MDU RESOURCES GROUP INC

Previous wording

Strategic Initiatives The Company incurred costs in connection with the strategic initiatives in 2023 and 2024, as noted in the Business Segment Financial and Operating Data section and expects to continue to incur these costs until the initiatives are completed.

Current wording

Strategic Initiatives The Company incurred costs in connection with the strategic initiatives in 2023 and 2024, as noted in the Business Segment Financial and Operating Data section and expects to continue to incur these costs until the initiatives and subsequent work are completed.

Previous wording

On May 31, 2023, the Company completed the separation of Knife River, its construction materials and contracting business, from the Company, resulting in Knife River becoming an independent, publicly traded company. The Company's board of directors approved the distribution of approximately 90 percent of the issued and outstanding shares of Knife River to the Company's stockholders. Stockholders of the Company received one share of Knife River common stock for every four shares of the Company's common stock held on May 22, 2023, the record date for the distribution. The Company retained approximately 10 percent or 5.7 million shares of Knife River common stock immediately following the separation, which were disposed of in a tax-free exchange in November 2023. The separation of Knife River was a tax-free spinoff transaction to the Company's stockholders for U.S. federal income tax purposes.

Current wording

On May 31, 2023, the Company completed the separation of Knife River, its construction materials and contracting business, from the Company, resulting in Knife River becoming an independent, publicly-traded company. The Company's board of directors approved the distribution of approximately 90 percent of the issued and outstanding shares of Knife River to the Company's stockholders. Stockholders of the Company received one share of Knife River common stock for every four shares of the Company's common stock held on May 22, 2023, the record date for the distribution. The Company retained approximately 10 percent or 5.7 million shares of Knife River common stock immediately following the separation, which were disposed of in a tax-free exchange in November 2023.

Previous wording

Based on the Company's anticipated future state as a pure-play regulated energy delivery business, the Company's board of directors established a long-term dividend payout ratio target of 60 percent to 70 percent of regulated energy delivery earnings. The Company has an 86-year history of uninterrupted dividend payments to stockholders and remains committed to paying a competitive dividend as the Company transitions to being a pure-play regulated energy delivery company.

Current wording

Based on the Company becoming a pure-play regulated energy delivery business, the Company's board of directors established a long-term dividend payout ratio target of 60 percent to 70 percent of regulated energy delivery earnings. The Company has an 86-year history of uninterrupted dividend payments to stockholders and remains committed to paying a competitive dividend as the Company transitions to being a pure-play regulated energy delivery company.

Previous wording

Market Trends The Company continues to manage the inflationary pressures experienced throughout the United States, including the impact that inflation, higher interest rates, commodity price volatility and supply chain disruptions may have on its business and customers and proactively looks for ways to lessen the impact to its business. Higher interest rates have resulted in and may continue to result in increased borrowing costs on new debt, resulting in impacts to the Company's asset valuations and negatively impacting the purchasing power of its customers. The Company has continued to evaluate its businesses and has increased pricing for its products and services where possible. The ability to raise selling prices to cover higher costs due to inflation are subject to regulatory approval, customer demand, industry competition and the availability of materials, among other things.

Current wording

Market Trends The Company continues to manage the inflationary pressures experienced throughout the United States, including the impact that inflation, higher interest rates, commodity price volatility and supply chain disruptions may have on its business and customers and proactively looks for ways to lessen the impact to its business. The Company has observed supply chain improvements in lead times for certain commodities. Additionally, the Company is closely monitoring potential supply chain disruptions due to hurricanes Helene and Milton. Storm-related orders may receive priority, which could impact the Company's supply chain operations. Although the Company has started to see some reduction to interest rates, they remain elevated and have resulted in and may continue to result in increased borrowing costs on new debt, impacts to the Company's asset valuations and negatively impacting the purchasing power of its customers. The Company has continued to evaluate its businesses and has increased pricing for its products and services where possible. The ability to raise selling prices to cover higher costs due to inflation are subject to regulatory approval, customer demand, industry competition and the availability of materials, among other things.

Previous wording

For more information on possible impacts to the Company's businesses, see the Outlook for each segment below and Part I, Item 1A. Risk Factors in the 2023 Annual Report.

Current wording

For more information on possible impacts to the Company's businesses, see the Outlook for each segment below, Part II, Item 1A. Risk Factors in this quarterly report and Part I, Item 1A. Risk Factors in the 2023 Annual Report.

Previous wording

The following sections contain forward-looking statements within the meaning of Section 21E of the Exchange Act. Forward-looking statements are all statements other than statements of historical fact, including without limitation those statements that are identified by the words "anticipates," "estimates," "expects," "intends," "plans," "predicts" and similar expressions, and include statements concerning plans, trends, objectives, goals, strategies, performance or future events, including the dividend payout ratio target, the anticipated tax-free spinoff of its construction services business or the proposed future structure of the Company as a pure-play regulated energy delivery company, and underlying assumptions (many of which are based, in turn, upon further assumptions) and other statements that are other than statements of historical facts. From time to time, the Company may publish or otherwise make available forward-looking statements of this nature, including statements contained within Business Segment Financial and Operating Data.

Current wording

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 21E of the Exchange Act. Forward-looking statements are all statements other than statements of historical fact, including without limitation those statements that are identified by the words "anticipates," "estimates," "expects," "intends," "plans," "predicts" and similar expressions, and include statements concerning plans, trends, objectives, goals, strategies, performance or future events, including the dividend payout ratio target or becoming a pure-play regulated energy delivery company, and underlying assumptions (many of which are based, in turn, upon further assumptions) and other statements that are other than statements of historical facts. From time to time, the Company may publish or otherwise make available forward-looking statements of this nature, including statements contained within Business Segment Financial and Operating Data.

Previous wording

Six Months Ended June 30, 2024, Compared to Six Months Ended June 30, 2023 The Company's consolidated earnings decreased $7.7 million. The decrease in earnings is primarily due to the absence of the 2023 $90.8 million, net of tax unrealized gain on the Company's retained interest in Knife River, partially offset by the absence of the 2023 loss from discontinued operations and increased earnings at the pipeline business.

Current wording

Three Months Ended September 30, 2024, Compared to Three Months Ended September 30, 2023 The Company's consolidated earnings decreased $10.3 million. The decrease in earnings is primarily due to the absence of the 2023 $22.8 million, net of tax, unrealized gain on the Company's retained interest in Knife River, partially offset by the absence of the 2023 loss from discontinued operations and increased earnings at the construction services, electric and pipeline businesses.

Previous wording

•Earnings increased at the pipeline business driven by higher transportation volumes, primarily from organic growth projects placed in service in November 2023 and March 2024. New transportation and storage service rates effective August 1, 2023, and higher storage-related revenue further drove the increase. The business also benefited from proceeds received from a customer settlement that was recorded in other income. These increases were offset in part by higher operation and maintenance expense, primarily attributable to payroll-related costs, and higher depreciation expense due to organic growth projects placed in service as previously discussed, which was partly offset by fully depreciated assets. The business also incurred higher interest expense as a result of increased debt balances to fund capital expenditures.

Current wording

•The earnings increase at the pipeline business was driven by higher transportation volumes, primarily from organic growth projects placed in service in November 2023, March 2024 and July 2024. Higher storage-related revenue and new transportation and storage service rates effective August 1, 2023, further drove the increase. The increase was offset in part by higher operation and maintenance expense primarily attributable to payroll-related costs and higher materials and contract services. The business also incurred higher depreciation expense due to organic growth projects placed in service as previously discussed.

Previous wording

•Other earnings decreased primarily due to the absence of the 2023 $90.8 million, net of tax unrealized gain on the Company's retained interest in Knife River. Partially offsetting this decrease was lower operation and maintenance expense, largely a result of corporate overhead costs classified as continuing operations allocated to the construction materials business in 2023 which are not included in Other in 2024.

Current wording

•Other earnings decreased primarily due to the absence of the 2023 $22.8 million, net of tax, unrealized gain on the Company's retained interest in Knife River and higher operation and maintenance expense related to higher insurance claims experience at the captive insurer. Partially offsetting the decrease was lower interest expense due to decreased borrowings.

Previous wording

Three Months Ended June 30, 2024, Compared to Three Months Ended June 30, 2023 The Company's consolidated earnings decreased $70.3 million. The decrease in earnings is primarily due to the absence of the 2023 $90.8 million, net of tax unrealized gain on the Company's retained interest in Knife River, partially offset by the absence of the 2023 loss from discontinued operations and increased earnings at the pipeline business.

Current wording

Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023 The Company's consolidated earnings decreased $18.1 million. The decrease in earnings is primarily due to the absence of the 2023 $113.6 million, net of tax, unrealized gain on the Company's retained interest in Knife River, partially offset by the absence of the 2023 loss from discontinued operations and increased earnings at the pipeline business.

Previous wording

•Earnings at the electric business increased primarily due to rate relief in North Dakota and Montana and providing power to a data center near Ellendale, North Dakota. These increases were offset in part by decreased residential sales volumes due to 37.0 percent cooler weather in the second quarter of 2024 and higher operation and maintenance expense, primarily contract services.

Current wording

•The electric business earnings increase was largely the result of higher retail sales revenue due to rate relief in North Dakota, Montana, and South Dakota. Partially offsetting the increase was higher operation and maintenance expense, primarily contract services, and decreased residential sales volumes due to 37.0 percent cooler weather in the second quarter of 2024.

Previous wording

•Earnings decreased slightly at the natural gas distribution business. The business experienced higher operation and maintenance expense, primarily contract services and software-related expenses, and increased depreciation and amortization expense, largely a result of increased plant additions. The business also experienced lower retail sales volumes to residential and commercial customers, partially offset by weather normalization and decoupling mechanisms. Partially offsetting these items was rate relief in North Dakota, South Dakota and Idaho, and increased transportation revenue, primarily to serve electric generation and industrial customers.

Current wording

•Earnings decreased slightly at the natural gas distribution business. The business experienced higher depreciation and amortization expense, primarily a result of increased plant additions, and higher operation and maintenance expense, primarily contract services and software-related expenses. The business also experienced lower retail sales volumes to residential and commercial customers, offset in part by weather normalization and decoupling mechanisms. Partially offsetting these items was rate relief in North Dakota, South Dakota and Idaho, and increased transportation revenue, primarily to serve industrial customers.

Previous wording

•The earnings increase at the pipeline business was driven by higher transportation volumes, primarily from organic growth projects placed in service in November 2023 and March 2024. New transportation and storage service rates effective August 1, 2023, and higher storage-related revenue further drove the increase. The business also benefited from proceeds received from a customer settlement that was recorded in other income. These increases were offset in part by higher operation and maintenance expense, primarily attributable to payroll-related costs. The business also incurred higher depreciation expense due to organic growth projects placed in service as previously discussed, which was partly offset by fully depreciated assets.

Current wording

•Earnings increased at the pipeline business, driven by higher transportation volumes, primarily from organic growth projects placed in service in November 2023, March 2024 and July 2024, and increased contracted volume commitments beginning February 2023 from the North Bakken Expansion project. New transportation and storage service rates effective August 1, 2023, and higher storage-related revenue further drove the increase. The business also benefited from proceeds received from a customer settlement that was recorded in other income. These increases were offset in part by higher operation and maintenance expense, primarily attributable to payroll-related costs, and higher depreciation expense due to organic growth projects placed in service as previously discussed, which was partly offset by fully depreciated assets.

Previous wording

•The construction services business experienced increased earnings, however, the business experienced a decrease in income from continuing operations as a result of interest on debt facilities repaid in connection with the Knife River separation in 2023 classified as discontinued operations. Although revenue was lower due to the timing of projects, the earnings increase was primarily driven by lower interest expense, including the interest expense classified as discontinued operations for the second quarter of 2023, and increased income from joint ventures activities. Also contributing to the increased earnings was higher operating income, particularly on transmission and distribution projects due to project mix and efficiencies on certain projects, and higher operating income as a percentage of revenue.

Current wording

•Although electrical and mechanical revenue was lower due to timing of projects, the construction services business experienced increased earnings, driven by higher operating income, particularly on transmission and distribution projects, partially offset by increased selling, general and administrative expense. Operating income as a percentage of revenue was higher as a result of project efficiencies. The business also experienced lower interest expense, including the interest expense classified as discontinued operations for the second quarter of 2023, and increased income from joint venture activities.

Previous wording

•Other earnings decreased primarily due to the absence of the 2023 $90.8 million, net of tax unrealized gain on the Company's retained interest in Knife River. Partially offsetting this decrease was lower operation and maintenance expense, largely a result of corporate overhead costs classified as continuing operations allocated to the construction materials business in 2023 which are not included in Other in 2024. Other also experienced increased interest income which partially offset the decrease.

Current wording

•Other earnings decreased primarily due to the absence of the 2023 $113.6 million, net of tax, unrealized gain on the Company's retained interest in Knife River. Partially offsetting this decrease was lower operation and maintenance expense, largely a result of corporate overhead costs classified as continuing operations allocated to the construction materials business in 2023 which are not included in Other in 2024. Other also experienced increased interest income which partially offset the decrease.

Previous wording

These segments are also subject to extensive regulation related to certain operational and environmental compliance, cybersecurity, permit terms and system integrity. 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. Within the past year, there have been cyber and physical attacks within the energy industry on infrastructure, such as substations, and the Company continues to evaluate the safeguards implemented to protect its electric and natural gas utility systems. Implementation of enhancements and additional requirements to protect the Company's infrastructure is ongoing.

Current wording

These segments are also subject to extensive regulation related to certain operational and environmental compliance, cybersecurity, permit terms and system integrity. 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. There have been cyber and physical attacks within the energy industry on infrastructure, such as substations, and the Company continues to evaluate the safeguards implemented to protect its electric and natural gas utility systems. Implementation of enhancements and additional requirements to protect the Company's infrastructure is ongoing.

Previous wording

To date, many states have enacted and others are considering, mandatory clean energy standards requiring utilities to meet certain thresholds of renewable and/or carbon-free energy supply. The current presidential administration has made climate change a focus, as further discussed in the Outlook section. Over the long-term, the Company expects overall electric demand to be positively impacted by increased electrification trends, including electric vehicle adoption, as a means to address economy-wide carbon emission concerns and changing customer conservation patterns. Recently, MISO and NERC announced concerns with the future reliability of the electric grid due to rapid expansion of renewables and retirement of baseload resources such as coal and the uncertainty of adequate energy production during certain periods of time, while load growth has increased faster than expected. MISO received FERC approval of a seasonal resource adequacy construct for its accreditation process, versus the previous annual summer peak capacity requirement process. Montana-Dakota filed its 2024 Integrated Resource Plan with the NDPSC on July 12, 2024. With MISO's filed changes in resources adequacy at FERC and the adoption of direct loss of load accreditation for generation resources around riskiest hours on the system versus peak load hours, Montana-Dakota is seeing the need to add additional capacity resources to its system in 2027 versus 2034 as identified in its last Integrated Resource Plan. The Company will continue to monitor the progress of these changes and assess the potential impacts they may have on its stakeholders, business processes, results of operations, cash flows and disclosures.

Current wording

To date, many states have enacted and others are considering, mandatory clean energy standards requiring utilities to meet certain thresholds of renewable and/or carbon-free energy supply. The current presidential administration has made climate change a focus, as further discussed in the Outlook section. Over the long-term, the Company expects overall electric demand to be positively impacted by increased electrification trends, including electric vehicle adoption, as a means to address economy-wide carbon emission concerns, data center growth and changing customer conservation patterns. Recently, MISO and NERC announced concerns with the future reliability of the electric grid due to rapid expansion of renewables and retirement of baseload resources such as coal and the uncertainty of adequate energy production during certain periods of time, while load growth has increased faster than expected. MISO received FERC approval of a seasonal resource adequacy construct for its accreditation process, versus the previous annual summer peak capacity requirement process. Montana-Dakota filed its 2024 Integrated Resource Plan with the NDPSC on July 12, 2024. With MISO's filed changes in resources adequacy at FERC and the adoption of direct loss of load accreditation for generation resources around riskiest hours on the system versus peak load hours, Montana-Dakota is seeing the need to add additional capacity resources to its system in 2027 versus 2034 as identified in its last Integrated Resource Plan. The Company will continue to monitor the progress of these changes and assess the potential impacts they may have on its stakeholders, business processes, results of operations, cash flows and disclosures.

Previous wording

In December 2022 and January 2023, natural gas prices significantly increased across the Pacific Northwest from multiple price-pressuring events including wide-spread below-normal temperatures and higher natural gas consumption; reduced natural gas flows due to pipeline constraints, including maintenance in West Texas; and historically low regional natural gas storage levels. Natural gas prices stabilized by March 2023. The higher natural gas prices in December 2022 and January 2023 impacted both Intermountain and Cascade, both of which borrowed short-term debt of $125.0 million and $150.0 million, respectively, in January 2023 to finance the increased natural gas costs. To assist in the recovery of higher natural gas costs, Intermountain filed an out-of-cycle purchased gas adjustment with the IPUC that was effective February 1, 2023, and is collecting interest costs associated with short-term borrowing with rates effective October 1, 2023. Effective November 1, 2023, as approved by the WUTC, Cascade started recovery in Washington of these increased gas costs over a period of two years rather than the normal one year period. In January 2024, Cascade and Intermountain made the final repayment on short-term debt of $50.0 million and $45.0 million, respectively.

Current wording

In December 2022 and January 2023, natural gas prices significantly increased across the Pacific Northwest from multiple price-pressuring events including wide-spread below-normal temperatures and higher natural gas consumption; reduced natural gas flows due to pipeline constraints, including maintenance in West Texas; and historically low regional natural gas storage levels. Natural gas prices stabilized by March 2023. The higher natural gas prices in December 2022 and January 2023 impacted both Intermountain and Cascade, both of which borrowed short-term debt of $125.0 million and $150.0 million, respectively, in January 2023 to finance the increased natural gas costs. To assist in the recovery of higher natural gas costs, Intermountain filed an out-of-cycle purchased gas adjustment with the Idaho Public Utilities Commission that was effective February 1, 2023, and collected interest costs associated with short-term borrowing. Effective November 1, 2023, as approved by the WUTC, Cascade started recovery in Washington of these increased gas costs over a period of two years rather than the normal one year period. In January 2024, Cascade and Intermountain made the final repayment on short-term debt of $50.0 million and $45.0 million, respectively.

Previous wording

In late summer and fall of 2023, electric fuel and purchased power prices increased across Montana-Dakota's integrated system. This was caused by transmission congestion in northwest North Dakota due to delays in additional SPP transmission line build-out, as well as additional load growth in the Bakken region. Electric fuel and purchased power prices remained elevated through November 2023. To assist in the recovery of the higher electric fuel and purchased power costs, Montana-Dakota filed waiver requests with the NDPSC and SDPUC, which were approved deferring the increased costs to the annual fuel clause adjustment. In Montana, the waiver request is filed monthly and is unopposed by the MTPSC. On December 22, 2023, MISO filed a dispute letter with SPP regarding the coordination of the constraint in northwest North Dakota. Montana-Dakota filed a complaint with FERC related to this issue on January 23, 2024, which is pending before FERC. MISO also filed its own complaint with FERC against SPP on March 8, 2024 related to the congestion coordination in northwest North Dakota. Effective April 1, 2024, as approved by the NDPSC, Montana-Dakota started recovery in North Dakota of these increased costs over a period of two years rather than one year, which will lessen the impact to customers and allow more time for Montana-Dakota's FERC complaint to mature and have greater certainty of the outcome. In South Dakota and Montana, Montana-Dakota started recovery of these costs over a one-year period effective July 1, 2024.

Current wording

In late summer and fall of 2023, electric fuel and purchased power prices increased across Montana-Dakota's integrated system. This was caused by transmission congestion in northwest North Dakota due to delays in additional SPP transmission line build-out, as well as additional load growth in the Bakken region. Electric fuel and purchased power prices remained elevated through November 2023. To assist in the recovery of the higher electric fuel and purchased power costs, Montana-Dakota filed waiver requests with the NDPSC and SDPUC, which were approved deferring the increased costs to the annual fuel clause adjustment. In Montana, the waiver request is filed monthly and is unopposed by the MTPSC. On December 22, 2023, MISO filed a dispute letter with SPP regarding the coordination of the constraint in northwest North Dakota. Montana-Dakota filed a complaint with FERC related to this issue on January 23, 2024. MISO also filed its own complaint with FERC against SPP on March 8, 2024 related to the congestion coordination in northwest North Dakota. On September 10, 2024, FERC issued an order denying both Montana-Dakota and MISO's complaints regarding this issue. On October 10, 2024, Montana-Dakota and MISO filed with FERC for rehearing on FERC's decision to deny these complaints. Effective April 1, 2024, as approved by the NDPSC, Montana-Dakota started recovery in North Dakota of these increased costs over a period of two years rather than one year, which will lessen the impact to customers and allow more time for Montana-Dakota's FERC complaint to mature and have greater certainty of the outcome. In South Dakota and Montana, Montana-Dakota started recovery of these costs over a one-year period effective July 1, 2024.

Previous wording

Three Months Ended June 30, 2024, Compared to Three Months Ended June 30, 2023 Electric earnings decreased $800,000 as a result of:

Current wording

Three Months Ended September 30, 2024, Compared to Three Months Ended September 30, 2023 Electric earnings increased $3.4 million as a result of:

Previous wording

▪Higher fuel and purchased power costs of $17.5 million recovered in customer rates and offset in expense, as described below.

Current wording

◦Partially offset by lower fuel and purchased power costs of $3.8 million recovered in customer rates and offset in expense, as described below.

Previous wording

•Electric fuel and purchased power increased $9.3 million, largely the result of higher commodity prices, partially offset by lower retail sales volumes.

Current wording

•Electric fuel and purchased power decreased $3.8 million, largely the result of lower commodity prices, partially offset by higher retail sales volumes.

Previous wording

•Interest expense increased $500,000, largely the result of higher long term interest expense due to higher commercial paper balances.

Current wording

•Interest expense increased $600,000, largely the result of higher long term interest expense due to incremental debt issuances.

Previous wording

•Income tax benefit increased $1.6 million, largely due to higher production tax credits driven by higher wind production and lower income before income taxes.

Current wording

•Income tax expense decreased $500,000, largely due to higher production tax credits driven by higher wind production, partially offset by higher income taxes related to higher income before income taxes.

Previous wording

Six Months Ended June 30, 2024, Compared to Six Months Ended June 30, 2023 Electric earnings increased $500,000 as a result of:

Current wording

Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023 Electric earnings increased $3.8 million as a result of:

Previous wording

▪Higher fuel and purchased power costs of $9.3 million recovered in customer rates and offset in expense, as described below.

Current wording

▪Higher fuel and purchased power costs of $13.8 million recovered in customer rates and offset in expense, as described below.

Previous wording

▪Higher miscellaneous revenue of $1.3 million, including higher transmission interconnect upgrades.

Current wording

▪Higher miscellaneous revenue of $1.8 million, including higher transmission interconnect upgrades.

Previous wording

◦Partially offset by lower retail sales volumes of $3.8 million, driven primarily by lower residential volumes due to 37.0 percent cooler weather in the second quarter of 2024. There was a 1.9 percent increase in volumes, which includes an increase in volumes from the data center as further discussed in the outlook section.

Current wording

◦Partially offset by lower retail sales volumes of $2.5 million, driven primarily by lower residential volumes due to 37.0 percent cooler weather in the second quarter of 2024. There was a 2.3 percent increase in volumes, which includes an increase in volumes from the data center as further discussed in the Outlook section.

Previous wording

•Electric fuel and purchased power increased $17.5 million, largely the result of higher commodity prices and higher retail sales volumes.

Current wording

•Electric fuel and purchased power increased $13.8 million, largely the result of higher commodity prices and higher retail sales volumes.

Previous wording

•Operation and maintenance increased $2.5 million, largely the result of increased contract services, primarily due to higher transmission expense and tree trimming expense.

Current wording

•Operation and maintenance increased $3.0 million, largely the result of increased contract services, primarily due to higher transmission expense and tree trimming expense.

Previous wording

•Other income increased $1.9 million, primarily resulting from higher interest income of $1.5 million, including contributions in aid of construction and amounts related to higher deferred fuel and purchased power balances, and higher AFUDC equity due to higher CWIP balances.

Current wording

•Other income increased $2.1 million, primarily resulting from higher interest income of $1.4 million, including amounts related to higher deferred fuel and purchased power balances, higher returns on the Company's nonqualified benefit plan investments, and higher AFUDC equity due to higher CWIP balances.

Previous wording

•Income tax benefit increased $1.2 million, primarily due to higher production tax credits due to higher wind production and lower income before income taxes.

Current wording

•Income tax benefit increased $1.5 million, primarily due to higher production tax credits due to higher wind production, partially offset by higher income taxes related to higher income before income taxes.

Previous wording

Three Months Ended June 30, 2024, Compared to Three Months Ended June 30, 2023 Natural gas distribution reported an increased seasonal loss of $1.8 million as a result of:

Current wording

Three Months Ended September 30, 2024, Compared to Three Months Ended September 30, 2023 Natural gas distribution reported a decreased seasonal loss of $200,000 as a result of:

Previous wording

•Purchased natural gas sold decreased $20.2 million, largely due to lower commodity costs of $22.5 million and lower volumes of natural gas purchased of $2.1 million. These decreases were partially offset by net environmental compliance costs and emissions allowance sales revenue of $4.5 million.

Current wording

•Purchased natural gas sold decreased $2.3 million, largely due to lower commodity costs of $11.3 million and lower volumes of natural gas purchased of $2.8 million. These decreases were partially offset by net environmental compliance costs and emissions allowance sales revenue of $11.8 million.

Previous wording

•Depreciation and amortization increased $4.3 million, primarily resulting from growth and replacement projects placed in service.

Current wording

•Depreciation and amortization increased $1.1 million, primarily resulting from growth and replacement projects placed in service, partially offset by lower depreciation rates implemented from a South Dakota rate case.

Previous wording

•Other income increased $500,000 driven primarily by higher interest income on regulatory deferral balances.

Current wording

•Other income increased $1.3 million driven primarily by higher returns on the Company's nonqualified benefit plans and higher interest income on regulatory deferral balances.

Previous wording

•Interest expense increased $1.7 million, primarily from higher long-term debt balances from debt issued in 2023 and higher commercial paper and revolving credit agreement balances, partially offset by lower short-term debt due to short term debt repayments.

Current wording

•Interest expense increased $1.5 million, primarily from higher long-term debt balances from debt issued in 2023 and 2024 and higher commercial paper and revolving credit agreement balances, partially offset by lower short-term debt due to short term debt repayments.

Previous wording

•Income tax benefit increased $600,000, the result of a higher seasonal loss before income taxes.

Current wording

•Income tax benefit decreased $200,000, the result of a lower seasonal loss before income taxes.

Previous wording

Six Months Ended June 30, 2024, Compared To Six Months Ended June 30, 2023 Natural gas distribution earnings decreased $800,000 as a result of:

Current wording

Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023 Natural gas distribution earnings decreased $400,000 as a result of:

Previous wording

▪A 5.7 percent decrease in retail sales volumes to residential and commercial customer classes, offset in part by weather normalization and decoupling mechanisms of $4.3 million in certain jurisdictions.

Current wording

▪A 5.6 percent decrease in retail sales volumes to residential and commercial customer classes, offset in part by weather normalization and decoupling mechanisms of $4.8 million in certain jurisdictions.