10-Q 1 ottr-20220331.htm 10-Q ottr-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2022 or
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number 0-53713 
OTTER TAIL CORPORATION
(Exact name of registrant as specified in its charter) 
Minnesota
(State or other jurisdiction of incorporation or organization)
27-0383995
(I.R.S. Employer Identification No.)
215 South Cascade Street, Box 496, Fergus Falls, Minnesota
(Address of principal executive offices)
56538-0496
(Zip Code)
Registrant's telephone number, including area code: 866-410-8780
Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, par value $5.00 per shareOTTRThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No   
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): 
 
Large Accelerated Filer
Accelerated Filer
 
Non-Accelerated Filer
Smaller Reporting Company
Emerging Growth Company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No  
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:
41,630,655 Common Shares ($5 par value) as of April 27, 2022. 



TABLE OF CONTENTS

1

DEFINITIONS
The following abbreviations or acronyms are used in the text.
AFUDCAllowance for Funds Used During ConstructionMISOMidcontinent Independent System Operator, Inc.
ARPAlternative Revenue ProgramMPUCMinnesota Public Utilities Commission
BTDBTD Manufacturing, Inc.OTCOtter Tail Corporation
CIPConservation Improvement ProgramOTPOtter Tail Power Company
EPAEnvironmental Protection AgencyPTCsProduction tax credits
ESSRPExecutive Survivor and Supplemental Retirement PlanPVCPolyvinyl chloride
FERCFederal Energy Regulatory CommissionRHRRegional Haze Rule
GCRGeneration Cost Recovery RiderROEReturn on equity
ISOIndependent System OperatorRRRRenewable Resource Rider
IRPIntegrated Resource PlanSECSecurities and Exchange Commission
kwhkilowatt-hourT.O. PlasticsT.O. Plastics, Inc.
MerricourtMerricourt Wind Energy CenterTCRTransmission Cost Recovery Rider
FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the Act). When used in this Form 10-Q and in future filings by the Company with the Securities and Exchange Commission (SEC), in the Company’s press releases and in oral statements, words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” "future," "goal," “intend,” "likely," “may,” “outlook,” “plan,” “possible,” “potential,” "probable," "projected," “should,” "target," “will,” “would” or similar expressions are intended to identify forward-looking statements within the meaning of the Act. Such statements are based on current expectations and assumptions and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. The Company’s risks and uncertainties include, among other things, uncertainty of the impact and duration of the COVID-19 pandemic, uncertainty of future investments and capital expenditures, rate base levels and rate base growth, long-term investment risk, seasonal weather patterns and extreme weather events, counterparty credit risk, future business volumes with key customers, reductions in our credit ratings, our ability to access capital markets on favorable terms, assumptions and costs relating to funding our employee benefit plans, our subsidiaries’ ability to make dividend payments, cyber security threats or data breaches, the impact of government legislation and regulation including foreign trade policy and environmental laws and regulations, the impact of climate change including compliance with legislative and regulatory changes to address climate change, operational and economic risks associated with our electric generating and manufacturing facilities, risks associated with energy markets, the availability and pricing of resource materials, attracting and maintaining a qualified and stable workforce, expectations regarding regulatory proceedings, and changing macroeconomic and industry conditions. These and other risks and uncertainties are more fully described in our filings with the SEC, including our most recently filed Annual Report on Form 10-K. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information.
PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS

2

OTTER TAIL CORPORATION
CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data)March 31,
2022
December 31,
2021
Assets  
Current Assets  
Cash and Cash Equivalents$1,371 $1,537 
Receivables, net of allowance for credit losses218,896 174,953 
Inventories145,857 148,490 
Regulatory Assets21,770 27,342 
Other Current Assets14,497 17,032 
Total Current Assets402,391 369,354 
Noncurrent Assets
Investments57,893 56,690 
Property, Plant and Equipment, net of accumulated depreciation2,128,344 2,124,605 
Regulatory Assets124,413 125,508 
Intangible Assets, net of accumulated amortization8,768 9,044 
Goodwill37,572 37,572 
Other Noncurrent Assets32,360 32,057 
Total Noncurrent Assets2,389,350 2,385,476 
Total Assets$2,791,741 $2,754,830 
Liabilities and Shareholders' Equity
Current Liabilities
Short-Term Debt$97,770 $91,163 
Current Maturities of Long-Term Debt29,990 29,983 
Accounts Payable119,022 135,089 
Accrued Salaries and Wages19,846 31,704 
Accrued Taxes21,879 19,245 
Regulatory Liabilities27,211 24,844 
Other Current Liabilities57,437 55,671 
Total Current Liabilities373,155 387,699 
Noncurrent Liabilities
Pension Benefit Liability53,153 73,973 
Other Postretirement Benefits Liability66,383 66,481 
Regulatory Liabilities233,989 234,430 
Deferred Income Taxes203,877 188,268 
Deferred Tax Credits16,475 16,661 
Other Noncurrent Liabilities63,497 62,527 
Total Noncurrent Liabilities637,374 642,340 
Commitments and Contingencies (Note 9)
Capitalization
Long-Term Debt, net of current maturities734,074 734,014 
Shareholders' Equity
Common Shares: 50,000,000 shares authorized, $5 par value; 41,605,884 and 41,551,524 outstanding
at March 31, 2022 and December 31, 2021
208,029 207,758 
Additional Paid-In Capital421,449 419,760 
Retained Earnings424,605 369,783 
Accumulated Other Comprehensive Loss(6,945)(6,524)
Total Shareholders' Equity1,047,138 990,777 
Total Capitalization1,781,212 1,724,791 
Total Liabilities and Shareholders' Equity$2,791,741 $2,754,830 
See accompanying notes to consolidated financial statements.
3

OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three Months Ended March 31,
(in thousands, except per-share amounts)20222021
Operating Revenues  
Electric$130,416 $123,699 
Product Sales244,488 138,011 
Total Operating Revenues374,904 261,710 
Operating Expenses
Electric Production Fuel14,853 14,714 
Electric Purchased Power20,529 19,260 
Electric Operating and Maintenance Expenses44,278 41,421 
Cost of Products Sold (excluding depreciation)151,759 101,977 
Other Nonelectric Expenses17,206 13,693 
Depreciation and Amortization23,548 22,126 
Electric Property Taxes4,432 4,320 
Total Operating Expenses276,605 217,511 
Operating Income98,299 44,199 
Other Income and Expense
Interest Charges8,948 9,398 
Nonservice Cost Components of Postretirement Benefits(22)383 
Other Income (Expense), net260 1,160 
Income Before Income Taxes89,633 35,578 
Income Tax Expense17,630 5,249 
Net Income$72,003 $30,329 
Weighted-Average Common Shares Outstanding:
Basic41,548 41,455 
Diluted41,871 41,700 
Earnings Per Share:
Basic$1.73 $0.73 
Diluted$1.72 $0.73 
See accompanying notes to consolidated financial statements.
4

OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Three Months Ended March 31,
(in thousands)20222021
Net Income$72,003 $30,329 
Other Comprehensive (Loss) Income:
Unrealized (Loss) on Available-for-Sale Securities, net of tax benefit of $61 and $10
(231)(35)
Pension and Other Postretirement Benefits, net of tax benefit (expense) of $67 and $(53)
(190)150 
Total Other Comprehensive (Loss) Income$(421)$115 
Total Comprehensive Income$71,582 $30,444 
See accompanying notes to consolidated financial statements.
5

OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)
(in thousands, except common shares outstanding)Common
Shares
Outstanding
Par Value,
Common
Shares
Additional Paid-In CapitalRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total Shareholders' Equity
Balance, December 31, 202141,551,524 $207,758 $419,760 $369,783 $(6,524)$990,777 
Stock Issued Under Share-Based Compensation Plans, net of shares withheld for employee taxes54,360 271 (3,215)— — (2,944)
Net Income— — — 72,003 — 72,003 
Other Comprehensive Loss— — — — (421)(421)
Stock Compensation Expense— — 4,904 — — 4,904 
Common Dividends ($0.4125 per share)
— — — (17,181)— (17,181)
Balance, March 31, 202241,605,884 $208,029 $421,449 $424,605 $(6,945)$1,047,138 
Balance, December 31, 202041,469,879 $207,349 $414,246 $257,878 $(8,507)$870,966 
Stock Issued Under Share-Based Compensation Plans, net of shares withheld for employee taxes40,576 203 (1,710)— — (1,507)
Stock Issued Under Dividend Reinvestment and Stock Purchase Plans, net of expenses and repurchased shares— — (25)— — (25)
Net Income— — — 30,329 — 30,329 
Other Comprehensive Income— — — — 115 115 
Stock Compensation Expense— — 4,197 — — 4,197 
Common Dividends ($0.39 per share)
— — — (16,208)— (16,208)
Balance, March 31, 202141,510,455 $207,552 $416,708 $271,999 $(8,392)$887,867 
See accompanying notes to consolidated financial statements.
6

OTTER TAIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended March 31,
(in thousands)20222021
Operating Activities  
Net Income$72,003 $30,329 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization23,548 22,126 
Deferred Tax Credits(186)(186)
Deferred Income Taxes14,342 5,697 
Discretionary Contribution to Pension Plan(20,000)(10,000)
Allowance for Equity Funds Used During Construction(260)(45)
Stock Compensation Expense4,904 4,197 
Other, Net866 (1,407)
Changes in Operating Assets and Liabilities:
Receivables(43,943)(20,431)
Inventories3,403 (261)
Regulatory Assets4,468 703 
Other Assets3,729 (6,421)
Accounts Payable(12,533)2,245 
Accrued and Other Liabilities(7,859)(8,890)
Regulatory Liabilities2,812 (3,850)
Pension and Other Postretirement Benefits122 1,464 
Net Cash Provided by Operating Activities45,416 15,270 
Investing Activities
Capital Expenditures(28,710)(50,076)
Proceeds from Disposal of Noncurrent Assets878 3,244 
Cash Used for Investments and Other Assets(3,617)(2,188)
Net Cash Used in Investing Activities(31,449)(49,020)
Financing Activities
Net Borrowings on Short-Term Debt6,608 53,854 
Payments for Retirement of Long-Term Debt (169)
Dividends Paid(17,181)(16,208)
Payments for Shares Withheld for Employee Tax Obligations(2,942)(1,507)
Other, net(618)(2,171)
Net Cash (Used in) Provided by Financing Activities
(14,133)33,799 
Net Change in Cash and Cash Equivalents(166)49 
Cash and Cash Equivalents at Beginning of Period1,537 1,163 
Cash and Cash Equivalents at End of Period$1,371 $1,212 
Supplemental Disclosure of Noncash Investing Activities
Accrued Property, Plant and Equipment Additions$9,165 $18,962 
See accompanying notes to consolidated financial statements
7

OTTER TAIL CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Summary of Significant Accounting Policies
Overview
Otter Tail Corporation (OTC) and its subsidiaries (collectively, the "Company", "us", "our" or "we") form a diverse, multi-platform business consisting of a vertically integrated, regulated utility with generation, transmission and distribution facilities complemented by manufacturing businesses providing metal fabrication for custom machine parts and metal components, manufacturing of extruded and thermoformed plastic products, and manufacturing of polyvinyl chloride (PVC) pipe products. We classify our business into three segments: Electric, Manufacturing and Plastics.
Basis of Presentation
The unaudited consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the SEC for interim reporting. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles. In the opinion of management, we have included all adjustments, including normal recurring accruals, necessary for a fair presentation of the consolidated financial statements for the periods presented. The consolidated financial statements and condensed notes thereto should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Because of the seasonality of our businesses and other factors, the earnings for the three months ended March 31, 2022 should not be taken as an indication of earnings for all or any part of the balance of the current year or as an indication of earnings for future years.
Use of Estimates
We use estimates based on the best information available in recording transactions and balances resulting from business operations. As better information becomes available or actual amounts are known, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.
Reclassifications
Certain reclassifications of amounts previously reported have been made to the accompanying consolidated statements of shareholders' equity and consolidated statements of cash flows to maintain consistency and comparability between periods presented. The reclassifications had no impact on previously reported shareholders' equity, net cash provided by operating activities, net cash used in investing activities, net cash (used in) provided by financing activities, or cash and cash equivalents.
2. Segment Information
We classify our business into three segments, Electric, Manufacturing and Plastics, consistent with our business strategy, organizational structure and our internal reporting and review processes used by our chief operating decision maker to make decisions regarding allocation of resources, to assess operating performance and to make strategic decisions.
Certain assets and costs are not allocated to our operating segments. Corporate operating costs include items such as corporate staff and overhead costs, the results of our captive insurance company and other items excluded from the measurement of operating segment performance. Corporate assets consist primarily of cash, prepaid expenses, investments and fixed assets. Corporate is not an operating segment, rather it is added to operating segment totals to reconcile to consolidated amounts.
Information for each segment and our unallocated corporate costs for the three months ended March 31, 2022 and 2021 are as follows:
Three Months Ended March 31,
(in thousands)20222021
Operating Revenue
Electric$130,416 $123,699 
Manufacturing104,957 75,825 
Plastics139,531 62,186 
Total$374,904 $261,710 
Net Income (Loss)
Electric$19,233 $17,587 
Manufacturing4,084 5,385 
Plastics50,846 9,147 
Corporate(2,160)(1,790)
Total$72,003 $30,329 
8

The following provides the identifiable assets by segment and corporate assets as of March 31, 2022 and December 31, 2021:
(in thousands)March 31,
2022
December 31,
2021
Identifiable Assets
Electric$2,278,337 $2,283,776 
Manufacturing269,833 251,044 
Plastics184,865 162,565 
Corporate58,706 57,445 
Total$2,791,741 $2,754,830 
3. Revenue
We present our operating revenues to external customers, in total and by amounts arising from contracts with customers and alternative revenue program (ARP) arrangements, disaggregated by revenue source and segment for the three months ended March 31, 2022 and 2021:
Three Months Ended March 31,
(in thousands)20222021
Operating Revenues
Electric Segment
Retail: Residential$40,561 $37,485 
Retail: Commercial and Industrial71,171 66,403 
Retail: Other1,907 1,818 
  Total Retail113,639 105,706 
Transmission12,556 11,944 
Wholesale2,463 4,507 
Other1,758 1,542 
Total Electric Segment130,416 123,699 
Manufacturing Segment
Metal Parts and Tooling89,573 62,673 
Plastic Products and Tooling12,445 10,295 
Scrap Metal Sales2,939 2,857 
Total Manufacturing Segment104,957 75,825 
Plastics Segment
PVC Pipe139,531 62,186 
Total Operating Revenue374,904 261,710 
Less: Non-contract Revenues Included Above
Electric Segment - ARP Revenues(2,460)(975)
Total Operating Revenues from Contracts with Customers$377,364 $262,685 
4. Select Balance Sheet Information
Receivables and Allowance for Credit Losses
Receivables as of March 31, 2022 and December 31, 2021 are as follows:
(in thousands)March 31,
2022
December 31,
2021
Receivables
Trade$192,315 $142,297 
Other8,139 10,591 
Unbilled Receivables20,229 23,901 
Total Receivables220,683 176,789 
Less: Allowance for Credit Losses(1,787)(1,836)
Receivables, net of allowance for credit losses$218,896 $174,953 
9

The following is a summary of activity in the allowance for credit losses for the three months ended March 31, 2022 and 2021:
March 31,March 31,
(in thousands)20222021
Beginning Balance, January 1$1,836 $3,215 
Additions Charged to Expense210 211 
Reductions for Amounts Written Off, Net of Recoveries(259)(443)
Ending Balance, March 31$1,787 $2,983 
Inventories
Inventories consist of the following as of March 31, 2022 and December 31, 2021:
(in thousands)March 31,
2022
December 31,
2021
Finished Goods$37,195 $39,903 
Work in Process33,962 35,705 
Raw Material, Fuel and Supplies74,700 72,882 
Total Inventories$145,857 $148,490 
Investments
The following is a summary of our investments as of March 31, 2022 and December 31, 2021:
(in thousands)March 31,
2022
December 31,
2021
Corporate-Owned Life Insurance Policies$40,722 $41,078 
Debt Securities8,959 9,202 
Money Market Funds1,893 949 
Mutual Funds6,285 5,432 
Other Investments34 29 
Total Investments$57,893 $56,690 
The amount of unrealized gains and losses on debt securities as of March 31, 2022 and December 31, 2021 was not material and no unrealized losses were deemed to be other-than-temporary. In addition, the amount of unrealized gains and losses on marketable equity securities still held as of March 31, 2022 and December 31, 2021 was not material.
Property, Plant and Equipment
Major classes of property, plant and equipment as of March 31, 2022 and December 31, 2021 include:
(in thousands)March 31,
2022
December 31,
2021
Electric Plant  
Electric Plant in Service$2,776,778 $2,758,445 
Construction Work in Progress72,347 74,926 
Total Gross Electric Plant2,849,125 2,833,371 
Less Accumulated Depreciation and Amortization829,499 817,302 
Net Electric Plant2,019,626 2,016,069 
Nonelectric Property, Plant and Equipment
Nonelectric Property, Plant and Equipment in Service278,729 273,950 
Construction Work in Progress14,365 16,611 
Total Gross Nonelectric Property, Plant and Equipment293,094 290,561 
Less Accumulated Depreciation and Amortization184,376 182,025 
Net Nonelectric Property, Plant and Equipment108,718 108,536 
Net Property, Plant and Equipment$2,128,344 $2,124,605 
10

5. Regulatory Matters
Regulatory Assets and Liabilities
The following presents our current and long-term regulatory assets and liabilities as of March 31, 2022 and December 31, 2021 and the period we expect to recover or refund such amounts:
Period ofMarch 31, 2022December 31, 2021
(in thousands)Recovery/RefundCurrentLong-TermCurrentLong Term
Regulatory Assets
Pension and Other Postretirement Benefit Plans1
Various$7,791 $113,663 $7,791 $114,961 
Alternative Revenue Program Riders2
Up to 2 years
9,280 5,713 11,889 5,564 
Asset Retirement Obligations1
Asset lives 1,098  742 
ISO Cost Recovery Trackers1
Up to 2 years
220 950  1,342 
Unrecovered Project Costs1
Up to 5 years
1,086 1,456 2,136 1,455 
Deferred Rate Case Expenses1
Various542 1,037 607 1,131 
Debt Reacquisition Premiums1
Up to 11 years
68 234 100 240 
Fuel Clause Adjustments1
Up to 1 year
2,767  4,819  
Other1
Various16 262  73 
Total Regulatory Assets$21,770 $124,413 $27,342 $125,508 
Regulatory Liabilities
Deferred Income TaxesAsset lives$ $128,042 $ $129,437 
Plant Removal ObligationsAsset lives8,561 101,850 8,306 101,595 
Fuel Clause Adjustments
Up to 1 year
5,386  1,554  
Alternative Revenue Program RidersVarious6,215 3,986 5,772 3,336 
Pension and Other Postretirement Benefit Plans
Up to 1 year
2,603  2,603  
Derivative InstrumentsVarious4,179  6,214  
OtherVarious267 111 395 62 
Total Regulatory Liabilities$27,211 $233,989 $24,844 $234,430 
1Costs subject to recovery without a rate of return.
2Amount eligible for recovery includes an incentive or rate of return.
6. Short-Term and Long-Term Borrowings
The following is a summary of our outstanding short- and long-term borrowings by borrower, OTC or Otter Tail Power (OTP), as of March 31, 2022 and December 31, 2021:
Short-Term Debt
The following is a summary of our lines of credit as of March 31, 2022 and December 31, 2021:
March 31, 2022December 31,
2021
(in thousands)Line LimitAmount OutstandingLetters
of Credit
Amount AvailableAmount Available
OTC Credit Agreement$170,000 $43,281 $ $126,719 $147,363 
OTP Credit Agreement170,000 54,489 7,844 107,667 88,315 
Total$340,000 $97,770 $7,844 $234,386 $235,678 
11

Long-Term Debt
The following is a summary of outstanding long-term debt by borrower as of March 31, 2022 and December 31, 2021: 
(in thousands)
EntityDebt InstrumentRateMaturityMarch 31,
2022
December 31,
2021
OTCGuaranteed Senior Notes3.55%12/15/26$80,000 $80,000 
OTPSeries 2007B Senior Unsecured Notes6.15%08/20/2230,000 30,000 
OTPSeries 2007C Senior Unsecured Notes6.37%08/02/2742,000 42,000 
OTPSeries 2013A Senior Unsecured Notes4.68%02/27/2960,000 60,000 
OTPSeries 2019A Senior Unsecured Notes 3.07%10/10/2910,000 10,000 
OTPSeries 2020A Senior Unsecured Notes3.22%02/25/3010,000 10,000 
OTPSeries 2020B Senior Unsecured Notes3.22%08/20/3040,000 40,000 
OTPSeries 2021A Senior Unsecured Notes2.74%11/29/3140,000 40,000 
OTPSeries 2007D Senior Unsecured Notes6.47%08/20/3750,000 50,000 
OTPSeries 2019B Senior Unsecured Notes3.52%10/10/3926,000 26,000 
OTPSeries 2020C Senior Unsecured Notes3.62%02/25/4010,000 10,000 
OTPSeries 2013B Senior Unsecured Notes5.47%02/27/4490,000 90,000 
OTPSeries 2018A Senior Unsecured Notes4.07%02/07/48100,000 100,000 
OTPSeries 2019C Senior Unsecured Notes3.82%10/10/4964,000 64,000 
OTPSeries 2020D Senior Unsecured Notes3.92%02/25/5015,000 15,000 
OTPSeries 2021B Senior Unsecured Notes3.69%11/29/51100,000 100,000 
Total$767,000 $767,000 
Less:Current Maturities, Net of Unamortized Debt Issuance Costs29,990 29,983 
Unamortized Long-Term Debt Issuance Costs2,936 3,003 
Total Long-Term Debt, Net of Unamortized Debt Issuance Costs$734,074 $734,014 
On June 10, 2021, OTP entered into a Note Purchase Agreement pursuant to which OTP agreed to issue, in a private placement transaction, $230.0 million of senior unsecured notes consisting of (a) $40.0 million of 2.74% Series 2021A Senior Unsecured Notes due November 29, 2031, (b) $100.0 million of 3.69% Series 2021B Senior Unsecured Notes due November 29, 2051 and (c) $90.0 million of 3.77% Series 2022A Senior Unsecured Notes due May 20, 2052. During the year ended December 31, 2021, OTP issued its Series 2021A and Series 2021B notes for aggregate proceeds of $140.0 million, which were used to repay the Series 2011A notes. The issuance of the Series 2022A notes is scheduled to close, subject to the satisfaction of certain customary conditions to closing, in May 2022.
Financial Covenants
Certain of OTC's and OTP's short- and long-term debt agreements require the borrower, whether OTC or OTP, to maintain certain financial covenants, including a maximum debt to total capitalization ratio of 0.60 to 1.00, a minimum interest and dividend coverage ratio of 1.50 to 1.00, and a maximum level of priority indebtedness. As of March 31, 2022, OTC and OTP were in compliance with these financial covenants.
7. Employee Postretirement Benefits
Pension Plan and Other Postretirement Benefits
The Company sponsors a noncontributory funded pension plan (the "Pension Plan"), an unfunded, nonqualified Executive Survivor and Supplemental Retirement Plan, both accounted for as defined benefit pension plans, and a postretirement healthcare plan accounted for as an other postretirement benefit plan.
The following table includes the components of net periodic benefit cost of our defined benefit pension plans and other postretirement benefits for the three months ended March 31, 2022 and 2021:
12

Pension Benefits (Pension Plan)Pension Benefits (ESSRP)Postretirement Benefits
(in thousands)202220212022202120222021
Service Cost$1,644 $1,866 $49 $47 $335 $430 
Interest Cost3,086 2,915 335 307 510 473 
Expected Return on Assets(5,921)(5,590)    
Amortization of Prior Service Cost    (1,433)(1,433)
Amortization of Net Actuarial Loss1,966 2,728 142 155 766 943 
Net Periodic Benefit Cost$775 $1,919 $526 $509 $178 $413 
The following table includes the impact of regulation on the recognition of periodic benefit cost arising from pension and other postretirement benefits for the three months ended March 31, 2022 and 2021:
(in thousands)20222021
Net Periodic Benefit Cost$1,479 $2,841 
Net Amount Amortized (Deferred) Due to the Effect of Regulation527 (115)
Net Periodic Benefit Cost Recognized$2,006 $2,726 
We had no minimum funding requirements for our pension plan or any other postretirement benefit plans as of December 31, 2021, but made a discretionary contribution of $20.0 million to our pension plan in February 2022.
8. Income Taxes
The reconciliation of the statutory federal income tax rate to our effective tax rate for each of the three months ended March 31, 2022 and 2021 is as follows:
Three Months Ended March 31,
20222021
Federal Statutory Rate21.0 %21.0 %
Increases (Decreases) in Tax from:
State Taxes on Income, Net of Federal Tax5.0 5.0 
Production Tax Credits (PTCs)(4.4)(7.6)
Amortization of Excess Deferred Income Taxes(