|
|
|
|
0.1
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Balance at End of Period
|
|
|
0.1
|
|
|
|
1.2
|
|
|
|
2.2
|
|
|
|
1.5
|
|
|
|
2.3
|
|
|
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Current Portion
|
|
|
0.1
|
|
|
|
0.2
|
|
|
|
0.4
|
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Balance at End of Period
|
|
$
|
|
|
|
$
|
1.0
|
|
|
$
|
1.8
|
|
|
$
|
1.0
|
|
|
$
|
1.8
|
|
|
$
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
NOTE 8: INCOME TAXES
The Company filed its tax returns for the year ended December 31, 2015 with the Internal Revenue Service in September 2016 and generated additional federal net operating loss (NOL) carryforward
assets principally due to current tax repair deductions, tax depreciation and research and development deductions. As of December 31, 2016, the Company had recorded cumulative federal and state NOL carryforward assets of $23.9 million to
offset against taxes payable in future periods. If unused, the Companys NOL carryforward assets will begin to expire in 2029. In addition, at December 31, 2016, the Company had $3.4 million of cumulative alternative minimum tax
credits, general business tax credit and other state tax credit carryforwards to offset future income taxes payable.
The Company evaluated
its tax positions at March 31, 2017 in accordance with the FASB Codification, and has concluded that no adjustment for recognition, derecognition, settlement and foreseeable future events to any tax liabilities or assets as defined by the FASB
Codification is required. The Company remains subject to examination by Federal, Maine, Massachusetts, and New Hampshire tax authorities for the tax periods ended December 31, 2013; December 31, 2014; and December 31, 2015.
The Company bills its customers for sales tax in Massachusetts and Maine and consumption tax in New Hampshire. These taxes are remitted to
the appropriate departments of revenue in each state and are excluded from revenues on the Companys unaudited Consolidated Statements of Earnings.
NOTE 9: RETIREMENT BENEFIT OBLIGATIONS
The Company co-sponsors the Unitil Corporation
Retirement Plan (Pension Plan), the Unitil Retiree Health and Welfare Benefits Plan (PBOP Plan), and the Unitil Corporation Supplemental Executive Retirement Plan (SERP) to provide certain pension and postretirement benefits for its retirees and
current employees. Please see Note 10 to the Consolidated Financial Statements in the Companys Form 10-K for the year ended December 31, 2016 as filed with the SEC on February 2, 2017 for additional information regarding these plans.
The following table includes the key weighted average assumptions used in determining the Companys benefit plan costs and obligations:
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2017
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2016
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Used to Determine Plan Costs
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Discount Rate
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4.10
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%
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4.30
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%
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Rate of Compensation Increase
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3.00
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%
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3.00
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%
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Expected Long-term rate of return on plan assets
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7.75
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%
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8.00
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%
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Health Care Cost Trend Rate Assumed for Next Year
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8.00
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%
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7.00
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%
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Ultimate Health Care Cost Trend Rate
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4.00
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%
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4.00
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%
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Year that Ultimate Health Care Cost Trend Rate is reached
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2025
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2022
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43
The following table provides the components of the Companys Retirement plan costs ($000s):
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Pension Plan
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PBOP Plan
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SERP
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Three Months Ended March 31,
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2017
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2016
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2017
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2016
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2017
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2016
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Service Cost
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$
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824
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$
|
851
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$
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744
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$
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652
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$
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115
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$
|
41
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|
Interest Cost
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1,514
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1,486
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|
|
978
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|
808
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|
98
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|
96
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Expected Return on Plan Assets
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(1,819
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)
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(1,814
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)
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(337
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)
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(301
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)
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Prior Service Cost Amortization
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66
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66
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350
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372
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47
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47
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Actuarial Loss Amortization
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1,176
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1,099
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|
524
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262
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74
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|
94
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Sub-total
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1,761
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1,688
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2,259
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1,793
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|
334
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|
278
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Amounts Capitalized and Deferred
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|
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(662
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)
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(610
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)
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(1,037
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)
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(737
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)
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Net Periodic Benefit Cost Recognized
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$
|
1,099
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|
$
|
1,078
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|
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$
|
1,222
|
|
|
$
|
1,056
|
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|
$
|
334
|
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$
|
278
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Employer Contributions
As of March 31, 2017, the Company had made $1.4 million and $0.4 million of contributions to its Pension Plan and PBOP Plan, respectively, in 2017. The Company, along with its subsidiaries, expects
to continue to make contributions to its Pension and PBOP Plans in 2017 and future years at minimum required and discretionary funding levels consistent with the amounts recovered in the distribution utilities rates for these Pension and PBOP
Plan costs.
As of March 31, 2017, the Company had made $8,500 of benefit payments under the SERP Plan in 2017. The Company presently
anticipates making an additional $25,600 of benefit payments under the SERP Plan in 2017.