0001466593falseFY2024http://fasb.org/us-gaap/2024#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2024#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrentP3Yiso4217:USDxbrli:sharesiso4217:USDxbrli:sharesottr:segmentottr:plantottr:reportingUnitottr:planottr:foundationxbrli:pureottr:yearottr:agreementottr:regionalTransmissionOrganizationottr:measureutr:MWh00014665932024-01-012024-12-3100014665932024-06-3000014665932025-01-3100014665932024-12-3100014665932023-12-310001466593ottr:ElectricMember2024-01-012024-12-310001466593ottr:ElectricMember2023-01-012023-12-310001466593ottr:ElectricMember2022-01-012022-12-310001466593ottr:ProductSalesMember2024-01-012024-12-310001466593ottr:ProductSalesMember2023-01-012023-12-310001466593ottr:ProductSalesMember2022-01-012022-12-3100014665932023-01-012023-12-3100014665932022-01-012022-12-310001466593us-gaap:CommonStockMember2021-12-310001466593us-gaap:AdditionalPaidInCapitalMember2021-12-310001466593us-gaap:RetainedEarningsMember2021-12-310001466593us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-3100014665932021-12-310001466593us-gaap:AdditionalPaidInCapitalMember2022-01-012022-12-310001466593us-gaap:CommonStockMember2022-01-012022-12-310001466593us-gaap:RetainedEarningsMember2022-01-012022-12-310001466593us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-12-310001466593us-gaap:CommonStockMember2022-12-310001466593us-gaap:AdditionalPaidInCapitalMember2022-12-310001466593us-gaap:RetainedEarningsMember2022-12-310001466593us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-3100014665932022-12-310001466593us-gaap:AdditionalPaidInCapitalMember2023-01-012023-12-310001466593us-gaap:CommonStockMember2023-01-012023-12-310001466593us-gaap:RetainedEarningsMember2023-01-012023-12-310001466593us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-12-310001466593us-gaap:CommonStockMember2023-12-310001466593us-gaap:AdditionalPaidInCapitalMember2023-12-310001466593us-gaap:RetainedEarningsMember2023-12-310001466593us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001466593us-gaap:AdditionalPaidInCapitalMember2024-01-012024-12-310001466593us-gaap:CommonStockMember2024-01-012024-12-310001466593us-gaap:RetainedEarningsMember2024-01-012024-12-310001466593us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-12-310001466593us-gaap:CommonStockMember2024-12-310001466593us-gaap:AdditionalPaidInCapitalMember2024-12-310001466593us-gaap:RetainedEarningsMember2024-12-310001466593us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-12-310001466593ottr:ElectricPlantMember2024-01-012024-12-310001466593ottr:ElectricPlantMember2023-01-012023-12-310001466593ottr:ElectricPlantMember2022-01-012022-12-310001466593ottr:ElectricPlantMembersrt:MinimumMemberus-gaap:EquipmentMember2024-01-012024-12-310001466593ottr:ElectricPlantMembersrt:MaximumMemberus-gaap:EquipmentMember2024-01-012024-12-310001466593ottr:NonelectricPlantMembersrt:MinimumMemberus-gaap:EquipmentMember2024-12-310001466593ottr:NonelectricPlantMembersrt:MaximumMemberus-gaap:EquipmentMember2024-12-310001466593ottr:NonelectricPlantMembersrt:MinimumMemberottr:BuildingAndLeaseholdImprovementsMember2024-12-310001466593ottr:NonelectricPlantMembersrt:MaximumMemberottr:BuildingAndLeaseholdImprovementsMember2024-12-310001466593srt:MinimumMember2024-12-310001466593srt:MaximumMember2024-12-310001466593us-gaap:RelatedPartyMemberottr:ContributionObligationMember2024-12-310001466593us-gaap:RelatedPartyMemberottr:ContributionObligationMember2023-12-310001466593us-gaap:RelatedPartyMemberottr:ContributionObligationPaidMember2023-12-310001466593us-gaap:RelatedPartyMemberottr:ContributionObligationPaidMember2024-12-310001466593us-gaap:RelatedPartyMemberottr:ContributionObligationPaidMember2022-12-310001466593us-gaap:RelatedPartyMemberottr:ContributionObligationPaidMember2024-01-012024-12-310001466593us-gaap:RelatedPartyMemberottr:ContributionObligationPaidMember2023-01-012023-12-310001466593us-gaap:RelatedPartyMemberottr:ContributionObligationPaidMember2022-01-012022-12-310001466593ottr:OtterTailPowerCompanyMemberottr:CoyoteCreekMiningCompanyLLCCCMCMemberottr:LigniteSalesAgreementMember2024-12-310001466593ottr:OtterTailPowerCompanyMemberottr:CoyoteCreekMiningCompanyLLCCCMCMemberottr:LigniteSalesAgreementMember2024-01-012024-12-310001466593us-gaap:OperatingSegmentsMemberottr:ElectricMember2024-01-012024-12-310001466593us-gaap:OperatingSegmentsMemberottr:ElectricMember2023-01-012023-12-310001466593us-gaap:OperatingSegmentsMemberottr:ElectricMember2022-01-012022-12-310001466593us-gaap:OperatingSegmentsMemberottr:ManufacturingMember2024-01-012024-12-310001466593us-gaap:OperatingSegmentsMemberottr:ManufacturingMember2023-01-012023-12-310001466593us-gaap:OperatingSegmentsMemberottr:ManufacturingMember2022-01-012022-12-310001466593us-gaap:OperatingSegmentsMemberottr:PlasticsMember2024-01-012024-12-310001466593us-gaap:OperatingSegmentsMemberottr:PlasticsMember2023-01-012023-12-310001466593us-gaap:OperatingSegmentsMemberottr:PlasticsMember2022-01-012022-12-310001466593us-gaap:CorporateNonSegmentMember2024-01-012024-12-310001466593us-gaap:CorporateNonSegmentMember2023-01-012023-12-310001466593us-gaap:CorporateNonSegmentMember2022-01-012022-12-310001466593us-gaap:OperatingSegmentsMemberottr:ElectricMember2024-12-310001466593us-gaap:OperatingSegmentsMemberottr:ElectricMember2023-12-310001466593us-gaap:OperatingSegmentsMemberottr:ManufacturingMember2024-12-310001466593us-gaap:OperatingSegmentsMemberottr:ManufacturingMember2023-12-310001466593us-gaap:OperatingSegmentsMemberottr:PlasticsMember2024-12-310001466593us-gaap:OperatingSegmentsMemberottr:PlasticsMember2023-12-310001466593us-gaap:CorporateNonSegmentMember2024-12-310001466593us-gaap:CorporateNonSegmentMember2023-12-310001466593us-gaap:OperatingSegmentsMember2024-01-012024-12-310001466593us-gaap:OperatingSegmentsMember2023-01-012023-12-310001466593us-gaap:OperatingSegmentsMember2022-01-012022-12-310001466593ottr:TwoCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberottr:ElectricMember2024-01-012024-12-310001466593ottr:TwoCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberottr:ManufacturingMember2024-01-012024-12-310001466593ottr:TwoCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberottr:PlasticsMember2024-01-012024-12-310001466593ottr:OneCustomerMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2024-01-012024-12-310001466593ottr:RetailResidentialMemberottr:ElectricMember2024-01-012024-12-310001466593ottr:RetailResidentialMemberottr:ElectricMember2023-01-012023-12-310001466593ottr:RetailResidentialMemberottr:ElectricMember2022-01-012022-12-310001466593ottr:RetailCommercialAndIndustrialMemberottr:ElectricMember2024-01-012024-12-310001466593ottr:RetailCommercialAndIndustrialMemberottr:ElectricMember2023-01-012023-12-310001466593ottr:RetailCommercialAndIndustrialMemberottr:ElectricMember2022-01-012022-12-310001466593ottr:RetailOtherMemberottr:ElectricMember2024-01-012024-12-310001466593ottr:RetailOtherMemberottr:ElectricMember2023-01-012023-12-310001466593ottr:RetailOtherMemberottr:ElectricMember2022-01-012022-12-310001466593ottr:ElectronicProductRetailMemberottr:ElectricMember2024-01-012024-12-310001466593ottr:ElectronicProductRetailMemberottr:ElectricMember2023-01-012023-12-310001466593ottr:ElectronicProductRetailMemberottr:ElectricMember2022-01-012022-12-310001466593us-gaap:ElectricTransmissionMemberottr:ElectricMember2024-01-012024-12-310001466593us-gaap:ElectricTransmissionMemberottr:ElectricMember2023-01-012023-12-310001466593us-gaap:ElectricTransmissionMemberottr:ElectricMember2022-01-012022-12-310001466593ottr:WholesaleMemberottr:ElectricMember2024-01-012024-12-310001466593ottr:WholesaleMemberottr:ElectricMember2023-01-012023-12-310001466593ottr:WholesaleMemberottr:ElectricMember2022-01-012022-12-310001466593ottr:ElectricProductOtherMemberottr:ElectricMember2024-01-012024-12-310001466593ottr:ElectricProductOtherMemberottr:ElectricMember2023-01-012023-12-310001466593ottr:ElectricProductOtherMemberottr:ElectricMember2022-01-012022-12-310001466593ottr:ElectricMember2024-01-012024-12-310001466593ottr:ElectricMember2023-01-012023-12-310001466593ottr:ElectricMember2022-01-012022-12-310001466593ottr:MetalPartsAndToolingMemberottr:ManufacturingMember2024-01-012024-12-310001466593ottr:MetalPartsAndToolingMemberottr:ManufacturingMember2023-01-012023-12-310001466593ottr:MetalPartsAndToolingMemberottr:ManufacturingMember2022-01-012022-12-310001466593ottr:PlasticProductsMemberottr:ManufacturingMember2024-01-012024-12-310001466593ottr:PlasticProductsMemberottr:ManufacturingMember2023-01-012023-12-310001466593ottr:PlasticProductsMemberottr:ManufacturingMember2022-01-012022-12-310001466593ottr:ScrapMetalMemberottr:ManufacturingMember2024-01-012024-12-310001466593ottr:ScrapMetalMemberottr:ManufacturingMember2023-01-012023-12-310001466593ottr:ScrapMetalMemberottr:ManufacturingMember2022-01-012022-12-310001466593ottr:ManufacturingMember2024-01-012024-12-310001466593ottr:ManufacturingMember2023-01-012023-12-310001466593ottr:ManufacturingMember2022-01-012022-12-310001466593ottr:PlasticsMember2024-01-012024-12-310001466593ottr:PlasticsMember2023-01-012023-12-310001466593ottr:PlasticsMember2022-01-012022-12-310001466593us-gaap:USGovernmentDebtSecuritiesMember2024-12-310001466593us-gaap:USGovernmentDebtSecuritiesMember2023-12-310001466593us-gaap:CorporateDebtSecuritiesMember2024-12-310001466593us-gaap:CorporateDebtSecuritiesMember2023-12-3100014665932024-04-012024-04-300001466593ottr:PensionAndOtherPostretirementBenefitPlansMember2024-12-310001466593ottr:PensionAndOtherPostretirementBenefitPlansMember2023-12-310001466593ottr:AlternativeRevenueProgramRidersMember2024-12-310001466593ottr:AlternativeRevenueProgramRidersMember2023-12-310001466593ottr:DeferredIncomeTaxesMember2024-12-310001466593ottr:DeferredIncomeTaxesMember2023-12-310001466593ottr:FuelClauseAdjustmentsMember2024-12-310001466593ottr:FuelClauseAdjustmentsMember2023-12-310001466593ottr:RegulatoryAssetDerivativeInstrumentsMember2024-12-310001466593ottr:RegulatoryAssetDerivativeInstrumentsMember2023-12-310001466593ottr:OtherRegulatoryAssetsMember2024-12-310001466593ottr:OtherRegulatoryAssetsMember2023-12-310001466593ottr:DeferredIncomeTaxesMember2024-12-310001466593ottr:DeferredIncomeTaxesMember2023-12-310001466593ottr:PlantRemovalObligationsMember2024-12-310001466593ottr:PlantRemovalObligationsMember2023-12-310001466593ottr:FuelClauseAdjustmentMember2024-12-310001466593ottr:FuelClauseAdjustmentMember2023-12-310001466593ottr:AlternativeRevenueProgramRidersMember2024-12-310001466593ottr:AlternativeRevenueProgramRidersMember2023-12-310001466593ottr:NorthDakotaPTCRefundsMember2024-12-310001466593ottr:NorthDakotaPTCRefundsMember2023-12-310001466593ottr:PensionAndOtherPostretirementBenefitPlansMember2024-12-310001466593ottr:PensionAndOtherPostretirementBenefitPlansMember2023-12-310001466593ottr:OtherRegulatoryLiabilitiesMember2024-12-310001466593ottr:OtherRegulatoryLiabilitiesMember2023-12-310001466593ottr:NorthDakotaRateCaseMemberottr:NDPSCMember2023-11-022023-11-020001466593ottr:NorthDakotaRateCaseMemberottr:NDPSCMember2024-07-032024-07-030001466593ottr:NorthDakotaRateCaseMemberottr:NDPSCMember2024-12-300001466593ottr:NorthDakotaRateCaseMemberottr:NDPSCMember2024-12-302024-12-300001466593us-gaap:EquipmentMember2024-12-310001466593us-gaap:EquipmentMember2023-12-310001466593ottr:BuildingsAndLeaseholdImprovementsMember2024-12-310001466593ottr:BuildingsAndLeaseholdImprovementsMember2023-12-310001466593us-gaap:LandMember2024-12-310001466593us-gaap:LandMember2023-12-310001466593ottr:BigStonePlantMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:BigStonePlantMember2024-12-310001466593ottr:CoyoteStationMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:CoyoteStationMember2024-12-310001466593ottr:BigStoneSouthEllendaleMultiValueProjectMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:BigStoneSouthEllendaleMultiValueProjectMember2024-12-310001466593ottr:FargoProjectMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:FargoProjectMember2024-12-310001466593ottr:BigStoneSouthBrookingsMultiValueProjectMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:BigStoneSouthBrookingsMultiValueProjectMember2024-12-310001466593ottr:BrookingsProjectMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:BrookingsProjectMember2024-12-310001466593ottr:BemidjiProjectMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:BemidjiProjectMember2024-12-310001466593ottr:JamestownProjectMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:JamestownProjectMember2024-12-310001466593ottr:BigStoneSouthAlexandriaMultiValueProjectMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:BigStoneSouthAlexandriaMultiValueProjectMember2024-12-310001466593ottr:AlexandriaProjectMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:AlexandriaProjectMember2024-12-310001466593ottr:OsloProjectMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:OsloProjectMember2024-12-310001466593ottr:BigStonePlantMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:BigStonePlantMember2023-12-310001466593ottr:CoyoteStationMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:CoyoteStationMember2023-12-310001466593ottr:BigStoneSouthEllendaleMultiValueProjectMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:BigStoneSouthEllendaleMultiValueProjectMember2023-12-310001466593ottr:FargoProjectMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:FargoProjectMember2023-12-310001466593ottr:BigStoneSouthBrookingsMultiValueProjectMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:BigStoneSouthBrookingsMultiValueProjectMember2023-12-310001466593ottr:BrookingsProjectMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:BrookingsProjectMember2023-12-310001466593ottr:BemidjiProjectMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:BemidjiProjectMember2023-12-310001466593ottr:JamestownProjectMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:JamestownProjectMember2023-12-310001466593ottr:BigStoneSouthAlexandriaMultiValueProjectMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:BigStoneSouthAlexandriaMultiValueProjectMember2023-12-310001466593ottr:AlexandriaProjectMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:AlexandriaProjectMember2023-12-310001466593ottr:ManufacturingMember2024-12-310001466593ottr:ManufacturingMember2023-12-310001466593ottr:PlasticsMember2024-12-310001466593ottr:PlasticsMember2023-12-310001466593us-gaap:CustomerRelationshipsMember2024-12-310001466593us-gaap:OtherIntangibleAssetsMember2024-12-310001466593us-gaap:CustomerRelationshipsMember2023-12-310001466593us-gaap:OtherIntangibleAssetsMember2023-12-310001466593srt:ParentCompanyMember2024-12-310001466593ottr:OtterTailPowerCompanyMember2024-12-310001466593srt:ParentCompanyMember2023-12-310001466593ottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:OtterTailCorporationCreditAgreementMember2024-12-310001466593ottr:OtterTailCorporationCreditAgreementMember2023-12-310001466593ottr:OTPCreditAgreementMember2024-12-310001466593ottr:OTPCreditAgreementMember2023-12-310001466593ottr:OtterTailCorporationCreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2024-12-110001466593ottr:OTPCreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2024-12-110001466593ottr:OtterTailCorporationCreditAgreementMemberus-gaap:LetterOfCreditMember2024-12-110001466593ottr:OTPCreditAgreementMemberus-gaap:LetterOfCreditMember2024-12-110001466593ottr:OtterTailCorporationCreditAgreementMember2024-12-110001466593ottr:OTPCreditAgreementMember2024-12-110001466593srt:MinimumMember2024-01-012024-12-310001466593srt:MaximumMember2024-01-012024-12-310001466593ottr:The355GuaranteedSeniorNotesDueDecember152026Member2024-12-310001466593ottr:The355GuaranteedSeniorNotesDueDecember152026Member2023-12-310001466593ottr:SeniorUnsecuredNotes6.37SeriesCDueAugust022027Member2024-12-310001466593ottr:SeniorUnsecuredNotes6.37SeriesCDueAugust022027Member2023-12-310001466593ottr:SeniorUnsecuredNotes468SeriesADueFebruary272029Member2024-12-310001466593ottr:SeniorUnsecuredNotes468SeriesADueFebruary272029Member2023-12-310001466593ottr:SeniorUnsecuredNotes307SeriesADueOctober102029Member2024-12-310001466593ottr:SeniorUnsecuredNotes307SeriesADueOctober102029Member2023-12-310001466593ottr:SeniorUnsecuredNotes3.22SeriesADueFebruary252030Member2024-12-310001466593ottr:SeniorUnsecuredNotes3.22SeriesADueFebruary252030Member2023-12-310001466593ottr:SeniorUnsecuredNotes322SeriesBDueAugust202030Member2024-12-310001466593ottr:SeniorUnsecuredNotes322SeriesBDueAugust202030Member2023-12-310001466593ottr:SeniorUnsecuredNotes274SeriesADueNovember292031Member2024-12-310001466593ottr:SeniorUnsecuredNotes274SeriesADueNovember292031Member2023-12-310001466593ottr:SeniorUnsecuredNotes5.48SeriesADueApril012034Member2024-12-310001466593ottr:SeniorUnsecuredNotes5.48SeriesADueApril012034Member2023-12-310001466593ottr:SeniorUnsecuredNotes647SeriesDDueAugust202037Member2024-12-310001466593ottr:SeniorUnsecuredNotes647SeriesDDueAugust202037Member2023-12-310001466593ottr:SeniorUnsecuredNotes352SeriesBDueOctober102039Member2024-12-310001466593ottr:SeniorUnsecuredNotes352SeriesBDueOctober102039Member2023-12-310001466593ottr:SeniorUnsecuredNotes362SeriesCDueFebruary252040Member2024-12-310001466593ottr:SeniorUnsecuredNotes362SeriesCDueFebruary252040Member2023-12-310001466593ottr:SeniorUnsecuredNotes547SeriesBDueFebruary272044Member2024-12-310001466593ottr:SeniorUnsecuredNotes547SeriesBDueFebruary272044Member2023-12-310001466593ottr:SeniorUnsecuredNotes4.07SeriesADueFebruary072048Member2024-12-310001466593ottr:SeniorUnsecuredNotes4.07SeriesADueFebruary072048Member2023-12-310001466593ottr:SeniorUnsecuredNotes382SeriesCDueOctober102049Member2024-12-310001466593ottr:SeniorUnsecuredNotes382SeriesCDueOctober102049Member2023-12-310001466593ottr:SeniorUnsecuredNotes392SeriesDDueFebruary252050Member2024-12-310001466593ottr:SeniorUnsecuredNotes392SeriesDDueFebruary252050Member2023-12-310001466593ottr:SeniorUnsecuredNotes369SeriesBDueNovember292051Member2024-12-310001466593ottr:SeniorUnsecuredNotes369SeriesBDueNovember292051Member2023-12-310001466593ottr:SeniorUnsecuredNotes377SeriesADueMay202052Member2024-12-310001466593ottr:SeniorUnsecuredNotes377SeriesADueMay202052Member2023-12-310001466593ottr:SeniorUnsecuredNotes5.77SeriesBDueApril012054Member2024-12-310001466593ottr:SeniorUnsecuredNotes5.77SeriesBDueApril012054Member2023-12-310001466593us-gaap:SeniorNotesMember2024-03-280001466593ottr:SeniorUnsecuredNotes5.48SeriesADueApril012034Memberus-gaap:SeniorNotesMember2024-03-280001466593ottr:SeniorUnsecuredNotes5.77SeriesBDueApril012054Memberus-gaap:SeniorNotesMember2024-03-2800014665932024-03-282024-03-280001466593us-gaap:PensionPlansDefinedBenefitMember2024-01-012024-12-310001466593us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2024-01-012024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:PermittedRange35To60PercentMembersrt:MinimumMemberottr:DefinedBenefitPlanReturnEnhancementMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:PermittedRange35To60PercentMembersrt:MaximumMemberottr:DefinedBenefitPlanReturnEnhancementMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:DefinedBenefitPlanReturnEnhancementMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:DefinedBenefitPlanReturnEnhancementMember2023-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:PermittedRange40To80PercentMembersrt:MinimumMemberottr:DefinedBenefitPlanRiskManagementMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:PermittedRange40To80PercentMembersrt:MaximumMemberottr:DefinedBenefitPlanRiskManagementMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:DefinedBenefitPlanRiskManagementMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:DefinedBenefitPlanRiskManagementMember2023-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:PermittedRange0To20PercentMembersrt:MinimumMemberottr:DefinedBenefitPlanAlternativesMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:PermittedRange0To20PercentMembersrt:MaximumMemberottr:DefinedBenefitPlanAlternativesMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:DefinedBenefitPlanAlternativesMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:DefinedBenefitPlanAlternativesMember2023-12-310001466593us-gaap:PensionPlansDefinedBenefitMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMember2023-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:DefinedBenefitPlanEquitySecuritiesMember2024-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:DefinedBenefitPlanEquitySecuritiesMember2024-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:DefinedBenefitPlanEquitySecuritiesMember2024-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:DefinedBenefitPlanEquitySecuritiesMember2024-12-310001466593us-gaap:DefinedBenefitPlanEquitySecuritiesMember2024-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:FixedIncomeFundsMember2024-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:FixedIncomeFundsMember2024-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:FixedIncomeFundsMember2024-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:FixedIncomeFundsMember2024-12-310001466593us-gaap:FixedIncomeFundsMember2024-12-310001466593us-gaap:FairValueInputsLevel1Memberottr:DefinedBenefitPlanHybridFundsMember2024-12-310001466593us-gaap:FairValueInputsLevel2Memberottr:DefinedBenefitPlanHybridFundsMember2024-12-310001466593us-gaap:FairValueInputsLevel3Memberottr:DefinedBenefitPlanHybridFundsMember2024-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberottr:DefinedBenefitPlanHybridFundsMember2024-12-310001466593ottr:DefinedBenefitPlanHybridFundsMember2024-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMember2024-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMember2024-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasuryAndGovernmentMember2024-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:USTreasuryAndGovernmentMember2024-12-310001466593us-gaap:USTreasuryAndGovernmentMember2024-12-310001466593us-gaap:FairValueInputsLevel1Memberottr:DefinedBenefitPlanOtherSEIEnergyDebtCollectiveFundMember2024-12-310001466593us-gaap:FairValueInputsLevel2Memberottr:DefinedBenefitPlanOtherSEIEnergyDebtCollectiveFundMember2024-12-310001466593us-gaap:FairValueInputsLevel3Memberottr:DefinedBenefitPlanOtherSEIEnergyDebtCollectiveFundMember2024-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberottr:DefinedBenefitPlanOtherSEIEnergyDebtCollectiveFundMember2024-12-310001466593ottr:DefinedBenefitPlanOtherSEIEnergyDebtCollectiveFundMember2024-12-310001466593us-gaap:FairValueInputsLevel1Member2024-12-310001466593us-gaap:FairValueInputsLevel2Member2024-12-310001466593us-gaap:FairValueInputsLevel3Member2024-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMember2024-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:DefinedBenefitPlanEquitySecuritiesMember2023-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:DefinedBenefitPlanEquitySecuritiesMember2023-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:DefinedBenefitPlanEquitySecuritiesMember2023-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:DefinedBenefitPlanEquitySecuritiesMember2023-12-310001466593us-gaap:DefinedBenefitPlanEquitySecuritiesMember2023-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:FixedIncomeFundsMember2023-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:FixedIncomeFundsMember2023-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:FixedIncomeFundsMember2023-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:FixedIncomeFundsMember2023-12-310001466593us-gaap:FixedIncomeFundsMember2023-12-310001466593us-gaap:FairValueInputsLevel1Memberottr:DefinedBenefitPlanHybridFundsMember2023-12-310001466593us-gaap:FairValueInputsLevel2Memberottr:DefinedBenefitPlanHybridFundsMember2023-12-310001466593us-gaap:FairValueInputsLevel3Memberottr:DefinedBenefitPlanHybridFundsMember2023-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberottr:DefinedBenefitPlanHybridFundsMember2023-12-310001466593ottr:DefinedBenefitPlanHybridFundsMember2023-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMember2023-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMember2023-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasuryAndGovernmentMember2023-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:USTreasuryAndGovernmentMember2023-12-310001466593us-gaap:USTreasuryAndGovernmentMember2023-12-310001466593us-gaap:FairValueInputsLevel1Memberottr:DefinedBenefitPlanOtherSEIEnergyDebtCollectiveFundMember2023-12-310001466593us-gaap:FairValueInputsLevel2Memberottr:DefinedBenefitPlanOtherSEIEnergyDebtCollectiveFundMember2023-12-310001466593us-gaap:FairValueInputsLevel3Memberottr:DefinedBenefitPlanOtherSEIEnergyDebtCollectiveFundMember2023-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberottr:DefinedBenefitPlanOtherSEIEnergyDebtCollectiveFundMember2023-12-310001466593ottr:DefinedBenefitPlanOtherSEIEnergyDebtCollectiveFundMember2023-12-310001466593us-gaap:FairValueInputsLevel1Member2023-12-310001466593us-gaap:FairValueInputsLevel2Member2023-12-310001466593us-gaap:FairValueInputsLevel3Member2023-12-310001466593us-gaap:FairValueMeasuredAtNetAssetValuePerShareMember2023-12-310001466593us-gaap:PensionPlansDefinedBenefitMember2022-12-310001466593ottr:ExecutiveSurvivorAndSupplementalRetirementPlanMember2023-12-310001466593ottr:ExecutiveSurvivorAndSupplementalRetirementPlanMember2022-12-310001466593us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2023-12-310001466593us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-12-310001466593us-gaap:PensionPlansDefinedBenefitMember2023-01-012023-12-310001466593ottr:ExecutiveSurvivorAndSupplementalRetirementPlanMember2024-01-012024-12-310001466593ottr:ExecutiveSurvivorAndSupplementalRetirementPlanMember2023-01-012023-12-310001466593us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2023-01-012023-12-310001466593ottr:ExecutiveSurvivorAndSupplementalRetirementPlanMember2024-12-310001466593us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsUpToAge39Member2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsUpToAge39Member2023-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsAge40To49Member2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsAge40To49Member2023-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsAge50AndOlderMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsAge50AndOlderMember2023-12-310001466593ottr:ParticipantsAge40To49NonUnionEmployeeMember2024-12-310001466593ottr:ParticipantsAge50AndOlderNonUnionEmployeeMember2024-12-310001466593us-gaap:PensionPlansDefinedBenefitMember2022-01-012022-12-310001466593ottr:ExecutiveSurvivorAndSupplementalRetirementPlanMember2022-01-012022-12-310001466593us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-01-012022-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsUpToAge39Member2024-01-012024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsUpToAge39Member2023-01-012023-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsUpToAge39Member2022-01-012022-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsAge40To49Member2024-01-012024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsAge40To49Member2023-01-012023-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsAge40To49Member2022-01-012022-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsAge50AndOlderMember2024-01-012024-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsAge50AndOlderMember2023-01-012023-12-310001466593us-gaap:PensionPlansDefinedBenefitMemberottr:ParticipantsAge50AndOlderMember2022-01-012022-12-310001466593ottr:TaxYears2029To2037Memberus-gaap:StateAndLocalJurisdictionMember2024-12-310001466593ottr:TaxYears2040To2043Memberus-gaap:StateAndLocalJurisdictionMember2024-12-310001466593ottr:OTPLandEasementsMemberottr:OtterTailPowerCompanyMember2024-01-012024-12-310001466593ottr:OtherCommitmentsMemberottr:OtterTailPowerCompanyMember2024-01-012024-12-310001466593ottr:CoalPurchaseCommitmentsMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:OtherCommitmentsMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:SolarMembersrt:ScenarioForecastMember2025-01-012026-12-310001466593ottr:SolarMembersrt:ScenarioForecastMember2026-12-310001466593ottr:OtterTailPowerCompanyMemberottr:FederalEnergyRegulatoryCommissionMember2024-01-012024-12-310001466593ottr:OtterTailPowerCompanyMemberottr:FederalEnergyRegulatoryCommissionMember2024-12-310001466593us-gaap:CumulativePreferredStockMember2024-12-310001466593ottr:CumulativePreferenceSharesMember2024-12-310001466593ottr:CumulativePreferenceSharesMember2023-12-310001466593us-gaap:CumulativePreferredStockMember2023-12-310001466593ottr:SecondShelfRegistrationMember2024-05-032024-05-030001466593ottr:SecondShelfRegistrationMember2024-01-012024-12-310001466593ottr:SecondShelfRegistrationMember2024-12-310001466593ottr:OtterTailPowerCompanyMemberottr:MinnesotaPublicUtilitiesCommissionMembersrt:MinimumMember2024-01-012024-12-310001466593ottr:OtterTailPowerCompanyMemberottr:MinnesotaPublicUtilitiesCommissionMembersrt:MaximumMember2024-01-012024-12-310001466593ottr:OtterTailPowerCompanyMembersrt:MaximumMember2024-12-310001466593ottr:OtterTailPowerCompanyMember2024-01-012024-12-310001466593us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-12-310001466593us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-12-310001466593us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-012022-12-310001466593us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-01-012022-12-310001466593us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-12-310001466593us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-12-310001466593us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-01-012023-12-310001466593us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-01-012023-12-310001466593us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-12-310001466593us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-12-310001466593us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-01-012024-12-310001466593us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2024-01-012024-12-310001466593us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-12-310001466593us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2024-12-310001466593ottr:The1999EmployeeStockPurchasePlanMember2024-12-310001466593ottr:The1999EmployeeStockPurchasePlanMember2024-01-012024-12-310001466593ottr:The1999EmployeeStockPurchasePlanMembersrt:MinimumMember2024-01-012024-12-310001466593ottr:The1999EmployeeStockPurchasePlanMembersrt:MaximumMember2024-01-012024-12-310001466593ottr:The1999EmployeeStockPurchasePlanMember2023-01-012023-12-310001466593ottr:The1999EmployeeStockPurchasePlanMember2022-01-012022-12-310001466593ottr:The2023StockIncentivePlanMember2023-04-300001466593ottr:The2023StockIncentivePlanMember2023-04-012023-04-300001466593ottr:The2023StockIncentivePlanMember2024-12-310001466593ottr:The2023StockIncentivePlanMember2024-01-012024-12-310001466593ottr:The2023StockIncentivePlanMember2023-01-012023-12-310001466593ottr:The2023StockIncentivePlanMember2022-01-012022-12-310001466593us-gaap:RestrictedStockMembersrt:MinimumMember2024-01-012024-12-310001466593us-gaap:RestrictedStockMembersrt:MaximumMember2024-01-012024-12-310001466593us-gaap:RestrictedStockMember2024-01-012024-12-310001466593us-gaap:RestrictedStockMember2023-12-310001466593us-gaap:RestrictedStockMember2024-12-310001466593us-gaap:RestrictedStockMember2023-01-012023-12-310001466593us-gaap:RestrictedStockMember2022-01-012022-12-310001466593us-gaap:PerformanceSharesMember2024-01-012024-12-310001466593us-gaap:PerformanceSharesMembersrt:MinimumMember2024-01-012024-12-310001466593us-gaap:PerformanceSharesMembersrt:MaximumMember2024-01-012024-12-310001466593us-gaap:PerformanceSharesMember2024-12-310001466593us-gaap:PerformanceSharesMember2023-01-012023-12-310001466593us-gaap:PerformanceSharesMember2022-01-012022-12-310001466593us-gaap:PerformanceSharesMember2023-12-310001466593us-gaap:EmployeeStockOptionMember2024-01-012024-12-310001466593us-gaap:EmployeeStockOptionMember2023-01-012023-12-310001466593us-gaap:EmployeeStockOptionMember2022-01-012022-12-310001466593us-gaap:SwapMember2024-01-012024-12-310001466593us-gaap:SwapMember2023-01-012023-12-310001466593us-gaap:SwapMember2024-12-310001466593us-gaap:SwapMember2023-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2024-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2024-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2024-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberottr:GovernmentDebtSecuritiesMember2024-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberottr:GovernmentDebtSecuritiesMember2024-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberottr:GovernmentDebtSecuritiesMember2024-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310001466593us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberottr:GovernmentDebtSecuritiesMember2023-12-310001466593us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberottr:GovernmentDebtSecuritiesMember2023-12-310001466593us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberottr:GovernmentDebtSecuritiesMember2023-12-310001466593us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-12-310001466593us-gaap:EstimateOfFairValueFairValueDisclosureMember2024-12-310001466593us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001466593us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-3100014665932024-10-012024-12-310001466593us-gaap:RelatedPartyMembersrt:ParentCompanyMember2024-12-310001466593us-gaap:RelatedPartyMembersrt:ParentCompanyMember2023-12-310001466593us-gaap:RelatedPartyMembersrt:ParentCompanyMember2024-01-012024-12-310001466593us-gaap:RelatedPartyMembersrt:ParentCompanyMember2023-01-012023-12-310001466593us-gaap:RelatedPartyMembersrt:ParentCompanyMember2022-01-012022-12-310001466593srt:ParentCompanyMember2024-01-012024-12-310001466593srt:ParentCompanyMember2023-01-012023-12-310001466593srt:ParentCompanyMember2022-01-012022-12-310001466593us-gaap:NonrelatedPartyMembersrt:ParentCompanyMember2024-01-012024-12-310001466593us-gaap:NonrelatedPartyMembersrt:ParentCompanyMember2023-01-012023-12-310001466593us-gaap:NonrelatedPartyMembersrt:ParentCompanyMember2022-01-012022-12-310001466593srt:ParentCompanyMember2022-12-310001466593srt:ParentCompanyMember2021-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:OtterTailPowerCompanyMember2024-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:NorthernPipeProductsIncMember2024-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:VinyltechCorporationMember2024-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:BTDManufacturingIncMember2024-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:TOPlasticsIncMember2024-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:VaristarCorporationMember2024-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:OtterTailAssuranceLimitedMember2024-12-310001466593us-gaap:RelatedPartyMemberottr:OtterTailCorporationMember2024-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:OtterTailPowerCompanyMember2023-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:NorthernPipeProductsIncMember2023-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:VinyltechCorporationMember2023-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:BTDManufacturingIncMember2023-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:TOPlasticsIncMember2023-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:VaristarCorporationMember2023-12-310001466593ottr:OtterTailCorporationMemberus-gaap:RelatedPartyMemberottr:OtterTailAssuranceLimitedMember2023-12-310001466593us-gaap:RelatedPartyMemberottr:OtterTailCorporationMember2023-12-310001466593us-gaap:AllowanceForCreditLossMember2023-12-310001466593us-gaap:AllowanceForCreditLossMember2024-01-012024-12-310001466593us-gaap:AllowanceForCreditLossMember2024-12-310001466593us-gaap:AllowanceForCreditLossMember2022-12-310001466593us-gaap:AllowanceForCreditLossMember2023-01-012023-12-310001466593us-gaap:AllowanceForCreditLossMember2021-12-310001466593us-gaap:AllowanceForCreditLossMember2022-01-012022-12-31

(Mark One)

☒    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2024 or

☐    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-53713 

(Exact name of registrant as specified in its charter) 

Registrant's telephone number, including area code: 866-410-8780

Securities registered pursuant to Section 12(b) of the Act: 

Securities registered pursuant to Section 12(g) of the Act: None 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑    No ☐ 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐    No ☑ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☑    No  ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☑     No  ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): 

Large Accelerated Filer ☑

Accelerated Filer ☐

Non-Accelerated Filer ☐

Smaller Reporting Company ☐

Emerging Growth Company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ 

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑  

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.   ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☑ 

As of June 30, 2024, the aggregate market value of common stock held by non-affiliates was $3,545,374,386. 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 41,827,999 Common Shares ($5 par value) as of January 31, 2025. 

The Registrant's definitive Proxy Statement for its 2025 Annual Meeting of Shareholders is incorporated by reference into Part III of this Form 10-K.

The following abbreviations or acronyms are used in the text:

WHERE TO FIND MORE INFORMATION

We make available free of charge on our website (www.ottertail.com) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements, Forms 3, 4 and 5 filed on behalf of directors and executive officers and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC). These reports are also available on the SEC's website (www.sec.gov). Information on our and the SEC's websites is not deemed to be incorporated by reference into this report on Form 10-K.

FORWARD-LOOKING INFORMATION

This report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the PSLRA). When used in this Form 10-K and in future filings by the Company with the SEC, in the Company’s press releases and in oral statements, words such as “anticipate,” “believe,” "can," “could,” “estimate,” “expect,” "future," "goal," “intend,” "likely," “may,” “outlook,” “plan,” “possible,” “potential,” "predict," "probable," "projected ," “should,” "target," “will,” “would” or similar expressions are intended to identify forward-looking statements within the meaning of the PSLRA. Such statements are based on current expectations and assumptions and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Such risks and uncertainties include the various factors set forth in Item 1A. Risk Factors of this report on Form 10-K and in our other SEC filings.

Otter Tail Corporation (OTC) is a holding company which has strategically invested in a portfolio of diversified operations including an electric utility and manufacturing and plastic pipe businesses with corporate offices located in Fergus Falls, Minnesota and Fargo, North Dakota.

We classify our five operating companies into three reportable segments consistent with our business strategy and management structure. The following table depicts our three segments, and the subsidiary entities included within each segment:

Electric includes the generation, purchase, transmission, distribution and sale of electric energy in western Minnesota, eastern North Dakota and northeastern South Dakota. Otter Tail Power (OTP), our primary business since 1907, serves approximately 134,000 customers in more than 400 communities across a predominantly rural and agricultural service territory.

Manufacturing consists of businesses engaged in the following manufacturing activities: contract machining; metal parts stamping; fabrication and painting; and production of plastic thermoformed horticultural containers, life science and industrial packaging, material handling components and extruded raw material stock. These businesses have manufacturing facilities in Georgia, Illinois and Minnesota and sell products primarily in the United States.

Plastics consists of businesses producing polyvinyl chloride (PVC) pipe at plants in North Dakota and Arizona. The PVC pipe is sold primarily in the western half of the United States and Canada.

Throughout the remainder of this report, we use the terms "Company," "us," "our," or "we" to refer to OTC and its subsidiaries collectively. We will also refer to our Electric, Manufacturing and Plastics segments and our individual subsidiaries as indicated above.

Our investment and growth strategy is focused on our electric utility as our foundational business, complemented by our investments in our Manufacturing and Plastics segments (collectively, our Manufacturing Platform). This strategic diversification allows us to maintain a moderate risk profile while driving growth through rate base investments in our Electric segment and organic growth opportunities in our Manufacturing Platform. This strategy and risk profile are designed to provide a more predictable earnings stream, to provide growth over long-term cycles, to produce returns above the utility industry average, to support investment grade credit ratings, and to provide for dividend payments to our shareholders.

Our long-term focus remains on executing our strategy to grow our business and achieving operational, commercial and talent excellence to strengthen our position in the markets we serve. Our long-term financial objectives include achieving a compounded annual growth rate in earnings per share in the range of 6 to 8%, with a long-term earnings mix of approximately 65% from our Electric segment and 35% from our Manufacturing Platform. We also are targeting an annual increase in our dividend to be in the range of 6 to 8%. We expect our earnings growth and cash flow generation to be driven by rate base investments in our Electric segment and from existing capacities and recent investments within our Manufacturing and Plastics segments.

Since 2021, our earnings mix has diverged from our long-term target of 65% from our Electric segment and 35% from our Manufacturing Platform and our earnings growth rate has exceeded our long-term targeted growth rate primarily due to market conditions within the PVC pipe industry. These conditions have led to significant revenue, earnings and cash flow growth in our Plastics segment. Currently, we expect these industry conditions to gradually normalize through 2027. As they do, we expect earnings and cash flow generation within our Plastics segment to moderate from current levels. Once these industry conditions have normalized, we expect to achieve our long-term financial objectives as outlined above.

We will continue to review our business portfolio to identify additional opportunities to improve our risk profile, enhance our credit metrics and generate additional sources of cash to support the organic growth opportunities in our Electric, Manufacturing, and Plastics segments. We will also evaluate opportunities to allocate capital to potential acquisitions. We are a committed long-term owner and do not acquire companies in pursuit of short-term gains. However, we will divest of businesses which no longer fit into our strategy and risk profile over the long term.

We maintain a set of criteria used in evaluating the strategic fit of our operating businesses. The operating company should:

•Maintain a minimum level of net earnings and a return on invested capital in excess of the Company’s weighted-average cost of capital,

•Have a strategic differentiation from competitors and a sustainable cost advantage,

•Operate within a stable and growing industry and be able to quickly adapt to changing economic cycles, and

•Have a strong management team committed to operational and commercial excellence.

Our actual mix of earnings for the years ended December 31, 2024 and 2023 along with an historical average and long-term expectation are shown below:

Our employees are a critical resource for our business and an integral part of our success. We strive to provide an environment of opportunity and accountability where people are valued and empowered to do their best work. We are focused on the health and safety of our employees and creating a culture of inclusion, excellence and learning. We monitor various metrics and objectives associated with i) employee safety, ii) workforce stability, iii) management and workforce demographics, iv) leadership development and succession planning v) productivity, and vi) employee engagement. We have established the following in furtherance of these efforts:

Safety - Safety is one of our core values. In managing our business, we focus on the safety of our employees and have implemented safety programs and management practices to promote a culture of safety. Safety is also a metric used and evaluated in determining annual incentive compensation. We continually monitor the Occupational Safety and Health Administration Total Recordable Incident Rate (number of work-related injuries per 100 employees for a one-year period) and Lost Time Incident Rate (number of employees who lost time due to work-related injuries per 100 employees for a one-year period). New cases are reported and evaluated for corrective action during monthly safety meetings attended by safety professionals at all locations. Our 2024 Total Recordable Incident Rate was 1.64, compared to 1.70 in 2023 and our Lost Time Incident Rate was 0.16 in 2024, compared to 0.53 in 2023.

Employee and Leadership Development, Succession Planning and Training Programs - We invest in training and professional development for employees, management and leaders throughout the Company to ensure all have the necessary training and skills to perform their work well, and to build enterprise-wide understanding of our culture, strategy and processes. Annual succession planning, individual development planning, mentoring, and supervisory and leadership development programs all play a role in ensuring a capable leadership team now and in the future. Our skill progression and technical training programs help to retain a stable and skilled workforce.

Workforce Stability - Recruiting, retaining and developing employees is an important factor in our continued success and growth. We regularly evaluate our recruiting programs, employee retention and turnover rates.

Employee Engagement - To enhance the effectiveness of our workforce and to help our companies continue to be places where our employees choose to work and thrive, we have undertaken a multi-year series of employee engagement surveys. We use the feedback to help shape the employee programs of our organization.

Human Rights - We are committed to the protection of our employee’s freedom of expression and freedom of organization and assembly.

Inclusive Workplace - We hold every employee accountable for their behavior in maintaining a workplace free of discrimination and harassment. We have implemented education initiatives for all employees, aimed at inclusive leadership and a respectful workplace.

Code of Business Ethics - We require employees to complete training on several topics associated with our code of business ethics to reinforce our commitment to compliance with laws, regulations and values that guide who we are and how we do business.

As of December 31, 2024, we employed 2,133 full-time employees as shown in the table below:

As of December 31, 2024, 371 employees of OTP were represented by local unions of the International Brotherhood of Electrical Workers under two separate collective bargaining agreements expiring on August 31, 2026 and October 31, 2026. OTP has not experienced any strike, work stoppage or strike vote, and considers its present relations with employees to be good. None of the employees of our other operating companies are represented by local unions.

OTP, headquartered in Fergus Falls, Minnesota, is a vertically integrated, regulated utility with generation, transmission and distribution facilities to serve its approximately 134,000 residential, commercial and industrial customers in a service area encompassing approximately 70,000 square miles of western Minnesota, eastern North Dakota and northeastern South Dakota.

Our service territory is predominantly rural and agricultural and includes over 400 communities, most of which have populations of less than 10,000. While our customer base includes relatively few large customers, sales to commercial and industrial customers are significant and in 2024 two customers combined accounted for 19% of segment operating revenues.

The following charts summarize our retail electric revenues by state and by customer segment for the years ended December 31, 2024 and 2023:

In addition to retail revenue, our Electric segment also generates operating revenues from the transmission of electricity for others over the transmission assets we wholly or jointly own with other transmission service providers, and from the sale of electricity we generate and sell into the wholesale electricity market.

Retail electric sales are made to customers in assigned service territories. As a result, most retail customers do not have the ability to choose their electric supplier. Competition is present in some areas from municipally owned systems, rural electric cooperatives and, in certain respects, from on-site generators and co-generators. Electricity also competes with other forms of energy.

Competition also arises from customers supplying their own power through distributed generation, which is the generation of electricity on-site or close to where it is needed, designed to meet specific, local needs. The adoption of distributed generation can be impacted by the availability of tax credits associated with the development and use of distributed energy. Distributed energy resources can include combined heat and power, solar photovoltaic, wind, battery storage, thermal storage and demand-response technologies.

The degree of competition may vary from time to time depending on relative costs and supplies of other forms of energy and advances in technology. Irrespective of the competitive environment, we are focused on providing value to our customers and ensuring our retail rates remain among the lowest in the region and in the nation. In 2024, our summer residential rates were 16% below the regional average and 30% below the national average.

The following table presents our average retail rate per kilowatt-hour (kwh) by customer class and in total for the years ended December 31, 2024 and 2023:

Wholesale electricity markets are competitive under the Federal Energy Regulatory Commission (FERC) open access transmission tariffs, which require utilities to provide nondiscriminatory access to all wholesale users. In addition, the FERC has established a competitive process for the construction and operation of certain new electric transmission facilities under federal regulation. Certain states, including the three states in our service territory, have laws which provide the incumbent transmission owner the right of first refusal to construct and own new transmission facilities. Future changes to the laws which provide for the right of first refusal could impact the competitive conditions related to the construction of new transmission facilities.

OTP has franchises to operate as an electric utility in substantially all of the incorporated municipalities it serves. Franchise rights generally require periodic renewal. No franchises are required to serve unincorporated communities in any of the three states OTP serves.

OTP primarily relies on company-owned generation, supplemented by power purchase agreements, to supply the energy to meet our customer needs. Wholesale market purchases and sales of electricity are used as necessary to balance supply and demand. Our mix of owned generation and wholesale market energy purchases to meet customer demand are impacted by wholesale energy prices and the relative cost of each energy source with wholesale market energy being utilized when it is determined to be beneficial to customers.

As of December 31, 2024, OTP’s wholly or jointly owned plants and facilities, as well as in place power purchase agreements, and their dependable kilowatt (kW) capacity were:

						Capacity / Purchased Power in kW
Owned Generation:
Baseload Plants
Big Stone Plant(1)						264,700
Coyote Station(2)						151,200
Total Baseload Plants						415,900
Combustion Turbine and Small Diesel Units
Astoria Station						288,800
Solway						50,000
All Other						77,900
Total Combustion Turbine and Small Diesel Units						416,700
Owned Wind Facilities (rated at nameplate)
Merricourt						150,000
Ashtabula III						62,400
Luverne						49,500
Ashtabula						48,000
Langdon						40,500
Total Owned Wind Facilities						350,400
Hoot Lake Solar (rated at nameplate)						49,900
Hydroelectric Facilities						1,000
Total Owned Generation Capacity						1,233,900
Power Purchase Agreements:
Purchased Wind Power (rated at nameplate and greater than 2,000 kW)
Edgeley						21,000
Langdon						19,500
Total Purchased Wind						40,500
Total Generating Capacity						1,274,400
(1) Reflects OTP's 53.9% ownership percentage of jointly owned facility.
(2) Reflects OTP's 35.0% ownership percentage of jointly owned facility.

The following charts summarize the percentage of our generating capacity by source, including owned and jointly owned facilities and through power purchase arrangements, as of December 31, 2024 and 2023:

    

Under the Midcontinent Independent System Operator (MISO) requirements, OTP is required to provide sufficient capacity through wholly or jointly owned generating capacity or power purchase agreements to meet its monthly weather-normalized forecast demand, plus a reserve obligation. MISO operates under a seasonal resource adequacy construct in which generation resources are accredited and planning reserve margin requirements are implemented on a seasonal basis. Current planning reserve margin requirements range between 9.0% and 33.9%, depending on the season.

The following charts summarize the percentage of retail kwh sold by source during the years ended December 31, 2024 and 2023:

                    

As part of our investment plan to meet our future energy needs, the following projects are under development or construction:

Wind Energy Facility Upgrades consist of the replacement and upgrade of hubs, gearboxes, blades, generators and other components of our Ashtabula, Ashtabula III, Langdon and Luverne wind facilities at a total cost of approximately $230 million. Once complete, we expect the increased energy production from these facilities will be equivalent to an additional 40 megawatts (MW) of generation. Our Langdon facility upgrades were completed in the fourth quarter of 2024 and we anticipate the remaining facilities will be completed in 2025. Once complete, the energy production from each of these facilities is eligible for production tax credits (PTCs) over a ten-year period. We expect these projects will lower customer costs through a combination of fuel savings and the tax credit benefits afforded to our customers.

Solway Solar is a solar facility currently under development that is planned to be constructed adjacent to our existing Solway natural gas plant in northern Minnesota. The project is expected to add an additional 50 MW of generating capacity. We estimate the facility will be operational by the end of 2026 and OTP's capital investment is estimated to be $100 million. The recovery of the costs of this project remains subject to regulatory approval.

Abercrombie Solar is solar facility currently under development in southeastern North Dakota. In October 2024, we entered into a purchase agreement to acquire the development assets of the project, including approximately 3,400 acres of land, interconnection agreements, state and local permits, and all other assets of the project. We anticipate we will close on the purchase of the development project in late 2025 or early 2026 and estimate the facility will be operational by the end of 2028. Once complete, the facility is expected to have a generating capacity of 295 MW. OTP's capital investment in the project is estimated to be $450 million. The recovery of the costs of this project remains subject to regulatory approval.

OTP is transitioning to a lower-carbon and increasingly clean energy future, while maintaining affordable and reliable electricity to serve our customers. We have developed the following goals in furtherance of our efforts to support the energy transition:

Own or purchase energy generation that is 55% renewable by 2030.

Reduce carbon emissions from owned generation resources 50% by 2030 from 2005 levels.

Reduce carbon emissions from owned generation resources 97% by 2050 from 2005 levels.

We have undertaken numerous initiatives to reduce our carbon footprint and mitigate greenhouse gas (GHG) emissions in the process of generating electricity for our customers. Our recent initiatives include adding the 49 MW Hoot Lake Solar facility to our resource mix, the investment in our wind energy facility upgrades, the commencement of development of the 50 MW Solway Solar and 295 MW Abercrombie Solar facilities, and sponsoring energy conservation programs.

From 2005 through 2024, we have reduced our carbon dioxide (CO2) emissions approximately 40% and increased the amount of renewable generation resources we own or purchase through power purchase agreements by approximately 420 MW. We currently own or contract energy generation that is 37% renewable.

The following chart depicts our energy resource mix, which is the electricity we used to serve our customers in 2005 and 2024, and the projected mix in 2030 and 2050. The amounts include energy generated from owned resources, procured through power purchase agreements and energy purchased in the wholesale market:

Coal is the principal fuel burned at our jointly owned Big Stone and Coyote Station generating plants. Coyote Station, a mine-mouth facility, burns North Dakota lignite coal. Big Stone Plant burns western subbituminous coal. We source coal for our coal-fired power plants through requirements contracts which do not include minimum purchase requirements but do require all coal necessary for the operation of the respective plant to be purchased from the counterparty. Our coal supply contracts for our Big Stone Plant and Coyote Station have expiration dates in 2026 and 2040, respectively.

The supply agreement between the Coyote Station owners, including OTP, and the coal supplier includes provisions requiring the Coyote Station owners to purchase the membership interests and pay off or assume loan and lease obligations of the coal supplier, as well as complete mine closing and post-mining reclamation, in the event of certain early termination events and at the expiration of the coal supply agreement in 2040. See below and Note 1 to our consolidated financial statements included in this report on Form 10-K for additional information.

Coal is transported to Big Stone Plant by rail and is provided under a common carrier rate which includes a mileage-based fuel surcharge.

We purchase natural gas for use at our combustion turbine facilities based on anticipated short-term resource needs. We procure natural gas from multiple vendors at spot prices in a liquid market primarily under firm delivery contracts.

Our transmission and distribution assets deliver energy from energy generation sources to our customers. In addition, we earn revenue from the transmission of electricity over our wholly or jointly owned transmission assets for others under approved rate tariffs. As of December 31, 2024, we were the sole or joint owner of approximately 14,000 miles of transmission and distribution lines.

MISO is an independent, non-profit organization that operates the transmission facilities owned by other entities, including OTP, within its regional jurisdiction and administers energy and generation capacity markets. MISO has operational control of our transmission facilities above 100 kilovolts (kV). MISO seeks to optimize the efficiency of the interconnected system, provide solutions to regional planning needs and minimize risk to reliability through its security coordination, long-term regional planning, market monitoring, scheduling and tariff administration functions.

MISO Tranche 1.0. In 2022, MISO approved several projects within the first tranche of its long-range transmission plan. Within the first tranche of projects, OTP will be a partial owner of two new 345 kV transmission projects. These projects will be developed and constructed over several years and OTP's total investment in these projects is estimated to be $475 million.

Jamestown-Ellendale includes the construction of a new 345 kV transmission line in southeastern North Dakota spanning approximately 95 miles from Jamestown, North Dakota to Ellendale, North Dakota. This project is in the initial stages of planning and development and is expected to be completed in 2028.

Big Stone South-Alexandria-Big Oaks includes the construction of a new 345 kV transmission line in eastern South Dakota and western Minnesota and the addition of a second circuit to an existing 345 kV line in central Minnesota. The new transmission line will span approximately 100 miles between Big Stone, South Dakota and Alexandria, Minnesota.

A second circuit will be added to the existing transmission line spanning from Alexandria, Minnesota to Big Oaks, Minnesota. This project is in the initial stages of planning and development and is expected to be completed in 2032.

MISO Tranche 2.1. In December 2024, MISO approved several projects within the second tranche of its long-range transmission plan. Within this second tranche of projects, we anticipate OTP will be a partial owner of three projects, including a new 345 kV transmission line, a new 765 kV transmission line, and the addition of a second circuit to an existing 345 kV transmission line. These projects will be developed and constructed over several years and OTP's total investment in these projects is estimated to be $700 million.

Bison-Alexandria includes the construction of a second 345 kV circuit, which is being added to an existing transmission line in eastern North Dakota and western Minnesota. This project is in the initial stages of planning and development and is expected to be completed in 2032.

Maple River-Cuyuna includes the construction of a new 345 kV transmission line in eastern North Dakota and western Minnesota, as well as investment in substation expansion. This project is in the initial stages of planning and development and is expected to be completed in 2033.

Big Stone South-Brookings County includes the construction of a new 765 kV transmission line in eastern South Dakota, as well as investment in substation expansion. This project is in the initial stages of planning and development and is expected to be completed in 2034.

Joint Targeted Interconnection Queue (JTIQ). In December 2024, MISO and Southwest Power Pool (SPP) approved a set of transmission projects that are part of a collaboration between MISO and SPP to construct high-voltage transmission lines along the MISO and SPP seam, which spans seven states - Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota. These projects will improve reliability and resolve constraints in the transmission system to allow for up to 30 gigawatts of new generation to be added to the system.

OTP expects to participate in one JTIQ project, being the sole owner of a new 345 kV transmission line spanning from Big Stone, South Dakota to Hankinson, North Dakota, and a partial owner of a new 345 kV line spanning from Hankinson, North Dakota to Bison, North Dakota. In October 2023, the U.S. Department of Energy (DOE) approved a grant in an amount up to 25% of the total JTIQ project costs. OTP's capital investment in these projects, after the impact of the 25% DOE grant, is estimated to be $450 million.

Electricity demand is affected by seasonal weather differences, with peak demand occurring in the summer and winter months. As a result, our Electric segment operating results regularly fluctuate on a seasonal basis. In addition, fluctuations in electricity demand within the same season but between years can impact our operating results. We monitor the level of heating and cooling degree days in a period to assess the impact of weather-related effects on our operating results between periods.

OTP is subject to regulation of rates and other matters in each of the three states in which it operates and by the federal government for, among other matters, the interstate transmission of electricity. OTP operates under approved retail electric tariff rates in all three states it serves. Tariff rates are designed to recover plant investments, a return on those investments and operating costs. In addition to determining rate tariffs, state regulatory commissions also authorize return on equity (ROE), capital structure and depreciation rates of our capital investments. Decisions by our regulators significantly impact our operating results, financial position and cash flows.

Below is a summary of the regulatory agencies with jurisdiction over OTP covered by each regulatory agency:

In addition to base rates, which are established through periodic rate case proceedings within each state jurisdiction, there are other mechanisms for recovery of our capital investments and operating costs between rate cases. The following table summarizes these recovery mechanisms:

Under Minnesota law, utilities are required to submit for approval by the Minnesota Public Utilities Commission (MPUC) a 15-year advance Integrated Resource Plan (IRP). An IRP is a set of resource options a utility could use to meet the service needs of its customers over the forecast period, including an explanation of the utility’s supply and demand circumstances, and the extent to which each resource option would be used to meet those service needs.

The MPUC’s findings of fact and conclusions regarding IRPs are considered to be prima facie evidence, subject to rebuttal, in future rate reviews and other proceedings.

Under North Dakota law, utilities are required to submit for approval by the North Dakota Public Service Commission (NDPSC) a 15-year advance IRP every three years.

South Dakota does not have a formal advance IRP process.

Minnesota law requires an annual filing of a capital structure petition with the MPUC. In this filing, the MPUC reviews and approves OTP's capital structure. Once approved, OTP may issue securities without further petition or approval, provided the issuance is consistent with the purposes and amounts set forth in the approved petition. OTP’s current capital structure approved by the MPUC on July 30, 2024, allows for an equity-to-total-capitalization ratio between 47.2% and 57.7%, with total capitalization not to exceed $2.2 billion.

Minnesota has adopted a renewable energy standard requiring utilities to generate or procure sufficient renewable generation such that the following percentages of total retail electric sales to Minnesota customers come from qualifying renewable sources: 25% by 2025 and 55% by 2035. Qualifying renewable sources are classified as wind, hydropower, hydrogen and certain biomass generation. We met the current renewable sources requirements with a combination of owned renewable generation and purchases from renewable generation sources. Minnesota law also requires 1.5% of total Minnesota retail electric sales by public utilities to be supplied by solar energy. For a public utility with between 50,000 and 200,000 retail electric customers, such as OTP, at least 10% of the 1.5% requirement must be met by solar energy generated by or procured from solar photovoltaic devices with a nameplate capacity of 40 kW or less. We met the current solar requirement with a combination of owned solar generation and solar renewable energy certificate (REC) purchases. We plan to comply with the requirements of this standard in the future through a combination of our existing and projected renewable generation fleet.

In February 2023, Minnesota enacted the Clean Energy Law, which requires electric utilities to generate or procure sufficient electricity from carbon-free resources, to provide retail customers in Minnesota with at least the following percentages of carbon-free electric energy: 80% by 2030, 90% by 2035, and 100% by 2040. Carbon-free resources include wind, solar, hydropower and nuclear generation. To provide flexibility, the law allows electric utilities to use RECs to offset carbon emissions and for the MPUC to consider whether a regulated utility's requirement to meet established standards should be delayed due to affordability or reliability impacts. We anticipate at least 80% of our Minnesota retail sales will be served with carbon-free generation by 2030, in compliance with Minnesota's clean energy requirements.

OTP is subject to stringent federal and state environmental standards and regulations regarding, among other things, air, water and solid waste pollution. OTP's facilities have been designed, constructed and, as necessary, updated to operate in compliance with applicable environmental regulations. However, new or amended laws and regulations or changes in interpretations of current laws and regulations may require additional pollution control equipment or other emission reduction measures which may require future capital investments or ongoing operating and monitoring costs.

For the five-year period ended December 31, 2024, OTP invested approximately $4.8 million in environmental control equipment, including $1.7 million in 2024. Our capital budget for the next five years includes approximately $9.0 million of capital investments in environmental control equipment. The timing and amount of our expenditures may change as the regulatory environment changes.

Regional Haze Rule (RHR). The Environmental Protection Agency (EPA) adopted the RHR in an effort to improve visibility in national parks and wilderness areas. The RHR requires states, in coordination with the EPA and other governmental agencies, to develop and implement state implementation plans (SIPs) that work towards achieving natural visibility conditions by the year 2064; to set goals to ensure reasonable progress is being made; and to periodically evaluate whether those goals and progress are on track or whether additional emission reductions are necessary. The second RHR implementation period covers the years 2018-2028.

Coyote Station, OTP's jointly owned coal-fired power plant in North Dakota, is subject to assessment in the second implementation period under the North Dakota SIP. The North Dakota Department of Environmental Quality (NDDEQ) submitted its SIP to the EPA in August 2022. In its plan, the NDDEQ concluded it is not reasonable to require additional emission controls during this planning period.

On December 2, 2024, the EPA published its final ruling on North Dakota's SIP, approving certain aspects of the plan and disapproving other aspects of the plan. Regarding the partial disapproval, the EPA found that North Dakota failed to submit a long-term strategy that includes enforceable emissions limitations, compliance schedules, and other measures necessary to make reasonable progress on national visibility goals.

Specific to Coyote Station, the EPA found that North Dakota relied on non-statutory visibility modeling to reject the installation of additional nitrogen oxides (NOx) and sulfur dioxide (SO2) emission controls.

Having disapproved, in part, the North Dakota SIP, the EPA now must promulgate a Federal Implementation Plan within two years from the issuance of its final decision. The Federal Implementation Plan may include emission controls required to satisfy the requirements of the RHR.

We cannot predict with certainty the final resolution of regional haze compliance in North Dakota and specifically the impact, if any, on the operations of Coyote Station. However, significant emission control investments could be required which may have a material impact on our operating results, financial condition and liquidity. Alternatively, such investments may prove to be uneconomic and result in the early closure, sale of or withdrawal from our interest in Coyote Station.

Clean Air Act. In May 2024, the EPA finalized new regulations under Section 111 of the Clean Air Act to regulate GHG emissions from existing and new fossil fuel-based power plants. The final rule establishes subcategories for new combustion turbines and existing coal-fired power plants to achieve certain CO2 emission reduction levels based on the respective subcategory. For existing coal-fired power plants, the applicable subcategory is based upon the date at which the plant will cease operations.

For existing coal-fired power plants anticipated to be operated after January 2039, the regulation set a Best System of Emission Reduction (BSER) based on 90% capture and sequestration of CO2 emissions with a compliance date of January 2032. For existing coal-fired power plants anticipated to be operated after January 2032 but plan to cease operations before January 2039, the regulation set a BSER of 40% co-firing with natural gas, which would result in a 16% reduction in CO2 emissions rate with a compliance date of January 2030. Coal-fired power plants with federally enforceable plans to cease operations by January 2032 are not subject to this regulation.

Several states and industry groups have filed lawsuits challenging the new regulation, arguing the EPA has overstepped its authority under the Clean Air Act.

We continue to review and evaluate the final regulations and the ongoing legal challenges. We cannot at this time conclude what the impact may be on our power plants and the potential impact to our operating results, financial condition and liquidity. However, significant emission control investments could be required, which may have a material impact on our operating results, financial condition and liquidity. Alternatively, such investments may prove to be uneconomic and result in the early closure, sale of or withdrawal from our interest in a coal-fired plant. Coyote Station and Big Stone Plant, our two co-owned coal-fired power plants, are within the scope of the regulations but our combustion turbines are not within the scope of the final regulation.

Coal Combustion Residual (CCR) Regulation. In May 2024, the EPA published a final rule amending CCR regulations, which introduce new requirements for the management of coal ash at active coal-fired power plants and inactive coal-fired power plants with a legacy surface impoundment. The regulations impose new requirements including groundwater monitoring, closure standards, post-closure care obligations and potential remediation activities. We anticipate we will incur costs related to coal ash removal and groundwater monitoring in the future as a result of the amended regulation; however, we continue to review and evaluate the overall impact this regulation may have on our business, including potential impacts to our operating results, financial condition and liquidity.

Mercury and Air Toxics Standards. In May 2024, the EPA published final regulations to strengthen and update Mercury and Air Toxics Standards for coal-fired power plants, tightening the emission standard for toxic metals and finalizing a reduction standard for mercury from existing lignite-fired sources. We continue to review and evaluate the overall impact this regulation may have on our business, including potential impacts to our operating results, financial condition and liquidity.

Global climate change presents a significant energy and environmental policy challenge. Combustion of fossil fuels for the generation of electricity is a considerable source of CO2 emissions, which is the primary GHG emitted by our utility operations. The federal government, many states and international organizations are pursuing climate policies to regulate GHG emissions as part of a broad-based effort to limit global warming.

The Minnesota Clean Energy Law, passed in 2023, requires electric utilities to generate or procure sufficient electricity from carbon-free resources to provide retail customers in Minnesota with at least the following percentages of carbon-free electric energy: 80% by 2030, 90% by 2035, and 100% by 2040.

The implementation of climate change programs, such as the Minnesota Clean Energy Law, regulations under the Clean Air Act and other existing or future federal or state regulations targeting GHG emissions, may have a significant impact on our utility business.

While the future financial impact of any current, proposed or pending regulation of GHG or other emissions is unknown at this time, any capital or operating costs incurred for additional pollution control equipment or emission reduction measures could materially adversely impact our future operating results, financial position and liquidity unless such costs could be recovered through related rates and/or future market prices for energy.

Our Manufacturing businesses are engaged in the production of metal or plastics products sold to commercial customers. The following is a brief description of each of these businesses:

BTD Manufacturing, Inc. (BTD), with facilities in Detroit Lakes and Lakeville, Minnesota, Washington, Illinois and Dawsonville, Georgia, provides metal fabrication services for custom machine parts and metal components. BTD is a full-service contract metal fabricator with capabilities in metal stamping and fabrication, tool and die, machining, tube bending, welding, assembly and product painting.

T.O. Plastics, Inc. (T.O. Plastics), with facilities in Otsego and Clearwater, Minnesota, manufactures thermoformed plastics products, including its own line of horticulture containers and custom packaging products for the medical and industrial product markets.

Our metal fabrication business primarily serves Midwestern and Southeastern U.S. original equipment manufacturers (OEM) in the recreational vehicle, lawn and garden, agricultural, construction, industrial, energy equipment and other end markets. Our customers include some of the largest recreational vehicle and equipment manufacturers based in the U.S.

Our plastic products business primarily serves U.S. customers in the horticulture, medical and life sciences, industrial, recreational and electronics industries. Most of our horticulture products are sold through distributors. Our customer packaging products are manufactured to customer specifications and sold directly to the end customer.

Although we sell our products to a large number of customers across a diverse group of end markets, two customers combined to account for approximately 36% of segment operating revenues in 2024.

The principal method of production distribution is by direct shipment to our customers through direct customer pick-up or common carrier ground transportation.

We compete in a highly fragmented market with competition from both domestic and international entities. Our competitors vary in size, ranging from small companies focused on certain end markets or geographical area, to large companies with broad manufacturing capabilities and domestic and international geographical reach. Competition can be geographically regionalized as customers procure products locally to manage cost and minimize logistical complexities. Certain competitors may have broader product lines, more manufacturing capacity and greater distribution capabilities than we do.

We believe the principal competitive factors in our Manufacturing segment are product performance, quality, price, technical innovation, cost effectiveness, customer service and breadth of product line. We intend to continue to compete based on high quality products, innovative production technologies, cost-effective manufacturing techniques, close customer relations and support, and increasing product offerings. 

In December 2024, we completed an expansion project at our Georgia location, which added approximately 162,000 square feet of owned manufacturing and warehouse space and will replace a warehouse facility that is currently being leased near the same location. This expansion provides additional manufacturing capacity in the southeastern U.S. to meet customer demand as their manufacturing base expands in the same region.

We use raw materials in the products we manufacture, including, among others, steel, aluminum, and polystyrene and other plastics resins. Managing price volatility and ensuring raw material availability are important aspects of our business. We attempt to pass increases in the costs of these raw materials through to our customers. Increases in the costs of raw materials that cannot be passed on to customers could have a negative effect on profit margins. Additionally, a certain amount of residual material (scrap) is a by-product of the manufacturing and production processes. Declines in commodity prices for these scrap materials due to weakened demand or excess supply can negatively impact the profitability of our Manufacturing segment.

Our manufacturing businesses are subject to environmental, health and safety laws and regulations, including those governing discharges to air and water, the management and disposal of hazardous substances, the cleanup of contaminated sites and health and safety matters.

Our Plastics businesses produce PVC pipe at plants in North Dakota and Arizona. The following is a brief description of these businesses:

Northern Pipe Products, Inc. (Northern Pipe), located in Fargo, North Dakota, manufactures and sells PVC pipe for municipal water, rural water, wastewater, storm drainage systems and other uses in the northern, midwestern, south-central and western regions of the United States as well as central and western Canada.

Vinyltech Corporation (Vinyltech), located in Phoenix, Arizona, manufactures and sells PVC pipe for municipal water, wastewater, water reclamation systems and other uses in the western, northwest and south-central regions of the United States.

PVC pipe is manufactured through an extrusion process, during which PVC compound (a dry powder-like substance) is blended with other materials and introduced into an extrusion machine, where it is heated to a molten state and then forced through a sizing apparatus to produce the pipe. The newly extruded pipe is pulled through a series of water-cooling tanks, marked to identify the type of pipe and cut to finished lengths. We produce pipe in a variety of diameters ranging from 3/4" to 24" and in varying lengths, generally from 10 feet to 20 feet.

Our PVC pipe is used in municipal and wastewater systems, residential and commercial plumbing applications, and rural water systems.

Our pipe products are marketed through a combination of independent sales representatives, company salespersons and customer service representatives. Substantially all of our products are sold through distribution partners, which range from large, national distributors to smaller regional or local distributors. In 2024, two customers, both of which are distributors of PVC pipe, combined to account for 52% of segment operating revenues.

The principal method for distribution of our products is by common carrier ground transportation.

Competition in the plastic pipe industry arises from other PVC pipe manufacturers and the fungible nature of the product. Due to shipping costs, competition is usually regional instead of national in scope. The principal factors of competition are price, customer service, product availability, shipping costs and product performance.

Industry competition is characterized by a limited number of competitors, with the three largest competitors capturing a significant portion of the overall market. These competitors have a broader geographical reach, integration with PVC resin producers, greater manufacturing capacity and national relationships with key distribution partners. We compete on a regional basis, serving our core markets with strong customer service and high-quality products.

In addition to competition with other PVC pipe manufacturers, our PVC pipe competes with other products that serve the same end markets, including ductile iron, high-density polyethylene (HDPE), steel and concrete pipe products.

We will continue to compete based on our high level of service quality, including being a responsive and reliable partner to our customers, through maintaining product availability, by producing high-quality products and using cost-effective production techniques.

In December 2024, we completed an expansion project at our Arizona location, which added approximately 62,000 square feet of manufacturing, warehouse and office space, allowing for additional manufacturing capacity, including the ability to produce large diameter pipe to serve our customers in our regional market.

PVC resins are acquired in bulk and shipped to our facilities by rail. There are four vendors from which we can source our PVC resin requirements and in 2024 we utilized all four vendors to source our PVC resin. Our contractual arrangements to acquire resin generally include estimated annual order quantities, with no required minimum purchases, and include variable pricing based on market prices for resin. The supply of PVC resin may also be limited due to manufacturing capacity and the limited availability of raw material components, along with rail transportation disruptions from PVC resin plants to our facilities. Most U.S. resin production plants are located in the Gulf Coast region. These plants are subject to the risk of damage and production shutdowns because of exposure to hurricanes or other extreme weather events that occur in this part of the United States. The loss of a key vendor or any interruption or delay in the supply of PVC resin could disrupt the ability of our Plastics segment businesses to manufacture products, cause customers to cancel orders or result in increased expenses for obtaining PVC resin from alternative sources, if such sources were available. We believe we have good relationships with our key raw material vendors.

Due to the commodity nature of PVC resin and the dynamic supply and demand factors worldwide, historically the market for PVC resin has been cyclical and subject to significant fluctuations in price.

In addition to PVC resin, we use certain other materials, such as stabilizers, waxes, gaskets and lumber, in the process of manufacturing and shipping our PVC pipe products. We generally source these materials from a limited number of suppliers, and supply chain constraints or disruptions related to these materials could disrupt our ability to manufacture or ship products and could result in increased costs.

Demand for our PVC pipe products can be impacted by seasonal weather differences, with generally lower sales volumes realized in the first quarter of the year when cold temperatures and frozen ground across the northern portion of our footprint can delay or prevent construction activity and consequently delay or prevent customer orders of PVC pipe.

Our plastics businesses are subject to environmental, health and safety laws and regulations, including those governing discharges to air and water, the management and disposal of hazardous substances, the cleanup of contaminated sites and health and safety matters.

Our businesses are subject to various risks and uncertainties. Any of the risks described below or elsewhere in this report on Form 10-K or in our other SEC filings could materially adversely affect our business, operating results, financial condition and liquidity. Additional risks and uncertainties we are not presently aware of or that we currently consider immaterial may also affect our business, operating results, financial condition and liquidity.

Our business strategy includes major capital investments at our operating companies. These capital projects are planned years in advance of their in-service dates and are subject to various risks including adverse changes in regulatory treatment or public policy; changes in commodity pricing or construction costs; delivery of critical materials; obtaining necessary permits and licenses; and other adverse conditions. Capital investments in our Electric segment require regulatory approval and are subject to the risks of not being granted timely approval or allowed to be fully recovered. In addition, our ability to construct and own utility assets may be impacted by regulatory requirements to competitively bid such investments, which could impact the amount and timing of our capital investments. A lack of direct ownership, or the inability to complete capital projects on budget and in a timely manner could impact our ability to achieve our strategic financial goals and could adversely impact our operating results and financial condition.

Our Electric segment business is seasonal, and weather patterns have had an impact on our financial performance in the past and may again in the future. Demand for electricity is normally greater in the winter and summer months. Unusually mild summers and winters could have an adverse effect on our financial condition and results of operations. Our Plastics segment businesses can be affected by seasonal weather prohibiting or delaying construction projects at any time of the year in any geography, but specifically times of the year when frozen ground and cold temperatures in many parts of the country can delay construction projects, all of which can result in reduced customer demand and could have an adverse effect on our financial condition, operating results and liquidity.

Longer term shifts in climate patterns may impact our customers' demand for electricity, interrupt our business operations and damage our facilities; reduce the availability of natural resources, such as water; and cause disruptions in our supply chains.

Climate change may increase the frequency and severity of extreme weather events, such as prolonged periods of extreme cold or heat, and natural disasters, such as severe snow and ice storms, tornadoes, flooding and wildfires. These acute events could result in the interruption of our business operations and damage to our facilities. We may not have sufficient insurance coverage to avoid adverse impacts to our operating results or financial condition from damage to our facilities or an interruption in our business. An extreme weather event within our utility service area could directly affect our capital assets, causing disruption in service to customers, and result in reduced operating revenues and additional repair or replacement costs, due to downed wires and poles or damage to other operating equipment.

In the past, severe weather events in the Gulf Coast region of the U.S. have disrupted the supply of PVC resin, the primary material input of our Plastics segment businesses. As most U.S. PVC resin production plants are located in the Gulf Coast region, an area prone to seasonal hurricane activity and other extreme weather events, our access to PVC resin may be impacted by the volume and magnitude of hurricane and storm activity in this region, which could impact our Plastics segment businesses.

Increased risk of natural disasters, such as wildfires, could have financial consequences, including limiting our ability to secure sufficient insurance coverage, or lead to increased insurance cost. While we carry liability insurance, given an extreme event, if we were found to be liable for damages, amounts that exceed our coverage limit could negatively impact our financial condition, operating results and liquidity.

These risks may also negatively impact our credit ratings, which may limit our access to capital markets and increase our borrowing costs. In addition, to the extent investors view climate change, fossil fuel combustion and GHG emissions as a financial risk, our stock price or our ability to access capital markets on favorable terms and conditions could be adversely impacted.

We may experience transition risks in moving towards low carbon generation and manufacturing. For example, we may face challenges with the adoption of new technologies, meeting changing customer expectations, ensuring reliability of electric service, and committing to voluntary GHG emissions reduction goals, as well as complying with evolving local, state or federal regulatory requirements intended to reduce GHG emissions.

We are subject to numerous federal, state and local environmental, health and safety laws and regulations governing, among other things, discharges to air and water, natural resources, hazardous waste and toxic substances, the cleanup of contaminated sites, and health and safety matters. Our failure to comply with applicable laws and regulations could result in civil or criminal fines or penalties, enforcement actions, and regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, which could materially and adversely affect our business. Compliance with these laws and regulations is a significant factor in our business. We have incurred and expect to continue to incur capital expenditures and operating costs to comply with applicable current and future laws and regulations.

Our businesses continue to be subject to additional and changing environmental, health and safety laws and regulations, and we could incur additional costs complying with requirements that are promulgated in the future. New laws or regulations or changes to existing laws and regulations in the future may result in disruptions to our business, changes in customer preferences or changes in customer demand, which could adversely impact our financial condition, operating results and liquidity.

Recently, various federal and state agencies have heightened their scrutiny of per- and polyfluoroalkyl substances (PFAS), which are manufactured chemicals used in a variety of consumer and industrial products. Regulators have recently proposed additional chemicals be designated as hazardous substances, including a proposal to designate perfluorooctanesulfonic acid and perfluorooctanoic acid, two of the most common PFAS chemicals, as hazardous substances, which could have wide-ranging impacts on companies across various industries, including ours. At this time, we cannot predict the outcome or the severity of the impact, if any, of future laws or regulations enacted to address PFAS.

We are periodically subject to actual and threatened claims, litigation, investigations and other proceedings, including proceedings by governments and regulatory authorities, involving utilities regulation, competition and antitrust, product quality matters, and liability claims.

Any of these proceedings, including the currently ongoing proceedings related to our Plastics segment businesses, could have an adverse effect on our financial condition, operating results and liquidity. It is possible that a resolution of one or more proceedings, including as a result of a settlement, could involve damages, sanctions, consent decrees or orders requiring us to make substantial future payments, prevent us from offering certain products or services, require us to change our business practices in a manner materially adverse to our business, otherwise disrupt our business, divert management resources, damage our reputation or otherwise have a material effect on our operations. The outcomes of these matters are inherently unpredictable and subject to significant uncertainties, and we are unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any, arising from the proceedings at this time.

The operation of our business is dependent on the secure functioning of our computer hardware and software systems, as well as that of third-party service providers and vendors. Information systems, both ours and those of third parties, are vulnerable to security breaches by computer hackers and cyber terrorists, system failures, the negligent or intentional breach of established controls and procedures or mismanagement of confidential information by employees. Cyber-attacks or other security breaches may also be perpetrated through the use of artificial intelligence, which could introduce additional complexity to such an attack or breach. While we employ a defense-in-depth strategy and regularly conduct cybersecurity assessments, we cannot be certain our information security systems and protocols and those of our vendors and other third parties are sufficient to withstand a cyber-attack or other security breach.

A system failure could result in a disruption to our business including, but not limited to, the inability to produce products or serve our customers. A prolonged system failure could negatively impact our operating results. A major cyber incident could result in significant expenses to investigate and repair security breaches or system damage, and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and damage to our reputation. For example, we may be subject to liability under various federal, state and international disclosure laws and data protection laws. These laws are subject to change and expansion and may require additional operational changes and costs to comply. 

The misappropriation, corruption or loss of personally identifiable information and other confidential data could lead to significant monetary damages, regulatory enforcement actions and breach notification and mitigation expenses, such as credit monitoring, and result in reputational damage affecting relations with shareholders, customers, regulators and others. In addition to property and casualty insurance, which may cover restoration of data, certain physical damage or third-party injuries, we have cybersecurity insurance related to a breach event. However, damage and claims arising from such incidents may not be covered or may exceed the amount of any available insurance.

In 2024, a single customer provided more than 10% of our consolidated operating revenues, and each of our segments have customers which accounted for over 10% of the segment’s operating revenues. In 2024, two customers combined to account for 19% of Electric segment revenues, two customers combined to account for 36% of Manufacturing segment operating revenues and two customers combined to account for 52% of Plastics segment operating revenues, with one of those customers providing more than 10% of our consolidated operating revenues. The loss of any one of these customers or a significant decline in sales to these customers, would have a significant negative impact on the segment's financial condition and operating results, and could have a significant negative impact on the Company’s consolidated financial condition, operating results and liquidity.

The success of our business is heavily dependent on the leadership of our executive officers and key employees for implementation of our strategy. In addition, all of our businesses rely on a qualified workforce, including technical employees who possess certain specialized knowledge and skills. The inability to attract and retain a skilled and stable workforce at necessary staffing levels, whether due to decreases in hiring rates, increases in employee retirements, increases in terminations, or any combination thereof, may negatively affect our ability to service our customers, manufacture products or successfully manage our business and achieve our objectives.

We rely on access to debt and equity capital markets as a source of liquidity to fund our investment initiatives, including rate base growth investments in our Electric segment and opportunities for investment, including acquisitions, in our Manufacturing and Plastics segments. Capital markets are impacted by global and domestic economic conditions, monetary policy, commodity prices, geopolitical events and other factors. If we are unable to access capital on acceptable terms and at reasonable costs, our ability to implement our business plans may be adversely affected. In addition, higher market interest rates on outstanding variable-rate indebtedness could also impact our operating results.

We rely on our investment grade credit ratings to provide acceptable costs for accessing the capital markets. A downgrade of our credit ratings could result in higher borrowing costs thereby negatively impacting our operating results and limiting our ability to access capital markets, which may negatively impact our ability to implement our business plans. In addition, OTP is a party to contracts that require the posting of collateral or settlement of applicable contracts if credit ratings fall below certain levels, which may negatively impact our financial condition or liquidity.

The financial obligations and related costs of our pension and other postretirement benefit plans are affected by numerous factors. Assumptions related to future costs, investment returns, actuarial estimates and interest rates have a significant effect on our funding obligations and the cost recognized related to these plans. If our pension plan assets do not achieve our estimated long-term rate of return or if our other estimates prove to be inaccurate, our operating results, financial condition and liquidity may be adversely impacted. In addition, our funding requirements could be impacted by changes to the Pension Protection Act.

OTC is a holding company with no significant operations of its own. The primary source of funds for payment of our financial obligations and dividends to our shareholders is from cash provided by our subsidiary companies. Our ability to meet our financial obligations and pay dividends on our common stock principally depends on the earnings, cash flows, capital requirements and general financial positions of our subsidiary companies. In addition, OTP is subject to federal and state regulations which may restrict its ability to pay dividends. Finally, we are also reliant on our subsidiary companies to maintain compliance with financial covenants under our various short- and long-term debt agreements. Our debt agreements include restrictions on the payment of cash dividends upon an event of default. 

Our provision for income taxes and tax obligations are impacted by various tax laws and regulations, including the availability of various tax credits, IRS tax policies such as tax normalization and, at times, the ability to carryforward net operating losses and tax credits. Changes in tax laws, regulations and interpretations could have an adverse effect on our financial condition and operating results. Tax law changes that reduce or eliminate production or investment tax credits (ITCs), or the ability to transfer or sell these credits, or a failure to meet the compliance requirements to receive these credits, may impact the economics of constructing certain electric generation resources, which may impact our planned investments, and could adversely affect our financial condition and operating results.

OTP is subject to federal and state legislation and comprehensive regulation by federal and state regulatory agencies, including the public utility commissions in each of the three states in which OTP operates, and by the FERC.

Our financial condition, operating results and liquidity are significantly impacted by and dependent upon our ability to recover the costs associated with providing utility service and earn a return on our utility capital investments. There is no assurance that each state utility commission will judge our utility costs to have been prudently incurred or that rates will produce full recovery of such costs. In addition, changes in the federal or state regulatory framework could impair our ability to recover utility costs historically collected from our customers. Diverging public policy priorities across the jurisdictions we serve and a lack of inter-jurisdictional consensus may impact our ability to recover the cost of and return on our capital investments and our operating costs; it may impact our future capital investment opportunities; and may result in inefficiencies which could negatively impact our financial position, operating results and liquidity.

In addition to the recovery of our utility costs, our profitability is impacted by our authorized ROE, which can be impacted by macroeconomic factors such as interest rates. There can be no assurance that each state utility commission or the FERC will authorize a rate of return which allows us to achieve our financial goals. An adverse decision by one or more regulatory authorities or any prolonged delay in rendering a decision in a rate or other proceeding could adversely impact our financial condition, operating results and liquidity.

Inflationary cost pressures have increased the cost of constructing our utility assets and operating our utility business. There can be no assurance that our state regulatory commissions will authorize recovery of rising costs. Regulatory commissions may also limit future capital investments, or the rate of return allowed on such investments in response to inflationary cost pressures and customer bill impacts. Such limitations could negatively impact our financial position, operating results and liquidity.

Changes in regulatory, operational or economic factors could result in the early closure or sale of or withdrawal from our interest in a coal-fired generating facility. In the event of an early closure, a significant asset impairment charge could be required, and we would be obligated to pay for our share of the costs of closure of the generating facility. In the event of a sale of our interest in a generating facility, we may be unable to negotiate the sale on favorable terms, which could result in the recognition of a loss on the sale. There can be no assurance that we would be authorized by any of our state utility commissions to recover any costs or losses associated with the early closure or sale of our interest in a generating facility.

Our IRP, approved in Minnesota by the MPUC in May 2024, directs OTP to commence activities to no longer serve Minnesota customers with capacity or energy from Coyote Station as early as 2029. The discontinuation of service to Minnesota customers from Coyote Station could result in stranded costs, which may significantly impact our operating results, financial condition and liquidity.

We are subject to federal, state and local environmental laws and regulations relating to air quality, water quality, waste management, natural resources and health safety. These laws and regulations regulate the modification and operation of existing facilities, the construction and operation of new facilities and the proper storage, handling, cleanup and disposal of hazardous waste and toxic substances. Compliance with these legal requirements may require us to commit significant resources and funds toward environmental monitoring, installation and operation of pollution control equipment, payment of emission fees and securing environmental permits. Obtaining environmental permits can entail significant expense and cause substantial construction delays. Failure to comply with environmental laws and regulations, even if caused by factors beyond our control, may result in civil or criminal liabilities, penalties and fines.

Coyote Station, one of OTP's jointly owned coal-fired power plants, is subject to assessment under the second planning period of the RHR as part of the state of North Dakota's RHR SIP. In December 2024, the EPA partially disapproved the North Dakota SIP related to Coyote Station and now must promulgate a Federal Implementation Plan. The federal plan may include emission controls required to satisfy the requirements of the RHR. We cannot predict with certainty the final resolution of regional haze compliance in North Dakota and specifically the impact, if any, on the operations of Coyote Station. However, significant emission control investments could be required which may have a material impact on our operating results, financial condition and liquidity. Alternatively, such investments may prove to be uneconomic and result in the early closure, sale of, or withdrawal from, our interest in Coyote Station.

Existing environmental laws or regulations may be revised, and new laws or regulations may be adopted or become applicable to us. The multiple jurisdictions that govern our electric utility business may not agree as to the appropriate resource mix, which may lead to costs incurred to comply with one jurisdiction that are not recoverable across all jurisdictions served by the same assets.

Revised or additional regulations which result in increased compliance costs or additional operating restrictions, particularly if those costs are not fully recoverable from customers, could have a material effect on our financial condition, operating results and liquidity, making the operation of some of our facilities no longer economically viable.

Current and future federal, state, regional and international legislation and regulations to address global climate change and reduce GHG emissions, including measures such as mandated levels of renewable generation, mandatory reductions in CO2 emission levels, taxes on CO2 emissions, or cap-and-trade regimes, could require us to incur significant costs, which could negatively impact our financial condition, operating results and liquidity if such costs cannot be recovered through rates granted by rate-making authorities or through increased market prices for electricity.

In May 2024, the EPA finalized new regulations under Section 111 of the Clean Air Act to regulate GHG emissions from existing and new fossil fuel-based power plants. The new regulations require existing coal-fired power plants to achieve certain CO2 emissions reduction levels, with the amount of reduction dependent upon the remaining operating life of the facility. The new regulation has the potential to materially impact the operations of our coal-fired power plants, which could have a material impact on our operating results, financial condition and liquidity.

In addition to complying with legislation and regulation, we could be subject to litigation related to climate change. If we were subjected to such litigation, the 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 our financial condition, operating results and liquidity if the costs are not recoverable in rates or covered by insurance.

Several factors, many of which are beyond our control, may contribute to reduced demand for energy from our customers or increase the cost of providing energy to our customers. These risks include economic growth or decline in our service areas, demographic changes in our customer base and changes in customer demand or load growth due to, among other items, proliferation of distributed generation, energy efficiency initiatives and technological advancements. In addition, customer demand could be impacted by increased competition in our service territories or the loss of a service territory or franchise. Other risks include increased transmission or interconnection costs, generation curtailment and changes in the manner in which wholesale power is purchased and sold. A decrease in revenues or an increase in expenses related to our electric operations could negatively impact our financial condition, operating results and liquidity.

We are subject to an extensive legal and regulatory framework imposed under federal and state laws and regulatory agencies, including the FERC and the North American Electric Reliability Corporation (NERC). We could be subject to potential financial penalties for compliance violations. Our transmission systems and electric generation facilities are subject to the NERC mandatory reliability standards, including cybersecurity standards. If a serious reliability incident were to occur, it could have a material effect on our operations or financial results. Some states have the authority to impose substantial penalties in the event of non-compliance. We attempt to mitigate the risk of regulatory penalties through formal training. However, there is no guarantee our compliance program will be sufficient to ensure against violations.

These laws and regulations significantly influence our operations and may affect our ability to recover costs from our customers. We are required to have numerous permits, licenses, approvals and certificates from the agencies and other organizations that regulate our business. We believe we have obtained the necessary approvals for our existing operations and that our business is conducted in accordance with applicable laws and regulatory requirements; however, we are unable to predict the impact on our operating results from the future regulatory activities of any of these agencies and other organizations. Changes in regulations or the imposition of additional regulations could have a material adverse impact on our financial condition, operating results and liquidity.

OTP owns electric transmission, distribution and generation facilities subject to mandatory and enforceable standards advanced by the NERC. These bulk electric system facilities provide the framework for the electrical infrastructure of OTP’s service territory and interconnected systems, the operation of which is dependent on information technology systems. Further, the information systems that operate OTP’s electric system are interconnected to external networks. Parties that wish to disrupt the U.S. bulk power system or OTP’s operations could view OTP’s computer systems, software or networks as attractive targets for cyber-attack.

In addition, OTP’s generation and transmission facilities are spread throughout a large service territory. These facilities could be subject to physical attack or vandalism that could disrupt OTP’s operations or conceivably the regional or U.S. bulk power system.

OTP is subject to mandatory cybersecurity and physical security regulatory requirements. OTP implements the NERC standards for operating its transmission and generation assets and remains abreast of best practices within the business and the utility industry to protect its computers and computer-controlled systems from outside attack.

We rely on industry-accepted security measures and technology to securely maintain confidential and proprietary information necessary for the operation of our systems. In an effort to reduce the likelihood and severity of cyber intrusions, we have cybersecurity processes and controls, and disaster recovery plans designed to protect and preserve the confidentiality, integrity and availability of data and systems. We also take prudent and reasonable steps to protect the physical security of our transmission, distribution and generation facilities. However, all these measures and technology may not adequately prevent security breaches, ransomware attacks or other cyber-attacks, or enable us to recover effectively from such a breach or attack. Any significant interruption or failure of our information systems or any significant breach of security due to cyber-attacks, hacking or internal security breaches or physical attack of our generation or transmission facilities could adversely affect our business and our financial condition, operating results and liquidity.

The operation of our generation, transmission and distribution facilities involves many risks including equipment failures, accidents and workforce safety matters, environmental damage, property damage, operator error and the occurrence of catastrophic events such as fires, explosions and floods. Diminished availability or performance of those facilities could result in facility shutdowns, reduced customer satisfaction, reputational harm and regulatory inquiries and fines.

Accidents, fires, explosions, catastrophic failures, general system damage or dysfunction, intentional acts of destruction and other unplanned events related to our infrastructure would increase repair costs and may expose us to liability for personal injury, loss of life and property damage. Fires alleged to have been caused by our transmission, distribution or generation infrastructure, or that allegedly result from our contractors’ operating or maintenance practices, could also expose us to claims for fire suppression and clean-up costs, evacuation costs, fines and penalties, and liability for economic damages, personal injury, loss of life, property damage and environmental pollution, whether based on claims of negligence, trespass or otherwise. We maintain insurance coverage for such operating and event risks, but insurance coverage is subject to the terms and limitations of the available policies and may not be sufficient in amount to cover our ultimate liability. We may be unable to fully recover costs in excess of insurance through customer rates or regulatory mechanisms. If the amount of insurance is insufficient or otherwise unavailable, and if we are unable to fully recover in rates the costs of uninsured losses, our financial condition, operating results and liquidity could be materially affected.

We own our coal-fired generation facilities jointly with other co-owners with varying ownership interests in such facilities. Our ability to make determinations to best navigate changing environmental regulations and economic conditions may be impacted by our rights and obligations under the co-ownership and related agreements, and our ability to reconcile a divergence in the interests of OTP and the co-owners of these generation facilities. Such a divergence could impair our ability to effectively manage these changing conditions to meet our strategic objectives, and could adversely impact our financial condition, operating results and liquidity.

Our electric business is subject to the risks associated with energy and capacity markets, including changes in market supply, energy and capacity prices. If we need to procure market energy and are faced with shortages in market supply, we may be unable to fulfill our contractual obligations to our retail, wholesale and other customers at previously anticipated costs. This could force us to obtain alternative energy or fuel supplies at higher costs or suffer increased liabilities for unfulfilled contractual obligations. Changes in our own generation capacity or market capacity, including from changes in capacity accreditation, could lead to increased capacity prices. Significantly higher than expected energy or capacity costs could negatively affect our financial condition, operating results and liquidity.

We rely on a limited number of suppliers to provide coal and a limited number of service providers to transport coal and natural gas to our facilities. A counterparty's failure to perform their obligations may arise due to liquidity challenges or insolvency, operational deficiencies or other circumstances such as severe weather or natural disasters and could impact our ability to provide service to our customers or require us to seek alternative sources for these products and services, if available. A prolonged failure to perform by one or more of our current suppliers or service providers could lead to increased costs or other consequences, which could negatively impact our financial condition, operating results and liquidity.

We are impacted by our customers' strategies, operational decisions and conditions in the end markets they serve.

Our manufacturing businesses derive a large amount of their revenues from customers in the following industry sectors: recreational vehicle/powersports, lawn and garden, construction, agriculture, industrial, energy and horticulture. Factors affecting any of these industries in general could adversely affect our operating results, as growth in our operating revenues is largely dependent on the growth of our customers’ businesses in their respective industries. These factors include:

•our customers’ failure to successfully market their products, gain or retain widespread commercial acceptance of their products or compete effectively in their industries;

•loss of market share for our customers’ products, which may lead our customers to reduce or discontinue purchasing our products and components and to reduce prices, thereby exerting pricing pressure on us;

•economic conditions in the markets in which our customers operate, the United States in particular, including recessionary periods such as a global economic downturn;

•our customers’ decisions to bring the production of components in-house that have traditionally been outsourced to us; and

•seasonality of demand for our customers’ products, which may cause our manufacturing capacity to be underutilized for periods of time;

•product design changes or manufacturing process changes that may reduce or eliminate demand for the components we supply.

We expect future sales will continue to depend on the success of our customers. If economic conditions or demand for our customers’ products deteriorates, we may experience a material adverse effect on our financial condition, operating results and liquidity.

The companies in our Manufacturing segment use a variety of raw materials in the products they manufacture including, among others, steel, aluminum, and polystyrene and other plastics resins. The price and availability of the raw materials used in our manufacturing processes are based on global supply and demand conditions, which can create volatile pricing and supply disruptions as conditions change. Federal trade policies, including imposed tariffs, can also impact prices for these raw materials. If we are unable to pass cost increases through to our customers or are unable to procure adequate or timely raw material inputs for use in our manufacturing processes, our financial condition, operating results and liquidity could be negatively impacted.

Additionally, a certain amount of residual material (scrap) is a by-product of the manufacturing and production processes used by our manufacturing companies. Declines in commodity prices for these scrap materials due to weakened demand or excess supply can negatively impact the profitability of our manufacturing companies as it reduces their ability to mitigate the cost associated with excess material.

Our manufacturing businesses are subject to intense competition from domestic and foreign manufacturers, many of whom have broader product lines, greater distribution capabilities, greater capital resources, larger marketing, research and development personnel and facilities, and other capabilities. Our ability to compete on product performance, competitive pricing, technological innovation and customer service is critical to our ongoing success. If we are unable to compete in these and potentially other areas, our business and financial condition, operating results and liquidity could be adversely impacted.

Our business may be adversely affected if we are not able to maintain our manufacturing, engineering and technological expertise.

The markets for our manufacturing businesses are characterized by changing technology and evolving process development. The continued success of our businesses will depend on our ability to:

•maintain technological leadership in our industry;

•implement new and expand on current robotics, automation and tooling technologies; and

•anticipate or respond to changes in manufacturing processes in a cost-effective and timely manner.

We may be unable to develop the capabilities required by our customers in the future. The emergence of new technologies, industry standards or customer requirements may render our equipment, inventory or processes obsolete or noncompetitive. We may be required to acquire new technologies and equipment to remain competitive. The acquisition and implementation of new technologies and equipment may require us to incur significant expense and capital investment, which could reduce our margins and affect our operating results. Failure to anticipate and adapt to customers’ changing technological needs and requirements and to maintain manufacturing, engineering and technological expertise may have material adverse effects on our financial condition, operating results and liquidity.

Our PVC pipe products, sold through distributors and wholesalers, are primarily used in municipal and rural water projects, wastewater projects, storm drainage systems and reclamation systems. External factors beyond our control can cause volatility in demand for our products and sales prices impacting our operating margins. These factors can magnify the impact of economic cycles on our business and results of operations. Examples of external factors include:

•general economic conditions including housing and construction markets which can be cyclical;

•increases in interest rates;

•severe weather and natural disasters;

•governmental regulation in the United States; and

•funding shortages for municipal water and wastewater projects.

Sales prices for PVC pipe began to significantly increase in 2021, reaching a peak level in mid-2022. Pipe prices have since retreated from the high point but remain elevated compared to historic levels. Elevated pipe prices led to a significant expansion in our operating margins and cash generation. We expect sales prices for PVC pipe to continue to decline, which will cause a decline in operating margins and cash generation prospectively. The pace and magnitude of the decline in product pricing could materially impact our operating results and liquidity.

The cost of PVC resin is based on global supply and demand conditions, which can create volatile pricing. Changes in PVC resin cost prices can negatively affect PVC pipe prices and profit margins on PVC pipe sales.

We rely on a limited number of vendors to supply the PVC resin used in our plastics businesses. In 2024, we sourced all of our PVC resin needs from four vendors. In addition, the supply of PVC resin may be limited primarily due to manufacturing capacity and the limited availability of raw material components. Most U.S. resin production plants are located in the Gulf Coast region. This could increase the risk of a shortage of resin in the event of a hurricane, other extreme weather events and other natural disasters in that region. The loss of a key vendor or any interruption or delay in the availability or supply of PVC resin could disrupt our ability to deliver our plastic products, cause customers to cancel orders or require us to incur additional expenses to obtain PVC resin from alternative sources, if such sources were available.

Although PVC resin is the most significant raw material input in our PVC pipe manufacturing process, we also use certain other materials, such as stabilizers, gaskets, lumber, banding and others in the process of manufacturing and shipping our PVC pipe products. We generally source these materials from a limited number of suppliers and any significant supply chain constraints or disruptions related to these materials could also disrupt our ability to manufacture or ship products and could result in increased costs.

Competition in the plastic pipe industry arises from other PVC pipe manufacturers and the fungible nature of the product. Certain of the companies we compete with have a broader geographical reach, integration with PVC resin producers, greater manufacturing capacity and national relationships with key distribution partners. In addition to competing with other plastic pipe manufacturers, our products also complete against similar products serving the same end markets, including ductile iron, HDPE, steel and concrete pipe. Our inability to compete effectively on product price, customer service and product performance may adversely affect the financial performance of our plastics businesses.

Our businesses are affected by local, national and worldwide economic conditions. Economic recessions, inflation, changes in commodity prices, changes in interest rates and tightening of credit in financial markets could adversely affect our operating results, financial condition and liquidity. In addition, changes in government policies, including trade regulations and tariffs, could impact our businesses, including increasing our costs of materials, negatively impacting our supply chain, reducing sales volumes of our products or services, or disrupting the competitive environment in which we operate. A broad increase in tariffs may also lead to elevated inflation and increased interest rates, which may negatively impact national economic conditions and impact our operating results, financial condition and liquidity.

We expect much of our growth in the next few years will come from major capital investments at existing companies. To achieve the organic growth we expect, we must have access to the capital markets, be successful with capital expansion programs related to organic growth, develop new products and services, expand our markets and increase efficiencies in our businesses. Competitive and economic factors could adversely affect our ability to do this. If we are unable to achieve and sustain consistent organic growth, we will be less likely to meet our earnings growth targets, which may adversely affect the market price of our common shares.

A future widespread outbreak of an infectious disease, which affects a large percentage of the population regionally, nationally or globally could impact our business operations, including our employees, customers, construction contractors, suppliers and vendors, and could impact our operating results, financial condition and liquidity.

None.

The operation of our businesses is dependent on the secure functioning of our computer infrastructure and digital information systems. Furthermore, all our businesses require us to collect and maintain sensitive customer data, as well as confidential employee and shareholder information, which is subject to electronic theft or loss. We also use third-party service providers to electronically process certain of our business transactions and perform certain cyber-related functions, such as system monitoring and critical infrastructure protection and maintenance. The confidentiality, integrity and availability of information systems, both ours and those of our third-party service providers, are vulnerable to security breaches by computer hackers and cyber terrorists and the negligent or intentional breach of established controls and procedures or mismanagement of confidential information by employees. We may also be impacted by attacks and data security breaches of financial institutions, merchants or other business partners. As part of our utility operations, we own electric generation, transmission and distribution facilities that are part of an interconnected regional grid, the operation of which is dependent on information technology systems. Parties who wish to disrupt the U.S. bulk power system or our utility operations could view our computer systems, software or networks as attractive targets for cyber-attack. Although we have not historically experienced material cyber incidents, we and other utilities are subject to cyber-attacks of increasing frequency and sophistication, and any significant interruption or failure of our information systems or any significant breach of security due to cyber-attacks, hacking or internal security breaches, could adversely affect our business and our financial condition, operating results and liquidity.

Our cybersecurity policies and practices, which are based on the Center for Information Security (CIS) Critical Security Controls, are governed by our information and cybersecurity governance program. The CIS Critical Security Controls are a set of 18 cybersecurity-related controls which aid companies in designing an effective control environment and are viewed as best practices by organizations worldwide. A significant number of our cybersecurity policies and practices associated with our electric utility operations are also subject to regulation by multiple governmental and other agencies.

Our information and cybersecurity governance program is the foundation of our cybersecurity risk management strategy. The program includes policies which authorize and guide the development of procedures, standards and guidelines for personnel activities, incident prevention and reporting, and compliance monitoring. Cybersecurity policies, procedures and controls are reviewed and approved by our Information and Cybersecurity Program (ICSP) group annually, with amendments made as deemed necessary for any updates for regulatory compliance and best practices, legal privacy protection and information protection, or to reflect current technology or new methods for ensuring secure business procedures.

We perform a corporate risk assessment annually, which includes specific consideration and assessment of cybersecurity risk. As part of our risk assessment process, we incorporate results from procedures performed by third-party consultants. We utilize third-party consultants to perform penetration and vulnerability testing and monitoring, as well as overall cybersecurity control testing. Potential risks associated with the use of third-party service providers are monitored and managed through an established service provider management policy. Service providers must meet certain security requirements such as security incident or data breach notification and response protocols, data encryption requirements and data disposal commitments.

In managing cybersecurity risk, we employ a defense-in-depth strategy and regularly monitor our cyber environment for potential new threats.

Our strategy includes employee training and awareness on cybersecurity risks and related best practices, required password complexity, the use of multi-factor authentication, information security protocols, anti-virus and anti-ransomware software, a patch management program, the execution of tabletop exercises on a periodic basis, established policies and protocols for cyber incident response planning and reporting, and ongoing internal cybersecurity testing.

At the management level, our cyber program is managed by our ICSP group. The ICSP group consists of Information Technology (IT) managers, IT security subject matter experts, and internal audit personnel and is led by our Vice President of IT who has more than 25 years of experience in IT, enterprise security and cyber risk management, a Bachelor's degree of Science, CIS, Information Technology and Master's of Business, Information Systems, and holds Certified Information Systems Security Professional, Certified Information Security Manager and Certified Data Privacy Solution Engineer designations. The ICSP group is in charge of developing, maintaining and measuring compliance with the information and cybersecurity governance program, as well as monitoring cyber incidents and implementing mitigation measures as part of an evolving, dynamic external environment. Our approach to cybersecurity incident reporting and response planning is governed by our incident response plans established for each of our business units. The plans outline the processes related to detecting, assessing, investigating, mitigating and remediating cyber incidents, as well the communication and reporting plan and the required personnel to be included in the process and communications.

Our cybersecurity risk management is integrated into our overall risk management system through our internal business risk management process. Our business risk management group works closely with our ICSP group to regularly assess and identify possible material risks from cybersecurity threats, including but not limited to, financial, operations, reputational and regulatory impact to the Company, as well as impacts on our employees and customers. Their risk assessment results are reported to our Executive Risk Committee on a quarterly basis. The Executive Risk Committee, which is comprised of our executive officers, meets quarterly to identify and assess short-, medium- and long-term risks, and to ensure adequate mitigation strategies are implemented. During these meetings, the Executive Risk Committee reviews significant and emerging risks, including cybersecurity risks, and assesses the Company’s plans to mitigate or otherwise manage and monitor those risks.

Our Board of Directors provides oversight of our cybersecurity program through quarterly and annual risk reviews and cybersecurity reporting. On a quarterly basis, cybersecurity risk and mitigation strategies are reviewed as part of our business risk management group's reporting to the Board of Directors, which includes the reporting of significant business risks, including cybersecurity mitigation strategies employed to manage these risks and a review of any emerging risks. At least annually, our Vice President of IT provides an overview of our cybersecurity program to the Board of Directors, including a review of key strategies, emerging risks and a summary of key performance indicators. In addition, annually the Board of Directors reviews the results of our penetration and vulnerability testing.

The following provides a summary of our properties which are material to our operations, by segment, as of December 31, 2024.

The following reflects our wholly or jointly owned material electric generation facilities as of December 31, 2024:

In addition to our generation facilities, we wholly or jointly own transmission and distribution lines as of December 31, 2024 as follows:

			Miles
Transmission
345 kV(1)			890
230 kV(2)			496
115 kV			974
Less than 115 kV			3,998
Distribution
Less than 115 kV			7,870
(1) As of December 31, 2024, OTP held a 14.2% ownership interest of 242 miles, a 4.8% ownership interest of 250 miles, and a 50.0% ownership interest of 234 miles of the 345 kV transmission lines, with the remaining miles being wholly owned.
(2) As of December 31, 2024, OTP held a 14.8% ownership interest of 70 miles of the 230 kV transmission lines, with the remaining miles being wholly owned.

The following reflects the properties of our Manufacturing and Plastic segments as of December 31, 2024 which are significant to our operations:

We believe the facilities described above are adequate for our present business.

Several class action complaints have been filed against certain PVC pipe manufacturers, including OTC, alleging, among other things, that the defendants conspired to fix, raise, maintain, and stabilize the price of PVC municipal water and electrical conduit pipe in violation of United States antitrust laws. See Note 14, Commitments and Contingencies, to the consolidated financial statements, which information is incorporated herein by reference, for further discussion of this matter.

Set forth below is a summary of the principal occupations and business experience during the past five years of our executive officers as defined by rules of the SEC. Each of the executive officers has been employed by the Company for more than five years in an executive or management position either with the Company or its wholly owned subsidiary, Otter Tail Power Company.

Chuck MacFarlane has served as the Company’s President and Chief Executive Officer and as a member of the Company’s Board of Directors since April 13, 2015.

Todd Wahlund has served as Chief Financial Officer and Vice President since January 1, 2024, and previously served as Chief Financial Officer and Vice President, Finance for OTP from May 1, 2018 to December 31, 2023.

Timothy Rogelstad has served as President of OTP and Senior Vice President, Electric Platform of the Company since April 14, 2014.

John Abbott has served as Senior Vice President, Manufacturing Platform since February 11, 2015.

Jennifer Smestad has served as Vice President, General Counsel and Corporate Secretary of the Company since January 1, 2018. Ms. Smestad has also served as General Counsel for OTP since March 1, 2013.

The term of office for each of the executive officers is one year and any executive officer elected may be removed by the vote of the board of directors at any time during the term. There are no family relationships between any of the executive officers or directors.

Not Applicable.

Our common stock is traded on the Nasdaq Global Select Market under the Nasdaq symbol “OTTR”. As of December 31, 2024, there were 10,245 holders of record of our common stock.

We do not have a publicly announced stock repurchase program and we did not repurchase any equity securities during the quarter ended December 31, 2024. 

This graph compares the cumulative total shareholder return on our common shares for the last five years with the cumulative return of the Nasdaq Stock Market Index and the Edison Electric Institute (EEI) Index over the same period (assuming the investment of $100 in each vehicle on December 31, 2019, and reinvestment of all dividends).

			2019						2020						2021						2022						2023						2024
OTTR			$	100.00					$	85.52					$	147.06					$	125.37					$	185.62					$	166.48
EEI			$	100.00					$	98.84					$	115.76					$	117.09					$	106.90					$	127.32
Nasdaq			$	100.00					$	121.27					$	152.67					$	122.55					$	154.93					$	192.86

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing under Item 8 of this Form 10-K.

Otter Tail Corporation and its subsidiaries form a diverse group of businesses with operations classified into three segments: Electric, Manufacturing and Plastics. Our Electric business is a vertically integrated, regulated utility with generation, transmission and distribution facilities to serve our customers in western Minnesota, eastern North Dakota and northeastern South Dakota. Our Manufacturing segment provides metal fabrication for custom machine parts and metal components, and manufactures extruded and thermoformed plastic products. Our Plastics segment manufactures PVC pipe for use in, among other applications, municipal and rural water, wastewater and water reclamation projects.

In 2024, our diversified business model generated record financial results, producing net income of $301.7 million, or $7.17 per diluted share, an increase of 3% from $294.2 million, or $7.00 per diluted share, in 2023. Our financial results for the year were driven by earnings growth in our Electric and Plastics segments, partially offset by a decline in our Manufacturing segment earnings. In 2024, we paid an annual dividend of $1.87 per share, or $78.3 million, completing our 86th consecutive year of dividend payments to our shareholders.

Our Electric segment produced earnings growth of 8% in 2024, from $84.4 million in 2023 to $91.0 million in 2024, primarily due to increased retail revenue resulting from an interim rate increase in North Dakota and increased rider revenue, partially offset by the investment and financing costs associated with our rate base investments, resulting in increased depreciation and interest expense compared to the prior year.

Our Manufacturing segment earnings decreased 36% in 2024, from $21.5 million in 2023 to $13.7 million in 2024, primarily due to soft end market demand, which resulted in lower sales volumes and a decrease in gross profit margins in our plastics thermoforming business, partially offset by reduced general and administrative expenses. Decreased profit margins were primarily due to reduced leveraging of fixed manufacturing costs resulting from decreased production and sales volumes.

Our Plastics segment produced earnings growth of 7%, from $187.7 million in 2023 to $200.7 million in 2024, primarily due to the impact of increased sales volumes, driven by strong customer and end market demand. Increased operating revenues, driven by increased sales volumes, were partially offset by a decrease in gross profit margins. Gross profit margins decreased primarily due to decreases in sales prices, which outpaced decreases in the cost of PVC resin and other input materials.

Our earnings mix in 2024 was 30% from our Electric segment and 70% from the combination of our Manufacturing and Plastics segments including unallocated corporate costs. Since 2021, our earnings mix has diverged from our long-term target of 65% from our Electric segment and 35% from our Manufacturing Platform primarily due to market conditions within the PVC pipe industry. These conditions have led to significant revenue, earnings and cash flow growth in our Plastics segment. Currently, we expect these industry conditions to gradually normalize through 2027. As they do, we expect earnings and cash flow generation within our Plastics segment to moderate from current levels and our earnings mix to return to our long-term targeted mix.

Extraordinary supply and demand conditions in the PVC industry beginning in 2021 have led to a significant expansion in operating margins and elevated earnings in our Plastics segment over the past four years. Periodic disruptions in the supply of PVC resin, the primary material input used in the manufacturing of PVC pipe, coupled with robust demand for resin, led to a significant increase in the cost of resin beginning in 2021. During this time, robust end market demand for PVC pipe led to a rapid and significant increase in sales prices for the product, significantly outpacing the increase in resin input costs, leading to increased operating margins within our Plastics segment. PVC pipe prices and resin costs reached historic levels, peaking in 2022. Sales prices have steadily declined since the third quarter of 2022, a trend that continued throughout 2024; however, operating margins remain elevated relative to historical levels.

In the second half of 2022, our sales volumes declined in response to uncertain and competitive market conditions, which continued through the first half of 2023. Robust infrastructure investment plans, particularly in water supply, sewage, and drainage systems, and increased construction activity drove strong distributor and end market demand for PVC pipe beginning in the second half of 2023 and those trends continued throughout 2024.

The market dynamics impacting our Plastics segment resulted in a significant increase in earnings in the last four years compared to historical levels. We anticipate PVC pipe sales prices will continue to decline over time; however, future supply and demand dynamics, as well as other factors, could impact future product prices. We anticipate PVC pipe prices will gradually normalize through 2027. The marketplace dynamics impacting our Plastics segments are fluid and subject to change and may impact our operating results prospectively.

Heating Degree Days (HDDs) is a measure of how much (in degrees), and for how long (in days), the outside air temperature was below a certain normalized level. Normal weather conditions are defined as the 20-year average of actual historical weather conditions. This measure is commonly used in calculations relating to the energy consumption required to heat buildings.

Cooling Degree Days (CDDs) is a measure of how much (in degrees), and for how long (in days), the outside air temperature was above a certain normalized level. This measure is commonly used in calculations relating to the energy consumption required to cool buildings.

OTP generally bases its forecasted kwh sales and rates on expected consumption under a normal level of HDDs and CDDs over a given period of time in its service territory. Increased or decreased levels of consumption for certain customer classifications are attributed to deviation from the norms and are a significant factor influencing consumption of electricity across our service territory. We present HDDs and CDDs to provide an indication of the impact of weather on kwh sales, revenues and earnings relative to forecast, and on period-to-period results.

For a comparison of fiscal year 2023 to 2022, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 14, 2024.

Provided below is a summary and discussion of our operating results on a consolidated basis followed by a discussion of the operating results of each of our segments, Electric, Manufacturing and Plastics. In addition to the segment results, we provide an overview of our Corporate costs. Our Corporate costs do not constitute a reportable segment, but rather consist of unallocated general corporate expenses, such as corporate staff and overhead costs, the results of our captive insurance company and other items excluded from the measurement of segment performance. Corporate costs are added to operating segment totals to reconcile to totals on our consolidated statements of income.

The following table summarizes our consolidated results of operations for the years ended December 31, 2024 and 2023:

Operating Revenues decreased $18.6 million on a consolidated basis in 2024. Electric segment operating revenues decreased 1% primarily due to decreased fuel recovery and wholesale revenues and the impact of unfavorable weather, partially offset by retail revenue increases due to an interim rate increase in North Dakota in connection with our most recent rate case, as well as increased commercial and industrial sales volumes, and increased rider revenue. Manufacturing segment operating revenues decreased 15% primarily due to lower sales volumes due to soft end market demand across most end markets. Plastics segment operating revenues increased 11% primarily due to increased sales volumes driven by strong customer demand, partially offset by a decrease in sales prices. See our segment disclosures below for additional discussion of items impacting operating revenues.

Operating Expenses decreased $20.9 million in 2024. Electric segment operating expenses decreased primarily due to decreased purchased power costs resulting from lower market energy prices. Operating expenses in our Manufacturing segment decreased primarily due to decreased sales volumes, as discussed above. Operating expenses in our Plastics segment increased primarily due to increased sales volumes, as discussed above. See our segment disclosures below for additional discussion of items impacting operating expenses.

Interest Expense increased $4.1 million in 2024 due to the issuance of an additional $120.0 million of long-term debt at OTP in March, the proceeds of which were used to repay short-term borrowings, fund capital expenditures and support operating activities.

Other Income increased $6.2 million in 2024 primarily due to an increase in investment income earned on our short-term cash equivalent investments and our long-term fixed income investments.

Income Tax Expense decreased $4.1 million in 2024 primarily due to an increase in PTCs produced by our wind and solar generation assets. Our effective tax rate was 17.8% in 2024 and 19.1% in 2023. See Note 13 to our consolidated financial statements included in this report on Form 10-K for additional information regarding factors impacting our effective tax rate.

The following table summarizes the operating results of our Electric segment for the years ended December 31, 2024 and 2023:

Our Electric segment operating results are impacted by fluctuations in weather conditions and the resulting demand for electricity for heating and cooling. The following table presents heating and cooling degree days as a percent of normal for the years ended December 31, 2024 and 2023:

The following table summarizes the estimated effect on diluted earnings per share of the difference in retail sales under actual weather conditions and expected retail sales under normal weather conditions for the years ended December 31, 2024 and 2023, and between years:

Retail Revenue decreased $2.6 million primarily due to the following:

•A $13.4 million decrease in fuel recovery revenues, primarily due to lower purchased power costs, as described below.

•A $8.1 million decrease in base revenues from the unfavorable impact of weather compared to last year.

The decreases in retail revenue described above were partially offset by the following:

•    A $12.4 million increase from an interim rate increase in North Dakota, effective January 1, 2024, in connection with our most recent rate case.

•    A $3.2 million increase in rider revenues, including recovery of our continued investments in advanced metering and outage management systems and wind repowering projects.

•Increased sales volumes to commercial and industrial customers, the mix of customer rates compared to the prior year and other factors.

Purchased Power costs to serve retail customers decreased $16.7 million due to a 17% decrease in the price of purchased power, primarily due to decreased market energy costs, as well as a 5% decrease in the volume of purchased power primarily due to decreased demand resulting from unfavorable weather.

Operating and Maintenance Expense decreased $0.8 million primarily due to decreased vegetative maintenance, outage, transmission tariff and insurance costs, partially offset by increased labor, software and environmental protection costs.

Depreciation and Amortization expense increased $6.8 million primarily due to the placing in service of our metering infrastructure project throughout the year, a full year of depreciation recognized for Hoot Lake Solar, which was placed in service in August 2023, and continued investments in distribution facilities during the year.

Property Taxes decreased $1.0 million due to lower taxes associated with certain wind farm facilities in North Dakota due to a revision of the tax methodology applied to the property and lower taxes in Minnesota.

Interest Expense increased $4.4 million due to the issuance of an additional $120.0 million of long-term debt in March, partially offset by lower interest on short-term borrowings due to lower average borrowings and interest rates compared to the prior year.

Income Tax Expense decreased $3.2 million due to an increase in PTCs produced by our wind and solar generation assets, partially attributable to Hoot Lake Solar going into service in August 2023.

The following table summarizes the operating results of our Manufacturing segment for the years ended December 31, 2024 and 2023:

Operating Revenues decreased $60.2 million primarily due to a 15% decrease in sales volumes, with declines experienced in the recreational vehicle, agriculture, construction, lawn and garden, and horticulture end markets. Sales volumes decreased due to lower end market demand and inventory management efforts by manufacturers, distributors and dealers. A 28% decline in scrap metal revenues, largely driven by lower production volumes, also contributed to the decrease in operating revenues.

Cost of Products Sold decreased $42.7 million primarily due to lower sales volumes, as described above. In response to declines in end market demand and decreased sales volumes, we reduced our headcount and operating hours and placed employees on temporary furlough during the year, which also reduced our costs. These decreases were partially offset by reduced leveraging of fixed manufacturing costs resulting from the decreased production and sales volumes.

Selling, General, and Administrative Expenses decreased $9.3 million primarily due to decreased employee compensation costs resulting from a decrease in headcount and lower variable compensation driven by financial performance in the current year.

Depreciation and Amortization increased $1.9 million due to capital expenditures during the year, which included investments in facility improvements and purchases of equipment.

The following table summarizes the operating results for our Plastics segment for the years ended December 31, 2024 and 2023:

Operating Revenues increased $45.4 million primarily due to a 27% increase in sales volumes driven by customer sales volume growth and strong distributor and end market demand. Sales volumes in 2023 were negatively impacted by distributors and contractors reducing purchase volumes in response to uncertain and competitive market conditions. Although market conditions remain somewhat uncertain, infrastructure investment and active construction across our sales territories contributed to increased distributor and end market demand in 2024. The impact of increased sales volumes was partially offset by decreased sales prices. Our sales prices have steadily declined after peaking in late 2022 and decreased 12% in 2024 compared to the prior year due to continuing changes in market conditions.

Cost of Products Sold increased $23.1 million primarily due to increased sales volumes, as described above. The supply and demand conditions for PVC resin experienced in recent years appear to have normalized and resin costs were less volatile throughout the year than they were in the recent past. The cost of PVC resin and other input materials decreased 13% compared to the prior year, partially offsetting the impact of increased sales volumes.

Selling, General, and Administrative Expenses increased $4.3 million due to costs associated with ongoing litigation regarding the pricing of PVC pipe, which is further described in Note 14 to the consolidated financial statements, as well as increased variable costs associated with our increase in sales volumes and current year financial performance.

The following table summarizes Corporate results of operations for the years ended December 31, 2024 and 2023:

Selling, General, and Administrative Expenses increased $12.4 million primarily due to increased insurance expense driven by higher claims costs associated with our self-funded insurance programs, as well as increased variable compensation based on the current year financial performance.

Other Income increased $4.6 million primarily due to an increase in investment income earned on our short-term cash equivalent investments and our long-term fixed income investments, primarily due to additional investments made during the year driven by an increase in cash available for investment.