
Items 1 and 2. Business and Properties

General

The Company is a regulated energy delivery and construction materials and services business. Its principal executive offices are located at 1200 West Century Avenue, P.O. Box 5650, Bismarck, North Dakota 58506-5650, telephone (701) 530-1000.

Montana-Dakota was incorporated under the state laws of Delaware in 1924. The Company was incorporated under the state laws of Delaware in 2018. ~~On January 2, 2019, the Company announced~~Upon the completion of the Holding Company Reorganization, ~~which resulted in~~ Montana-Dakota ~~becoming~~became a subsidiary of the Company. ~~Immediately after consummation of the Holding Company Reorganization, the Company had, on a consolidated basis, the same assets, businesses~~

The Company's mission is to deliver superior value to stakeholders by providing essential infrastructure and ~~operations as immediately prior~~services to ~~the consummation of the Holding Company Reorganization.~~

America. The Company's strategy is to deliver superior value with a two-platform model of regulated energy delivery and construction materials and services, ~~businesses,~~ while ~~also~~ pursuing organic growth opportunities and ~~using a disciplined approach to~~ strategic acquisitions of well-managed companies and properties.

The Company focuses on infrastructure and is Building a Strong America® by providing essential products and services through its regulated energy delivery platform and its construction materials and services platform, which Each of the Company's platforms are ~~both~~ comprised of different operating segments. Most of these segments experience seasonality related to the industries in which they operate. The two-platform approach helps balance this seasonality and the ~~risk~~risks associated with each type of industry. Through its regulated energy delivery platform, the Company generates, transmits and distributes electricity and provides natural gas distribution, transportation and storage services. These businesses are regulated by state public service commissions and/or the FERC. The construction materials and services platform provides construction services to a variety of industries, including commercial, industrial and governmental customers, and provides construction materials through aggregate mining and marketing of related products, such as ~~ready-mixed~~ready-mix concrete, asphalt and asphalt oil.

The Company is organized into five reportable business segments. These business segments include: electric, natural gas distribution, pipeline, construction materials and contracting, and construction services. The Company's business segments are determined based on the Company's method of internal reporting, which generally segregates the strategic business units due to differences in products, services and regulation. The internal reporting of these segments is defined based on the reporting and review process used by the Company's chief executive officer.

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The Company, through its wholly owned subsidiary, MDU Energy Capital, owns Montana-Dakota, Cascade and Intermountain. The electric segment is comprised of Montana-Dakota while the natural gas distribution segment is comprised of Montana-Dakota, Cascade and Intermountain.

The Company, through its wholly owned subsidiary, Centennial, owns WBI ~~Holdings,~~Energy, Knife River, MDU Construction Services and Centennial Capital. WBI ~~Holdings~~Energy is the pipeline segment, Knife River is the construction materials and contracting segment, MDU Construction Services is the construction services segment, and Centennial Capital is reflected in the Other category.

~~MDU Resources Group, Inc.~~ ~~Form 10-K~~ 7

~~Part I~~

The financial results and data applicable to each of the Company's business segments, as well as their financing requirements, are set forth in Item 7 - MD&A and Item 8 - Note 17.

The Company's material properties, which are of varying ages and are of different construction types, are generally in good condition, are well maintained and are generally suitable and adequate for the purposes for which they are used.

Human Capital Management At the core of Building a Strong America® is building a strong workforce. This means building a strong team of employees with a focus on safety and a commitment to diversity, equity and inclusion. The Company's team ~~consisted of 12,994 employees~~was located in 4041 states plus Washington D.C. as of December 31, ~~2020.~~2021. The number of employees fluctuates during the year due to the seasonality and the number and size of construction projects. During ~~2020,~~2021, the number of employees peaked in the second quarter at ~~15,668.~~just over 14,700. Employees as of December 31, ~~2020,~~2021, were as follows:


~~Company~~			~~Number of employees~~
~~MDU Resources Group, Inc.~~			~~250~~
~~MDU Energy Capital~~			~~1,592~~
~~WBI Holdings~~			~~323~~
~~Knife River~~			~~3,582~~
~~MDU Construction Services~~			~~7,247~~
~~Total employees~~			~~12,994~~

Many of the Company's employees are represented by collective-bargaining ~~agreements.~~agreements and the Company is committed to establishing constructive dialogue with this representation and bargain in good faith. The majority of the collective-bargaining agreements contain provisions that prohibit work stoppages or strikes and provide ~~for~~dispute resolution through binding arbitration ~~dispute resolution~~ in the event of an extended disagreement.

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The following information is as of December 31, ~~2020.~~2021.


Company	~~Collective- bargaining~~Collective-bargaining agreement	Number of employees represented	Agreement status
Montana-Dakota	IBEW	~~336~~327	Effective through April 30, ~~2021~~2024
Intermountain	UA	~~129~~132	Effective through March 31, 2023
Cascade	ICWU	~~190~~194	Effective through March 31, ~~2021~~2024
WBI Energy Transmission	IBEW	6770	Effective through March 31, 2022
Knife River	3940 various agreements	~~555~~452	2 agreements in negotiations
MDU Construction Services	103 various agreements	~~5,927~~5,488	~~2 agreements~~1 agreement in negotiations
Total		~~7,204~~6,663

Diversity, Equity and Inclusion The Company is committed to an inclusive environment that respects the differences and embraces the strengths of its diverse employees. Essential to the Company's success is its ability to attract, retain and engage the best people from a broad range of backgrounds and build an inclusive culture where all employees feel valued and contribute their best. To aid in the Company's commitment to an inclusive environment, each business segment has a diversity officer who serves as a conduit for diversity-related issues and provides a voice to all employees. The Company requires employees to participate in its Leading with Integrity training which provides training on the Company's code of conduct and additional courses focusing on diversity, effective leadership, equal employment opportunity, workplace harassment, respect and unconscious bias.

The Company has three strategic goals related to diversity:

•Enhance collaboration efforts through cooperation and sharing of best practices to create new ways of meeting employee, customer and shareholder needs.

•Maintain a culture of integrity, respect and safety by ensuring employees understand these essential values which are part of the Company's vision statement.

•Increase productivity and profitability through the creation of a work environment which values all perspectives and methods of accomplishing work.

The Company also promotes its strategic diversity goals through the following special recognition awards:

Building People Building a strong workforce begins with employee recruitment. The Company hires and trains employees to have the skills, abilities and motivation to achieve the results needed for their jobs. Each job is important and part of a coordinated team effort to accomplish the organization's objectives. The Company uses a variety of means to recruit new employees for open positions including posting on the Company's website at www.jobs.mdu.com, which is not incorporated by reference herein. Other sources for employee recruitment include employee referrals, union workforce, direct recruitment, advertising, social media, career fairs, job service organizations and associations connected with a variety of professions. The Company also uses internship programs to introduce individuals to the Company's business operations and provide a possible source of future employees. In markets where labor availability is tight, when possible, the Company uses telecommuting, guaranteed hours, flexible schedules and work arrangements to fill open positions.

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Building a strong workforce also requires developing employees in their current positions and for future advancement. The Company provides opportunities for advancement through job mobility, succession planning and promotions both within and between business segments. The Company provides employees the opportunity to further develop and grow through various forms of training, mentorship programs and internship programs, among other things.

To attract and retain employees, the Company offers:

The Company conducts employee surveys at least every two years to hear and gauge employee opinions on issues such as fairness, camaraderie and pride in the workplace. Survey responses are compiled and evaluated at various levels throughout the Company to develop action plans to address areas of concern raised by employees.

Safety The Company is committed to safety and health in the ~~workplace and subscribes to the principle that all injuries can be prevented.~~workplace. To ensure safe work environments, the Company provides training, adequate resources and appropriate follow-up on any unsafe conditions or actions.

To facilitate a strong safety culture, the Company established its Safety Leadership Council which is charged with receiving and reviewing information for the identification and adoption of best practices in the prevention of occupationally induced injuries and illness, as well as monitoring the effectiveness of the Company's safety and environmental health programs.

Council. In addition to the Safety Leadership Council, the Company has policies and training that support safety in the workplace including training on safety matters through classroom and toolbox meetings on job sites. The Company utilizes safety compliance in the evaluation of employees, which includes management, and recognizes employee safety through safety award programs. Accident and safety statistical information is gathered for each of the business segments and regularly reported to management and the board of directors.

In response to COVID-19, the Company established a task force to monitor developments related to the pandemic and implemented procedures to protect employees. The Company adopted recommended practices ~~from~~and procedures by the CDC and other governmental entities, and is following the rules and directives of ~~each~~applicable federal, state and local ~~jurisdiction~~jurisdictions in which the Company operates. Some of these practices include, among other things, a daily COVID-19 self-assessment to access Company facilities; social distancing; telecommuting; virtual meetings; designated entrances, exits and stairwells; restricted business travel; and increased access to personal protective equipment.

~~Building People~~ Employees are hired having the skills, abilities and motivation to achieve the results needed for their jobs. Each job is important and part of a coordinated team effort to accomplish the organization's objectives. The Company provides opportunities for advancement through job mobility, succession planning and promotions both within and between business segments.

The Company uses a variety of recruiting sources depending on the position, market and job requirements. All open positions across the Company's businesses are posted on the Company's website www.jobs.mdu.com. Other sources for recruiting employees include team member referrals, union workforce, direct recruitment and various forms of advertising, including social media. The Company also uses internship programs to introduce

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~~Part I~~

individuals to the Company's business operations and provide a possible source of future employees. In markets where labor availability is tight, the Company uses telecommuting, guaranteed hours, flexible schedules and work arrangements to fill open positions.

~~To attract and retain employees, the Company offers:~~

•~~Competitive salaries and wages based on the labor markets in which it operates.~~

•~~Employee growth through training in the form of technical, professional and leadership programs.~~

Environmental Matters The Company believes it has a responsibility to use natural resources efficiently and attempt to minimize the environmental impact of its activities. The Company produces GHG emissions primarily from its fossil fuel electric-generating facilities, as well as from natural gas pipeline and storage systems, and operations of equipment and fleet vehicles. The ~~Company also provides formal and informal mentoring and job shadowing programs to assist employees in their job and career goals.~~

•~~Incentive compensation opportunities based on the Company's performance.~~

•~~Comprehensive benefits including vacation, sick leave, health and wellness programs, retirement plans and discount programs.~~

~~Diversity and Inclusion~~ To further its corporate vision, the Company is committed to an inclusive environment that respects the differences and embraces the strengths of its diverse employees. Each business segment has an appointed diversity officer who serves as a conduit for diversity-related issues by providing a voice to all employees. The Company has three strategic goals related to diversity:

•~~Increase productivity and profitability through the creation of a work environment which values all perspectives and methods of accomplishing work.~~

•~~Enhance collaboration efforts through cooperation and sharing of best practices to create new ways of meeting employee, customer and shareholder needs.~~

•~~Maintain a culture of integrity, respect and safety by ensuring employees understand these essential values which are part of the Company's vision statement.~~

The Company provides training and has policies which speak to diversity and inclusion. Training for employees on diversity and inclusion topics include equal employment opportunity, workplace harassment, respect and unconscious bias. In 2020, the Company implemented a telecommuting policy to allow certain employees to work from home or other offsite locations. The flexibility of the policy may expand the potential applicant pool for job openings beyond the Company's traditional geographic footprint.

~~The Company also promotes its strategic diversity goals through the following special recognition awards:~~

•~~The Einstein award recognizes the best process improvement ideas that contribute in a measurable way to improving the Company's bottom line and are vital to the Company's success.~~

•~~The Community Spirit award recognizes employees who are actively involved in their community.~~

•~~The Summit award recognizes employees who make the Company a better place to work.~~

•~~The Environmental Integrity award recognizes an employee program, project or activity that reflects the Company's environmental policy and philosophy.~~

•~~The Hero Award recognizes employees who go above and beyond the call of duty to save another's life.~~

~~Governmental Matters~~ The operations of the Company and certain of its subsidiaries are subject to laws and regulations relating to air, water and solid waste pollution control; state facility-siting regulations; zoning and planning regulations of certain state and local authorities; federal and state health and safety regulations; and state hazard communication standards. The Company believes it is in substantial compliance with these regulations, except as to what may be ultimately determined with regard to items discussed in Environmental matters in Item 8 - Note 21. There are no pending CERCLA actions for any of the Company's material properties. However, the Company is involved in certain claims relating to the Portland, Oregon, Harbor Superfund Site and the Bremerton Gasworks Superfund Site. For more information on the Company's environmental matters, see Item 8 - Note 21.

The Company produces GHG emissions primarily from its fossil fuel electric generating facilities, as well as from natural gas pipeline and storage systems, and operations of equipment and fleet vehicles. GHG emissions also result from customer use of natural gas for heating and other uses. As interest in reductions in GHG emissions has grown, the Company has developed renewable generation with lower or no GHG emissions. Governmental legislation and regulatory initiatives regarding environmental and energy policy are continuously evolving and could negatively impact the Company's operations and financial results. Until legislation and regulation are finalized, the impact of these measures cannot be accurately predicted. The Company will continue to monitor legislative and regulatory activity related to environmental and energy policy initiatives. ~~Disclosure regarding specific environmental matters applicable to each of the Company's businesses is set forth under each business description later.~~ In addition, for a discussion of the Company's risks related to environmental laws and regulations, see Item 1A - Risk Factors.

In 2021, the Company formed an executive management Sustainability Committee that supports the execution of, and makes recommendations to advance, the Company's environmental and sustainability strategy. For more information on the Company's sustainability goals, programs and performance, see the Company's Sustainability Report on its website, which is not incorporated by reference herein.

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			Governmental Matters The operations of the Company and certain of its subsidiaries are subject to laws and regulations relating to air, water and solid waste pollution control; state facility-siting regulations; zoning and planning regulations of certain state and local authorities; federal and state health and safety regulations; and state hazard communication standards. The Company strives to be in substantial compliance with applicable regulations, except as to what may be ultimately determined with regard to items discussed in Environmental matters in Item 8 - Note 21. There are no pending CERCLA actions for any of the Company's material properties. However, the Company is involved in certain claims relating to the Portland, Oregon, Harbor Superfund Site and the Bremerton Gasworks Superfund Site. For more information on the Company's environmental matters, see Item 8 - Note 21.

Technology The Company uses technology in substantially all aspects of its business operations and requires uninterrupted operation of information technology systems and network infrastructure. These systems may be vulnerable to failures or unauthorized access. The Company has policies, procedures and processes designed to strengthen and protect these systems, which include the Company’s enterprise information technology and operation technology groups continually evaluating new tools and techniques to reduce the risk and potential impacts of a cyber breach.

The Company created CyROC to oversee its approach to cybersecurity. CyROC is responsible for supplying management and the Audit Committee with analyses, appraisals, recommendations and pertinent information concerning cyber defense of the Company’s electronic information and

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~~Part I~~

information technology systems. A quarterly cybersecurity report is provided to the Audit Committee. For a discussion of the Company's risks related to cybersecurity, see Item 1A - Risk Factors.

Available Information This annual report on Form 10-K, the Company's quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge through the Company's website as soon as reasonably practicable after the Company has electronically filed such reports with, or furnished such reports to, the SEC. The Company's website address is www.mdu.com. The information available on the Company's website is not part of this annual report on Form 10-K. The SEC also maintains a website where the Company's filings can be obtained free of charge at www.SEC.gov.

Electric

~~General~~The Company's electric segment is operated through its wholly owned subsidiary, Montana-Dakota. Montana-Dakota provides electric service at retail, serving residential, commercial, industrial and municipal customers in 185 communities and adjacent rural areas in Montana, North Dakota, South Dakota and Wyoming. For more information on the retail customer classes served, see the table below. The material properties owned by Montana-Dakota for use in its electric operations include interests in 16 electric generating units at 11 facilities and two small portable diesel generators, as further described under System Supply, System Demand and Competition, approximately 3,400 and 4,900 miles of transmission and distribution lines, respectively, and 81 transmission and 298 distribution substations. Montana-Dakota has obtained and holds, or is in the process of renewing, valid and existing franchises authorizing it to conduct its electric operations in all of the municipalities it serves where such franchises are required. Montana-Dakota intends to protect its service area and seek renewal of all expiring franchises. At December 31, 2020, Montana-Dakota's net electric plant investment was $1.5 billion and its rate base was $1.3 billion.

~~The retail customers served and respective revenues by class for the electric business were as follows:~~

2020 2019 2018
Customers
Served Revenues Customers
Served Revenues Customers
Served Revenues
(Dollars in thousands)
Residential 118,893 $ 122,545 118,563 $ 125,614 118,426 $ 126,173
Commercial 23,050 131,207 22,948 142,062 22,756 141,961
Industrial 230 36,736 234 37,790 236 36,081
Other 1,609 6,601 1,601 7,454 1,604 7,882
143,782 $ 297,089 143,346 $ 312,920 143,022 $ 312,097

Other electric revenues, which are largely transmission-related revenues, for Montana-Dakota were $34.9 million, $38.8 million and $23.0 million for the years ended December 31, 2020, 2019 and 2018, respectively.

~~The percentage of electric retail revenues by jurisdiction was as follows:~~

2020 2019 2018
North Dakota 64 % 65 % 66 %
Montana 22 % 22 % 20 %
Wyoming 9 % 8 % 9 %
South Dakota 5 % 5 % 5 %


GeneralThe Company's electric segment is operated through its wholly owned subsidiary, Montana-Dakota. Montana-Dakota provides electric service at retail, serving residential, commercial, industrial and municipal customers in 185 communities and adjacent rural areas. The material properties owned by Montana-Dakota for use in its electric operations include interests in 15 electric generating units at 11 facilities and two small portable diesel generators, as further described under System Supply, System Demand and Competition, approximately 3,500 and 4,800 miles of transmission and distribution lines, respectively, and 83 transmission and 294 distribution substations. Montana-Dakota has obtained and holds, or is in the process of renewing, valid and existing franchises authorizing it to conduct its electric operations in all of the municipalities it serves where such franchises are required. Montana-Dakota intends to protect its service area and seek renewal of all expiring franchises. At December 31, 2021, Montana-Dakota's net electric plant investment was $1.6 billion and its rate base was $1.3 billion.

Retail electric rates, service, accounting and certain ~~security~~securities issuances are subject to regulation by the MTPSC, NDPSC, SDPUC and WYPSC. The interstate transmission and wholesale electric power operations of Montana-Dakota are also subject to regulation by the FERC under provisions of the Federal Power Act, as are interconnections with other utilities and power generators, the issuance of certain securities, accounting, cybersecurity and other matters.

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Through MISO, Montana-Dakota has access to wholesale energy, ancillary services and capacity markets for its interconnected system. MISO is a regional transmission organization responsible for operational control of the transmission systems of its members. MISO provides security center operations, tariff administration and operates day-ahead and real-time energy markets, ancillary services and capacity markets. As a member of MISO, Montana-Dakota's generation is sold into the MISO energy market and its energy needs are purchased from that market.

The retail customers served and respective revenues by class for the electric business were as follows:


	2021			2020			2019
	Customers Served	Revenues		Customers Served	Revenues		Customers Served	Revenues
	(Dollars in thousands)
Residential	119,113	$	123,043	118,893	$	122,545	118,563	$	125,614
Commercial	23,149	133,336		23,050	131,207		22,948	142,062
Industrial	231	40,477		230	36,736		234	37,790
Other	1,610	6,754		1,609	6,601		1,601	7,454
	144,103	$	303,610	143,782	$	297,089	143,346	$	312,920

Other electric revenues, which are largely transmission-related revenues, for Montana-Dakota were $46.0 million, $34.9 million and $38.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The percentage of electric retail revenues by jurisdiction was as follows:


	2021		2020		2019
North Dakota	64	%	64	%	65	%
Montana	22	%	22	%	22	%
Wyoming	9	%	9	%	8	%
South Dakota	5	%	5	%	5	%

System Supply, System Demand and Competition Through an interconnected electric system, Montana-Dakota serves markets in portions of North Dakota, Montana and South Dakota. These markets are highly seasonal and sales volumes depend largely on the weather. Additionally, the average customer consumption has tended to decline due to increases in energy efficient lighting and appliances being installed. The interconnected system consists of 1514 electric generating units at 10 facilities and two small portable diesel ~~generators, which have an aggregate nameplate rating attributable to Montana-Dakota's interest of 750,318 kW and total net ZRCs of 512.3~~generators. Additional details are included in ~~2020.~~the table that follows. For ~~2020,~~2021, Montana-Dakota's total ZRCs, including its firm purchase power contracts, were ~~553.2.~~535.0. Montana-Dakota's planning reserve margin requirement within MISO was ~~531.4~~530.8 ZRCs for ~~2020.~~2021. The maximum electric peak demand experienced to date attributable to Montana-Dakota's sales to retail customers on the interconnected system was 611,542 kW in August 2015. Montana-Dakota's latest forecast for its interconnected system indicates that its annual peak will continue to occur

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during the summer. Montana-Dakota's interconnected system electric generating capability includes five steam-turbine generating units at four facilities using coal for fuel, four natural gas combustion turbine units at three facilities, three wind electric generating facilities, two natural gas-fired reciprocating internal combustion engines at one facility, a heat recovery electric generating facility and two small portable diesel generators.

Additional energy is purchased as needed, or in lieu of generation if more economical, from the MISO ~~market, and in 2020,~~market. In 2021, Montana-Dakota purchased approximately 2529 percent of its net kWh needs for its interconnected system through the MISO market.

Approximately 30 percent of the electricity delivered to customers from Montana-Dakota's owned generation in 2020 was from renewable resources. Although Montana-Dakota's generation resource capacity has increased to serve the needs of its customers, the carbon dioxide emission intensity of its electric generation resource fleet has been reduced by approximately 28 percent since 2005 through the addition of renewable generation and MISO market purchases. Montana-Dakota's carbon dioxide emissions are expected to continue to decline through the retirement of aging coal-fired electric generating units.

Through the Sheridan System, Montana-Dakota serves Sheridan, Wyoming, and neighboring communities. The maximum peak demand experienced to date attributable to Montana-Dakota sales to retail customers on that system was approximately ~~64,129~~69,404 kW in July ~~2020.~~2021. Montana-Dakota has a power supply contract with Black Hills Power, Inc. to purchase up to 49,000 kW of capacity annually through December 31, 2023. Wygen III also serves a portion of the needs of Montana-Dakota's Sheridan-area customers.

Approximately 29 percent of the electricity delivered to customers from Montana-Dakota's owned generation in 2021 was from renewable resources. Although Montana-Dakota's generation resource capacity has increased to serve the needs of its customers, the carbon dioxide emission intensity of its electric generation resource fleet has been reduced by approximately 30 percent since 2005 through the addition of renewable generation. Montana-Dakota's carbon dioxide emissions are expected to continue to decline through the retirement of aging coal-fired electric generating units, as further discussed below.

In February 2019, Montana-Dakota announced the retirement of three aging coal-fired electric generating units. The Company ceased operations on March 31, 2021, of Unit 1 at Lewis & Clark Station in Sidney, Montana, and commenced decommissioning in July 2021. Units 1 and 2 at Heskett Station near Mandan, North Dakota, are being retired during the first quarter of 2022. In addition, during the first half of 2022, Montana-Dakota will begin construction of a new 88-MW simple-cycle natural gas-fired combustion turbine peaking unit at the existing Heskett Station.

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The following table sets forth details applicable to the Company's electric generating stations:


Generating Station	Generating Station	Type	Nameplate Rating (kW)	2020 ZRCs	(a)	2020 Net Generation (kWh in thousands)	Generating Station	Type	Fuel	Nameplate Rating (kW)	2021 ZRCs	(a)	2021 Net Generation (kWh in thousands)
Interconnected System:	Interconnected System:						Interconnected System:
North Dakota:	North Dakota:						North Dakota:
Coyote (b)	Coyote (b)	Steam	103,647	92.7		552,839	Coyote (b)	Steam	Coal	103,647	94.0		620,045
Heskett	Heskett	Steam	86,000	87.9		469,765	Heskett	Steam	Coal	86,000	—		501,446
Heskett	Heskett	Combustion Turbine	89,038	77.9		1,331	Heskett	Combustion turbine	Natural gas	89,038	70.9		7,325
Glen Ullin	Glen Ullin	Heat Recovery	7,500	4.8		29,813	Glen Ullin	Renewable	Heat recovery	7,500	3.4		44,771
Cedar Hills	Cedar Hills	Wind	19,500	4.0		55,889	Cedar Hills	Renewable	Wind	19,500	3.7		58,221
Thunder Spirit	Thunder Spirit	Wind	155,500	24.2		600,626	Thunder Spirit	Renewable	Wind	155,500	22.2		556,575
South Dakota:	South Dakota:						South Dakota:
Big Stone (b)	Big Stone (b)	Steam	94,111	105.7		394,021	Big Stone (b)	Steam	Coal	94,111	106.5		375,130
Montana:	Montana:						Montana:
Lewis & Clark(c)	Lewis & Clark(c)	Steam	44,000	—		232,433	Lewis & Clark(c)	Steam	Coal	44,000	—		64,733
Lewis & Clark	Lewis & Clark	Reciprocating Internal Combustion Engine	18,700	17.6		1,613	Lewis & Clark	Reciprocating internal combustion engine	Natural gas	18,700	18.0		3,779
Glendive	Glendive	Combustion Turbine	75,522	67.6		853	Glendive	Combustion turbine	Natural gas / diesel	75,522	68.9		16,346
Miles City	Miles City	Combustion Turbine	23,150	21.2		349	Miles City	Combustion turbine	Natural gas / diesel	23,150	21.0		2,974
Diamond Willow	Diamond Willow	Wind	30,000	5.5		98,781	Diamond Willow	Renewable	Wind	30,000	5.1		92,757
Diesel Units		Oil	3,650	3.2		10
Portable Units (2)							Portable Units (2)	Reciprocating internal combustion engine	Diesel	3,650	3.6		14
			750,318	512.3		2,438,323				750,318	417.3		2,344,116
Sheridan System:	Sheridan System:						Sheridan System:
Wyoming:	Wyoming:						Wyoming:
Wygen III (b)	Wygen III (b)	Steam	28,000	N/A		209,423	Wygen III (b)	Steam	Coal	28,000	N/A		207,348
			778,318	512.3		2,647,746				778,318	417.3		2,551,464


Item 1A. Risk Factors

The Company's business and financial results are subject to a number of risks and uncertainties, including those set forth below and in other documents filed with the SEC. The factors and other matters discussed herein are important factors that could cause actual results or outcomes for the Company to differ materially from those discussed in the forward-looking statements included elsewhere in this document. If any of the risks described below actually occur, the Company's business, prospects, financial condition or financial results could be materially harmed. The following are the most material risk factors applicable to the Company and are not necessarily listed in order of importance or probability of occurrence.

Economic Risks

The Company is subject to government regulations that may have a negative impact on its business and its results of operations and cash flows. Statutory and regulatory requirements also may limit another party's ability to acquire the Company or impose conditions on an acquisition of or by the Company.

The Company's electric and natural gas transmission and distribution businesses are subject to comprehensive regulation by federal, state and local regulatory agencies with respect to, among other things, allowed rates of return and recovery of investments and ~~costs, financing,~~costs; financing; rate ~~structures,~~structures; customer ~~service,~~service; health care coverage and ~~costs, taxes,~~costs; taxes; franchises; recovery of purchased power and purchased natural gas costs; and construction and siting of generation and transmission facilities. These governmental regulations significantly influence the Company's operating environment and may affect its ability to recover costs from its customers. The Company is unable to predict the impact on operating results from future regulatory activities of any of these agencies. Changes in regulations or the imposition of additional regulations could have an adverse impact on the Company's results of operations and cash flows.

There can be no assurance that applicable regulatory commissions will determine that the Company's electric and natural gas transmission and distribution businesses' costs have been prudent, which could result in the disallowance of costs in setting rates for customers. Also, the regulatory process of approving rates for these businesses may not allow for timely and full recovery of the costs of providing services or a return on the Company's invested capital. Changes in regulatory requirements or operating conditions may require early retirement of certain assets. While regulation typically provides rate recovery for these retirements, there is no assurance regulators will allow full recovery of all remaining costs, which could leave stranded asset costs. Rising fuel costs could increase the risk that the utility businesses will not be able to fully recover those fuel costs from customers.

Approval from federal and state regulatory agencies would be needed for acquisition of the Company, as well as for certain acquisitions by the Company. The approval process could be lengthy and the outcome uncertain, which may deter potential acquirers from approaching the Company or impact the Company's ability to pursue acquisitions.

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Economic volatility affects the Company's operations, as well as the demand for its products and services.

Unfavorable economic conditions can negatively affect the level of public and private expenditures on projects and the timing of these projects which, in turn, can negatively affect demand for the Company's products and services, primarily at the Company's construction businesses. The level of demand for construction products and services could be adversely impacted by the economic conditions in the industries the Company serves, as well as in the general economy. State and federal budget issues affect the funding available for infrastructure spending.

Economic conditions and population growth affect the electric and natural gas distribution businesses' growth in service territory, customer base and usage demand. Economic volatility in the markets served, along with economic conditions such as increased unemployment which could impact the ability of the Company's customers to make payments, could adversely affect the Company's results of operations, cash flows and asset values. Further, any material decreases in customers' energy demand, for economic or other reasons, could have an adverse impact on the Company's earnings and results of operations.

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The Company's operations involve risks that may result from catastrophic events.

The Company's operations, particularly those related to electric and natural gas ~~and electric~~ transmission and distribution, include a variety of inherent hazards and operating risks, such as product leaks; explosions; mechanical failures; vandalism; fires; pandemics; social or civil unrest; protests and riots; natural disasters; acts of terrorism; and acts of war. These hazards and operating risks have occurred and may recur in the future which could result in loss of human life; personal injury; property damage; environmental pollution; impairment of operations; and substantial financial losses. The Company maintains insurance against some, but not all, of these risks and losses. A significant incident could also increase regulatory scrutiny and result in penalties and higher amounts of capital expenditures and operational costs. Losses not fully covered by insurance could have an adverse effect on the Company’s financial position, results of operations and cash flows.

A disruption of the regional electric transmission grid or interstate natural gas infrastructure could negatively impact the Company's business and reputation. Because the Company's electric and natural gas utility and pipeline systems are part of larger interconnecting systems, a disruption could result in a significant decrease in revenues and system repair costs negatively impacting the Company's financial position, results of operations and cash flows.

The Company is subject to capital market and interest rate risks.

The Company's operations, particularly its electric and natural gas transmission and distribution businesses, require significant capital investment. Consequently, the Company relies on financing sources and capital markets as sources of liquidity for capital requirements not satisfied by cash flows from operations. If the Company is not able to access capital at competitive rates, including through its "at-the-market" offering program, the ability to implement business plans, make capital expenditures or pursue acquisitions the Company would otherwise rely on for future growth may be adversely affected. Market disruptions may increase the cost of borrowing or adversely affect the Company's ability to access one or more financial markets. Such disruptions could include:

•A significant economic downturn.

•The financial distress of unrelated industry leaders in the same line of business.

•Deterioration in capital market conditions.

•Turmoil in the financial services industry.

•Volatility in commodity prices.

•Pandemics, including COVID-19.

•Terrorist attacks.

•Cyberattacks.

The issuance of a substantial amount of the Company's common stock, whether issued in connection with an acquisition or otherwise, or the perception that such an issuance could occur, could have a dilutive effect on shareholders and/or may adversely affect the market price of the Company's common stock. Higher interest rates on borrowings could also have an adverse effect on the Company's operating results.

Financial market changes could impact the Company’s pension and postretirement benefit plans and obligations.

The Company has pension and postretirement defined benefit plans for some of its ~~employees~~current and former employees. Assumptions regarding future costs, returns on investments, interest rates and other actuarial assumptions have a significant impact on the funding requirements and expense recorded relating to these plans. Adverse changes in economic indicators, such as consumer spending, inflation data, interest rate changes, political developments and threats of terrorism, among other things, can create volatility in the financial markets. These changes could impact the assumptions and negatively affect the value of assets held in the Company's pension and other postretirement benefit plans and may increase the amount and accelerate the timing of required funding contributions for those plans.

Significant changes in energy prices could negatively affect the Company's businesses.

Fluctuations in oil and natural gas production, supplies and prices; fluctuations in commodity price basis differentials; political and economic conditions in oil-producing countries; actions of the Organization of Petroleum Exporting Countries; demand for oil due to the economic slowdowns; and other external factors impact the development of oil and natural gas supplies and the expansion and operation of natural gas pipeline systems. The Company has benefited from associated natural gas production in the Bakken, which has provided opportunities for organic growth projects.

~~MDU Resources Group, Inc.~~ ~~Form 10-K~~ 21

~~Part I~~

Depressed oil and natural gas prices, however, place pressure on the ability of oil exploration and production companies to meet credit requirements and ~~will continue to~~can be a challenge if prices remain depressed long-term. Prolonged depressed prices for oil and natural gas could negatively affect the growth, results of operations, cash flows and asset values of the Company's electric, natural gas and pipeline businesses.

If oil and natural gas prices increase significantly, customer demand could decline for utility, pipeline and construction ~~materials,~~products and services, which could impact the Company's results of operations and cash flows. While the Company has fuel clause recovery mechanisms for its utility operations in all of the states where it operates, higher utility fuel costs could also significantly impact results of operations if such costs are not recovered. Delays in the collection of utility fuel cost recoveries, as compared to expenditures for fuel purchases, could also negatively impact the Company's cash flows. High oil prices also affect the ~~cost~~margins realized and demand for ~~asphalt products~~construction materials and related contracting services.

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COVID-19 may have a negative impact on the Company's business operations, revenues, results of operations, liquidity and cash flows.

The ongoing COVID-19 pandemic has disrupted national, state and local economies. To the extent the COVID-19 pandemic adversely ~~affects~~impacts the Company's ~~business,~~businesses, operations, revenues, liquidity or cash flows, it ~~may~~could also have ~~the~~a heightened effect ~~of heightening many of the~~on other risks described in this section. The degree to which COVID-19 will impact the Company depends on future developments, including ~~severity~~the resurgence of COVID-19 and ~~duration of the outbreak,~~its variants, federal and state mandates, actions taken by governmental authorities, ~~timing and~~ effectiveness of vaccines being administered, and ~~timing of when~~the pace and extent to which the economy recovers and remains under relatively normal ~~economic and~~ operating ~~conditions resume.~~

conditions.

The Company's operations have experienced ~~some~~minor disruptions due to ~~its~~shortages of employees or third-party ~~employees being diagnosed with COVID-19 or other illnesses~~contractors and ~~required quarantine periods for those in close contact to COVID-19. Self-quarantine or actual viral health issues may have a negative impact on the Company's employees~~altered work operations. Government and ~~the ability to continue its work activities under a normal course of business. Moreover, the diagnosis of COVID-19 or other illnesses~~customer vaccine mandates could ~~require~~leave the Company ~~or its business partners to suspend projects, quarantine employees or institute more aggressive preventive measures including closure of job sites. Mandated healthcare protocols could lead to~~with a shortage of vaccinated employees or ~~altered operations.~~reduce workforce capacity to bid on new projects, which may further exacerbate the already tight labor markets for skilled employees or cause additional wage inflation. The Company could also be impacted by additional costs and lost productivity associated with COVID-19 testing and tracking of employee vaccination records. If a significant percentage of the Company's workforce are unable to work because of illness, quarantine, vaccination requirements or government restrictions in connection with the COVID-19 pandemic, the Company's operations may be negatively impacted, potentially adversely affecting its business, operations, revenues, liquidity and cash flows.

~~A portion~~In response to the COVID-19 pandemic, the Company implemented a remote work environment for certain employees of the Company's ~~workforce has been working remotely~~workforce. As of July 2021, many of these employees returned to their office; however, some employees have transitioned to a permanent remote work environment. The increase in remote work and the Company has delayed return to work processes for certain office employees due to the rise in local COVID-19 cases in some operating regions. To date, the Company has not experienced any significant delays or information technology disruptions. An increased amount of social engineering and attacks by bad actors taking advantagelongevity of the pandemic ~~could affect~~may create increased vulnerability to cybersecurity incidents affecting the ~~Company's~~Company’s ability to maintain secure ~~operations, communications and productivity in the future.~~

The regulated businesses have been deemed essential service providers and have seen some impacts on their businesses; however, the Company could be materially affected if its businesses were no longer deemed essential service providers. Future actions of its regulatory commissions on accounting for the impacts of the COVID-19 pandemic may also affect the Company's future operating results and cash flows. The Company has experienced some impacts to its commercial and industrial electric and natural gas loads associated with reduced demand from those customers due to the COVID-19 pandemic.

The construction businesses have generally been deemed essential service providers and have experienced some inefficiencies and interruptions on its businesses from the pandemic; however, the Company could be materially impacted if its businesses were no longer deemed essential service providers. These businesses could be further impacted in the future by site closures, government shut-down measures, additional inefficiencies due to compliance with safety and social distancing measures, public and private sector budget changes and constraints, and the impact of overall macro and local economic conditions on future construction projects.operations.

Other factors associated with the COVID-19 pandemic that could impact the Company's businesses and future operating results, revenues and liquidity include impacts related to the health, safety, and availability of ~~its~~ employees and contractors; extended rise in unemployment; public and private sector budget changes and constraints; continued flexible payment ~~plans;~~plans for utility customers; counterparty credit; costs and availability of supplies; capital construction and infrastructure operation and maintenance programs; financing plans; pension valuations; travel restrictions; and legal and regulatory matters, including the potential for delayed regulatory filings, accounting for the impacts of the COVID-19 pandemic and recovery of invested capital. The economic and market disruptions resulting from COVID-19 could also lead to greater than normal uncertainty with respect to the realization of estimated amounts, including estimates for backlog, revenue recognition, intangible assets, other investments and provisions for credit losses.

Reductions in the Company's credit ratings could increase financing costs.

There is no assurance the Company's current credit ratings, or those of its subsidiaries, will remain in effect or that a rating will not be lowered or withdrawn by a rating agency. Events affecting the Company's financial results may impact its cash flows and credit metrics, potentially resulting in a change in the Company's credit ratings. The Company's credit ratings may also change as a result of the differing methodologies or changes in the methodologies used by the rating agencies.

Increasing costs associated with health care plans may adversely affect the Company's results of operations.

The Company's self-insured costs of health care benefits for eligible employees continues to increase. Increasing quantities of large individual health care claims and an overall increase in total health care claims could have an adverse impact on operating results, financial position and liquidity. Legislation related to health care could also change the Company's benefit program and costs.

~~22 MDU Resources Group, Inc.~~ ~~Form 10-K~~

~~Part I~~

The Company is exposed to risk of loss resulting from the nonpayment and/or nonperformance by the Company's customers and counterparties.

If the Company's customers or counterparties experience financial difficulties, the Company could experience difficulty in collecting receivables. Nonpayment and/or nonperformance by the Company's customers and counterparties, particularly customers and counterparties of the Company’s pipeline, construction materials and contracting and construction services businesses for large construction projects, could have a negative impact on the Company's results of operations and cash flows. The Company could also have indirect credit risk from participating in energy markets such as MISO in which credit losses are socialized to all participants.

Changes in tax law may negatively affect the Company's business.

Changes to federal, state and local tax laws have the ability to benefit or adversely affect the Company's earnings and customer costs. Significant changes to corporate tax rates could result in the impairment of deferred tax assets that are established based on existing law at the time of deferral. Changes to the value of various tax credits could change the economics of resources and the resource selection for the electric generation business. Regulation incorporates changes in tax law into the rate-setting process for the regulated energy delivery businesses which could create timing delays before the impact of changes are realized.

The Company's operations could be negatively impacted by import tariffs and/or other government mandates.

The Company operates in or provides services to capital intensive industries in which federal trade policies could significantly impact the availability and cost of materials. Imposed and proposed tariffs could significantly increase the prices and delivery lead times on raw materials and finished products that are critical to the Company and its customers, such as aluminum and steel. Prolonged lead times on the delivery of raw materials and further tariff increases on raw materials and finished products could adversely affect the Company's business, financial condition and results of operations.

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Operational Risks

Significant portions of the Company’s natural gas pipelines and power generation and transmission facilities are aging. The aging infrastructure may require significant additional maintenance or replacement that could adversely affect the Company’s results of operations.

The Company’s energy delivery infrastructure is aging, which increases certain risks, including breakdown or failure of equipment, pipeline leaks and fires developing from power ~~lines.~~lines, all of which have occurred and may recur in the future resulting in material costs. Aging infrastructure is more prone to failure which increases maintenance costs, unplanned outages and the need to replace facilities. Even if properly maintained, reliability may ultimately deteriorate and negatively affect the Company’s ability to serve its customers, which could result in increased costs associated with regulatory oversight. The costs associated with maintaining the aging infrastructure and capital expenditures for new or replacement infrastructure could cause rate volatility and/or regulatory lag in some jurisdictions. If, at the end of its life, the investment costs of a facility have not been fully recovered, the Company may be adversely affected if commissions do not allow such costs to be recovered in rates. Such impacts of an aging infrastructure could adversely affect the Company’s results of operations and cash flows.

Additionally, hazards from aging infrastructure could result in serious injury, loss of human life, significant damage to property, environmental impacts and impairment of operations, which in turn could lead to substantial financial losses. The location of facilities near populated areas, including residential areas, business centers, industrial sites and other public gathering places, could increase the damages resulting from these risks. A major incident involving another natural gas system could lead to additional capital expenditures, increased regulation, and fines and penalties on natural gas utilities. The occurrence of any of these events could adversely affect the Company’s results of operations, financial position and cash flows.

The Company's utility and pipeline operations are subject to planning risks.

Most electric and natural gas utility investments, including natural gas transmission pipeline investments, are made with the intent of being used for decades. In particular, electric transmission and generation resources are planned well in advance of when they are placed into service based upon resource plans using assumptions over the planning horizon including sales growth, commodity prices, equipment and construction costs, regulatory treatment, available technology and public policy. Public policy changes and technology advancements related to areas such as energy efficient appliances and buildings, renewable and distributive electric generation and storage, carbon dioxide emissions, electric vehicle penetration, restrictions on or disallowance of new or existing services, and natural gas availability and cost may significantly impact the planning assumptions. Changes in critical planning assumptions may result in excess generation, transmission and distribution resources creating increased per customer costs and downward pressure on load growth. These changes could also result in a stranded investment if the Company is unable to fully recover the costs of its investments.

The regulatory approval, permitting, construction, startup and/or operation of pipelines, power generation and transmission facilities, and aggregate reserves may involve unanticipated events, delays and unrecoverable costs.

The construction, startup and operation of natural gas pipelines and electric power generation and transmission facilities involve many risks, which may include delays; breakdown or failure of equipment; inability to obtain required governmental permits and approvals; inability to obtain or renew easements; public opposition; inability to complete financing; inability to negotiate acceptable equipment acquisition, construction, fuel supply, off-take, transmission, transportation or other material agreements; changes in markets and market prices for power; cost increases and overruns; the risk of performance below expected levels of output or efficiency; and the inability to obtain full cost recovery in regulated rates. Additionally, in a number of states in which the Company operates, it can be difficult to permit new aggregate sites or expand existing aggregate sites due to community resistance. Such unanticipated events could negatively impact the Company's business, its results of operations and cash flows.

~~MDU Resources Group, Inc.~~ ~~Form 10-K~~ 23

~~Part I~~

Operating or other costs required to comply with current or potential pipeline safety regulations and potential new regulations under various agencies could be significant. The regulations require verification of pipeline infrastructure records by pipeline owners and operators to confirm the maximum allowable operating pressure of certain lines. Increased emphasis on pipeline safety and increased regulatory scrutiny may result in penalties and higher costs of operations. If these costs are not fully recoverable from customers, they could have an adverse effect on the Company’s results of operations and cash flows.

The backlogs at the Company's construction materials and contracting and construction services businesses may not accurately represent future revenue.

Backlog consists of the uncompleted portion of services to be performed under job-specific contracts. Contracts are subject to delay, default or cancellation, and contracts in the Company's backlog are subject to changes in the scope of services to be provided, as well as adjustments to the costs relating to the applicable contracts. Backlog may also be affected by project delays or cancellations resulting from weather conditions, external market factors and economic factors beyond the Company's ~~control.~~control, among other things. Accordingly, there is no assurance that backlog will be realized. The timing of contract awards, duration of large new contracts and the mix of services can significantly affect backlog. Backlog at any given point in time may not accurately represent the revenue or net income that is realized in any period. Also, the backlog as of the end of the year may not be indicative of the revenue and net income expected to be earned in the following year and should not be relied upon as a stand-alone indicator of future revenues or net income.

The Company's participation in joint venture contracts may have a negative impact on its reputation, business operations, revenues, results of operations, liquidity and cash flows.

The Company enters into certain joint venture arrangements typically to bid and execute particular projects. Generally, these agreements are directly with a third-party client; however, services may be performed by the venture, the joint venture partners or a combination thereof. Engaging in joint venture contracts exposes the Company to risks and uncertainties, some of which are outside the Company's control.

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The Company is reliant on joint venture partners to satisfy their contractual obligations, including obligations to commit working capital and equity, and to perform the work as outlined in the agreement. Failure to do so could result in the Company providing additional investments or services to address such performance issues. If the Company is unable to satisfactorily resolve any partner performance issues, the customer could terminate the contract opening the Company to legal liability which could negatively impact the Company's reputation, revenues, results of operations, liquidity and cash flows.

Supply chain disruptions may adversely affect Company operations.

The Company relies on third-party vendors and manufacturers to supply many of the materials necessary for its operations. Disruptions or delays in receiving materials; price increases from suppliers or manufacturers; or inability to source needed materials could adversely affect the Company’s results of operations, financial condition and cash flows.

Environmental and Regulatory Risks

The Company's operations could be adversely impacted by climate change.

Severe weather events, such as tornadoes, hurricanes, rain, drought, ice and snowstorms, and high and low temperature extremes, occur in regions in which the Company operates and maintains infrastructure. Climate change could change the frequency and severity of these weather events, which may create physical and financial risks to the Company. Such risks could have an adverse effect on the Company's financial condition, results of operations and cash flows.

Severe weather events may damage or disrupt the Company's electric and natural gas transmission and distribution facilities, which could result in disruption of service and ability to meet customer demand ~~increased~~and increase maintenance or capital costs to repair facilities and restore customer service. The cost of providing service could increase ~~to the extent~~if the frequency of severe weather events increases because of climate change or otherwise. The Company may not recover all costs related to mitigating these physical risks.

Increases in severe weather conditions or extreme temperatures may cause infrastructure construction projects to be delayed or canceled and limit resources available for such projects resulting in decreased revenue or increased project costs at the construction materials and contracting and construction services businesses. In addition, drought conditions could restrict the availability of water supplies, inhibiting the ability of the construction businesses to conduct operations.

Utility customers’ energy needs vary with weather conditions, primarily temperature and humidity. For residential customers, heating and cooling represent the largest energy use. To the extent weather conditions are affected by climate change, customers’ energy use could increase or decrease. Increased energy use by its utility customers due to weather may require the Company to invest in additional generating assets, transmission and other infrastructure to serve increased load. Decreased energy use due to weather may result in decreased revenues. Extreme weather conditions, such as uncommonly long periods of high or low ambient temperature in general require more system backup, adding to costs, and can contribute to increased system stress, including service interruptions. Weather conditions outside of the Company's service territory could also have an impact on revenues. The Company buys and sells electricity that might be generated outside its service territory, depending upon system needs and market opportunities. Extreme temperatures may create high energy demand and raise electricity prices, which could increase the cost of energy provided to customers.

Climate change may impact a region’s economic health, which could impact revenues at all of the Company's businesses. The Company's financial performance is tied to the health of the regional economies served. The Company provides natural gas and electric utility service, as well as construction materials and services, for some states and communities that are economically affected by the agriculture industry. Increases in severe weather events or significant changes in temperature and precipitation patterns could adversely affect the agriculture industry and, correspondingly, the economies of the states and communities affected by that industry.

The insurance industry may be adversely affected by severe weather events which may impact ~~the~~ availability of insurance coverage, insurance premiums and insurance policy terms.

The Company may be subject to litigation related to climate change. Costs of such litigation could be significant, and an adverse outcome could require substantial capital expenditures, changes in operations and possible payment of penalties or damages, which could affect the Company's results of operations and cash flows if the costs are not recoverable in rates.

The price of energy also has an impact on the economic health of communities. The cost of additional regulatory requirements to combat climate change, such as regulation of carbon dioxide emissions under the federal Clean Air Act, requirements to replace ~~fossil-fuels~~fossil fuels with renewable energy or credits, or other environmental regulation or taxes could impact the availability of goods and the prices charged by suppliers, which would normally be borne by consumers through higher prices for energy and purchased goods, and could adversely impact economic conditions of areas served by the

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Company. To the extent financial markets view climate change and emissions of GHGs as a financial risk, this could negatively affect the Company's ability to access capital markets or ~~cause~~result in less ~~than ideal~~competitive terms and conditions.

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The Company's operations are subject to environmental laws and regulations that may increase costs of operations, impact or limit business plans, or expose the Company to environmental liabilities.

The Company is subject to environmental laws and regulations affecting many aspects of its operations, including air and water quality, wastewater discharge, the generation, transmission and disposal of solid waste and hazardous substances, aggregate permitting and other environmental considerations. These laws and regulations can increase capital, operating and other costs; cause delays as a result of litigation and administrative proceedings; and create compliance, remediation, containment, monitoring and reporting obligations, particularly relating to electric generation, permitting and environmental compliance for construction material facilities, and natural gas transmission and storage operations. Environmental laws and regulations can also require the Company to install pollution control equipment at its facilities, clean up spills and other contamination and correct environmental hazards, including payment of all or part of the cost to remediate sites where the Company's past activities, or the activities of other parties, caused environmental contamination. These laws and regulations generally require the Company to obtain and comply with a variety of environmental licenses, permits, inspections and other approvals and may cause the Company to shut down existing facilities due to difficulties in assuring compliance or where the cost of compliance makes operation of the facilities uneconomical. Although the Company strives to comply with all applicable environmental laws and regulations, public and private entities and private individuals may interpret the Company's legal or regulatory requirements differently and seek injunctive relief or other remedies against the Company. The Company cannot predict the outcome, financial or operational, of any such litigation or administrative proceedings.

Existing environmental laws and regulations may be revised and new laws and regulations seeking to protect the environment may be adopted or become applicable to the Company. These laws and regulations could require the Company to limit the use or output of certain facilities; restrict the use of certain fuels; prohibit or restrict new or existing services; replace certain fuels with renewable fuels; retire and replace certain facilities; install pollution controls; remediate environmental impacts; remove or reduce environmental hazards; or forego or limit the development of resources. Revised or new laws and regulations that increase compliance and disclosure costs and or restrict operations, particularly if costs are not fully recoverable from customers, could adversely affect the Company's results of operations and cash flows.

Initiatives related to global climate change and to reduce GHG emissions could adversely impact the Company's operation, costs of or access to capital and impact or limit business plans.

Concern that GHG emissions contribute to global climate change has led to international, federal, state and local legislative and regulatory proposals to reduce or mitigate the effects of GHG emissions. The Company’s primary GHG emission is carbon dioxide from fossil fuels combustion at Montana-Dakota's electric generating facilities, particularly its coal-fired facilities. Approximately 4642 percent of Montana-Dakota's owned generating capacity and approximately 7069 percent of the electricity it generated in ~~2020~~2021 was from coal-fired facilities.

Treaties, legislation or regulations to reduce GHG emissions in response to climate change may be adopted that affect the Company's utility and pipeline operations by requiring additional energy conservation efforts or renewable energy sources, limiting emissions, imposing carbon taxes or other compliance costs; as well as other mandates that could significantly increase capital expenditures and operating costs or reduce demand for the Company's utility services. If the Company’s utility operations do not receive timely and full recovery of GHG emission compliance costs from customers, then such costs could adversely impact the results of operations and cash flows. Significant reductions in demand for the Company's utility services as a result of increased costs or emissions limitations could also adversely impact the results of operations and cash flows.

The Company monitors, analyzes and reports GHG emissions from its other operations as required by applicable laws and regulations. The Company will continue to monitor GHG regulations and their potential impact on operations.

Due to the uncertain availability of technologies to control GHG emissions and the unknown obligations that potential GHG emission legislation or regulations may create, the Company cannot determine the potential financial impact on its operations.

There have also been recent efforts to discourage the investment community from investing in equity and debt securities of companies engaged in fossil fuel related business and pressuring lenders to limit funding to such companies. Additionally, some insurance carriers have indicated an unwillingness to insure assets and operations related to certain fossil fuels. Although the Company has not experienced difficulties in accessing the capital markets or insurance; such efforts, if successfully directed at the Company, could increase the costs of or access to capital or insurance and interfere with business operations and ability to make capital expenditures.

Other Risks

The Company's various businesses are seasonal and subject to weather conditions that ~~can~~could adversely affect the Company's operations, revenues and cash flows.

The Company's results of operations ~~can~~could be affected by changes in the weather. Weather conditions influence the demand for electricity and natural gas and affect the price of energy commodities. Utility operations have historically generated lower revenues when weather conditions are cooler than normal in the summer and warmer than normal in the winter, particularly in jurisdictions that do not have weather normalization mechanisms in place. Where weather normalization mechanisms are in place, there is no assurance the Company will continue to receive such regulatory protection from adverse weather in future rates.

~~MDU Resources Group, Inc.~~ ~~Form 10-K~~ 25

~~Part I~~

Adverse weather conditions, such as heavy or sustained rainfall or snowfall, storms, wind and colder weather may affect the demand for products and the ability to perform services at the construction businesses and affect ongoing operation and maintenance and construction activities for the electric and natural gas transmission and distribution businesses. In addition, severe weather can be destructive, causing outages and property

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damage, which could require additional remediation costs. The Company could also be impacted by drought conditions, which may restrict the availability of water supplies and inhibit the ability of the construction businesses to conduct operations. As a result, unusual or adverse weather conditions could negatively affect the Company's results of operations, financial position and cash flows.

Competition exists in all of the Company's businesses.

The Company's businesses are subject to competition. Construction services' competition is based primarily on price and reputation for quality, safety and reliability. Construction materials products are marketed under highly competitive conditions and are subject to competitive forces such as price, service, delivery time and proximity to the customer. The electric utility and natural gas ~~industries~~businesses also experience competitive pressures as a result of consumer demands, technological advances and other factors. The pipeline business competes with several pipelines for access to natural gas supplies and for transportation and storage business. New acquisition opportunities are subject to competitive bidding environments which impact prices the Company must pay to successfully acquire new properties and acquisition opportunities to grow its business. The Company's failure to effectively compete could negatively affect the Company's results of operations, financial position and cash flows.

The Company's operations may be negatively affected if it is unable to obtain, develop and retain key personnel and skilled labor forces.

The Company must attract, develop and retain executive officers and other professional, technical and skilled labor forces with the skills and experience necessary to successfully manage, operate and grow the Company's businesses. ~~Competition~~Due to the changing workforce demographics and a lack of younger employees who are qualified to replace employees as they retire and remote work opportunities, among other things, competition for these employees is ~~high, and in~~high. In some cases competition for these employees is on a regional or national basis. At times of low unemployment or economic downturns, it can be difficult for the Company to attract and retain qualified and affordable personnel. A shortage in the supply of skilled personnel creates competitive hiring markets, increased labor expenses, decreased productivity and potentially lost business opportunities to support the Company's operating and growth strategies. Additionally, if the Company is unable to hire employees with the requisite skills, the Company may be forced to incur significant training expenses. As a result, the Company's ability to maintain productivity, relationships with customers, competitive costs, and quality services is limited by the ability to employ, retain and train the necessary skilled personnel and could negatively affect the Company's results of operations, financial position and cash flows.

The Company's construction materials and contracting and construction services businesses may be exposed to warranty claims.

The Company, particularly its construction businesses, may provide warranties guaranteeing the work performed against defects in workmanship and material. If warranty claims occur, they may require the Company to re-perform the services or to repair or replace the warranted item, at a cost to the Company and could also result in other damages if the Company is not able to adequately satisfy warranty obligations. In addition, the Company may be required under contractual arrangements with customers to warrant any defects or failures in materials the Company purchased from third parties. While the Company generally requires suppliers to provide warranties that are consistent with those the Company provides to customers, if any of the suppliers default on their warranty obligations to the Company, the Company may nonetheless incur costs to repair or replace the defective materials. Costs incurred as a result of warranty claims could adversely affect the Company's results of operations, financial condition and cash flows.

The Company is a holding company and relies on cash from its subsidiaries to pay dividends.

The ~~Company is a holding company as a result of the Holding Company Reorganization in 2019. The~~ Company's investments in its subsidiaries comprise the Company's primary assets. The Company depends on earnings, cash flows and dividends from its subsidiaries to pay dividends on its common stock. Regulatory, contractual and legal limitations, as well as their capital requirements, affect the ability of the subsidiaries to pay dividends to the Company and thereby could restrict or influence the Company's ability or decision to pay dividends on its common stock, which could adversely affect the Company's stock price.

Costs related to obligations under MEPPs could have a material negative effect on the Company's results of operations and cash flows.

Various operating subsidiaries of the Company participate in ~~approximately 68~~69 MEPPs for employees represented by certain unions. The Company is required to make contributions to these plans in amounts established under numerous collective bargaining agreements between the operating subsidiaries and those unions.

The Company may be obligated to increase its contributions to underfunded plans that are classified as being in endangered, seriously endangered or critical status as defined by the Pension Protection Act of 2006. Plans classified as being in one of these statuses are required to adopt RPs or FIPs to improve their funded status through increased contributions, reduced benefits or a combination of the two. Based on available information, the Company believes that approximately 3128 percent of the MEPPs to which it contributes are currently in endangered, seriously endangered or critical status.

The Company may also be required to increase its contributions to MEPPs if the other participating employers in such plans withdraw from the plans and are not able to contribute amounts sufficient to fund the unfunded liabilities associated with their participation in the plans. The amount and timing of any increase in the Company's required contributions to MEPPs may depend upon one or more factors including the outcome of collective bargaining; actions taken by trustees who manage the plans; actions taken by the plans' other participating employers; the industry for which contributions are made; future determinations that additional plans reach endangered, seriously endangered or critical status; newly-enacted government laws or regulations and the actual return on assets held in the plans; among others. The Company could experience increased operating

~~26 MDU Resources Group, Inc.~~ ~~Form 10-K~~

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expenses as a result of required contributions to MEPPs, which could have an adverse effect on the Company's results of operations, financial position or cash flows.

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In addition, pursuant to ERISA, as amended by MPPAA, the Company could incur a partial or complete withdrawal liability upon withdrawing from a plan, exiting a market in which it does business with a union workforce or upon termination of a plan. The Company could also incur additional withdrawal liability if its withdrawal from a plan is determined by that plan to be part of a mass withdrawal.

~~Information technology~~Technology disruptions or ~~cyber-attacks~~cyberattacks could adversely impact the Company's operations.

The Company uses technology in substantially all aspects of its business operations and requires uninterrupted operation of information technology and operation technology systems, including disaster recovery and backup systems and network infrastructure. While the Company has policies, procedures and processes in place designed to strengthen and protect these systems, they may be vulnerable to physical and cybersecurity failures or unauthorized access, due to to:

•hacking,

•human error,

•theft,

•sabotage,

•malicious software,

•ransomware,

•third-party compromise,

•acts of terrorism,

•acts of war,

•acts of nature or

•other causes. ~~If these systems fail~~

Although there are manual processes in place, should a compromise or ~~become compromised, and they are not recovered in a timely manner,~~system failure occur, interdependencies to technology may disrupt the ~~Company may be unable~~Company's ability to fulfill critical business functions. This may include interruption of electric generation, transmission and distribution facilities, natural gas storage and pipeline facilities and facilities for delivery of construction materials or other products and services, any of which could adversely affect the Company's reputation, business, cash flows and results of operations or subject the Company to legal or regulatory liabilities and increased costs. Additionally, ~~because~~the Company's electric generation and transmission systems and natural gas pipelines are part of interconnected systems with other operators’ ~~facilities,~~facilities; therefore, a cyber-related disruption in another operator’s system could negatively impact the Company's business.

The Company’s accounting systems and its ability to collect information and invoice customers for products and services could be disrupted. If the Company’s operations are disrupted, it could result in decreased revenues orand remediation costs that could adversely affect the Company's results of operations and cash flows.

The Company is subject to cybersecurity and privacy laws, regulations and ~~regulations~~security directives of many government agencies, including TSA, FERC and NERC. NERC issues comprehensive regulations and standards surrounding the security of bulk power systems and continually updates these requirements, as well as establishing new requirements with which the utility industry must comply. As these regulations evolve, the Company may experience increased compliance costs and may be at higher risk for violating these standards. Experiencing a cybersecurity incident could cause the Company to be non-compliant with applicable laws and regulations, causing the Company to incur costs related to legal claims, or proceedings and regulatory fines or penalties.

The Company, through the ordinary course of business, requires access to sensitive customer, supplier, employee and Company data. While the Company has implemented extensive security measures, including limiting the amount of sensitive information retained, a breach of its systems could compromise sensitive data and could go unnoticed for some time. Such an event could result in negative publicity and reputational harm, remediation costs, legal claims and fines that could have an adverse effect on the Company's financial results. Third-party service providers that perform critical business functions for the Company or have access to sensitive information within the Company also may be vulnerable to security breaches and information technology risks that could adversely affect the Company.

The Company’s information systems experience ~~on-going~~ongoing and often sophisticated ~~cyber-attacks~~cyberattacks by a variety of sources with the apparent aim to breach the Company's cyber-defenses. ~~As cyber-attacks~~Although the incidents the Company has experienced to date have not had a material effect on its business, financial condition or results of operations, such incidents could have a material adverse effect in the future as cyberattacks continue to increase in frequency and ~~sophistication, the Company may be unable to prevent all such attacks in the future.~~sophistication. The Company is continuously reevaluating the need to upgrade and/or replace systems and network infrastructure. These upgrades and/or replacements could adversely impact operations by imposing substantial capital expenditures, creating delays or outages, or experiencing difficulties transitioning to new systems. ~~Systems implementation disruption and any other information technology disruption,~~System disruptions, if not anticipated and appropriately mitigated, could adversely affect the Company.

30 MDU Resources Group, Inc. Form 10-K

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Part I

General risk factors that could impact the Company's businesses.

The following are additional factors that should be considered for a better understanding of the risks to the Company. These factors may negatively impact the Company's financial results in future periods.

•Acquisition, disposal and impairments of assets or facilities.

•Changes in present or prospective electric generation.

•Population decline and demographic patterns in the Company's areas of service.

•The cyclical nature of large construction projects at certain operations.

•Labor negotiations or disputes.

•Succession planning.

•Inability of ~~the~~ contract counterparties to meet their contractual obligations.

•The inability to effectively integrate the operations and the internal controls of acquired companies.


Item 1B. Unresolved Staff Comments

The Company has no unresolved comments with the SEC.

~~MDU Resources Group, Inc.~~ ~~Form 10-K~~ 27

~~Part I~~


Item 3. Legal Proceedings

SEC regulations require the Company to disclose certain information about proceedings arising under federal, state or local environmental provisions if the Company reasonably believes that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to SEC regulations, the Company has adopted a threshold of $1.0 million for purposes of determining whether disclosure of any such proceedings is required.

For information regarding legal proceedings required by this item, see Item 8 - Note 21, which is incorporated herein by reference.


Item 4. Mine Safety Disclosures

For information regarding mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K, see Exhibit 95 to this Form 10-K, which is incorporated herein by reference.

28 MDU Resources Group, Inc. Form 10-K31

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Part II

~~Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~


Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company's common stock is listed on the New York Stock Exchange under the symbol "MDU."

As of December 31, ~~2020,~~2021, the Company's common stock was held by approximately ~~10,400~~9,900 stockholders of record.

The Company depends on earnings and dividends from its subsidiaries to pay dividends on common stock. The Company has paid uninterrupted dividends to stockholders for 8384 consecutive years with an increase in the payout amount for the last 3031 consecutive years. The declaration and payment of dividends is at the sole discretion of the board of directors, subject to limitations imposed by agreements governing the Company's ~~credit agreements,~~indebtedness, federal and state laws, and applicable regulatory limitations. For more information on factors that may limit the Company's ability to pay dividends, see Item 8 - Note 12.

The following table includes information with respect to the Company's purchase of equity securities:


ISSUER PURCHASES OF EQUITY SECURITIES	ISSUER PURCHASES OF EQUITY SECURITIES					ISSUER PURCHASES OF EQUITY SECURITIES
Period	Period	(a) Total Number of Shares (or Units) Purchased (1)	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2)	Period	(a) Total Number of Shares (or Units) Purchased (1)	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2)
October 1 through October 31, 2020		—	—	—	—
November 1 through November 30, 2020		45,273	$25.40	—	—
December 1 through December 31, 2020		—	—	—	—
October 1 through October 31, 2021						October 1 through October 31, 2021	—	—	—	—
November 1 through November 30, 2021						November 1 through November 30, 2021	41,925	$28.98	—	—
December 1 through December 31, 2021						December 1 through December 31, 2021	372	$30.85	—	—
Total	Total	45,273		—	—	Total	42,297	$29.00	—	—

(1) Represents shares of common stock purchased on the open market in connection with annual stock grants made to the Company's non-employee ~~directors.~~directors and for those directors who elected to receive additional shares of common stock in lieu of a portion of their cash retainer.

(2) Not applicable. The Company does not currently have in place any publicly announced plans or programs to purchase equity securities.


Item 6.

Reserved.

32 MDU Resources Group, Inc. Form 10-K29

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Part II

~~Item 6. Selected Financial Data~~

2020 2019 2018 2017 2016 2015
Selected Financial Data
Operating revenues (000's):
Electric $ 332,029 $ 351,725 $ 335,123 $ 342,805 $ 322,356 $ 280,615
Natural gas distribution 848,185 865,222 823,247 848,388 766,115 817,419
Pipeline 143,877 140,444 128,923 122,213 141,602 154,904
Construction materials and contracting 2,178,002 2,190,717 1,925,854 1,812,529 1,874,270 1,904,282
Construction services 2,095,723 1,849,266 1,371,453 1,367,602 1,073,272 926,427
Other 11,903 16,551 11,259 7,874 8,643 9,191
Intersegment eliminations (76,969) (77,149) (64,307) (58,060) (57,430) (78,786)
$ 5,532,750 $ 5,336,776 $ 4,531,552 $ 4,443,351 $ 4,128,828 $ 4,014,052
Operating income (loss) (000's):
Electric $ 63,434 $ 64,039 $ 65,148 $ 79,902 $ 67,929 $ 59,915
Natural gas distribution 73,082 69,188 72,336 84,239 66,166 54,974
Pipeline 49,436 42,796 36,128 36,004 42,864 30,218
Construction materials and contracting 214,498 179,955 141,426 143,230 178,753 148,312
Construction services 147,644 126,426 86,764 81,292 53,546 43,678
Other (3,169) (1,184) (79) (619) (349) (8,414)
Intersegment eliminations — — — — — (2,942)
$ 544,925 $ 481,220 $ 401,723 $ 424,048 $ 408,909 $ 325,741
Earnings (loss) on common stock (000's):
Electric $ 55,601 $ 54,763 $ 47,000 $ 49,366 $ 42,222 $ 35,914
Natural gas distribution 44,049 39,517 37,732 32,225 27,102 23,607
Pipeline 37,012 29,603 28,459 20,493 23,435 13,250
Construction materials and contracting 147,325 120,371 92,647 123,398 102,687 89,096
Construction services 109,721 92,998 64,309 53,306 33,945 23,762
Other (3,181) (2,086) (761) (1,422) (3,231) (14,941)
Intersegment eliminations — — — 6,849 6,251 5,016
Earnings on common stock before income (loss) from discontinued operations 390,527 335,166 269,386 284,215 232,411 175,704
Income (loss) from discontinued operations, net of tax* (322) 287 2,932 (3,783) (300,354) (834,080)
Loss from discontinued operations attributable to noncontrolling interest — — — — (131,691) (35,256)
$ 390,205 $ 335,453 $ 272,318 $ 280,432 $ 63,748 $ (623,120)
Earnings per common share before discontinued operations - diluted $ 1.95 $ 1.69 $ 1.38 $ 1.45 $ 1.19 $ .90
Discontinued operations attributable to the Company, net of tax — — .01 (.02) (.86) (4.10)
$ 1.95 $ 1.69 $ 1.39 $ 1.43 $ .33 $ (3.20)
Common Stock Statistics
Weighted average common shares outstanding - diluted (000's) 200,571 198,626 196,150 195,687 195,618 194,986
Dividends declared per common share $ .8350 $ .8150 $ .7950 $ .7750 $ .7550 $ .7350
Book value per common share $ 15.36 $ 14.21 $ 13.09 $ 12.44 $ 11.78 $ 12.83
Market price per common share (year end) $ 26.34 $ 29.71 $ 23.84 $ 26.88 $ 28.77 $ 18.32
Market price ratios:
Dividend payout** 43 % 48 % 58 % 53 % 63 % 82 %
Yield 3 % 3 % 3 % 3 % 3 % 4 %
Market value as a percent of book value 171 % 209 % 182 % 216 % 244 % 143 %

* Reflects oil and natural gas properties noncash write-downs of $315.3 million (after tax) in 2015 and fair value impairments of assets held for sale of $157.8 million (after tax) and $475.4 million (after tax) in 2016 and 2015, respectively.

**~~Based on continuing operations.~~

~~30 MDU Resources Group, Inc.~~ ~~Form 10-K~~

~~Part II~~

~~Item 6. Selected Financial Data (continued)~~

2020 2019 2018 2017 2016 2015
General
Total assets (000's) $ 8,053,372 $ 7,683,059 $ 6,988,110 $ 6,334,666 $ 6,284,467 $ 6,565,154
Total long-term debt (000's) $ 2,213,130 $ 2,243,107 $ 2,108,695 $ 1,714,853 $ 1,790,159 $ 1,796,163
Capitalization ratios:
Total equity 58 % 56 % 55 % 59 % 56 % 58 %
Total debt 42 44 45 41 44 42
100 % 100 % 100 % 100 % 100 % 100 %
Electric
Retail sales (thousand kWh) 3,204,523 3,314,307 3,354,401 3,306,470 3,258,537 3,316,017
Electric system summer and firm purchase contract ZRCs (Interconnected system) 553.2 591.3 574.5 553.1 559.7 547.3
Electric system peak demand obligation, including firm purchase contracts, planning reserve margin requirement (Interconnected system) 531.4 537.2 537.2 530.2 559.7 547.3
All-time demand peak - kW (Interconnected system) 611,542 611,542 611,542 611,542 611,542 611,542
Electricity produced (thousand kWh) 2,647,746 2,792,770 2,840,353 2,630,640 2,626,763 1,898,160
Electricity purchased (thousand kWh) 890,054 891,539 831,039 955,687 904,702 1,658,002
Average cost of electric fuel and purchased power per kWh $ .019 $ .023 $ .022 $ .022 $ .021 $ .024
Natural Gas Distribution
Retail sales (Mdk) 114,543 123,675 112,566 112,551 99,296 95,559
Transportation sales (Mdk) 160,010 166,077 149,497 144,477 147,592 154,225
Pipeline
Transportation (Mdk) 438,615 429,660 351,498 312,520 285,254 290,494
Gathering (Mdk) 8,611 13,900 14,882 16,064 20,049 33,441
Customer natural gas storage balance (Mdk) 25,451 16,223 13,928 22,397 26,403 16,600
Construction Materials and Contracting
Sales (000's):
Aggregates (tons) 30,949 32,314 29,795 28,213 27,580 26,959
Asphalt (tons) 7,202 6,707 6,838 6,237 7,203 6,705
Ready-mixed concrete (cubic yards) 4,087 4,123 3,518 3,548 3,655 3,592
Aggregate reserves (000's tons) 1,104,887 1,054,186 1,014,431 965,036 989,084 1,022,513

~~MDU Resources Group, Inc.~~ ~~Form 10-K~~ 31

~~Part II~~

~~Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations~~


Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation

The Company ~~focuses on infrastructure and~~ is Building a Strong America® by providing essential ~~products~~infrastructure and services through its regulated energy delivery and construction materials and services businesses. The Company and its employees work hard to keep the economy of ~~the United States~~America moving with the products and services provided, which include powering, heating and connecting homes, factories, offices and stores; and building roads, highways, data infrastructure and airports.

The Company's two-platform business model, regulated energy delivery and construction materials and services, are each comprised of different operating segments. Most of these segments experience seasonality related to the industries in which they operate. The two-platform approach helps balance this seasonality and the risks associated with each type of industry. The Company is authorized to conduct business in ~~45 states~~nearly every state and during peak ~~times~~construction season has employed over ~~15,600~~16,000 employees. The Company’s organic investments are strong drivers of high-quality earnings ~~growth~~ and continue to be an important part of the Company’s ~~growth story.~~growth. Management believes the Company is well positioned in the industries and markets in which it operates.

~~Impact~~The Company continues to effectively execute its strategy while managing the ongoing effects of the COVID-19 ~~pandemic on~~pandemic. Since early 2020, the Company

~~In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, and the President of the United States declared the COVID-19 outbreak~~ has maintained its business continuity plans as well as a ~~national emergency.~~task force to monitor developments related to the pandemic allowing the Company to continue to provide safe and reliable services. Most of the Company's products and services are considered essential to ~~our~~its country and ~~our communities; therefore,~~communities and, as a result, operations have generally ~~been permitted~~continued throughout the pandemic.

Certain of the Company's supply vendors are facing production and staffing challenges as they work to ~~proceed~~achieve production capacity and lead times consistent with ~~increased social distancing~~pre-pandemic levels. Coupled with other challenges of the pandemic, these vendors are also experiencing strong demand from the residential construction market, some industrial segments and some utility infrastructure investments. In addition, freight markets continue to have challenges with driver shortages; strong demand for consumer goods; extended lead times; and costs for vehicles, driver retention and recruitment. The Company has implemented measures to proactively order supplies and ~~hygiene practices for its employees. While~~work with additional suppliers to ensure work continues without delays; however, the Company has experienced some ~~inefficiency~~delays on delivery of certain materials as well as cost pressures from supply chain disruptions and commodity price inflation.

The situation surrounding COVID-19 and the potential impacts on the Company and the economy remain fluid. A number of factors could directly impact the Company and the economy, including ~~operation suspensions~~a widespread resurgence in COVID-19 infections, whether due to the spread of variants of the virus or otherwise; the rate of vaccinations; vaccine mandates; labor constraints; the strength of the global supply chain; and ~~interruptions at some locations to carry out preventative measures~~the rate in which governments are re-opening businesses or, in ~~response~~certain jurisdictions, reversing re-opening decisions. Due to ~~instances of positive tests,~~ the ~~impacts have not been material. For more information on specific impacts to each~~uncertainty of the ~~Company's business segments, see the following discussions in each business segment's Outlook section.~~

~~In March 2020, the President of the United States signed into law the CARES Act in response to~~economic outlook resulting from the COVID-19 ~~pandemic. The CARES Act provided economic relief and stimulus to support the national economy during the~~ pandemic, including support for individuals and businesses affected by the pandemic and economic downturn. The CARES Act allowed businesses to defer payment of the employer portion of social security taxes incurred through the end of 2020. At December 31, 2020, the Company had deferred approximately $56.7 million in payroll taxes related to this provision. The Company is required to pay 50 percent of the payroll taxes deferred under this provision by the end of 2021 and the remaining balance by the end of 2022.

The Company evaluated its planned capital projects and delayed certain expenditures in 2020 to provide additional financial flexibility and to ensure projects will provide acceptable returns on investment. In addition, the Company established a task forcecontinues to monitor ~~developments related to~~ the pandemic and implemented procedures to protect employees. Many employees that have the capacity to work from home continue to do so as the Company has delayed return to work processes for certain office employees due to COVID-19 cases in some operating regions. The Company has also enacted additional physical and cybersecurity measures to safeguard systems for remote work locations.

situation closely. Although there have been logistical and other challenges as a result of COVID-19, there were no material adverse impacts on the Company's results of operations for the ~~year~~years ended December 31, 2021 or 2020. The Company ~~continues~~will continue to adjust its business in response to the pandemic while positioning for ~~an economic rebound and~~ potential opportunities to enhance its competitive position. The situation surrounding COVID-19 remains fluid and the potential for a material adverse impact on the Company increases the longer the virus impacts the level of economic activity in the United States. DueFor more information specific to ~~the uncertainty~~each of the ~~economic outlook resulting from~~Company's business segments, see the ~~COVID-19 pandemic, the Company continues to monitor the situation closely.~~following discussions in each business segment's Outlook section. For more information on the possible impacts, see Item 1A - Risk Factors.

32 MDU Resources Group, Inc. Form 10-K33

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Consolidated Earnings Overview

The following table summarizes the contribution to the consolidated income by each of the Company's business segments.


Years ended December 31,	Years ended December 31,	2020		2019		2018		Years ended December 31,	2021		2020		2019
		(In millions, except per share amounts)							(In millions, except per share amounts)
Electric	Electric	$	55.6	$	54.8	$	47.0	Electric	$	51.9	$	55.6	$	54.8
Natural gas distribution	Natural gas distribution	44.0		39.5		37.7		Natural gas distribution	51.6		44.0		39.5
Pipeline	Pipeline	37.0		29.6		28.5		Pipeline	40.9		37.0		29.6
Construction materials and contracting	Construction materials and contracting	147.3		120.4		92.6		Construction materials and contracting	129.8		147.3		120.4
Construction services	Construction services	109.7		93.0		64.3		Construction services	109.4		109.7		93.0
Other	Other	(3.1)		(2.1)		(.7)		Other	(5.9)		(3.1)		(2.1)

Income from continuing operations	Income from continuing operations	390.5		335.2		269.4		Income from continuing operations	377.7		390.5		335.2
Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	(.3)		.3		2.9		Income (loss) from discontinued operations, net of tax	.4		(.3)		.3

Net income	Net income	$	390.2	$	335.5	$	272.3	Net income	$	378.1	$	390.2	$	335.5
Earnings per share - basic:	Earnings per share - basic:							Earnings per share - basic:
Income from continuing operations	Income from continuing operations	$	1.95	$	1.69	$	1.38	Income from continuing operations	$	1.87	$	1.95	$	1.69
Discontinued operations, net of tax	Discontinued operations, net of tax	—		—		.01		Discontinued operations, net of tax	—		—		—
Earnings per share - basic	Earnings per share - basic	$	1.95	$	1.69	$	1.39	Earnings per share - basic	$	1.87	$	1.95	$	1.69
Earnings per share - diluted:	Earnings per share - diluted:							Earnings per share - diluted:
Income from continuing operations	Income from continuing operations	$	1.95	$	1.69	$	1.38	Income from continuing operations	$	1.87	$	1.95	$	1.69
Discontinued operations, net of tax	Discontinued operations, net of tax	—		—		.01		Discontinued operations, net of tax	—		—		—
Earnings per share - diluted	Earnings per share - diluted	$	1.95	$	1.69	$	1.39	Earnings per share - diluted	$	1.87	$	1.95	$	1.69

2021 compared to 2020 The Company's consolidated earnings decreased $12.1 million.

Negatively impacting the Company's earnings was a decrease in gross margin across most product lines at the construction materials and contracting business resulting from labor constraints; increased material costs, including asphalt oil and fuel; higher equipment, repair and maintenance costs; and less available paving work in certain regions. The decrease was partially offset by higher AFUDC for the construction of the North Bakken Expansion project and higher earnings due to increased natural gas transportation volumes at the pipeline business. Also positively impacting earnings were higher adjusted gross margins at the electric and natural gas businesses, largely a result of approved rate relief in certain jurisdictions, partially offset by higher operations and maintenance expenses.

2020 compared to 2019 The Company's consolidated earnings increased $54.7 ~~million or 16 percent in 2020 as compared to 2019.~~million.

The Company's earnings were positively impacted by increased earnings across all of the Company's businesses in 2020. The construction materials and contracting business experienced an increase in gross margin, primarily resulting from favorable weather conditions and higher realized materials margins on asphalt and asphalt-related products and ~~ready-mixed~~ready-mix concrete, as well as most other product lines. The construction services business also experienced an increase in gross margin as a result of higher ~~inside and outside~~ specialty contracting workloads, partially due to the businesses acquired, as well as hospitality projects, high-tech projects and natural disaster recovery work. The pipeline business experienced increased transportation volumes and revenues, largely related to organic growth projects, as well as higher storage-related revenues as a result of stronger demand for storage services. In addition, approved rate recovery positively impacted earnings at the electric and natural gas distribution businesses.

~~2019 compared to 2018~~ ~~The Company's consolidated earnings increased $63.2 million or 23 percent in 2019 as compared to 2018.~~

Positively impacting the Company's earnings was an increase in gross margin at the construction services business, largely resulting from higher inside and outside specialty contracting workloads. Also contributing to the increase in earnings was an increase in gross margin at the construction materials and contracting business as a result of strong economic environments in certain states, as well as contributions from the businesses acquired and an increase in gains recognized on asset sales. The electric business also positively impacted earnings primarily due to approved rate relief in Montana and recovery of the investment in the BSSE project placed into service in the first quarter of 2019. Higher returns on the Company's benefit plan investments also increased earnings across all businesses. At the pipeline business, increased rates and volumes of natural gas being transported through its pipeline were mostly offset by the absence of a $4.2 million income tax benefit recorded in 2018 relating to the reversal of a regulatory liability recorded in 2017 based on a FERC final accounting order and higher depreciation, depletion and amortization expense.

A discussion of key financial data from the Company's business segments follows.

Business Segment Financial and Operating Data

Following are key financial and operating data for each of the Company's business segments. Also included are highlights on key growth strategies, projections and certain assumptions for the Company and its subsidiaries and other matters of the Company's business segments. Many of these highlighted points are "forward-looking statements." For more information, see Part I - Forward-Looking Statements. There is no assurance that the Company's projections, including estimates for growth and changes in earnings, will in fact be achieved. Please refer to assumptions contained in this section, as well as the various important factors listed in Item 1A - Risk Factors. Changes in such assumptions and factors could cause actual future results to differ materially from the Company's growth and earnings projections.

For information pertinent to various commitments and contingencies, see Item 8 - Notes to Consolidated Financial Statements. For a summary of the Company's business segments, see Item 8 - Note 17.

34 MDU Resources Group, Inc. Form 10-K33

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Part II

Electric and Natural Gas Distribution

Strategy and challenges The electric and natural gas distribution segments provide electric and natural gas distribution services to customers, as discussed in Items 1 and 2 - Business Properties. Both segments strive to be top performing utility companies measured by integrity, employee safety and satisfaction, customer service and shareholder return, while providing safe, environmentally ~~friendly,~~responsible, reliable and competitively priced energy and related services to customers. The Company is focused on cultivating organic growth while managing operating costs and monitoring opportunities for these segments to retain, grow and expand their customer base through extensions of existing operations, including building and upgrading electric generation, transmission and distribution, and natural gas systems, and through selected acquisitions of companies and properties with similar operating and growth objectives at prices that will provide stable cash flows and an opportunity to earn a competitive return on investment. The continued efforts to create operational improvements and efficiencies across both segments promotes the Company's business integration strategy. The primary factors that impact the results of these segments are the ability to earn authorized rates of return, the cost of natural gas, cost of electric fuel and purchased power, weather, climate change initiatives, competitive factors in the energy industry, population growth and economic conditions in the segments' service areas.

The electric and natural gas distribution segments are subject to extensive regulation in the jurisdictions where they conduct operations with respect to costs, timely recovery of investments and permitted returns on ~~investment, as well as certain operational, environmental~~investment. The Company is focused on modernizing utility infrastructure to meet the varied energy needs of both its customers and ~~system integrity regulations. Legislative~~communities while ensuring the delivery of safe, environmentally responsible, reliable and regulatory initiatives to increase renewable energy resources and reduce GHG emissions could impact the price and demand for electricity and natural gas, as well as increase costs to produce electricity and natural gas.affordable energy. The segments continue to invest in facility upgrades to be in compliance with ~~the~~ existing and known future regulations. To assist in the reduction of regulatory lag in obtaining revenue increases to align with increased investments, tracking mechanisms have been implemented in certain jurisdictions, as further discussed in Items 1 and 2 - Business Properties and Item 8 - Note 20.

~~In September 2019, the Pipeline~~The segments are also subject to extensive regulation including certain operational and ~~Hazardous Materials Safety Administration issued a rule for additional regulations to strengthen the safety of natural gas transmission~~environmental compliance, cybersecurity, permit terms and ~~storage facilities and hazardous liquid pipelines.~~system integrity. The natural gas segment ~~has~~recently implemented procedure changes ~~for the initial requirements and continues to evaluate procedure changes necessary for the additional requirements~~issued by PHSMA that were effective July 1, 2021. Both segments are faced with the ongoing need to actively evaluate cybersecurity processes and procedures related to its transmission and distribution systems for opportunities to further strengthen its cybersecurity protections. Implementation of enhancements and additional requirements is ongoing.

~~State implementation~~To date, many states have enacted and others are considering, mandatory clean energy standards requiring utilities to meet certain thresholds of ~~pollution control plans~~renewable and/or carbon-free energy supply. The current presidential administration has made climate change a focus, including consideration for legislation on clean energy standards and GHG emission, and the Company expects that to ~~improve visibility at Class I areas, such~~continue. Over the long-term, the Company expects overall electric demand to be positively impacted by increased electrification trends, including electric vehicle adoption, as ~~national parks, under~~a means to address economy-wide carbon emission concerns and changing customer conservation patterns. These initiatives could result in increased costs to produce electricity and procure natural gas. To date, the ~~EPA's Regional Haze Rule could require~~impact of these initiatives on the ~~owners~~Company is unknown. The Company will continue to monitor the progress of ~~Coyote Station to incur significant new costs. If~~these initiatives and assess the ~~owners decide to incur such costs, the costs could, dependent~~potential impacts they may have on ~~determination by state regulatory commissions on approval to recover such costs from customers, negatively impact the Company's~~its stakeholders, business processes, results of operations, ~~financial position~~cash flows and cash flows. The NDDEQ's state implementation plan is due to be submitted to the EPA by July 2021. The Company expects the NDDEQ to draft a state implementation plan and share its controls selection with federal land managers of the National Park Service and the United States Fish and Wildlife Service in early 2021. Additionally, the Company is one of four owners of Coyote Station and cannot make a unilateral decision on the plant's future. The Company could be negatively impacted by the decisions of the other owners.

The electric and natural gas distribution segments are facing increased lead times on delivery of certain raw materials used in electric transmission and natural gas pipeline projects. Long lead times are attributable to increased demand for steel products from pipeline companies as they respond to the United States Department of Transportation Pipeline System Safety and Integrity Plan, as well as delays in the manufacturing of electrical equipment as a result of the COVID-19 pandemic, including delays in trucking times and issuance of permits for large and heavy loads. The Company continues to monitor the material lead times and is working with manufacturers to proactively order such materials to help mitigate the risk of delays due to extended lead times.

The ability to grow through acquisitions is subject to significant competition and acquisition premiums. In addition, the ability of the segments to grow their service territory and customer base is affected by regulatory constraints, the economic environment of the markets served and competition from other energy providers and fuels. The construction of any new electric generating facilities, transmission lines and other service facilities is subject to increasing costs and lead times, extensive permitting procedures, and federal and state legislative and regulatory initiatives, which will likely necessitate increases in electric energy prices.disclosures.

Revenues are impacted by both customer growth and usage, the latter of which is primarily impacted by weather, as well as impacts associated with commercial and industrial slow-downs, including economic recessions, and energy efficiencies. Very cold winters increase demand for natural gas and to a lesser extent, electricity, while warmer than normal summers increase demand for electricity, especially among residential and commercial customers. Average consumption among both electric and natural gas customers has tended to decline as more efficient appliances and furnaces are installed, and as the Company has implemented conservation programs. Natural gas weather normalization and decoupling mechanisms in certain jurisdictions have been implemented to largely mitigate the effect that would otherwise be caused by variations in volumes sold to these customers due to weather and changing consumption patterns on the Company's distribution margins, as further discussed in Items 1 and 2 - Business Properties.

In February 2021, a prolonged period of unseasonably cold temperatures in the central United States significantly increased the demand for electric and natural gas services and contributed to increased market prices. The Company's transmission settlement process with SPP helped offset the increased energy costs to electric customers during the cold-weather event. Further, in some jurisdictions the Company utilized natural gas in storage to lessen the impact of high natural gas costs. Overall, Montana-Dakota and Great Plains incurred approximately $44.0 million in increased natural gas costs in order to maintain services for its customers. These extraordinary natural gas costs were recorded as regulatory assets as they are expected to be recovered from customers. Montana-Dakota and Great Plains have received approval for the recovery of purchased gas adjustments related to the cold-weather event in all jurisdictions impacted, including out-of-cycle purchased gas adjustment requests in most jurisdictions. The approval in Minnesota is subject to a prudence review by the MNPUC, which is pending, with an order to be issued on or before August 29, 2022. For a discussion of the Company's most recent cases by jurisdiction, see Item 8 - Note 20.

The electric and natural gas distribution segments continue to face increased lead times on delivery of certain raw materials and equipment used in electric transmission and distribution system and natural gas pipeline projects. Long lead times are attributable to increased demand for steel products from pipeline companies as they continue pipeline system safety and integrity replacement projects driven by PHMSA regulations, as well as delays in the manufacturing of electrical equipment as a result of the COVID-19 pandemic, including delays in shipping times and issuance of permits for large and heavy loads. The Company did not experience significant impacts from these delays for the year ended December 31, 2021.

34 MDU Resources Group, Inc. Form 10-K35

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However, the Company continues to monitor the material lead times and is working with manufacturers to proactively order such materials and working with additional suppliers to help mitigate the risk of any delays.

The ability to grow through acquisitions is subject to significant competition and acquisition premiums. In addition, the ability of the segments to grow their service territory and customer base is affected by regulatory constraints, the economic environment of the markets served and competition from other energy providers and fuels. The construction of new electric generating facilities, transmission lines and other service facilities is subject to increasing costs and lead times, extensive permitting procedures, and federal and state legislative and regulatory initiatives, which may necessitate increases in electric energy prices.

Earnings overview - The following information summarizes the performance of the electric segment.

2020 vs. 2019 2019 vs. 2018
Years ended December 31, 2020 2019 2018 % change % change
(Dollars in millions, where applicable)
Operating revenues $ 332.0 $ 351.7 $ 335.1 (5.6) % 5.0 %
Electric fuel and purchased power 66.9 86.6 80.7 (22.7) % 7.3 %
Taxes, other than income .6 .6 .7 — % (14.3) %
Adjusted gross margin 264.5 264.5 253.7 — % 4.3 %
Operating expenses:
Operation and maintenance 121.3 125.7 123.0 (3.5) % 2.2 %
Depreciation, depletion and amortization 63.0 58.7 51.0 7.3 % 15.1 %
Taxes, other than income 16.8 16.1 14.5 4.3 % 11.0 %
Total operating expenses 201.1 200.5 188.5 .3 % 6.4 %
Operating income 63.4 64.0 65.2 (.9) % (1.8) %
Other income 7.2 3.4 1.2 111.8 % 183.3 %
Interest expense 26.7 25.3 25.9 5.5 % (2.3) %
Income before income taxes 43.9 42.1 40.5 4.3 % 4.0 %
Income tax benefit (11.7) (12.7) (6.5) (7.9) % 95.4 %
Net income $ 55.6 $ 54.8 $ 47.0 1.5 % 16.6 %

Operating statistics 2020 2019 2018
Retail sales (million kWh):
Residential 1,170.9 1,177.9 1,196.6
Commercial 1,419.4 1,499.9 1,513.9
Industrial 532.1 549.4 551.0
Other 82.1 87.1 92.9
3,204.5 3,314.3 3,354.4
Average cost of electric fuel and purchased power per kWh $ .019 $ .023 $ .022


							2021 vs. 2020		2020 vs. 2019
Years ended December 31,	2021		2020		2019		Variance		Variance
	(In millions)
Operating revenues	$	349.6	$	332.0	$	351.7	5.3	%	(5.6)	%
Electric fuel and purchased power	74.1		66.9		86.6		10.8	%	(22.7)	%
Taxes, other than income	.8		.6		.6		33.3	%	—	%
Adjusted gross margin	274.7		264.5		264.5		3.9	%	—	%
Operating expenses:
Operation and maintenance	124.9		121.3		125.7		3.0	%	(3.5)	%
Depreciation, depletion and amortization	66.8		63.0		58.7		6.0	%	7.3	%
Taxes, other than income	16.7		16.8		16.1		(.6)	%	4.3	%
Total operating expenses	208.4		201.1		200.5		3.6	%	.3	%
Operating income	66.3		63.4		64.0		4.6	%	(.9)	%
Other income	4.6		7.2		3.4		(36.1)	%	111.8	%
Interest expense	26.7		26.7		25.3		—	%	5.5	%
Income before income taxes	44.2		43.9		42.1		.7	%	4.3	%
Income tax benefit	(7.7)		(11.7)		(12.7)		(34.2)	%	(7.9)	%
Net income	$	51.9	$	55.6	$	54.8	(6.7)	%	1.5	%

Adjusted gross margin is a non-GAAP financial measure. For additional information and reconciliation of the non-GAAP adjusted gross margin attributable to the electric segment, see the Non-GAAP Financial Measures section later in this Item.


Operating statistics
	2021		2020		2019
Revenues (millions)
Retail sales:
Residential	$	123.0	$	122.6	$	125.6
Commercial	133.3		131.2		142.1
Industrial	40.5		36.7		37.8
Other	6.8		6.6		7.4
	303.6		297.1		312.9
Transportation and other	46.0		34.9		38.8
	$	349.6	$	332.0	$	351.7
Retail sales (million kWh)
Residential	1,164.8		1,170.9		1,177.9
Commercial	1,433.0		1,419.4		1,499.9
Industrial	589.4		532.1		549.4
Other	84.4		82.1		87.1
	3,271.6		3,204.5		3,314.3
Average cost of electric fuel and purchased power per kWh	$	.021	$	.019	$	.023

2021 compared to 2020 Electric earnings decreased $3.7 million as a result of:

•Adjusted gross margin increased $10.2 million attributable to:

◦Higher transmission revenues of $3.3 million.

◦Higher transmission interconnect upgrades of $2.4 million.

◦Higher MISO revenue of $2.0 million.

◦Higher demand revenues of $1.5 million.

36 MDU Resources Group, Inc. Form 10-K

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◦Increased retail sales volumes of 2.1 percent, largely as a result of increased industrial and commercial sales volumes, offset in part by lower residential sales volumes, as the impacts of the COVID-19 pandemic began to reverse and businesses reopened.

•Operation and maintenance increased $3.6 million.

◦Primarily the result of:

•Higher planned maintenance outage costs of $2.1 million at Big Stone Station and $800,000 higher maintenance fees at Thunder Spirit.

•Higher other miscellaneous expenses.

◦Partially offset by lower payroll-related costs of $700,000, which includes lower employee incentive accruals, offset in part by higher health care costs.

•Depreciation, depletion and amortization increased $3.8 million largely resulting from:

◦Increased property, plant and equipment balances, primarily related to transmission projects placed in service.

◦Increased amortization of plant retirement and closure costs of $1.7 million recovered in operating revenues, as discussed in Item 8 - Note 6.

•Taxes, other than income was comparable to the same period in the prior year.

•Other income decreased $2.6 million.

◦Primarily due to:

•The absence of an out-of-period adjustment of $2.5 million in 2020 as a result of previously overstated benefit plan expenses.

•Lower returns on certain of the Company's benefit plan investments of $1.3 million.

◦Partially offset by increased interest income associated with higher contributions in aid of construction.

•Interest expense was comparable to the same period in the prior year.

•Income tax benefit decreased $4.0 million largely resulting from:

◦Lower production tax credits of $2.1 million related to the expiration of the 10-year credit-qualifying period on certain facilities and less wind generation.

◦Lower excess deferred tax amortization.

2020 compared to 2019 Electric earnings increased $800,000 as a result of:

•Adjusted gross ~~margin:~~margin in 2020 was comparable to that of 2019.

◦ ~~Comparable to the prior year. The adjusted gross margin was positively~~Positively impacted by higher rates of $2.8 million, including approved rate relief resulting in $2.0 million additional revenue. ~~These increases were offset~~

◦Offset by lower retail sales volumes of 3.3 percent across all customer classes due to warmer weather and slow-downs as a result of the COVID-19 pandemic.

•Operation and ~~maintenance:~~maintenance expense decreased $4.4 million.

◦ ~~Decrease of $4.4 million, largely~~Largely due ~~to lower~~to:

•Lower generation station expenses of $3.5 ~~million and lower~~million.

•Lower payroll and other employee-related costs of approximately $1.5 million.

◦Partially ~~offsetting the decreases were~~offset by increased bad debt expense of $500,000 as a result of the COVID-19 pandemic, as discussed later.

•Depreciation, depletion and ~~amortization:~~ ~~Increase of~~amortization increased $4.3 million largely ~~from an increase in~~from:

◦Increased asset base driven by capital expenditures, which include transmission ~~projects, and higher~~projects.

◦Higher depreciation rates implemented from a Montana rate case of $1.2 million.

•Taxes, other than ~~income:~~ ~~Increase of~~income increased $700,000 from higher property taxes in certain jurisdictions.

•Other ~~income:~~ ~~Increase of~~income increased $3.8 million largely attributable ~~to an~~to:

◦An out-of-period adjustment of $2.5 million in the fourth quarter of 2020 ~~related to~~as a result of previously overstated benefit plan ~~expense, as discussed in Item 8 - Note 1, and the~~expenses.

◦The absence of the write-down of a non-utility investment in the second quarter of 2019 for $1.2 ~~million, as discussed in Item 8 - Note 8.~~ million.

◦Lower 2020 pension ~~expense also contributed to the increase in other income.~~expense.

•Interest ~~expense:~~ ~~Increase of~~expense increased $1.4 million driven by higher short-term debt balances.

•Income tax ~~benefit:~~ ~~Decrease of~~benefit decreased $1.0 million, largely due to higher income before income taxes.

~~2019 compared to 2018Electric earnings increased $7.8 million as a result of:~~

~~Adjusted gross margin:~~ Increase of $10.8 million, primarily due to an increase in revenues. The revenue increase was driven by implemented regulatory mechanisms, which include approved Montana interim and final rates and recovery of the investment in the BSSE project placed into service in the first quarter of 2019. Also contributing to the increase was the absence in 2019 of a transmission formula rate adjustment

MDU Resources Group, Inc. Form 10-K 3537

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~~recognized in the third quarter of 2018 for decreased costs on the BSSE project. These increases were partially offset by lower retail sales volumes of 1.2 percent across all major customer classes.~~

~~Operation and maintenance:~~ ~~Increase of $2.7 million, primarily resulting from higher payroll-related costs, partially offset by lower material expenses across all locations.~~

~~Depreciation, depletion and amortization:~~ Increase of $7.7 million as a result of increased property, plant and equipment balances including the BSSE project, as previously discussed, and other capital projects, as well as a reserve for certain costs related to the retirement of three aging coal-fired electric generating units, as discussed in Item 8 - Note 6, which is offset in income taxes.

~~Taxes, other than income:~~ ~~Increase of $1.6 million, primarily from higher property taxes in certain jurisdictions.~~

~~Other income:~~ Increase of $2.2 million, largely the result of higher returns on the Company's benefit plan investments, partially offset by the write-down of a non-utility investment in the second quarter of 2019, as discussed in Item 8 - Note 8.

~~Interest expense:~~ ~~Decrease of $600,000 driven by higher AFUDC, which resulted in more interest being capitalized on regulated construction projects.~~

~~Income tax benefit:~~ ~~Increase of $6.2 million, largely due to increased production tax credits, as well as increased excess deferred tax amortization.~~

Earnings overview - The following information summarizes the performance of the natural gas distribution segment.


								2020 vs. 2019		2019 vs. 2018									2021 vs. 2020		2020 vs. 2019
Years ended December 31,	Years ended December 31,	2020		2019		2018		% change				Years ended December 31,	2021		2020		2019		Variance
		(Dollars in millions, where applicable)											(In millions)
Operating revenues	Operating revenues	$	848.2	$	865.2	$	823.2	(2.0)	%	5.1	%	Operating revenues	$	971.9	$	848.2	$	865.2	14.6	%	(2.0)	%
Purchased natural gas sold	Purchased natural gas sold	448.1		477.6		454.8		(6.2)	%	5.0	%	Purchased natural gas sold	542.0		448.1		477.6		21.0	%	(6.2)	%
Taxes, other than income	Taxes, other than income	32.4		30.3		28.5		6.9	%	6.3	%	Taxes, other than income	34.7		32.4		30.3		7.1	%	6.9	%
Adjusted gross margin	Adjusted gross margin	367.7		357.3		339.9		2.9	%	5.1	%	Adjusted gross margin	395.2		367.7		357.3		7.5	%	2.9	%
Operating expenses:	Operating expenses:											Operating expenses:
Operation and maintenance	Operation and maintenance	185.4		185.0		173.4		.2	%	6.7	%	Operation and maintenance	194.1		185.4		185.0		4.7	%	.2	%
Depreciation, depletion and amortization	Depreciation, depletion and amortization	84.6		79.6		72.5		6.3	%	9.8	%	Depreciation, depletion and amortization	86.0		84.6		79.6		1.7	%	6.3	%
Taxes, other than income	Taxes, other than income	24.6		23.5		21.7		4.7	%	8.3	%	Taxes, other than income	25.9		24.6		23.5		5.3	%	4.7	%
Total operating expenses	Total operating expenses	294.6		288.1		267.6		2.3	%	7.7	%	Total operating expenses	306.0		294.6		288.1		3.9	%	2.3	%
Operating income	Operating income	73.1		69.2		72.3		5.6	%	(4.3)	%	Operating income	89.2		73.1		69.2		22.0	%	5.6	%
Other income	Other income	13.5		7.2		.2		87.5	%	NM		Other income	8.1		13.5		7.2		(40.0)	%	87.5	%
Interest expense	Interest expense	36.8		35.5		30.7		3.7	%	15.6	%	Interest expense	37.3		36.8		35.5		1.4	%	3.7	%
Income before income taxes	Income before income taxes	49.8		40.9		41.8		21.8	%	(2.2)	%	Income before income taxes	60.0		49.8		40.9		20.5	%	21.8	%
Income tax expense	Income tax expense	5.8		1.4		4.1		NM		(65.9)	%	Income tax expense	8.4		5.8		1.4		44.8	%	NM
Net income	Net income	$	44.0	$	39.5	$	37.7	11.4	%	4.8	%	Net income	$	51.6	$	44.0	$	39.5	17.3	%	11.4	%

* NM - not meaningful

~~36 MDU Resources Group, Inc.~~ ~~Form 10-K~~

~~Part II~~

Operating statistics 2020 2019 2018
Volumes (MMdk)
Retail sales:
Residential 65.5 69.4 63.7
Commercial 44.2 49.1 44.4
Industrial 4.8 5.2 4.5
114.5 123.7 112.6
Transportation sales:
Commercial 2.0 2.2 2.2
Industrial 158.0 163.9 147.3
160.0 166.1 149.5
Total throughput 274.5 289.8 262.1
Average cost of natural gas per dk $ 3.91 $ 3.86 $ 4.04

Adjusted gross margin is a non-GAAP financial measure. For additional information and reconciliation of the non-GAAP adjusted gross margin attributable to the natural gas distribution segment, see the Non-GAAP Financial Measures section later in this Item.


Operating statistics
	2021		2020		2019
Revenues (millions)
Retail sales:
Residential	$	548.1	$	480.5	$	479.7
Commercial	330.4		281.2		293.2
Industrial	31.1		26.2		26.5
	909.6		787.9		799.4
Transportation and other	62.3		60.3		65.8
	$	971.9	$	848.2	$	865.2
Volumes (MMdk)
Retail sales:
Residential	65.6		65.5		69.4
Commercial	44.7		44.2		49.1
Industrial	5.0		4.8		5.2
	115.3		114.5		123.7
Transportation sales:
Commercial	1.9		2.0		2.2
Industrial	172.5		158.0		163.9
	174.4		160.0		166.1
Total throughput	289.7		274.5		289.8
Average cost of natural gas per dk	$	4.70	$	3.91	$	3.86

2021 compared to 2020: Natural gas distribution earnings increased $7.6 million as a result of:

•Adjusted gross margin increased $27.5 million.

◦Largely as a result of:

•Approved rate relief in certain jurisdictions of $15.9 million.

•Increased retail sales volumes of 0.7 percent across all customer classes, including the benefit of weather normalization and decoupling mechanisms in certain jurisdictions.

•Increased transportation volumes of 9 percent, primarily to electric generation customers.

•Higher non-regulated project revenues of $1.7 million.

•Increased basic service charges due to customer growth and increased per unit average rates of $1.5 million each.

38 MDU Resources Group, Inc. Form 10-K

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•Operation and maintenance increased $8.7 million.

◦Primarily due to:

•Higher payroll-related costs of $4.3 million, largely related to health care costs and straight-time payroll.

•Decreased credits of $2.4 million for costs associated with the installation of meters partially from delaying meter replacements for safety measures implemented as a result of the COVID-19 pandemic.

•Higher expenses for materials, new software, insurance and vehicle fuel.

◦Partially offset by:

•The absence of the write-off of an abandoned project in the third quarter of 2020 for $1.2 million.

•Decreased bad debt expense of $1.0 million as the impacts of the COVID-19 pandemic began to subside.

•Depreciation, depletion and amortization increased $1.4 million.

◦Largely from increased property, plant and equipment balances from growth and replacement projects placed in service.

◦Partially offset by decreased depreciation rates in certain jurisdictions of $4.0 million.

•Taxes, other than income increased $1.3 million resulting from:

◦Higher property taxes in certain jurisdictions of $700,000.

◦Higher payroll taxes driven by increased payroll-related costs.

•Other income decreased $5.4 million primarily related to:

◦The absence of an out-of-period adjustment of $4.4 million in 2020 as a result of previously overstated benefit plan expenses.

◦Decreased interest income related to the recovery of purchased gas cost adjustment balances in certain jurisdictions.

•Interest expense increased $500,000, primarily from lower AFUDC borrowed.

•Income tax expense increased $2.6 million due to higher income before income taxes.

2020 compared to 2019 Natural gas distribution earnings increased $4.5 million as a result of:

•Adjusted gross ~~margin:~~ ~~Increase of~~margin increased $10.4 million ~~largely~~.

◦Largely the result of:

•Approved rate recovery of $6.8 million in ~~approved rate recovery in~~ certain ~~jurisdictions, higher~~jurisdictions.

•Higher basic service charges of $2.1 million due to customer growth of 2 ~~percent and increased~~percent.

•Increased property tax tracker revenue of $1.7 million, which offsets the property tax expense below.

◦Slightly ~~offsetting the increases was a decrease in~~offset by decreased retail sales volumes of 7.4 percent across all customer classes due to warmer weather and slow-downs as a result of the COVID-19 pandemic, ~~which was~~ largely offset by weather normalization and decoupling mechanisms in certain jurisdictions.

•Operation and ~~maintenance:~~maintenance increased $400,000.

◦ ~~Increase of $400,000, primarily~~Primarily related ~~to increased~~to:

•Increased contract services, largely $1.2 million for the write-off of an abandoned project in the third quarter of ~~2020, and increased~~2020.

•Increased software expenses.

◦Partially ~~offsetting the increase was~~offset by lower employee-related costs of $1.6 million as a result of the COVID-19 pandemic.

•Depreciation, depletion and ~~amortization:~~ ~~Increase of~~amortization increased $5.0 million, primarily from an increase in asset base driven by capital expenditures, which include system safety and reliability enhancements and other growth projects.

•Taxes, other than ~~income:~~ ~~Increase of~~income increased $1.1 million due ~~to higher~~to:

◦Higher property taxes in certain jurisdictions of $1.7 ~~million, partially~~million.

◦Partially offset by lower payroll taxes.

•Other ~~income:~~income increased $6.3 million.

◦ ~~Increase of $6.3 million, largely~~Largely driven ~~by an~~by:

•An out-of-period adjustment of $4.4 million in the fourth quarter of 2020 ~~related to~~as a result of previously overstated benefit plan ~~expenses, as discussed in Item 8 - Note 1, and lower~~expenses.

•Lower 2020 benefit plan expenses of approximately $2.2 million.

•The absence of the write-down of a non-utility investment of approximately $800,000 in the second quarter of ~~2019, as discussed in Item 8 - Note 8, also contributed to the increase in other income.~~ 2019.

◦Partially ~~offsetting the increases was~~offset by a decrease in interest income of $1.5 million related to the recovery of purchased gas cost adjustment balances.

•Interest ~~expense:~~ ~~Increase of~~expense increased $1.3 million, primarily attributable to increased long-term debt balances, partially offset by lower short-term borrowings.

•Income tax ~~expense:~~ ~~Increase of~~expense increased $4.4 ~~million, as a result of the increase in income before taxes and permanent tax adjustments.~~

~~2019 compared to 2018~~ ~~Natural gas distribution earnings increased $1.8~~ million as a result of:

~~Adjusted gross margin:~~◦ Increase of $17.4 million, primarily driven by an increase in retail sales volumes of 9.9 percent related to all customer classes due to colder weather, partially offset by weather normalization and conservation adjustments in certain jurisdictions, and approved rate recovery in certain jurisdictions. The adjusted gross margin was also positively impacted by higher rate realization due to higher conservation revenue, which offsets the conservation expense in operation and maintenance expense.

~~Operation and maintenance:~~ Increase of $11.6 million, largely related to higher payroll-related costs, as well as higher conservation expenses being recovered in revenue. The increase was partially offset by lower contract services, which includes the absence of the prior year's recognition of a non-recurring expense related to the approved WUTC general rate case settlement in the second quarter 2018.

~~Depreciation, depletion and amortization:~~ ~~Increase of $7.1 million, primarily as a result of increased property, plant and equipment balances.~~

~~Taxes, other than income:~~ ~~Increase of $1.8 million due to higher property taxes in certain jurisdictions and increased payroll~~Higher income before income taxes.

~~Other income:~~◦ Increase of $7.0 million, largely resulting from higher returns on the Company's benefit plan investments and increased interest income related to higher gas costs to be collected from customers. Partially offsetting these increases was a write-down of a non-utility investment in the second quarter of 2019, as discussed in Item 8 - Note 8.

~~Interest expense:~~ ~~Increase of $4.8 million, largely resulting from increased debt balances to finance higher gas costs to be collected from customers.~~

~~Income~~Permanent tax ~~expense:~~ ~~Decrease of $2.7 million, largely due to increased permanent tax benefits related to the Company's benefit plan investments.~~adjustments.

MDU Resources Group, Inc. Form 10-K 3739

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Outlook The Company continues to assess the impacts of the COVID-19 pandemic on its operations and is committed to providing safe and reliable service while ensuring the health and safety of its employees, customers and the communities in which it operates. In ~~response to the pandemic,~~2020, the Company instituted certain measures to help protect its employees from exposure to COVID-19 and to curb potential spread of the virus in customer homes and facilities, including suspension of disconnects due to nonpayment of ~~bills. The~~bills, and continued to adjust and reduce these measures in 2021. In April 2020, the Company ~~also~~ waived late payment fees ~~effective April 1, 2020,~~ to help customers experiencing financial hardships. As of October 2021, the Company had reinstated disconnects in all states of operation and late payment fees in a majority of states. As a consequence of the suspended disconnects and waived late fees, the Company's cash flows and collection of receivables have been ~~affected.~~affected but impacts have not been material. The Company reinstated disconnects and late payment fees in five of its eight states effective September 1, 2020, and the Company reinstated disconnects and late payment fees to certain customer classes in another two states effective January 1, 2021. The Company has experienced some impacts to its commercial and industrial electric and natural gas loads associated with reduced economic activity due to the COVID-19 pandemic and oil price impacts, as further discussed ~~below.~~below, which began to transition back to historic levels in 2021. The Company expects this downward trend on demand to continue throughout the pandemic. The Company temporarily implemented cost containment measures in response to the COVID-19 pandemic, including reduced employee travel and temporary delays in training for employees, as well as delays in filling open positions and contract work. The Company has filed requests for the use of deferred accounting for costs related to the COVID-19 pandemic in ~~most~~all of the jurisdictions in which it ~~operates; the~~operates and has since withdrawn its applications in three of those jurisdictions. The Company has deferred an immaterial amount of costs related to the pandemic to date. ~~The Company's outstanding filings by jurisdiction related to the COVID-19 pandemic are discussed in Item 8 - Note 20.~~

The Company expects these segments will grow rate base by approximately 5 percent annually over the next five years on a compound basis. Operations are spread across eight states where the Company expects customer growth to be higher than the national average. In ~~2020~~2021 and ~~2019,~~2020, these segments experienced retail customer growth of approximately 1.7 percent and 1.8 percent, ~~each year~~respectively, and the Company expects customer growth to continue to average 1 percent to 2 percent per year. This customer growth, along with system upgrades and replacements needed to supply safe and reliable service, will require investments in new and replacement electric and natural gas systems. On July 1, 2021, the Company filed in North Dakota, and provided a courtesy copy to South Dakota, an integrated resource plan for the electric segment, which included the Company's plans for future resources to meet customer demand. This integrated resource plan was filed in Montana on September 15, 2021.

These segments are exposed to energy price ~~volatility.~~volatility and may be impacted by changes in oil and natural gas exploration and production activity. Rate schedules in the jurisdictions in which the Company's natural gas distribution segment operates contain clauses that permit the Company to file for rate adjustments for changes in the cost of purchased gas. Although changes in the price of natural gas are passed through to customers and have minimal impact on the Company's earnings, the natural gas distribution segment's customers benefit from lower natural gas prices through the Company's utilization of storage and fixed price contracts. ~~Additionally,~~During the third and fourth quarters of 2021, the Company ~~has implemented risk mitigation measures to minimize the price volatility associated with~~experienced increased natural gas ~~costs~~prices and expects this trend to continue through ~~derivative contracts at Cascade. For further discussion on~~ the ~~Company's derivative instruments, see Item 8 - Note 2. Demand for~~winter due to the ~~Company's regulated energy delivery services could be impacted by reduced oil and natural gas exploration and production activity.~~increase in demand outpacing the supply. The Company ~~continues~~will continue to monitor natural gas prices, as well as ~~the~~ oil and natural gas production levels.

In February 2019, the Company announced ~~that it intends to retire~~the retirement of three aging coal-fired electric generating units, resulting from the Company's analysis showing that the plants are no longer expected to be cost competitive for customers. The ~~retirements are expected to be in~~Company ceased operations on March 31, 2021, ~~for~~of Unit 1 at Lewis & Clark Station in Sidney, Montana, and commenced decommissioning in ~~early 2022 for~~July 2021. Units 1 and 2 at Heskett Station near Mandan, North ~~Dakota.~~Dakota, are being retired during the first quarter of 2022. In addition, during the first half of 2022, the Company ~~announced that it intends to construct~~will begin construction of Heskett Unit 4, an 88-MW simple-cycle natural gas-fired combustion turbine peaking unit at the existing Heskett Station near Mandan, North Dakota. ~~Heskett Unit 4 production~~

The Company is one of four owners of Coyote Station and cannot make a unilateral decision on the plant's future; therefore, the Company could be negatively impacted by decisions of the other owners. State implementation of pollution control plans to improve visibility at Class I areas, such as national parks, under the EPA's Regional Haze Rule could require the owners of Coyote Station to incur significant new costs. If the owners decide to incur such costs, ~~coupled with~~ the ~~MISO market purchases are expected~~costs could, dependent on determination by state regulatory commissions on approval to recover such costs from customers, negatively impact the Company's results of operations, financial position and cash flows. The NDDEQ submitted a draft state implementation plan to the EPA and federal land managers of the National Park Service, the United States Fish and Wildlife Service and the United States Forest Service for consultation, and the federal land managers have submitted comments back to the NDDEQ for review. North Dakota determined it is not reasonable to require controls during this planning period. The emissions modeling conducted for the combined western state agencies affected by the Regional Haze Rule was delayed and has subsequently delayed the NDDEQ state implementation plan process. Therefore, the NDDEQ's state implementation plan, which was due to the EPA by July 2021, is anticipated to be ~~about half the total cost of continuing~~submitted to ~~run the coal-fired electric generating units at Heskett and Lewis & Clark stations. Heskett Unit 4 was included~~EPA in the ~~Company's integrated resource plan submitted~~first half of 2022. Additionally, in September 2021, Otter Tail Power Company filed its 2022 Integrated Resource Plan in Minnesota and North Dakota which included its intent to start the process of withdrawal from its 35 percent ownership interest in Coyote Station with an anticipated exit from the plant by December 31, 2028. The joint owners continue to collaborate in analyzing data and weighing decisions that impact the plant and each company's employees, customers and communities served.

The Company continues to monitor legislation related to clean energy standards that may impact its segments. The current presidential administration is considering changes to the ~~NDPSC in July 2019. On August 28, 2019,~~federal Clean Air Act, some of which were amended by the previous presidential administration. The content and impacts of the changes under consideration are uncertain and the Company ~~filed~~continues to monitor for ~~an advanced determination of prudence with~~potential actions by the ~~NDPSC for Heskett Unit 4. This request~~EPA. In Oregon, the Climate Protection Program Rule was approved in December 2021, which requires natural gas companies to reduce GHG emissions 50 percent below the baseline by 2035 and 90 percent below the ~~NDPSC on August 5, 2020. Heskett Unit 4~~baseline by 2050, which may be achieved through surrendering emissions allowances, investing in additional customer conservation and energy efficiency programs, purchasing community climate investment credits, and purchasing low carbon fuels such as renewable natural gas. The Company expects the compliance costs for these regulations to be recovered through customer rates. In Washington, the Climate Commitment Act signed into law in May 2021 requires natural gas distribution companies to reduce overall GHG emissions 45 percent below 1990 levels by 2030, 70 percent below 1990 levels by 2040 and 95 percent below 1990 levels by 2050, which may be achieved through increased energy efficiency and conservation measures, purchased emission allowances and offsets, and purchases of low carbon fuels. The Washington DOE has begun the Climate Commitment Program rule-making process and is expected to ~~be placed into service~~publish a final rule in ~~2023.~~the

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fall of 2022. The Company ~~filed,~~has begun reviewing compliance options and expects the ~~commissions approved, requests with the NDPSC, MTPSC and SDPUC~~compliance costs for ~~the usage of deferred accounting for the costs related to the retirement of Unit 1 at Lewis & Clark Station and Units 1 and 2 at Heskett Station.~~

In December 2020, the governor of Washington outlined a climate policy package that included House Bill 1084, which would eliminate all onsite fossil fuel emissions in new buildings by 2030 and eliminate fossil fuels from existing buildings by 2050, among other things. A public hearing on House Bill 1084 was held February 17, 2021, in the House Committee on Appropriations. The Company is monitoring the status of the proposed legislation.these regulations will be recovered through customer rates.

The Company continues to be focused on the regulatory recovery of its investments by filing for rate adjustments to seek recovery of operating costs and capital investments, as well as reasonable returns as allowed by regulators. The Company's most recent cases by jurisdiction are discussed in Item 8 - Note 20.

~~38 MDU Resources Group, Inc.~~ ~~Form 10-K~~

~~Part II~~

Pipeline

Strategy and challenges The pipeline segment provides natural gas transportation, underground storage and energy-related services, as discussed in Items 1 and 2 - Business Properties. The segment focuses on utilizing its extensive expertise in the design, construction and operation of energy infrastructure and related services to increase market share and profitability through optimization of existing operations, organic growth and investments in energy-related assets within or in close proximity to its current operating areas. The segment focuses on the continual safety and reliability of its systems, which entails building, operating and maintaining safe natural gas pipelines and facilities. The segment continues to evaluate growth opportunities including the expansion of natural gas facilities; incremental pipeline projects; and expansion of energy-related services leveraging on its core competencies. In support of this strategy, the ~~Company completed and placed into service the~~ following were organic growth projects for the Company in ~~2020~~2021 and ~~2019:~~2020:

•~~In September 2020~~The North Bakken Expansion project in western North Dakota, construction began in July of 2021 and ~~November 2019,~~ was placed in service in February of 2022. The project has capacity to transport 250 MMcf of natural gas per day and can be increased to 625 MMcf per day with additional compression.

•Phase II ~~and Phase I, respectively,~~ of the Line Section 22 Expansion project in the Billings, Montana, ~~area.~~area was placed in service in September of 2020. The ~~total project~~completion of Phase I and II increased capacity by 22.5 MMcf per day.

•~~In February 2020, the~~The Demicks Lake Expansion project in McKenzie County, North Dakota, was placed in service in February of 2020 and increased capacity by 175 MMcf per day.

•In ~~September 2019,~~April 2020 and November 2020, the ~~Demicks Lake project in McKenzie County, North Dakota, increased capacity by 175 MMcf per day.~~Company completed the sales of its regulated and non-regulated natural gas gathering assets, respectively. With the completion of these sales, the Company has exited the natural gas gathering business.

The segment is exposed to energy price volatility which is impacted by the fluctuations in pricing, production and basis differentials of the energy market's commodities. Legislative and regulatory initiatives ~~to increase~~on increased pipeline safety regulations and ~~reduce~~environmental matters such as the reduction of methane emissions could also impact the price and demand for natural gas.

The segment regularly experiences extended lead times on raw materials that are critical to the segment's construction and maintenance work. Long lead times on materials could delay maintenance work and project construction potentially causing lost revenues and/or increased costs. The Company continues to proactively monitor and plan for the material lead times, as well as work with manufacturers and suppliers to help mitigate the risk of delays due to extended lead times.

~~The~~ pipeline segment is also subject to extensive regulation including certain operational and environmental ~~and system integrity regulations, as well as various~~compliance, cybersecurity, permit terms and ~~operational compliance conditions. In September 2019,~~system integrity. The Company continues to actively evaluate cybersecurity processes and procedures, including changes in the ~~Pipeline~~industry's cybersecurity regulations, for opportunities to further strengthen its cybersecurity protections. Implementation of enhancements and ~~Hazardous Materials Safety Administration issued a rule~~additional requirements is ongoing. The pipeline segment recently implemented procedural changes for additional regulations to strengthen the safety of natural gas transmission and storage facilities and hazardous liquid pipelines. The segment has implemented procedure changes for the initial requirements and continues to evaluate procedure changes and implementation of physical modifications to existing facilities necessary for additional requirementspipelines issued by PHSMA that were effective July 1, 2021. The segment reviews and secures existing permits and easements, as well as new permits and easements as necessary, to meet current demand and future growth opportunities on an ongoing basis. Groups opposing natural gas pipelines could also cause negative impacts on the segment with increased costs, potential delays to project completion or cancellation of prospective projects.

The segment regularly experiences extended lead times on raw materials that are critical to the segment's construction and maintenance work. Long lead times on materials could delay maintenance work and construction projects potentially causing lost revenues and/or increased costs. Current national supply chain challenges did not have significant impacts to the procurement of raw materials for the year ended December 31, 2021. However, the Company is actively monitoring the situation and working with its manufacturers and suppliers to help mitigate the risk of delays.

The segment focuses on the recruitment and retention of a skilled workforce to remain competitive and provide services to its customers. The industry in which it operates relies on a skilled workforce to construct energy infrastructure and operate existing infrastructure in a safe manner. A shortage of skilled personnel can create a competitive labor market which could increase costs incurred by the segment. Competition from other pipeline companies can also have a negative impact on the segment.

~~Earnings overview -~~ ~~The following information summarizes the performance of the pipeline segment.~~

2020 vs. 2019 2019 vs. 2018
Years ended December 31, 2020 2019 2018 % change % change
(Dollars in millions)
Operating revenues $ 143.9 $ 140.4 $ 128.9 2.5 % 8.9 %
Operating expenses:
Operation and maintenance 59.9 63.1 62.2 (5.1) % 1.4 %
Depreciation, depletion and amortization 21.7 21.2 17.9 2.4 % 18.4 %
Taxes, other than income 12.9 13.3 12.7 (3.0) % 4.7 %
Total operating expenses 94.5 97.6 92.8 (3.2) % 5.2 %
Operating income 49.4 42.8 36.1 15.4 % 18.6 %
Other income 2.9 1.2 1.0 141.7 % 20.0 %
Interest expense 7.6 7.2 5.9 5.6 % 22.0 %
Income before income taxes 44.7 36.8 31.2 21.5 % 17.9 %
Income tax expense 7.7 7.2 2.7 6.9 % 166.7 %
Net income $ 37.0 $ 29.6 $ 28.5 25.0 % 3.9 %

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Operating statistics 2020 2019 2018
Transportation volumes (MMdk) 438.6 429.7 351.5
Natural gas gathering volumes (MMdk) 8.6 13.9 14.9
Customer natural gas storage balance (MMdk):
Beginning of period 16.2 13.9 22.4
Net injection (withdrawal) 9.3 2.3 (8.5)
End of period 25.5 16.2 13.9
Earnings overview - The following information summarizes the performance of the pipeline segment.


							2021 vs. 2020		2020 vs. 2019
Years ended December 31,	2021		2020		2019		Variance		Variance
	(In millions)
Operating revenues	$	142.6	$	143.9	$	140.4	(.9)	%	2.5	%
Operating expenses:
Operation and maintenance	61.3		59.9		63.1		2.3	%	(5.1)	%
Depreciation, depletion and amortization	20.5		21.7		21.2		(5.5)	%	2.4	%
Taxes, other than income	12.7		12.9		13.3		(1.6)	%	(3.0)	%
Total operating expenses	94.5		94.5		97.6		—	%	(3.2)	%
Operating income	48.1		49.4		42.8		(2.6)	%	15.4	%
Other income	9.4		2.9		1.2		224.1	%	141.7	%
Interest expense	7.0		7.6		7.2		(7.9)	%	5.6	%
Income before income taxes	50.5		44.7		36.8		13.0	%	21.5	%
Income tax expense	9.6		7.7		7.2		24.7	%	6.9	%
Net income	$	40.9	$	37.0	$	29.6	10.5	%	25.0	%


Operating statistics
	2021	2020	2019
Transportation volumes (MMdk)	471.1	438.6	429.7
Natural gas gathering volumes (MMdk)	—	8.6	13.9
Customer natural gas storage balance (MMdk):
Beginning of period	25.5	16.2	13.9
Net injection (withdrawal)	(2.5)	9.3	2.3
End of period	23.0	25.5	16.2

2021 compared to 2020 Pipeline earnings increased $3.9 million as a result of:

•Revenues decreased $1.3 million.

◦Primarily decreased gathering revenues of $4.9 million due to the sale of the Company's natural gas gathering assets in 2020.

◦Partially offset by:

•Increased transportation volumes and demand revenue of $1.8 million largely from organic growth projects, as previously discussed, and short-term discounted contracts.

•Increased non-regulated project revenues of $1.4 million.

•Operation and maintenance increased $1.4 million due to:

◦The absence of the gain on sale of the Company's natural gas gathering assets of $1.5 million in 2020, offset partially by lower operating expenses related to the natural gas gathering assets.

◦Partially offset by lower payroll-related costs.

•Depreciation, depletion and amortization decreased $1.2 million.

◦Primarily related to lower expense of $1.6 million due to the sale of the Company's natural gas gathering assets in 2020, as previously discussed.

◦Slightly offset by increased property, plant and equipment balances related to organic growth projects.

•Taxes, other than income was comparable to the same period in the prior year.

•Other income increased $6.5 million.

◦Primarily due to:

•Higher AFUDC of $7.3 million for the construction of the North Bakken Expansion project.

•The absence of the write-off of unrecovered gas costs and project expenses of $1.2 million in 2020.

◦Partially offset by:

•The absence of a positive impact of $700,000 related to the sale of the Company's regulated gathering assets in 2020.

•The absence of an out-of-period adjustment of $500,000 in 2020 as a result of previously overstated benefit plan expenses.

•Lower returns on certain of the Company's benefit plan investments.

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•Interest expense decreased $600,000.

◦Primarily due to:

•Higher AFUDC of $1.5 million for the construction of the North Bakken Expansion project.

•Lower average interest rates.

◦Partially offset by higher debt balances.

•Income tax expense increased $1.9 million.

◦Largely a result of:

•Higher income before income taxes.

•The absence of the reversal of excess deferred taxes of $1.5 million associated with the sale of the Company's gas gathering assets in 2020.

◦Partially offset by permanent tax adjustments and an energy efficiency tax benefit.

2020 compared to 2019 Pipeline earnings increased $7.4 million as a result of:

~~Revenues:~~ •~~Increase of~~Revenues increased $3.5 ~~million, largely attributable to increased~~million.

◦Primarily the result of:

•Increased transportation volumes and demand revenue of $6.2 million largely from organic growth projects, as previously ~~discussed, and increased~~discussed.

•Increased storage-related revenues of $4.6 million as a result of stronger demand for storage services. ~~Also contributing to the increase was additional~~

•Additional revenues of $2.4 million primarily from increased rates effective May 1, 2019, due to the FERC rate case finalized in September 2019. ~~These increases were partially~~

◦Partially offset ~~by lower~~by:

•Lower non-regulated project revenues of $5.3 ~~million and lower~~million.

•Lower volumes associated with the sale of the Company's natural gas gathering assets in 2020 ~~as discussed later,~~ and lower gathering rates resulting in a decrease in revenues of $4.3 million.

•Operation and ~~maintenance:~~ maintenance decreased $3.2 million.

◦~~Decrease of $3.2 million, primarily from decreased~~Largely driven by:

•Decreased non-regulated project costs of $3.7 million associated with lower non-regulated project ~~revenue and~~revenue.

•A $1.5 million gain on the sale of the Company's non-regulated natural gas gathering assets in ~~2020, as discussed later, partially~~2020.

◦Partially offset by higher payroll-related costs.

•Depreciation, depletion and ~~amortization:~~amortization increased $500,000.

◦ ~~Increase of $500,000, primarily~~Primarily due ~~to additional~~to:

•Additional expense of $1.3 million associated with increased property, plant and equipment balances as a result of organic growth projects that have been placed into ~~service, and higher~~service.

•Higher depreciation rates effective May 1, 2019, due to the FERC rate case finalized in September 2019. ~~The~~

◦Partially offset by lower expense of $1.5 million due to the sale of the Company's natural gas gathering assets in ~~2020, as discussed later, reduced the increases by $1.5 million.~~2020.

•Taxes, other than ~~income:~~ income decreased $400,000.

◦~~Decrease of $400,000 driven~~Driven by lower expense due to the sale of the Company's natural gas gathering assets ~~partially~~in 2020.

◦Partially offset by higher property taxes in certain jurisdictions of $300,000.

•Other ~~income:~~income increased $1.7 million.

◦ ~~Increase of $1.7 million, as~~As a result ~~of higher~~of:

•Higher AFUDC of $1.1 ~~million, a~~million.

•A positive impact of $700,000 related to the sale of the Company's regulated gathering ~~assets and an~~assets.

•An out-of-period adjustment of $500,000 in the fourth quarter of 2020 ~~related to~~as a result of previously overstated benefit plan ~~expense, as discussed in Item 8 - Note 1.~~ expenses.

◦Partially ~~offsetting these increases was the~~offset by a write-off of unrecovered gas costs and project expenses of $1.2 million.

•Interest ~~expense:~~ ~~Increase of~~expense increased $400,000, ~~largely resulting~~primarily from higher debt balances to finance organic growth ~~projects, as previously discussed.~~projects.

•Income tax ~~expense:~~expense increased $500,000.

◦ ~~Increase of $500,000, directly~~Directly resulting from ~~an increase in~~higher income before ~~taxes, largely~~income taxes.

◦Largely offset by the reversal of excess deferred taxes of $1.5 million associated with the sale of the Company's regulated natural gas gathering assets.

~~2019 compared to 2018~~ ~~Pipeline earnings increased $1.1 million as a result of:~~

~~Revenues:~~ Increase of $11.5 million, largely attributable to increased volumes of natural gas transported through its system as a result of organic growth projects, as previously discussed, and increased rates effective May 1, 2019, due to the FERC rate case finalized in September 2019.

~~Operation and maintenance:~~ ~~Increase of $900,000, primarily from higher payroll-related costs and materials costs.~~

~~Depreciation, depletion and amortization:~~ Increase of $3.3 million, primarily due to increased property, plant and equipment balances, largely the result of organic growth projects that have been placed into service, and higher depreciation rates effective May 1, 2019, due to the FERC rate case finalized in September 2019.

~~Taxes, other than income:~~ ~~Increase of $600,000 driven by higher property taxes in certain jurisdictions.~~

~~Other income:~~ ~~Comparable to the prior year.~~

~~Interest expense:~~ ~~Increase of $1.3 million, largely resulting from higher debt balances to finance organic growth projects, as previously discussed.~~

~~Income tax expense:~~ Increase of $4.5 million, primarily driven by the absence in 2019 of a $4.2 million income tax benefit recorded in 2018 related to the reversal of a regulatory liability recorded in 2017 based on a FERC final accounting order issued.

Outlook The Company continues to ~~successfully~~ manage the impacts of the COVID-19 pandemic on its operations and is committed to providing safe, reliable and compliant service while ensuring the health and safety of its employees, customers and the communities in which it operates. ~~The Company~~Overall, the pipeline business has experienced ~~minor delays on capital~~some impacts due to COVID-19 and maintenance projects during the first quarter of 2020 but resumed project activities in the second quarter of 2020. Work has progressed on these projects as scheduled through the fourth quarter of 2020. The Company does not expect significant delays to its regulatory filings or projects due to the pandemic.

In February 2021, the FERC issued a revised notice of inquiry seeking new information and stakeholder perspectives regarding the certification of new interstate natural gas facilities. The FERC issued the original notice of inquiry seeking stakeholder perspectives on this topic in April 2018. The FERC also took a step toward reforming the way in which it analyzes GHG emissions for purposes of natural gas pipeline certificates by including a quantitative analysis of the GHG emissions associated with a pipeline replacement project. At this time, no accepted methodology for a GHG

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significance calculation has been established. A technical conference led by FERC Staff discussing methods natural gas companies may use to mitigate the effects of direct and indirect GHG emissions was held on November 19, 2021. No clear guidance resulted from the conference and comments regarding various questions raised at the conference were due to the FERC on January 7, 2022. On February 18, 2022, the FERC issued two policy statements. The first is an updated certificate policy statement which will apply in pending and future certificate proceedings and is intended to explain how the FERC will consider applications to construct new interstate natural gas transportation facilities to determine whether a project is in the public convenience and necessity. This updated policy statement includes increased focus on the project purpose and need and environmental impacts. This update also focuses on impacts to landowners and environmental justice communities. The second is an interim policy statement which explains how the FERC will assess the impacts of natural gas infrastructure projects on climate change in its reviews under the National Environmental Policy Act and Natural Gas Act. Under the interim version of the policy statement, the FERC will proceed with the preparation of an environmental impact statement if a project may result in emissions of 100,000 metric tons per year of carbon dioxide equivalents or more. Comments are due on the interim policy statement by April 4, 2022. The Company continues to monitor and assess these initiatives and the potential impacts they may have on its business processes, current and future projects, results of operations and disclosures.

The Company has continued to experience the effect of associated natural gas production in the Bakken, which has provided opportunities for organic growth projects and increased demand. The completion of organic growth projects has contributed to the ~~increased~~ volumes of natural gas the Company transports through its system. Reduced global oil demand due to the COVID-19 pandemic and disagreements in oil supply levels between the Organization of the Petroleum Exporting Countries and other countries led to record low oil prices during the first quarter of 2020;

~~40 MDU Resources Group, Inc.~~ ~~Form 10-K~~

~~Part II~~

~~however, oil prices started to recover after the first quarter of 2020 as states and other countries started to reopen.~~ Although low oil prices ~~have~~ slowed 2020 drilling activities and led to the shut-in of certain wells, the recovery of oil prices has allowed producers ~~continue~~ to bring wells back online and support new drilling. Associated natural gas production in the ~~Company continues~~Bakken has returned to ~~focus on growth~~near pre-pandemic levels and ~~improving existing operations through organic projects in all areas in which it operates.~~ is expected to grow due to new oil wells and increasing gas to oil ratios.

The national record levels of natural gas supply ~~over the last few years have~~has moderated the ~~need for storage services and put downward~~ pressure on natural gas prices and minimized price volatility. While the Company believes there will continue to be varying pressures on natural gas production levels and prices, ~~due to these circumstances,~~the long-term outlook for low natural gas prices continues to provide growth opportunity for industrial supply related projects and seasonal pricing differentials provide opportunities for storage services.

The Company continues to focus on growth and improving existing operations through organic projects in all areas in which it operates, which includes additional organic growth projects with local distribution companies and industrial customers in various stages of development.

In January 2019, the Company announced the North Bakken Expansion project, which includes construction of a new pipeline, compression and ancillary facilities to transport natural gas from core Bakken production areas near Tioga, North Dakota, to a new connection with Northern Border Pipeline in McKenzie County, North Dakota. ~~Construction is expected~~Long-term take or pay customer contracts support the project at an amended design capacity of 250 MMcf per day, which can be readily expanded to ~~begin in the second quarter of 2021 with an estimated in-service date late in 2021, which is dependent on regulatory~~meet forecasted natural gas growth levels and ~~environmental permitting. On~~customer needs. In February ~~14,~~ 2020, the Company filed with the FERC its application for this project. ~~On July 28, 2020,~~In June 2021, the Company ~~filed an amendment to its application with~~received a FERC order issuing a certificate of public convenience and necessity for the project and in July 2021, the FERC ~~reflecting~~granted the Company a ~~decrease~~notice to proceed with construction. Construction began in July 2021 and the ~~design capacity from 350 MMcf per day to 250 MMcf per day by reducing compression due to delays in forecasted growth levels of~~project was placed into service on February 1, 2022.

In July 2021, the Company announced plans for a natural gas ~~production~~pipeline expansion project in ~~the Bakken region. Further, as a result~~eastern North Dakota. The Wahpeton Expansion project consists of ~~the forecasted Bakken oil~~60 miles of pipe and associated natural gas production delays driven by COVID-19 pandemic-related demand decreases and commodity price impacts, the Company negotiated adjustments to certain long-term customer commitments. A portion of the first-year committed volumes have been delayed one year and, through a combination of rate, volume and term adjustments, the overall project return profile remains unchangedancillary facilities and is ~~expected~~designed to ~~be accretive to earnings of the Company. These long-term take or pay customer contracts support the project at a design~~increase capacity ~~of 250~~by 20 MMcf per day, which ~~can be readily expanded when forecasted growth levels rebound.~~is supported by long-term customer agreements with Montana-Dakota and its utility customers. Construction is expected to begin in early 2024, depending on regulatory approvals, with an anticipated completion date later in 2024. On ~~December 17, 2020,~~September 22, 2021, the Company filed with the FERC ~~issued its environment assessment for~~a request to initiate the ~~project.~~pre-filing review process and received FERC approval of the ~~project is anticipated in early~~pre-filing request on September 27, 2021.

In December 2019, the Company entered into a purchase and sale agreement to divest of the Company's regulated natural gas gathering assets located in Montana and North Dakota, which included approximately 400 miles of natural gas gathering pipelines and associated compression and ancillary facilities. On January 8, 2020, the Company filed an application with the FERC to authorize abandonment by sale of the assets and received FERC approval on April 2, 2020. The sale closed in April 2020 with an effective date of January 1, 2020. Pursuant to the FERC's approval of the abandonment by sale, the proposed accounting treatment was filed with the FERC in October 2020 and approved in November 2020.

In October 2020, the Company entered into a purchase and sale agreement to divest of the Company's non-regulated natural gas gathering assets located in northern Montana, which included approximately 800 miles of natural gas gathering pipelines and associated compression and ancillary facilities. The sale closed in November 2020 with an effective date of December 1, 2020. With the completion of this sale, the Company has exited the natural gas gathering business.

Construction Materials and Contracting

Strategy and challenges The construction materials and contracting segment provides an integrated set of aggregate-based construction services, as discussed in Items 1 and 2 - Business Properties. The segment focuses on high-growth strategic markets located near major transportation corridors and desirable mid-sized metropolitan areas; strengthening the long-term, strategic aggregate reserve position through available purchase and/or lease opportunities; enhancing profitability through cost containment, margin discipline and vertical integration of the segment's operations; development and recruitment of talented employees; and continued growth through organic and strategic acquisition opportunities.

A key element of the Company's long-term strategy for this business is to further expand its market presence in the higher-margin materials business (rock, sand, gravel, ~~liquid~~ asphalt oil, asphalt concrete, ~~ready-mixed~~ready-mix concrete and related products), complementing and expanding on the segment's expertise. The Company's continued acquisition activity supports this strategy.

As one of the country's largest sand and gravel producers, the segment continues to strategically manage its approximately ~~1.1~~1.2 billion tons of aggregate reserves in all its markets, as well as take further advantage of being vertically integrated. The segment's vertical integration allows ~~the segment~~it to manage operations from aggregate mining to final lay-down of concrete and asphalt, with control of and access to permitted aggregate reserves being significant. The Company's aggregate reserves are naturally declining and as a result, the Company seeks acquisition opportunities to replace the reserves. In the fourth quarter of ~~2020,~~2021, the Company acquired ~~the assets of McMurry Ready-Mix Co.,~~Baker Rock Resources, an aggregates and ~~concrete~~asphalt supplier located in ~~Casper, Wyoming.~~Beaverton, Oregon. The acquisition included ~~nearly 100~~approximately 80 million tons of proven aggregate reserves. In the first quarter of ~~2019,~~2021, the Company ~~purchased additional aggregate deposits in Texas that were~~received the necessary permitting to expand its operation capabilities at its Honey Creek quarry near Austin, Texas. Honey Creek contains an estimated ~~to contain a 40-year supply of high-quality aggregates for projected local market needs. Also during 2019, the Company increased aggregate reserves by approximately 40~~50 million tons ~~largely due to strategic asset purchases.~~of proven aggregate reserves.

44 MDU Resources Group, Inc. Form 10-K

Index

Part II

The construction materials and contracting segment faces challenges that are not under the direct control of the business. The segment operates in geographically diverse and highly competitive markets. Competition can put negative pressure on the segment's operating margins. The segment is also subject to volatility in the cost of raw materials such as diesel fuel, gasoline, ~~liquid~~ asphalt oil, cement and steel. Such volatility can have an impact on the segment's margins, including fixed-price construction contracts that are particularly vulnerable to the volatility of energy and material prices. The Company has and will continue to increase its product pricing to keep pace with rising costs. Other variables that can impact the segment's margins include adverse weather conditions, the timing of project starts or completion and declines or delays in new and existing projects due to the cyclical nature of the construction industry and governmental infrastructure spending. Accordingly, operating results in any particular period may not be indicative of the results that can be expected for any other period.

~~MDU Resources Group, Inc.~~ ~~Form 10-K~~ 41

~~Part II~~

The segment also faces challenges in the recruitment and retention of employees. Trends in the labor market include an aging workforce and availability issues. Most of the markets the segment operates in saw an increase in labor shortages in 2021, largely truck drivers, causing increased labor-related costs. The Company continues to monitor the labor markets and expects labor costs to continue to increase based on the increased demand for services and, to a lesser extent, the recent escalated inflationary environment in the United States. If labor costs continue to increase, it could negatively impact gross margin as the segment continues to face increasing pressure to control ~~costs, as well as~~costs. The increase in labor shortages also impacts the segments ability to recruit and train a skilled workforce to meet the needs of increasing demand and seasonal work. In order to help attract new workers to the construction industry and enhance the skills of its current employees, the Company has completed a training facility in Oregon. The training facility offers hands-on training for heavy equipment operators and truck drivers, as well as leadership and safety training.

Earnings overview - The following information summarizes the performance of the construction materials and contracting segment.


								2020 vs. 2019		2019 vs. 2018									2021 vs. 2020		2020 vs. 2019
Years ended December 31,	Years ended December 31,	2020		2019		2018		% change				Years ended December 31,	2021		2020		2019		% change
		(Dollars in millions)											(In millions)
Operating revenues	Operating revenues	$	2,178.0	$	2,190.7	$	1,925.9	(.6)	%	13.7	%	Operating revenues	$	2,228.9	$	2,178.0	$	2,190.7	2.3	%	(.6)	%
Cost of sales:	Cost of sales:											Cost of sales:
Operation and maintenance	Operation and maintenance	1,733.1		1,798.3		1,601.7		(3.6)	%	12.3	%	Operation and maintenance	1,794.8		1,733.1		1,798.3		3.6	%	(3.6)	%
Depreciation, depletion and amortization	Depreciation, depletion and amortization	84.8		74.3		59.0		14.1	%	25.9	%	Depreciation, depletion and amortization	96.8		84.8		74.3		14.2	%	14.1	%
Taxes, other than income	Taxes, other than income	46.0		44.1		39.7		4.3	%	11.1	%	Taxes, other than income	47.7		46.0		44.1		3.7	%	4.3	%
Total cost of sales	Total cost of sales	1,863.9		1,916.7		1,700.4		(2.8)	%	12.7	%	Total cost of sales	1,939.3		1,863.9		1,916.7		4.0	%	(2.8)	%
Gross margin	Gross margin	314.1		274.0		225.5		14.6	%	21.5	%	Gross margin	289.6		314.1		274.0		(7.8)	%	14.6	%
Selling, general and administrative expense:	Selling, general and administrative expense:											Selling, general and administrative expense:
Operation and maintenance	Operation and maintenance	89.9		86.3		77.6		4.2	%	11.2	%	Operation and maintenance	88.6		89.9		86.3		(1.4)	%	4.2	%
Depreciation, depletion and amortization	Depreciation, depletion and amortization	4.8		3.1		2.2		54.8	%	40.9	%	Depreciation, depletion and amortization	4.2		4.8		3.1		(12.5)	%	54.8	%
Taxes, other than income	Taxes, other than income	4.9		4.6		4.3		6.5	%	7.0	%	Taxes, other than income	5.7		4.9		4.6		16.3	%	6.5	%
Total selling, general and administrative expense	Total selling, general and administrative expense	99.6		94.0		84.1		6.0	%	11.8	%	Total selling, general and administrative expense	98.5		99.6		94.0		(1.1)	%	6.0	%
Operating income	Operating income	214.5		180.0		141.4		19.2	%	27.3	%	Operating income	191.1		214.5		180.0		(10.9)	%	19.2	%
Other income (expense)		.8		1.6		(3.1)		(50.0)	%	151.6	%
Other income												Other income	1.3		.8		1.6		62.5	%	(50.0)	%
Interest expense	Interest expense	20.6		23.8		17.3		(13.4)	%	37.6	%	Interest expense	19.2		20.6		23.8		(6.8)	%	(13.4)	%
Income before income taxes	Income before income taxes	194.7		157.8		121.0		23.4	%	30.4	%	Income before income taxes	173.2		194.7		157.8		(11.0)	%	23.4	%
Income tax expense	Income tax expense	47.4		37.4		28.4		26.7	%	31.7	%	Income tax expense	43.4		47.4		37.4		(8.4)	%	26.7	%
Net income	Net income	$	147.3	$	120.4	$	92.6	22.3	%	30.0	%	Net income	$	129.8	$	147.3	$	120.4	(11.9)	%	22.3	%


Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.


Item 9A. Controls and Procedures

The following information includes the evaluation of disclosure controls and procedures by the Company's chief executive officer and the chief financial officer, along with any significant changes in internal controls of the Company.

Evaluation of Disclosure Controls and Procedures

The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. The Company's disclosure controls and other procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. The Company's disclosure controls and other procedures are designed to provide reasonable assurance that information required to be disclosed is accumulated and communicated to management, including the Company's chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. The Company's management, with the participation of the Company's chief executive officer and chief financial officer, has evaluated the effectiveness of the Company's disclosure controls and other procedures as of the end of the period covered by this report. Based upon that evaluation, the chief executive officer and the chief financial officer have concluded that, as of the end of the period covered by this report, such controls and procedures were effective at a reasonable assurance level.

Changes in Internal Controls

No change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended December 31, ~~2020,~~2021, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Management's Annual Report on Internal Control Over Financial Reporting

The information required by this item is included in this Form 10-K at Item 8 - Management's Report on Internal Control Over Financial Reporting.

Attestation Report of the Registered Public Accounting Firm

The information required by this item is included in this Form 10-K at Item 8 - Report of Independent Registered Public Accounting Firm.


Item 9B. Other Information

None.


Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

~~108~~ MDU Resources Group, Inc. Form 10-K115

Index

Part III


Item 10. Directors, Executive Officers and Corporate Governance

Information required by this item will be included in the Company's Proxy Statement, which is incorporated herein by reference.


Item 11. Executive Compensation

Information required by this item will be included in the Company's Proxy Statement, which is incorporated herein by reference.


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

The following table includes information as of December 31, ~~2020,~~2021, with respect to the Company's equity compensation plans:


Plan Category	Plan Category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights		(b) Weighted average exercise price of outstanding options, warrants and rights			(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))		Plan Category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights		(b) Weighted average exercise price of outstanding options, warrants and rights			(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by stockholders (1)	Equity compensation plans approved by stockholders (1)	613,174	(2)	$	—	(3)	3,555,471	(4)(5)	Equity compensation plans approved by stockholders (1)	648,747	(2)	$	—	(3)	3,032,901	(4)(5)
Equity compensation plans not approved by stockholders	Equity compensation plans not approved by stockholders	N/A		N/A			N/A		Equity compensation plans not approved by stockholders	N/A		N/A			N/A
Total	Total	613,174		$	—		3,555,471		Total	648,747		$	—		3,032,901

(1) Consists of the Non-Employee Director Long-Term Incentive Compensation Plan and the Long-Term Performance-Based Incentive Plan.

(2) Consists of restricted stock awards and performance share awards.

(3) No weighted average exercise price is shown for the restricted stock awards or performance share awards because such awards have no exercise price.

(4) This amount includes ~~3,328,721~~2,849,487 shares available for future issuance under the Long-Term Performance-Based Incentive Plan in connection with grants of restricted stock, performance units, performance shares or other equity-based awards.

(5) This amount includes ~~226,750~~183,414 shares available for future issuance under the Non-Employee Director Long-Term Incentive Compensation Plan.

The remaining information required by this item will be included in the Company's Proxy Statement, which is incorporated herein by reference.


Item 13. Certain Relationships and Related Transactions, and Director Independence

Information required by this item will be included in the Company's Proxy Statement, which is incorporated herein by reference.


Item 14. Principal Accountant Fees and Services

Information required by this item about aggregate fees billed to the Company by its principal accountant, Deloitte & Touche LLP (PCAOB ID No. 34), will be included in the Company's Proxy Statement, which is incorporated herein by reference.

116 MDU Resources Group, Inc. Form 10-K~~109~~

Index

Part IV


Item 15. Exhibits, Financial Statement Schedules

(a) Financial Statements, Financial Statement Schedules and Exhibits

Index to Financial Statements and Financial Statement Schedules


1. Financial Statements
The following consolidated financial statements required under this item are included under Item 8 - Financial Statements and Supplementary Data.			Page

Consolidated Statements of Income for each of the three years in the period ended December 31, ~~2020~~2021			6068

Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, ~~2020~~2021			6169

Consolidated Balance Sheets at December 31, ~~2020~~2021 and ~~2019~~2020			6270

Consolidated Statements of Equity for each of the three years in the period ended December 31, ~~2020~~2021			6371

Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, ~~2020~~2021			6472

Notes to Consolidated Financial Statements			6573


2. Financial Statement Schedules
The following financial statement schedules are included in Part IV of this report.			Page

Schedule I - Condensed Financial Information of Registrant (Unconsolidated)

Condensed Statements of Income and Comprehensive Income for each of the three years in the period ended December 31, ~~2020~~2021			~~111~~118

Condensed Balance Sheets at December 31, ~~2020~~2021 and ~~2019~~2020			~~112~~119

Condensed Statements of Cash Flows for each of the three years in the period ended December 31, ~~2020~~2021			~~113~~120

Notes to Condensed Financial Statements			~~113~~120

All other schedules have been omitted because they are not applicable or the required information is included elsewhere in the financial statements or related notes.


3. Exhibits			~~114~~121

~~110~~ MDU Resources Group, Inc. Form 10-K117

Index

Part IV

MDU RESOURCES GROUP, INC.

Schedule I - Condensed Financial Information of Registrant (Unconsolidated)

Condensed Statements of Income and Comprehensive Income

Years ended December 31, 2020 2019 2018
(In thousands)
Operating revenues $ 0 $ 0 $ 628,331
Operating expenses 0 0 540,125
Operating income 0 0 88,206
Other income 0 0 1,504
Interest expense 0 0 32,761
Income before income taxes 0 0 56,949
Income taxes 0 0 (4,259)
Equity in earnings of subsidiaries from continuing operations 390,527 335,166 208,177
Income from continuing operations 390,527 335,166 269,385
Equity in earnings (loss) of subsidiaries from discontinued operations (322) 287 2,933
Net income $ 390,205 $ 335,453 $ 272,318
Comprehensive income $ 384,229 $ 331,693 $ 279,269


Years ended December 31,	2021		2020		2019
	(In thousands)
Equity in earnings of subsidiaries from continuing operations	$	377,731	$	390,527	$	335,166
Income from continuing operations	377,731		390,527		335,166
Equity in earnings (loss) of subsidiaries from discontinued operations	400		(322)		287
Net income	$	378,131	$	390,205	$	335,453
Comprehensive income	$	385,205	$	384,229	$	331,693

The accompanying notes are an integral part of these condensed financial statements.

118 MDU Resources Group, Inc. Form 10-K

Index

Part IV

MDU RESOURCES GROUP, INC.

Schedule I - Condensed Financial Information of Registrant (Unconsolidated)

Condensed Balance Sheets


December 31,	2021		2020
(In thousands, except shares and per share amounts)
Assets
Current assets:
Cash and cash equivalents	$	6,159	$	8,781
Receivables, net	6,120		4,865
Accounts receivable from subsidiaries	49,696		50,539
Prepayments and other current assets	2,528		1,612
Total current assets	64,503		65,797
Noncurrent assets
Investments	55,686		52,000
Investment in subsidiaries	3,368,537		3,069,956
Deferred income taxes	7,364		9,691
Operating lease right-of-use assets	114		56
Other	26,558		28,866
Total noncurrent assets	3,458,259		3,160,569
Total assets	$	3,522,762	$	3,226,366

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	2,546	$	2,135
Accounts payable to subsidiaries	6,133		5,412
Taxes payable	1,672		4,056
Dividends payable	44,229		42,611
Accrued compensation	4,098		7,825
Operating lease liabilities due within one year	52		40
Other accrued liabilities	7,309		6,881
Total current liabilities	66,039		68,960
Noncurrent liabilities:
Operating lease liabilities	62		16
Other	73,787		78,285
Total noncurrent liabilities	73,849		78,301
Commitments and contingencies	0		0
Stockholders' equity:
Common stock Authorized - 500,000,000 shares, $1.00 par value Shares issued - 203,889,661 at December 31, 2021 and 201,061,198 at December 31, 2020	203,889		201,061
Other paid-in capital	1,461,205		1,371,385
Retained earnings	1,762,410		1,558,363
Accumulated other comprehensive loss	(41,004)		(48,078)
Treasury stock at cost - 538,921 shares	(3,626)		(3,626)

Total stockholders' equity	3,382,874		3,079,105
Total liabilities and stockholders' equity	$	3,522,762	$	3,226,366

The accompanying notes are an integral part of these condensed financial statements.

MDU Resources Group, Inc. Form 10-K ~~111~~119

~~Part IV~~

~~MDU RESOURCES GROUP, INC.~~

~~Schedule I - Condensed Financial Information of Registrant (Unconsolidated)~~

~~Condensed Balance Sheets~~

December 31, 2020 2019
(In thousands, except shares and per share amounts)
Assets
Current assets:
Cash and cash equivalents $ 8,781 $ 12,326
Receivables, net 4,865 4,727
Accounts receivable from subsidiaries 50,539 49,943
Prepayments and other current assets 1,612 501
Total current assets 65,797 67,497
Noncurrent assets
Investments 52,000 46,294
Investment in subsidiaries 3,069,956 2,842,068
Deferred income taxes 9,691 7,269
Operating lease right-of-use assets 56 153
Other 28,866 27,098
Total noncurrent assets 3,160,569 2,922,882
Total assets $ 3,226,366 $ 2,990,379
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,135 $ 2,981
Accounts payable to subsidiaries 5,412 4,752
Taxes payable 4,056 1,253
Dividends payable 42,611 41,580
Accrued compensation 7,825 8,812
Operating lease liabilities due within one year 40 96
Other accrued liabilities 6,881 7,690
Total current liabilities 68,960 67,164
Noncurrent liabilities:
Operating lease liabilities 16 56
Other 78,285 75,913
Total noncurrent liabilities 78,301 75,969
Commitments and contingencies 0 0
Stockholders' equity:
Common stock
Authorized - 500,000,000 shares, $1.00 par value
Shares issued - 201,061,198 at December 31, 2020 and 200,922,790 at December 31, 2019
201,061 200,923
Other paid-in capital 1,371,385 1,355,404
Retained earnings 1,558,363 1,336,647
Accumulated other comprehensive loss (48,078) (42,102)
Treasury stock at cost - 538,921 shares (3,626) (3,626)
Total stockholders' equity 3,079,105 2,847,246
Total liabilities and stockholders' equity $ 3,226,366 $ 2,990,379

~~The accompanying notes are an integral part of these condensed financial statements.~~

~~112 MDU Resources Group, Inc.~~ ~~Form 10-K~~

Index

Part IV

MDU RESOURCES GROUP, INC.

Schedule I - Condensed Financial Information of Registrant (Unconsolidated)

Condensed Statements of Cash Flows


Years ended December 31,	Years ended December 31,	2020		2019		2018		Years ended December 31,	2021		2020		2019
		(In thousands)							(In thousands)

Net cash provided by operating activities	Net cash provided by operating activities	$	226,642	$	168,520	$	294,379	Net cash provided by operating activities	$	187,297	$	226,642	$	168,520
Investing activities:	Investing activities:							Investing activities:
Capital expenditures		0		0		(242,692)
Net proceeds from sale or disposition of property and other		0		0		5,032
Investments in and advances to subsidiaries	Investments in and advances to subsidiaries	(67,000)		(120,000)		(40,000)		Investments in and advances to subsidiaries	(102,000)		(67,000)		(120,000)
Advances from subsidiaries	Advances from subsidiaries	0		17,000		70,000		Advances from subsidiaries	—		—		17,000
Investments	Investments	(4)		(236)		(528)		Investments	(391)		(4)		(236)
Net cash used in investing activities	Net cash used in investing activities	(67,004)		(103,236)		(208,188)		Net cash used in investing activities	(102,391)		(67,004)		(103,236)
Financing activities:	Financing activities:							Financing activities:

Issuance of long-term debt		0		0		199,422
Repayment of long-term debt		0		0		(125,961)
Payments of stock issuance costs		0		0		(10)
Proceeds from issuance of common stock	Proceeds from issuance of common stock	3,385		106,848		0		Proceeds from issuance of common stock	88,767		3,385		106,848
Dividends paid	Dividends paid	(166,405)		(160,256)		(154,573)		Dividends paid	(171,354)		(166,405)		(160,256)
Repurchase of common stock	Repurchase of common stock	0		0		(1,920)		Repurchase of common stock	(2,992)		—		—
Tax withholding on stock-based compensation	Tax withholding on stock-based compensation	(163)		(1,821)		(1,721)		Tax withholding on stock-based compensation	(1,949)		(163)		(1,821)
Net cash used in financing activities	Net cash used in financing activities	(163,183)		(55,229)		(84,763)		Net cash used in financing activities	(87,528)		(163,183)		(55,229)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	(3,545)		10,055		1,428		Increase (decrease) in cash and cash equivalents	(2,622)		(3,545)		10,055
Cash and cash equivalents - beginning of year	Cash and cash equivalents - beginning of year	12,326		2,271		843		Cash and cash equivalents - beginning of year	8,781		12,326		2,271
Cash and cash equivalents - end of year	Cash and cash equivalents - end of year	$	8,781	$	12,326	$	2,271	Cash and cash equivalents - end of year	$	6,159	$	8,781	$	12,326

The accompanying notes are an integral part of these condensed financial statements.

Notes to Condensed Financial Statements

Note 1 - Summary of Significant Accounting Policies

Basis of presentation The condensed financial information reported in Schedule I is being presented to comply with Rule 12-04 of Regulation S-X. The information is unconsolidated and is presented for the parent company only, MDU Resources Group, Inc. (the Company) as of and for the years ended December 31, 2020 and 2019. Prior to the Holding Company Reorganization, the Company included Montana-Dakota and Great Plains, public utility divisions of the Company as of December 31, 2018. On January 2, 2019, the Company announced the completion of the Holding Company Reorganization, which resulted in Montana-Dakota and Great Plains becoming a subsidiary of the Company. Immediately after consummation, the Company had, on a consolidated basis, the same assets, businesses and operations as it had immediately prior to the reorganization. For more information on the reorganization, see Item 8 - Note 1. The prior periods have not been restated and reflect the condensed financial information of Montana-Dakota and Great Plains as of and for the year ended December 31, 2018. Due to the completion of the Holding Company Reorganization, the presentation of the year ended December 31, 2018, will vary from that of and for the years ended December 31,2021, 2020 and 2019. In Schedule I, investments in subsidiaries are presented under the equity method of accounting where the assets and liabilities of the subsidiaries are not consolidated. The investments in net assets of the subsidiaries are recorded on the Condensed Balance Sheets. The income from subsidiaries is reported as equity in earnings of subsidiaries on the Condensed Statements of Income. The material cash inflows on the Condensed Statements of Cash Flows are primarily from the dividends and other payments received from its subsidiaries and the proceeds raised from the issuance of equity securities. The consolidated financial statements of ~~MDU Resources Group, Inc.~~the Company reflect certain businesses as discontinued operations. These statements should be read in conjunction with the consolidated financial statements and notes thereto of ~~MDU Resources Group, Inc.~~the Company.

Earnings per common share Please refer to the Consolidated Statements of Income of the registrant for earnings per common share. In addition, see Item 8 - Note 2 for information on the computation of earnings per common share.

Note 2 - Debt At December 31, ~~2020,~~2021, the Company had no long-term debt maturities. For more information on debt, see Item 8 - Note 9.

Note 3 - Dividends The Company depends on earnings and dividends from its subsidiaries to pay dividends on common stock. Cash dividends paid to the Company by subsidiaries were $188.1 million, $228.4 million ~~$177.1 million~~ and ~~$115.9~~$177.1 million for the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018,~~2019, respectively.

120 MDU Resources Group, Inc. Form 10-K~~113~~

Index

Part IV

Exhibits

Incorporated by Reference

Exhibit Number

Exhibit Description

Filed Herewith

Form

Period Ended

Exhibit

Filing Date

File Number

~~2(a)~~

~~Agreement and Plan of Merger, dated December 31, 2018, by and among MDU Resources Group, Inc., MDUR Newco, Inc. MDU Newco Sub, Inc.~~

~~8-K~~

~~2(a)~~

~~1/2/19~~

~~1-03480~~

3(a)

Amended and Restated Certificate of Incorporation of MDU Resources Group, Inc.

8-K

3.2

5/8/19

1-03480

3(b)

Amended and Restated Bylaws of MDU Resources Group, Inc.

8-K

3.1

2/15/19

1-03480

4(a)

Indenture, dated as of December 15, 2003, between MDU Resources Group, Inc. and The Bank of New York, as trustee

S-8

4(f)

1/21/04

333-112035

4(b)

First Supplemental Indenture, dated as of November 17, 2009, between MDU Resources Group, Inc. and the Bank of New York Mellon, as trustee

10-K

12/31/09

4(c)

2/17/10

1-03480

*4(c)

Fifth Amended and Restated Credit Agreement, dated as of December 19, 2019, among Centennial Energy Holdings, Inc., U.S. Bank National Association, as Administrative Agent, and The Several Financial Institutions party thereto

10-K

12/31/19

4(c)

2/21/20

1-03480

*4(d)

Montana-Dakota Utilities Co. Amended and Restated Credit Agreement, dated December 19, 2019, among Montana-Dakota Utilities Co., Various Lenders, and Wells Fargo Bank, National Association, as Administrative Agent

10-K

12/31/19

4(d)

2/21/20

1-03480

4(e)

Centennial Energy Holdings, Inc. Note Purchase Agreement, dated December 20, 2012, among Centennial Energy Holdings, Inc. and various purchasers of the notes

10-Q

6/30/19

4(a)

8/2/19

1-03480

4(f)

Montana-Dakota Utilities Co. Note Purchase Agreement, dated July 24, 2019, among Montana-Dakota Utilities Co. and various purchasers of the notes

10-Q

9/30/19

4(a)

11/1/19

1-03480

4(g)

MDU Resources Group, Inc. Description of Securities Registered Pursuant to Section 12 of the Securities and Exchange Act of 1934

10-K

12/31/19

4(g)

2/21/20

1-03480

*4(h)

WBI Energy Transmission, Inc. Amended and Restated Note Purchase and Private Shelf Agreement, effective as of September 12, 2013, among Prudential Investment Management, Inc. and certain investors described therein

X10-K

12/31/20

4(h)

2/19/21

1-03480

4(i)

Amendment No. 1 to WBI Energy Transmission, Inc. Amended and Restated Note Purchase and Private Shelf Agreement, dated May 17, 2016, among Prudential Investment Management, Inc. and certain investors described therein

X10-K

12/31/20

4(i)

2/19/21

1-03480

4(j)

Amendment No. 2 to WBI Energy Transmission, Inc. Amended and Restated Note Purchase and Private Shelf Agreement, dated July 26, 2019 and effective May 16, 2019, among Prudential Investment Management, Inc. and certain investors described therein

X10-K

12/31/20

4(j)

2/19/21

1-03480

+10(a)

MDU Resources Group, Inc. Supplemental Income Security Plan, as amended and restated May 10, 2017

10-Q

6/30/17

10(d)

8/4/17

1-03480

+10(b)

MDU Resource Group, Inc. Director Compensation Policy, as amended May ~~8, 2019~~12, 2021

10-Q

6/30/1921

~~10(a)~~10(b)

8/~~2/19~~5/21

1-03480

+10(c)

Deferred Compensation Plan for Directors, as amended May 15, 2008

10-Q

6/30/08

10(a)

8/7/08

1-03480

+10(d)

Non-Employee Director Stock Compensation Plan, as amended May 12, 2011

10-Q

6/30/11

10(a)

8/5/11

1-03480

+10(e)

MDU Resources Group, Inc. Non-Employee Director Long-Term Incentive Compensation Plan, as amended May 17, 2012

10-Q

6/30/12

10(a)

8/7/12

1-03480

+10(f)

MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan, as amended February 11, 2016

10-K

12/31/15

10(f)

2/19/16

1-03480

+10(g)

MDU Resources Group, Inc. Executive Incentive Compensation Plan, as amended November 12, 2020, and Rules and Regulations, as amended November 12, 2020

10-K

12/31/20

10(h)

2/19/21

1-03480

~~114~~ MDU Resources Group, Inc. Form 10-K121

Index

Part IV

Incorporated by Reference

Exhibit Number

Exhibit Description

Filed Herewith

Form

Period Ended

Exhibit

Filing Date

File Number

+~~10(g)~~

~~MDU Resources Group, Inc. Executive Incentive Compensation Plan, as amended November 13, 2019, and Rules and Regulations, as amended November 13, 2019~~

~~10-K~~

~~12/31/19~~

~~10(g)~~

~~2/21/20~~

~~1-03480~~

+10(h)

~~MDU Resources Group, Inc. Executive Incentive Compensation Plan, as amended November 12, 2020, and Rules and Regulations, as amended November 12, 2020~~

~~+10(i)~~

~~Form of Performance Share Award Agreement under the Long-Term Performance-Based Incentive Plan, as amended February 15, 2018~~

~~8-K~~

~~10.1~~

~~2/21/18~~

~~1-03480~~

~~+10(j)~~

Form of Performance Share Award Agreement under the Long-Term Performance-Based Incentive Plan, as amended February 14, 2019

10-K

12/31/18

10(k)

2/22/19

1-03480

+~~10(k)~~10(i)

Form of Performance Share Award Agreement under the Long-Term Performance-Based Incentive Plan, as amended February 13, 2020

10-K

12/31/19

10(k)

2/21/20

1-03480

+~~10(l)~~10(j)

Form of Performance Share Award Agreement under the Long-Term Performance-Based Incentive Plan, as amended February 11, 2021

X10-K

12/31/20

10(l)

2/19/21

1-03480

+~~10(m)~~10(k)

~~Restricted Stock Unit~~Form of Performance Share Award Agreement under the Long-Term Performance-Based Incentive Plan, as amended February ~~15, 2018~~17, 2022

~~8-K~~X

~~10.3~~

~~2/21/18~~

~~1-03480~~

+~~10(n)~~10(l)

Restricted Stock Unit Award Agreement under the Long-Term Performance-Based Incentive Plan, as amended February 11, 2021

10-K

12/31/20

10(n)

2/19/21

1-03480

+10(m)

Restricted Stock Unit Award Agreement under the Long-Term Performance-Based Incentive Plan, as amended February 17, 2022

+~~10(o)~~10(n)

Form of MDU Resources Group, Inc. Indemnification Agreement for Section 16 Officers and Directors, dated May 15, 2014

8-K

10.1

5/15/14

1-03480

+~~10(p)~~10(o)

Form of Amendment No. 1 to Indemnification Agreement, dated May 15, 2014

8-K

10.2

5/15/14

1-03480

+~~10(q)~~10(p)

MDU Resources Group, Inc. Section 16 Officers and Directors with Indemnification Agreements Chart, as of February 6, 2021

X10-K

12/31/20

10(q)

2/19/21

1-03480

+~~10(r)~~10(q)

MDU Resources Group, Inc. Nonqualified Defined Contribution Plan, as amended and restated November 12, 2020

X10-K

12/31/20

10(r)

2/19/21

1-03480

+10(r)

MDU Resources Group, Inc. Deferred Compensation Plan Adoption Agreement, as amended August 12, 2021

10-Q

9/30/21

10(c)

11/4/21

1-03480

+10(s)

MDU Resources Group, Inc. Deferred Compensation Plan ~~Adoption Agreement, dated November~~ 12 ~~, 2020~~

~~8-K~~

~~10.1~~

~~11/12/20~~

~~1-03480~~

~~+10(t)~~

~~MDU Resources Group, Inc. Deferred Compensation~~ ~~Plan~~ Document, dated November 12,, 2020

8-K

10.2

11/12/20

1-03480

+~~10(u)~~10(t)

Instrument of Amendment to the MDU Resources Group, Inc. 401(k) Retirement Plan, dated December 17, 2020

X10-K

12/31/20

10(u)

2/19/21

1-03480

+~~10(v)~~10(u)

MDU Resources Group, Inc. 401(k) Retirement Plan, as restated April 1, 2020

10-Q

3/31/20

10(a)

5/8/20

1-03480

+10(v)

MDU Resources Group, Inc. 401(k) Retirement Plan, as amended January 1, 2021

10-Q

3/31/21

10(a)

5/6/21

1-03480

+10(w)

MDU Resources Group, Inc. 401(k) Retirement Plan, as amended January 1, 2022

+10(x)

Employment Letter for Jeffrey S. Thiede, dated May 16, 2013

10-K

12/31/13

10(ab)

2/21/14

1-03480

+~~10(x)~~10(y)

Jason L. Vollmer Offer Letter, dated September 20, 2017

8-K

10.1

9/21/17

1-03480

Subsidiaries of MDU Resources Group, Inc.

Consent of Independent Registered Public Accounting Firm

31(a)

Certification of Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31(b)

Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Executive Officer and Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Mine Safety Disclosures

122 MDU Resources Group, Inc. Form 10-K~~115~~

Index

Part IV

Incorporated by Reference

Exhibit Number

Exhibit Description

Filed Herewith

Form

Period Ended

Exhibit

Filing Date

File Number

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document


* Schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished as a supplement to the SEC upon request.
+ Management contract, compensatory plan or arrangement.
MDU Resources Group, Inc. agrees to furnish to the SEC upon request any instrument with respect to long-term debt that MDU Resources Group, Inc. has not filed as an exhibit pursuant to the exemption provided by Item 601(b)(4)(iii)(A) of Regulation S-K.


Item 16. Form 10-K Summary

None.

~~116~~ MDU Resources Group, Inc. Form 10-K123

Index

Part IV

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		MDU Resources Group, Inc.

Date:	February ~~19, 2021~~23, 2022	By:	/s/ David L. Goodin
			David L. Goodin
			(President and Chief Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the date indicated.


Signature	Title	Date

/s/ David L. Goodin	Chief Executive Officer and Director	February ~~19, 2021~~23, 2022
David L. Goodin
(President and Chief Executive Officer)

/s/ Jason L. Vollmer	Chief Financial Officer	February ~~19, 2021~~23, 2022
Jason L. Vollmer
(Vice President and Chief Financial Officer)

/s/ Stephanie A. Barth	Chief Accounting Officer	February ~~19, 2021~~23, 2022
Stephanie A. Barth
(Vice President, Chief Accounting Officer and Controller)

/s/ Dennis W. Johnson	Director	February ~~19, 2021~~23, 2022
Dennis W. Johnson
(Chair of the Board)

/s/ Thomas Everist	Director	February ~~19, 2021~~23, 2022
Thomas Everist

/s/ Karen B. Fagg	Director	February ~~19, 2021~~23, 2022
Karen B. Fagg

/s/ ~~Mark A. Hellerstein~~	~~Director~~	~~February 19, 2021~~
~~Mark A. Hellerstein~~

~~/s/~~ Patricia L. Moss	Director	February ~~19, 2021~~23, 2022
Patricia L. Moss

/s/ Dale S. Rosenthal	Director	February 23, 2022
Dale S. Rosenthal

/s/ Edward A. Ryan	Director	February ~~19, 2021~~23, 2022
Edward A. Ryan

/s/ David M. Sparby	Director	February ~~19, 2021~~23, 2022
David M. Sparby

/s/ Chenxi Wang	Director	February ~~19, 2021~~23, 2022
Chenxi Wang

~~/s/ John K. Wilson~~	~~Director~~	~~February 19, 2021~~
~~John K. Wilson~~

124 MDU Resources Group, Inc. Form 10-K~~117~~


Delaware						30-1133956
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	MDU	New York Stock Exchange


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


Part I		Page

Forward-Looking Statements		7

Items 1 and 2 Business and Properties		7
	General	7
	Electric	1011
	Natural Gas Distribution	1315
	Pipeline	1517
	Construction Materials and Contracting	1618
	Construction Services	1922

Item 1A	Risk Factors	2023

Item 1B	Unresolved Staff Comments	2731

Item 3	Legal Proceedings	2831

Item 4	Mine Safety Disclosures	2831

Part II

Item 5	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2932

Item 6	~~Selected Financial Data~~Reserved	3032

Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	3233

Item 7A	Quantitative and Qualitative Disclosures About Market Risk	5462

Item 8 Financial Statements and Supplementary Data		5563
	Consolidated Statements of Income	6068
	Consolidated Statements of Comprehensive Income	6169
	Consolidated Balance Sheets	6270
	Consolidated Statements of Equity	6371
	Consolidated Statements of Cash Flows	6472
	Notes to Consolidated Financial Statements	6573
	1. Basis of Presentation	6573
	2. Significant Accounting Policies	6674
	3 .3. Revenue from Contracts with Customers	7281
	4 .4. Business Combinations	7583
	5. Property, Plant and Equipment	7684
	6. Regulatory Assets and Liabilities	7785
	7 .7. Goodwill and Other Intangible Assets	7886
	8 .8. Fair Value Measurements	7987
	9 .9. Debt	8189
	10 .10. Leases	8391
	11 .11. Asset Retirement Obligations	8492
	1 2 .12. Equity	8492
	1 3 .13. Stock-Based Compensation	8593
	14.Accumulated Other Comprehensive ~~Income (Loss)~~Loss	8694
	1 5 . Income Taxes	8795
	1 6 . Cash Flow Information	8897


The following abbreviations and acronyms used in this Form 10-K are defined below:
Abbreviation or Acronym
AFUDC			Allowance for funds used during construction
Army Corps			U.S. Army Corps of Engineers
ASC			FASB Accounting Standards Codification
ASU			FASB Accounting Standards Update
Audit Committee			Audit Committee of the board of directors of the Company
Bcf			Billion cubic feet
Big Stone Station			475-MW coal-fired electric generating facility near Big Stone City, South Dakota (22.7 percent ownership)
~~Brazilian Transmission Lines~~			~~Company's former investment in companies owning three electric transmission lines in Brazil~~
BSSE			345-kilovolt transmission line from Ellendale, North Dakota, to Big Stone City, South Dakota (50 percent ownership)
Btu			British thermal unit
CARES Act			United States Coronavirus Aid, Relief, and Economic Security Act
Cascade			Cascade Natural Gas Corporation, an indirect wholly owned subsidiary of MDU Energy Capital
CDC			Centers for Disease Control and Prevention
Centennial			Centennial Energy Holdings, Inc., a direct wholly owned subsidiary of the Company
Centennial Capital			Centennial Holdings Capital LLC, a direct wholly owned subsidiary of Centennial
Centennial's Consolidated EBITDA			Centennial's consolidated net income from continuing operations plus the related interest expense, taxes, depreciation, depletion, amortization of intangibles and any non-cash charge relating to asset impairment for the preceding 12-month period
~~Centennial Resources~~			~~Centennial Energy Resources LLC, a direct wholly owned subsidiary of Centennial~~
CERCLA			Comprehensive Environmental Response, Compensation and Liability Act
~~Clean Air Act~~			~~Federal Clean Air Act~~
~~Clean Water Act~~			~~Federal Clean Water Act~~
Company			MDU Resources Group, Inc. (formerly known as MDUR Newco), which, as the context requires, refers to the previous MDU Resources Group, Inc. prior to January 1, 2019, and the new holding company of the same name after January 1, 2019
COVID-19			Coronavirus disease 2019
Coyote Creek			Coyote Creek Mining Company, LLC, a subsidiary of The North American Coal Corporation
Coyote Station			427-MW coal-fired electric generating facility near Beulah, North Dakota (25 percent ownership)
CyROC			Cyber Risk Oversight Committee
~~Dakota Prairie Refining~~			~~Dakota Prairie Refining, LLC, a limited liability company previously owned by WBI Energy and Calumet Specialty Products Partners, L.P. (previously included in the Company's refining segment)~~
dk			Decatherm
Dodd-Frank Act			Dodd-Frank Wall Street Reform and Consumer Protection Act
EBITDA			Earnings before interest, taxes, depreciation, depletion and amortization
EIN			Employer Identification Number
EPA			United States Environmental Protection Agency
ERISA			Employee Retirement Income Security Act of 1974
ESA			Endangered Species Act
Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
FERC			Federal Energy Regulatory Commission
Fidelity			Fidelity Exploration & Production Company, a direct wholly owned subsidiary of WBI Holdings (previously referred to as the Company's exploration and production segment)
FIP			Funding improvement plan
GAAP			Accounting principles generally accepted in the United States of America
GHG			Greenhouse gas
Great Plains			Great Plains Natural Gas Co., a public utility division of ~~the Company prior to the closing of the Holding Company Reorganization and a public utility division of~~ Montana-Dakota ~~as of January 1, 2019~~
GVTC			Generation Verification Test Capacity


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Part II (continued)		Page
	1 7 . Business Segment Data	8997
	1 8 . Employee Benefit Plans	92100
	19. Jointly Owned Facilities	~~100~~109
	20 .20. Regulatory Matters	~~101~~109
	21 .21. Commitments and Contingencies	~~102~~110


Item 9	Changes in and Disagreements ~~With~~with Accountants on Accounting and Financial Disclosure	~~108~~115

Item 9A	Controls and Procedures	~~108~~115

Item 9B	Other Information	~~108~~115

Item 9C	Disclosure Regarding Foreign Jurisdiction that Prevents Inspection	115

Part III

Item 10	Directors, Executive Officers and Corporate Governance	~~109~~116

Item 11	Executive Compensation	~~109~~116

Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~109~~116

Item 13	Certain Relationships and Related Transactions, and Director Independence	~~109~~116

Item 14	Principal Account ant Fees and Services	~~109~~116

Part IV

Item 15	Exhibits, Financial Statement Schedules	~~110~~117

3. Exhibits		~~114~~121

Item 16	Form 10-K Summary	~~116~~123

Signatures		~~117~~124


Holding Company Reorganization			The internal holding company reorganization completed on January 1, 2019, pursuant to the agreement and plan of merger, dated as of December 31, 2018, by and among Montana-Dakota, the Company and MDUR Newco Sub, which resulted in the Company becoming a holding company and owning all of the outstanding capital stock of Montana-Dakota.
IBEW			International Brotherhood of Electrical Workers
ICWU			International Chemical Workers Union
Intermountain			Intermountain Gas Company, an indirect wholly owned subsidiary of MDU Energy Capital
IPUC			Idaho Public Utilities Commission
Item 8			Financial Statements and Supplementary Data
Knife River			Knife River Corporation, a direct wholly owned subsidiary of Centennial
Knife River - Northwest			Knife River Corporation - Northwest, an indirect wholly owned subsidiary of Knife River


K-Plan			Company's 401(k) Retirement Plan
kW			Kilowatts
kWh			Kilowatt-hour
LIBOR			London Inter-bank Offered Rate
~~LWG~~			~~Lower Willamette Group~~
MD&A			Management's Discussion and Analysis of Financial Condition and Results of Operations
Mdk			Thousand dk
MDU Construction Services			MDU Construction Services Group, Inc., a direct wholly owned subsidiary of Centennial
MDU Energy Capital			MDU Energy Capital, LLC, a direct wholly owned subsidiary of the Company
MDUR Newco			MDUR Newco, Inc., a public holding company created by implementing the Holding Company Reorganization, now known as the Company
MDUR Newco Sub			MDUR Newco Sub, Inc., a direct, wholly owned subsidiary of MDUR Newco, which was merged with and into Montana-Dakota in the Holding Company Reorganization
MEPP			Multiemployer pension plan
MISO			Midcontinent Independent System Operator, Inc., the organization that provides open-access transmission services and monitors the high-voltage transmission system in the Midwest United States and Manitoba, Canada and a southern United States region which includes much of Arkansas, Mississippi and Louisiana
MMBtu			Million Btu
MMcf			Million cubic feet
MMdk			Million dk
MNPUC			Minnesota Public Utilities Commission
Montana-Dakota			Montana-Dakota Utilities Co. ~~(formerly known as MDU Resources Group, Inc.), a public utility division of the Company prior to the closing of the Holding Company Reorganization and~~ a direct wholly owned subsidiary of MDU Energy Capital ~~as of January 1, 2019~~
MPPAA			Multiemployer Pension Plan Amendments Act of 1980
MTDEQ			Montana Department of Environmental Quality
MTPSC			Montana Public Service Commission
MW			Megawatt
NDDEQ			North Dakota Department of Environmental Quality
NDPSC			North Dakota Public Service Commission
NERC			North American Electric Reliability Corporation
Non-GAAP			Not in accordance with GAAP
Oil			Includes crude oil and condensate
OPUC			Oregon Public Utility Commission
PCAOB			Public Company Accounting Oversight Board
PCBs			Polychlorinated biphenyls
PHMSA			Pipeline and Hazardous Material Safety Administration
Proxy Statement			Company's ~~2021~~2022 Proxy Statement to be filed no later than April ~~30, 2021~~29, 2022
PRP			Potentially Responsible Party
RCRA			Resource Conservation and Recovery Act
RNG			Renewable Natural Gas
~~ROD~~			~~Record of Decision~~
RP			Rehabilitation plan
SDPUC			South Dakota Public Utilities Commission
SEC			United States Securities and Exchange Commission
Securities Act			Securities Act of 1933, as amended
~~Securities Act Industry Guide 7~~			~~Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations~~
Sheridan System			A separate electric system owned by Montana-Dakota
SOFR			Secured Overnight Financing Rate
SPP			Southwest Power Pool, the organization that manages the electric grid and wholesale power market for the central United States.
UA			United Association of Journeyman and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada
TSA			Transportation Security Administration
VIE			Variable interest entity
Washington DOE			Washington State Department of Ecology
WBI Energy			WBI Energy, Inc., an indirect wholly owned subsidiary of Centennial
WBI Energy Transmission			WBI Energy Transmission, Inc., an indirect wholly owned subsidiary of WBI Holdings
WBI Holdings			WBI Holdings, Inc., a direct wholly owned subsidiary of Centennial


~~SOFR~~			~~Secured Overnight Financing Rate~~
~~TCJA~~			~~Tax Cuts and Jobs Act~~
UA			~~United Association of Journeyman and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada~~
~~VIE~~			~~Variable interest entity~~
~~Washington DOE~~			~~Washington State Department of Ecology~~
~~WBI Energy~~			~~WBI Energy, Inc., a direct wholly owned subsidiary of WBI Holdings~~
~~WBI Energy Transmission~~			~~WBI Energy Transmission, Inc., an indirect wholly owned subsidiary of WBI Holdings~~
~~WBI Holdings~~			~~WBI Holdings, Inc., a direct wholly owned subsidiary of Centennial~~
WUTC			Washington Utilities and Transportation Commission
Wygen III			100-MW coal-fired electric generating facility near Gillette, Wyoming (25 percent ownership)
WYDEQ			Wyoming Department of Environmental Quality
WYPSC			Wyoming Public Service Commission
ZRCs			Zonal resource credits - a MW of demand equivalent assigned to generators by MISO for meeting system reliability requirements


Facility	Application Date	Issuance Date	Issuing Body
Wygen III *	To be submitted timely in 2022	Not specified at this time	WYDEQ
Lewis & Clark Station	Submitted timely in December 2019	May 13, 2021	MTDEQ
Miles City	Submitted timely in December 2020	November 5, 2021	MTDEQ
Glendive	Submitted timely in December 2020	December 9, 2021	MTDEQ


GeneralThe Company's natural gas distribution segment is operated through its wholly owned subsidiaries, consisting of operations from Montana-Dakota, Cascade and Intermountain. These companies sell natural gas at retail, serving residential, commercial and industrial customers in 338 communities and adjacent rural areas across eight states. They also provide natural gas transportation services to certain customers on the Company's systems. These services are provided through distribution and transmission systems aggregating approximately 20,900 miles and 600 miles, respectively. The natural gas distribution operations have obtained and hold, or are in the process of renewing, valid and existing franchises authorizing them to conduct their natural gas operations in all of the municipalities they serve where such franchises are required. These operations intend to seek renewal of all expiring franchises. At December 31, 2021, the natural gas distribution operations' net natural gas distribution plant investment was $2.0 billion and its rate base was $1.4 billion.


GeneralWBI Energy owns and operates both regulated and non-regulated businesses. The regulated business of this segment, WBI Energy Transmission, owns and operates approximately 3,700 miles of natural gas transmission and storage lines. WBI Energy Transmission's underground storage fields provide storage services to local distribution companies, industrial customers, natural gas marketers and others, and serve to enhance system reliability. Its system is strategically located near four natural gas producing basins, making natural gas supplies available to its transportation and storage customers. The system has 13 interconnecting points with other pipeline facilities allowing for the receipt and/or delivery of natural gas to and from other regions of the country and from Canada. Under the Natural Gas Act, as amended, WBI Energy Transmission is subject to the jurisdiction of the FERC regarding certificate, rate, service and accounting matters, and at December 31, 2021, its net plant investment was $762.4 million. The non-regulated business of this segment provides a variety of energy-related services, including cathodic protection and energy efficiency product sales and installation services to large end-users.


			GeneralKnife River mines, processes and sells construction aggregates (crushed stone, sand and gravel); produces and sells asphalt mix; and supplies ready-mix concrete. These products are used in most types of construction, performed by Knife River and other companies, including roads, freeways and bridges, as well as homes, schools, shopping centers, office buildings and industrial parks. Knife River focuses on vertical integration of its contracting services with its construction materials to support the aggregate-based product lines including aggregate placement, asphalt and concrete paving, and site development and grading. Although not common to all locations, other products include the sale of cement, asphalt oil for various commercial and roadway applications, various finished concrete products and other building materials and related contracting services. During 2021, Knife River's acquisitions included Mt. Hood Rock, a construction aggregates business in Oregon, as well as Baker Rock Resources and Oregon Mainline Paving, two premier construction material companies located around the Portland, Oregon metro area. For more information on business combinations, see Item 8 - Note 4.


	Number of Sites (Crushed Stone)		Number of Sites (Sand & Gravel)		Tons Sold (000's)			Estimated Reserves (000's tons)	Lease Expiration	Reserve Life (years)
Production Area	owned	leased	owned	leased	2020	2019	2018
Anchorage, AK	—	—	1	—	817	868	725	14,363	N/A	18
Hawaii	—	6	—	—	1,466	1,680	1,734	46,513	2023-2064	29
Northern CA	—	—	9	1	2,076	1,901	1,798	38,510	2028-2046	20
Southern CA	—	2	—	—	341	292	356	90,570	2035	Over 100
Portland, OR	2	4	3	3	4,085	4,868	5,402	166,311	2025-2055	35
Eugene, OR	3	4	5	—	1,230	1,205	743	154,039	2021-2049	Over 100
Central OR/WA/ID	—	1	9	2	3,119	2,700	2,362	82,061	2028-2077	30
Southwest OR	5	5	11	6	2,194	1,932	2,395	111,749	2021-2053	51
Central MT	—	—	3	1	1,074	822	1,081	13,344	2023-2027	13
Northwest MT	—	—	9	—	2,007	2,084	1,965	57,794	N/A	29
Wyoming	2	6	—	5	840	837	626	104,894	2021-2085	62	*
Central MN	1	1	41	7	3,233	3,477	2,890	64,902	2021-2028	20
Northern MN	2	—	11	2	483	330	369	20,046	2021-2024	51
ND/SD	1	—	2	22	4,528	3,747	1,506	63,069	2021-2031	15	*
Eastern TX	2	2	4	—	984	1,378	1,094	76,722	2022-2029	67
Sales from other sources					2,472	4,193	4,749
					30,949	32,314	29,795	1,104,887


	Crushed Stone				Sand & Gravel				Total Estimated Reserves (000's tons)
Production Area (b)	Number of Sites		Estimated Reserves (000's tons)		Number of Sites		Estimated Reserves (000's tons)				Tons Sold (000's)			Lease Expiration	Reserve Life (years)
	owned	leased			owned	leased					2021	2020	2019
Alaska	—	—	—		1	—	13,583		13,583		780	817	868	N/A	17
California	—	2	90,290		9	1	36,025		126,315		2,766	2,417	2,193	2028-2035	51
Hawaii	—	6	45,096		—	—	—		45,096		1,417	1,466	1,680	2023-2064	30
Idaho	—	—	—		8	1	28,439		28,439		2,460	2,565	2,138	2028	12
Minnesota	3	1	16,228		49	9	60,765		76,993		4,133	3,528	3,654	2022-2032	20
Montana	—	—	—		12	—	72,636		72,636		3,157	3,081	2,906	N/A	24
North Dakota	—	—	—		3	16	24,958		24,958		1,102	1,027	986	2022-2028	24
Oregon	11	14	385,920		19	11	192,192		578,112		8,467	8,063	8,567	2022-2077	53	(a)
South Dakota	2	—	34,048		1	2	1,667		35,715		3,651	3,689	2,914	2025-2028	10
Texas	2	2	19,288		3	—	61,070		80,358		1,336	984	1,378	2022-2029	65
Wyoming	2	6	89,643		1	5	29,969		119,612		1,817	840	837	2024-2085	103
Sales from other sources											2,432	2,472	4,193
	20	31	680,513	(c)	106	45	521,304	(c)	1,201,817	(c)	33,518	30,949	32,314


			General MDU Construction Services operates in nearly every state across the country and provides a full spectrum of construction services through its electrical and mechanical and transmission and distribution specialty contracting services across the country. These specialty contracting services are provided to utilities and manufacturing, transportation, commercial, industrial, institutional, renewable and governmental customers. Its electrical and mechanical contracting services include construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, and mechanical piping and services. Its transmission and distribution contracting services include construction and maintenance of overhead and underground electrical, gas and communication infrastructure, as well as manufacturing and distribution of transmission line construction equipment and tools. Construction and maintenance crews are active year round. However, activity in certain locations may be seasonal in nature due to the effects of weather. MDU Construction Services works with the National Electrical Contractors Association, the IBEW and other trade associations on hiring and recruiting a qualified workforce.


		Actual*						Estimated							Actual*						Estimated
		2018		2019		2020		2021		2022		2023			2019		2020		2021		2022		2023		2024
		(In millions)													(In millions)
Capital expenditures:	Capital expenditures:													Capital expenditures:
Electric	Electric	$	186	$	99	$	115	$	141	$	182	$	109	Electric	$	99	$	115	$	82	$	165	$	116	$	85
Natural gas distribution	Natural gas distribution	206		207		193		215		225		188		Natural gas distribution	207		193		170		248		232		207
Pipeline	Pipeline	70		71		62		230		74		110		Pipeline	71		62		235		72		159		106
Construction materials and contracting	Construction materials and contracting	280		190		191		189		154		150		Construction materials and contracting	190		191		418		189		166		172
Construction services	Construction services	25		61		84		46		34		35		Construction services	61		84		29		47		42		43
Other	Other	2		8		3		5		4		3		Other	8		3		2		5		4		3
Total capital expenditures	Total capital expenditures	$	769	$	636	$	648	$	826	$	673	$	595	Total capital expenditures	$	636	$	648	$	936	$	726	$	719	$	616


		Less than 1 year		1-3 years		3-5 years		More than 5 years		Total			Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
		(In millions)											(In millions)
Long-term debt maturities*	Long-term debt maturities*	$	1.6	$	225.9	$	460.7	$	1,530.7	$	2,218.9	Long-term debt maturities*	$	148.1	$	716.5	$	318.6	$	1,564.9	$	2,748.1
Estimated interest payments**	Estimated interest payments**	90.8		173.5		156.4		770.3		1,191.0		Estimated interest payments**	98.6		178.7		157.3		835.8		1,270.4
Operating leases	Operating leases	36.6		41.8		20.0		48.8		147.2		Operating leases	38.6		47.2		19.0		44.0		148.8
Purchase commitments	Purchase commitments	458.4		409.2		223.6		691.6		1,782.8		Purchase commitments	589.9		342.1		186.1		731.7		1,849.8
		$	587.4	$	850.4	$	860.7	$	3,041.4	$	5,339.9		$	875.2	$	1,284.5	$	681.0	$	3,176.4	$	6,017.1


	Pension Benefits				Other Postretirement Benefits
	50 Basis Point Increase		50 Basis Point Decrease		50 Basis Point Increase		50 Basis Point Decrease
Discount rate	(In millions)
Projected benefit obligation as of December 31, 2021	$	(22.0)	$	24.2	$	(4.0)	$	4.5
Net periodic benefit cost (credit) for 2022	$	.3	$	(.4)	$	(.3)	$	.2
Expected long-term return on plan assets
Net periodic benefit cost (credit) for 2022	$	(1.8)	$	1.8	$	(.5)	$	.5


	100 Basis Point Increase		100 Basis Point Decrease
	(In millions)
Service and interest cost components for 2022	$	.2	$	(.1)
Postretirement benefit obligation as of December 31, 2021	$	3.0	$	(2.6)


Item 7A. Quantitative and Qualitative Disclosures About Market Risk


/s/ Deloitte & Touche LLP


Minneapolis, Minnesota
February ~~19, 2021~~23, 2022

We have served as the Company's auditor since 2002.


Years ended December 31, 2020, 2019 and 2018
Years ended December 31, 2021, 2020 and 2019																		Years ended December 31, 2021, 2020 and 2019
					Other Paid-in Capital		Retained Earnings		Accumu-lated Other Compre-hensive Loss													Other Paid-in Capital		Retained Earnings		Accumu-lated Other Compre-hensive Loss
		Common Stock									Treasury Stock						Common Stock			Other Paid-in Capital								Treasury Stock
		Shares	Amount								Shares	Amount		Total			Shares		Amount									Total
																	(in thousands, except shares)
At December 31, 2017		195,843,297	$	195,843	$	1,233,412	$	1,040,748	$	(37,334)	(538,921)	$	(3,626)		$	2,429,043
Cumulative effect of adoption of ASC 606		—	—		—		(970)		—		—	—			(970)
Adjusted Balance at January 1,2018		195,843.297	195,843		1,233,412		1,039,778		(37,334)		(538.921)	(3,626)			2,428,073
At December 31, 2018																		At December 31, 2018	196,564,907			$	196,565	$	1,248,576	$	1,163,602	$	(38,342)	(538,921)		$	(3,626)			$	2,566,775
Net income																		Net income	—			—		—		335,453		—		—		—				335,453
Other comprehensive loss																		Other comprehensive loss	—	—		—		—		(3,760)		—		—				(3,760)
Dividends declared on common stock																		Dividends declared on common stock	—	—		—		(162,408)		—		—		—				(162,408)
Employee stock-based compensation																		Employee stock-based compensation	—	—		7,353		—		—		—		—				7,353
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings																		Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	246,214	246		(3,261)		—		—		—		—				(3,015)
Issuance of common stock																		Issuance of common stock	4,111,669	4,112		102,736		—		—		—		—				106,848
At December 31, 2019																		At December 31, 2019	200,922,790	200,923		1,355,404		1,336,647		(42,102)		(538,921)		(3,626)				2,847,246
Net Income																		Net Income	—	—		—		390,205		—		—		—				390,205
Other comprehensive loss																		Other comprehensive loss	—	—		—		—		(5,976)		—		—				(5,976)
Dividends declared on common stock																		Dividends declared on common stock	—	—		—		(168,489)		—		—		—				(168,489)
Employee stock-based compensation																		Employee stock-based compensation	—	—		13,096		—		—		—		—				13,096
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings																		Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	26,406	26		(388)		—		—		—		—				(362)
Issuance of common stock																		Issuance of common stock	112,002	112		3,273		—		—		—		—				3,385
At December 31, 2020																		At December 31, 2020	201,061,198	201,061		1,371,385		1,558,363		(48,078)		(538,921)		(3,626)				3,079,105
Net income	Net income	—	—		—		272,318		—		—	—			272,318			Net income	—	—		—		378,131		—		—		—				378,131
Other comprehensive income	Other comprehensive income	—	—		—		—		6,951		—	—			6,951			Other comprehensive income	—	—		—		—		7,074		—		—				7,074
Reclassification of certain prior period tax effects from accumulated other comprehensive loss		—	—		—		7,959		(7,959)		—	—			0
Dividends declared on common stock	Dividends declared on common stock	—					(156,453)		—						(156,453)			Dividends declared on common stock	—	—		—		(174,084)		—		—		—				(174,084)
Stock-based compensation		—	—		5,060		—		—		—	—			5,060
Employee stock-based compensation																		Employee stock-based compensation	—	—		14,709		—		—		—		—				14,709
Repurchase of common stock	Repurchase of common stock	—	—		—		—		—		(182,424)	(5,020)			(5,020)			Repurchase of common stock	—	—		—		—		—		(392,294)		(6,701)				(6,701)
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	—	—		(7,350)		—		—		182,424	5,020			(2,330)			Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings	—	—		(10,828)		—		—		392,294		6,701				(4,127)
Issuance of common stock	Issuance of common stock	721,610	722		17,454		—		—		—	—			18,176			Issuance of common stock	2,828,463	2,828		85,939		—		—		—		—				88,767
At December 31, 2018		196,564,907	196,565		1,248,576		1,163,602		(38,342)		(538,921)	(3,626)			2,566,775
Net Income		—	—		—		335,453		—		—	—			335,453
Other comprehensive loss		—	—		—		—		(3,760)		—	—			(3,760)
Dividends declared on common stock		—	—		—		(162,408)		—		—	—			(162,408)
Stock-based compensation		—	—		7,353		—		—		—	—			7,353
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings		246,214	246		(3,261)		—		—		—	—			(3,015)
Issuance of common stock		4,111,669	4,112		102,736		—		—		—	—			106,848
At December 31, 2019		200,922,790	200,923		1,355,404		1,336,647		(42,102)		(538,921)	(3,626)			2,847,246
Net income		—	—		—		390,205		—		—	—			390,205
Other comprehensive loss		—	—		—		—		(5,976)		—	—			(5,976)
Dividends declared on common stock		—	—		—		(168,489)		—		—	—			(168,489)
Stock-based compensation		—	—		13,096		—		—		—	—			13,096
Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings		26,406	26		(388)		—		—		—	—			(362)
Issuance of common stock		112,002	112		3,273		—		—		—	—			3,385
At December 31, 2020		201,061,198	$	201,061	$	1,371,385	$	1,558,363	$	(48,078)	(538,921)	$	(3,626)		$	3,079,105
At December 31, 2021																		At December 31, 2021	203,889,661	$	203,889	$	1,461,205	$	1,762,410	$	(41,004)	(538,921)		$	(3,626)			$	3,382,874


Standard	Description	Effective date	Impact on financial statements/disclosures
Recently adopted accounting standards
ASU 2018-14 - Changes to the Disclosure Requirements for Defined Benefit Plans	In August 2018, the FASB issued guidance on modifying the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans as part of the disclosure framework project. The guidance removed disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and added disclosure requirements identified as relevant. The guidance added, among other things, the requirement to include an explanation for significant gains and losses related to changes in benefit obligations for the period. The guidance removed, among other things, the disclosure requirement to disclose the amount of net periodic benefit costs to be amortized over the next fiscal year from accumulated other comprehensive income (loss) and the effects a one percentage point change in assumed health care cost trend rates will have on certain benefit components.	January 1, 2021	The Company determined the guidance did not materially impact its consolidated financial statement disclosures.
ASU 2019-12 - Simplifying the Accounting for Income Taxes	In December 2019, the FASB issued guidance on simplifying the accounting for income taxes by removing certain exceptions in ASC 740 and providing simplification amendments. The guidance removed exceptions on intraperiod tax allocations and reporting and provided simplification on accounting for franchise taxes, tax basis goodwill and tax law changes.	January 1, 2021	The Company determined the guidance did not materially impact its results of operations, financial position, cash flows or disclosures.
Recently issued accounting standards not yet adopted
ASU 2020-04 - Reference Rate Reform	In March 2020, the FASB issued optional guidance to ease the facilitation of the effects of reference rate reform on financial reporting. The guidance applies to certain contract modifications, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Beginning January 1, 2022, LIBOR or other discontinued reference rates cannot be applied to new contracts. New contracts will incorporate a new reference rate, which includes SOFR. LIBOR or other discontinued reference rates cannot be applied to contract modifications or hedging relationships entered into or evaluated after December 31, 2022. Existing contracts referencing LIBOR or other reference rates expected to be discontinued must identify a replacement rate by June 30, 2023.	Effective as of March 12, 2020 and will continue through December 31, 2022	The Company has updated its credit agreements to include language regarding the successor or alternate rate to LIBOR, and a review of other contracts and agreements is on-going. The Company does not expect the guidance to have a material impact on its results of operations, financial position, cash flows or disclosures.
ASU 2021-10 - Government Assistance	In November 2021, the FASB issued guidance on modifying the disclosure requirements to increase the transparency of government assistance including disclosure of the types of assistance, an entity's accounting for the assistance and the effect of the assistance on an entity's financial statements.	January 1, 2022	The Company is currently evaluating the impact the guidance will have on its disclosures for the year ended December 31, 2022.


		Electric		Natural gas distribution		Pipeline		Construction materials and contracting		Construction services		Total			Electric		Natural gas distribution		Pipeline		Construction materials and contracting		Construction services		Total
		(In thousands)													(In thousands)
At January 1, 2020	At January 1, 2020	$	328	$	1,056	$	0	$	5,357	$	1,756	$	8,497	At January 1, 2020	$	328	$	1,056	$	—	$	5,357	$	1,756	$	8,497
Current expected credit loss provision		1,517		3,187		2		1,447		4,832		10,985
Current expected credit loss provision*														Current expected credit loss provision*	1,517		3,187		2		1,447		4,832		10,985
Less write-offs charged against the allowance	Less write-offs charged against the allowance	1,289		2,511		0		640		866		5,306		Less write-offs charged against the allowance	1,289		2,511		—		640		866		5,306
Credit loss recoveries collected	Credit loss recoveries collected	343		839		0		0		0		1,182		Credit loss recoveries collected	343		839		—		—		—		1,182
At December 31, 2020	At December 31, 2020	$	899	$	2,571	$	2	$	6,164	$	5,722	$	15,358	At December 31, 2020	899		2,571		2		6,164		5,722		15,358
Current expected credit loss provision*														Current expected credit loss provision*	1,099		2,188		—		68		(2,250)		1,105
Less write-offs charged against the allowance														Less write-offs charged against the allowance	2,139		4,072		—		826		1,032		8,069
Credit loss recoveries collected														Credit loss recoveries collected	410		819		—		—		93		1,322
At December 31, 2021														At December 31, 2021	$	269	$	1,506	$	2	$	5,406	$	2,533	$	9,716


Year ended December 31, 2020		Electric		Natural gas distribution		Pipeline		Construction materials and contracting		Construction services		Other		Total
Year ended December 31, 2021																Year ended December 31, 2021	Electric		Natural gas distribution		Pipeline		Construction materials and contracting		Construction services		Other		Total
		(In thousands)															(In thousands)
Residential utility sales	Residential utility sales	$	122,663	$	476,388	$	—	$	—	$	—	$	—	$	599,051	Residential utility sales	$	126,841	$	544,721	$	—	$	—	$	—	$	—	$	671,562
Commercial utility sales	Commercial utility sales	131,477		277,873		—		—		—		—		409,350		Commercial utility sales	137,556		328,285		—		—		—		—		465,841
Industrial utility sales	Industrial utility sales	36,744		26,243		—		—		—		—		62,987		Industrial utility sales	41,757		30,964		—		—		—		—		72,721
Other utility sales	Other utility sales	6,634		0		—		—		—		—		6,634		Other utility sales	7,051		—		—		—		—		—		7,051
Natural gas transportation	Natural gas transportation	—		45,546		111,686		—		—		—		157,232		Natural gas transportation	—		48,408		114,001		—		—		—		162,409
Natural gas gathering		—		—		4,865		—		—		—		4,865
Natural gas storage	Natural gas storage	—		—		14,918		—		—		—		14,918		Natural gas storage	—		—		14,680		—		—		—		14,680
Contracting services	Contracting services	—		—		—		1,069,665		—		—		1,069,665		Contracting services	—		—		—		1,017,471		—		—		1,017,471
Construction materials	Construction materials	—		—		—		1,659,152		—		—		1,659,152		Construction materials	—		—		—		1,712,503		—		—		1,712,503
Intrasegment eliminations	Intrasegment eliminations	—		—		—		(550,815)		—		—		(550,815)		Intrasegment eliminations	—		—		—		(501,044)		—		—		(501,044)
Inside specialty contracting		—		—		—		—		1,397,124		—		1,397,124
Outside specialty contracting		—		—		—		—		649,486		—		649,486
Electrical & mechanical specialty contracting																Electrical & mechanical specialty contracting	—		—		—		—		1,324,419		—		1,324,419
Transmission & distribution specialty contracting																Transmission & distribution specialty contracting	—		—		—		—		677,074		—		677,074
Other	Other	32,452		10,753		12,216		0		1,541		11,903		68,865		Other	42,902		10,567		13,667		—		557		13,714		81,407
Intersegment eliminations	Intersegment eliminations	(491)		(534)		(58,531)		(417)		(5,038)		(11,958)		(76,969)		Intersegment eliminations	(543)		(576)		(59,678)		(624)		(2,555)		(13,630)		(77,606)
Revenues from contracts with customers	Revenues from contracts with customers	329,479		836,269		85,154		2,177,585		2,043,113		(55)		5,471,545		Revenues from contracts with customers	355,564		962,369		82,670		2,228,306		1,999,495		84		5,628,488
Revenues out of scope	Revenues out of scope	2,059		11,382		192		0		47,572		0		61,205		Revenues out of scope	(6,525)		8,995		188		—		49,587		—		52,245
Total external operating revenues	Total external operating revenues	$	331,538	$	847,651	$	85,346	$	2,177,585	$	2,090,685	$	(55)	$	5,532,750	Total external operating revenues	$	349,039	$	971,364	$	82,858	$	2,228,306	$	2,049,082	$	84	$	5,680,733


Year ended December 31, 2019		Electric		Natural gas distribution		Pipeline		Construction materials and contracting		Construction services		Other		Total
Year ended December 31, 2020																Year ended December 31, 2020	Electric		Natural gas distribution		Pipeline		Construction materials and contracting		Construction services		Other		Total
		(In thousands)															(In thousands)
Residential utility sales	Residential utility sales	$	125,369	$	483,452	$	—	$	—	$	—	$	—	$	608,821	Residential utility sales	$	122,663	$	476,388	$	—	$	—	$	—	$	—	$	599,051
Commercial utility sales	Commercial utility sales	141,596		296,835		—		—		—		—		438,431		Commercial utility sales	131,477		277,873		—		—		—		—		409,350
Industrial utility sales	Industrial utility sales	37,765		26,895		—		—		—		—		64,660		Industrial utility sales	36,744		26,243		—		—		—		—		62,987
Other utility sales	Other utility sales	7,408		0		—		—		—		—		7,408		Other utility sales	6,634		—		—		—		—		—		6,634
Natural gas transportation	Natural gas transportation	—		45,449		101,665		—		—		—		147,114		Natural gas transportation	—		45,546		111,686		—		—		—		157,232
Natural gas gathering	Natural gas gathering	—		—		9,164		—		—		—		9,164		Natural gas gathering	—		—		4,865		—		—		—		4,865
Natural gas storage	Natural gas storage	—		—		11,708		—		—		—		11,708		Natural gas storage	—		—		14,918		—		—		—		14,918
Contracting services	Contracting services	—		—		—		1,088,633		—		—		1,088,633		Contracting services	—		—		—		1,069,665		—		—		1,069,665
Construction materials	Construction materials	—		—		—		1,627,833		—		—		1,627,833		Construction materials	—		—		—		1,659,152		—		—		1,659,152
Intrasegment eliminations	Intrasegment eliminations	—		—		—		(525,749)		—		—		(525,749)		Intrasegment eliminations	—		—		—		(550,815)		—		—		(550,815)
Inside specialty contracting		—		—		—		—		1,266,196		—		1,266,196
Outside specialty contracting		—		—		—		—		531,882		—		531,882
Electrical & mechanical specialty contracting																Electrical & mechanical specialty contracting	—		—		—		—		1,397,124		—		1,397,124
Transmission & distribution specialty contracting																Transmission & distribution specialty contracting	—		—		—		—		649,486		—		649,486
Other	Other	35,574		12,726		17,687		0		131		16,551		82,669		Other	32,452		10,753		12,216		—		1,541		11,903		68,865
Intersegment eliminations	Intersegment eliminations	0		0		(56,252)		(1,066)		(3,370)		(16,461)		(77,149)		Intersegment eliminations	(491)		(534)		(58,531)		(417)		(5,038)		(11,958)		(76,969)
Revenues from contracts with customers	Revenues from contracts with customers	347,712		865,357		83,972		2,189,651		1,794,839		90		5,281,621		Revenues from contracts with customers	329,479		836,269		85,154		2,177,585		2,043,113		(55)		5,471,545
Revenues out of scope	Revenues out of scope	4,013		(135)		220		0		51,057		0		55,155		Revenues out of scope	2,059		11,382		192		—		47,572		—		61,205
Total external operating revenues	Total external operating revenues	$	351,725	$	865,222	$	84,192	$	2,189,651	$	1,845,896	$	90	$	5,336,776	Total external operating revenues	$	331,538	$	847,651	$	85,346	$	2,177,585	$	2,090,685	$	(55)	$	5,532,750


Year ended December 31, 2018		Electric		Natural gas distribution		Pipeline		Construction materials and contracting		Construction services		Other		Total
Year ended December 31, 2019																Year ended December 31, 2019	Electric		Natural gas distribution		Pipeline		Construction materials and contracting		Construction services		Other		Total
		(In thousands)															(In thousands)
Residential utility sales	Residential utility sales	$	121,477	$	457,959	$	—	$	—	$	—	$	—	$	579,436	Residential utility sales	$	125,369	$	483,452	$	—	$	—	$	—	$	—	$	608,821
Commercial utility sales	Commercial utility sales	136,236		276,716		—		—		—		—		412,952		Commercial utility sales	141,596		296,835		—		—		—		—		438,431
Industrial utility sales	Industrial utility sales	34,353		24,603		—		—		—		—		58,956		Industrial utility sales	37,765		26,895		—		—		—		—		64,660
Other utility sales	Other utility sales	7,556		0		—		—		—		—		7,556		Other utility sales	7,408		—		—		—		—		—		7,408
Natural gas transportation	Natural gas transportation	—		43,238		89,159		—		—		—		132,397		Natural gas transportation	—		45,449		101,665		—		—		—		147,114
Natural gas gathering	Natural gas gathering	—		—		9,159		—		—		—		9,159		Natural gas gathering	—		—		9,164		—		—		—		9,164
Natural gas storage	Natural gas storage	—		—		11,543		—		—		—		11,543		Natural gas storage	—		—		11,708		—		—		—		11,708
Contracting services	Contracting services	—		—		—		968,755		—		—		968,755		Contracting services	—		—		—		1,088,633		—		—		1,088,633
Construction materials	Construction materials	—		—		—		1,423,068		—		—		1,423,068		Construction materials	—		—		—		1,627,833		—		—		1,627,833
Intrasegment eliminations	Intrasegment eliminations	—		—		—		(465,969)		—		—		(465,969)		Intrasegment eliminations	—		—		—		(525,749)		—		—		(525,749)
Inside specialty contracting		—		—		—		—		926,875		—		926,875
Outside specialty contracting		—		—		—		—		392,544		—		392,544
Electrical & mechanical specialty contracting																Electrical & mechanical specialty contracting	—		—		—		—		1,266,196		—		1,266,196
Transmission & distribution specialty contracting																Transmission & distribution specialty contracting	—		—		—		—		531,882		—		531,882
Other	Other	31,568		14,579		18,865		0		525		11,259		76,796		Other	35,574		12,726		17,687		—		131		16,551		82,669
Intersegment eliminations	Intersegment eliminations	0		0		(50,905)		(669)		(1,681)		(11,052)		(64,307)		Intersegment eliminations	—		—		(56,252)		(1,066)		(3,370)		(16,461)		(77,149)
Revenues from contracts with customers	Revenues from contracts with customers	331,190		817,095		77,821		1,925,185		1,318,263		207		4,469,761		Revenues from contracts with customers	347,712		865,357		83,972		2,189,651		1,794,839		90		5,281,621
Revenues out of scope	Revenues out of scope	3,933		6,152		197		0		51,509		0		61,791		Revenues out of scope	4,013		(135)		220		—		51,057		—		55,155
Total external operating revenues	Total external operating revenues	$	335,123	$	823,247	$	78,018	$	1,925,185	$	1,369,772	$	207	$	4,531,552	Total external operating revenues	$	351,725	$	865,222	$	84,192	$	2,189,651	$	1,845,896	$	90	$	5,336,776


		December 31, 2020		December 31, 2019		Change		Location on Consolidated Balance Sheets		December 31, 2021		December 31, 2020		Change		Location on Consolidated Balance Sheets
		(In thousands)								(In thousands)
Contract assets	Contract assets	$	104,345	$	109,078	$	(4,733)	Receivables, net	Contract assets	$	125,742	$	104,345	$	21,397	Receivables, net
Contract liabilities - current	Contract liabilities - current	(158,603)		(142,768)		(15,835)		Accounts payable	Contract liabilities - current	(179,140)		(158,603)		(20,537)		Accounts payable
Contract liabilities - noncurrent	Contract liabilities - noncurrent	(52)		(19)		(33)		Noncurrent liabilities - other	Contract liabilities - noncurrent	(118)		(52)		(66)		Noncurrent liabilities - other
Net contract liabilities	Net contract liabilities	$	(54,310)	$	(33,709)	$	(20,601)		Net contract liabilities	$	(53,516)	$	(54,310)	$	794


		December 31, 2019		December 31, 2018		Change		Location on Consolidated Balance Sheets		December 31, 2020		December 31, 2019		Change		Location on Consolidated Balance Sheets
		(In thousands)								(In thousands)
Contract assets	Contract assets	$	109,078	$	104,239	$	4,839	Receivables, net	Contract assets	$	104,345	$	109,078	$	(4,733)	Receivables, net
Contract liabilities - current	Contract liabilities - current	(142,768)		(93,901)		(48,867)		Accounts payable	Contract liabilities - current	(158,603)		(142,768)		(15,835)		Accounts payable
Contract liabilities - noncurrent	Contract liabilities - noncurrent	(19)		(135)		116		Noncurrent liabilities - other	Contract liabilities - noncurrent	(52)		(19)		(33)		Noncurrent liabilities - other
Net contract assets (liabilities)		$	(33,709)	$	10,203	$	(43,912)
Net contract liabilities									Net contract liabilities	$	(54,310)	$	(33,709)	$	(20,601)


		2020		2019		Weighted Average Depreciable Life in Years		2021		2020		Weighted Average Depreciable Life in Years
		(Dollars in thousands, where applicable)						(Dollars in thousands, where applicable)
Regulated:	Regulated:						Regulated:
Electric:	Electric:						Electric:
Generation	Generation	$	1,133,390	$	1,139,059	48	Generation	$	1,056,632	$	1,133,390	48
Distribution	Distribution	464,442		443,780		46	Distribution	474,037		464,442		47
Transmission	Transmission	524,155		445,485		64	Transmission	562,080		524,155		65
Construction in progress	Construction in progress	61,766		66,664		—	Construction in progress	62,781		61,766		—
Other	Other	139,650		132,157		14	Other	140,117		139,650		14
Natural gas distribution:	Natural gas distribution:						Natural gas distribution:
Distribution	Distribution	2,302,121		2,133,249		47	Distribution	2,427,779		2,302,121		50
Transmission	Transmission	104,695		104,401		51	Transmission	107,721		104,695		60
Storage	Storage	33,014		31,484		24	Storage	34,997		33,014		39
General	General	198,211		191,446		14	General	197,653		198,211		14
Construction in progress	Construction in progress	16,836		39,506		—	Construction in progress	21,741		16,836		—
Other	Other	213,976		188,037		16	Other	225,272		213,976		14
Pipeline:	Pipeline:						Pipeline:
Transmission	Transmission	665,567		636,796		46	Transmission	673,344		665,567		46
Gathering		0		35,661		—
Storage	Storage	52,632		50,001		53	Storage	57,670		52,632		53
Construction in progress	Construction in progress	46,690		22,597		—	Construction in progress	263,640		46,690		—
Other	Other	49,640		48,340		17	Other	50,477		49,640		17
Non-regulated:	Non-regulated:						Non-regulated:
Pipeline:	Pipeline:						Pipeline:
Gathering		0		31,148		—
Construction in progress	Construction in progress	4		154		—	Construction in progress	18		4		—
Other	Other	7,164		9,518		11	Other	6,719		7,164		10
Construction materials and contracting:	Construction materials and contracting:						Construction materials and contracting:
Land	Land	132,948		127,729		—	Land	149,066		132,948		—
Buildings and improvements	Buildings and improvements	130,417		122,064		21	Buildings and improvements	149,262		130,417		21
Machinery, vehicles and equipment	Machinery, vehicles and equipment	1,284,604		1,180,343		12	Machinery, vehicles and equipment	1,414,260		1,284,604		12
Construction in progress	Construction in progress	23,803		25,018		—	Construction in progress	50,425		23,803		—
Aggregate reserves	Aggregate reserves	456,704		455,408		**	Aggregate reserves	584,683		456,704		*
Construction services:	Construction services:						Construction services:
Land	Land	7,218		7,146		—	Land	6,513		7,218		—
Buildings and improvements	Buildings and improvements	41,674		31,735		25	Buildings and improvements	39,039		41,674		24
Machinery, vehicles and equipment	Machinery, vehicles and equipment	163,080		156,537		7	Machinery, vehicles and equipment	166,739		163,080		7
Other	Other	8,824		17,952		4	Other	13,467		8,824		2
Other:	Other:						Other:
Land	Land	2,648		2,648		—	Land	2,648		2,648		—
Other	Other	34,897		32,565		12	Other	34,069		34,897		7

Less accumulated depreciation, depletion and amortization	Less accumulated depreciation, depletion and amortization	3,133,831		2,991,486			Less accumulated depreciation, depletion and amortization	3,216,461		3,133,831
Net property, plant and equipment	Net property, plant and equipment	$	5,166,939	$	4,917,142		Net property, plant and equipment	$	5,756,388	$	5,166,939


		Estimated Recovery or Refund Period	*	2020		2019			Estimated Recovery or Refund Period	*	2021		2020
				(In thousands)							(In thousands)
Regulatory assets:	Regulatory assets:							Regulatory assets:
Current:	Current:							Current:
Natural gas costs recoverable through rate adjustments	Natural gas costs recoverable through rate adjustments	Up to 1 year		$	42,481	$	42,823	Natural gas costs recoverable through rate adjustments	Up to 1 year		$	86,371	$	42,481
Decoupling								Decoupling	Up to 1 year		9,131		703
Conservation programs								Conservation programs	Up to 1 year		8,225		7,117
Cost recovery mechanisms	Cost recovery mechanisms	Up to 1 year		10,645		6,288		Cost recovery mechanisms	Up to 1 year		4,536		10,645
Conservation programs		Up to 1 year		7,117		6,963
Other	Other	Up to 1 year		8,284		7,539		Other	Up to 1 year		10,428		7,581
				68,527		63,613					118,691		68,527
Noncurrent:	Noncurrent:							Noncurrent:
Pension and postretirement benefits	Pension and postretirement benefits	**		155,942		157,069		Pension and postretirement benefits	**		142,681		155,942
Plant costs/asset retirement obligations	Plant costs/asset retirement obligations	Over plant lives		71,740		66,000		Plant costs/asset retirement obligations	Over plant lives		63,116		71,740
Plant to be retired	Plant to be retired	-		65,919		32,931		Plant to be retired	-		50,070		65,919
Cost recovery mechanisms								Cost recovery mechanisms	Up to 10 years		44,870		16,245
Manufactured gas plant sites remediation	Manufactured gas plant sites remediation	-		26,429		15,126		Manufactured gas plant sites remediation	-		26,053		26,429
Taxes recoverable from customers								Taxes recoverable from customers	Over plant lives		12,339		10,785
Natural gas costs recoverable through rate adjustments	Natural gas costs recoverable through rate adjustments	Up to 2 years		21,539		46,381		Natural gas costs recoverable through rate adjustments	Up to 2 years		5,186		21,539
Cost recovery mechanisms		Up to 10 years		16,245		13,108
Taxes recoverable from customers		Over plant lives		10,785		11,486
Long-term debt refinancing costs	Long-term debt refinancing costs	Up to 40 years		4,426		4,286		Long-term debt refinancing costs	Up to 39 years		3,794		4,426
Other	Other	Up to 18 years		6,356		7,397		Other	Up to 17 years		9,742		6,356
				379,381		353,784					357,851		379,381
Total regulatory assets	Total regulatory assets			$	447,908	$	417,397	Total regulatory assets			$	476,542	$	447,908
Regulatory liabilities:	Regulatory liabilities:							Regulatory liabilities:
Current:	Current:							Current:
Natural gas costs refundable through rate adjustments	Natural gas costs refundable through rate adjustments	Up to 1 year		$	18,565	$	23,825	Natural gas costs refundable through rate adjustments	Up to 1 year		$	6,700	$	18,565
Taxes refundable to customers								Taxes refundable to customers	Up to 1 year		3,841		3,557
Electric fuel and purchased power deferral	Electric fuel and purchased power deferral	Up to 1 year		3,667		5,824		Electric fuel and purchased power deferral	Up to 1 year		—		3,667
Taxes refundable to customers		Up to 1 year		3,557		3,472
Other	Other	Up to 1 year		5,661		9,814		Other	Up to 1 year		5,762		5,661
				31,450		42,935					16,303		31,450
Noncurrent:	Noncurrent:							Noncurrent:
Taxes refundable to customers	Taxes refundable to customers	Over plant lives		227,850		246,034		Taxes refundable to customers	Over plant lives		215,421		227,850
Plant removal and decommissioning costs	Plant removal and decommissioning costs	Over plant lives		167,171		173,722		Plant removal and decommissioning costs	Over plant lives		168,152		167,171
Pension and postretirement benefits	Pension and postretirement benefits	**		16,989		18,065		Pension and postretirement benefits	**		20,434		16,989
Other	Other	Up to 21 years		16,065		9,549		Other	Up to 20 years		24,783		16,065
				428,075		447,370					428,790		428,075
Total regulatory liabilities	Total regulatory liabilities			$	459,525	$	490,305	Total regulatory liabilities			$	445,093	$	459,525
Net regulatory position	Net regulatory position			$	(11,617)	$	(72,908)	Net regulatory position			$	31,449	$	(11,617)


		Balance at January 1, 2020		Goodwill Acquired During the Year		Measurement Period Adjustments		Balance at December 31, 2020			Balance at January 1, 2021		Goodwill Acquired During the Year		Measurement Period Adjustments		Balance at December 31, 2021
		(In thousands)									(In thousands)
Natural gas distribution	Natural gas distribution	$	345,736	$	0	$	0	$	345,736	Natural gas distribution	$	345,736	$	—	$	—	$	345,736

Construction materials and contracting	Construction materials and contracting	217,234		8,778		(9)		226,003		Construction materials and contracting	226,003		50,640		(217)		276,426
Construction services	Construction services	118,388		24,436		400		143,224		Construction services	143,224		—		—		143,224
Total	Total	$	681,358	$	33,214	$	391	$	714,963	Total	$	714,963	$	50,640	$	(217)	$	765,386