What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-01 compared with 2021-02-02 · 50 added, 69 removed, 141 unchanged (46% of the section changed)

UNITIL CORPORATION

In this Annual Report on Form 10-K,

the “Company”, “Unitil”, “we”, and “our” refer to Unitil Corporation and its subsidiaries, unless the context requires otherwise.

In this Annual Report on Form 10-K, the “Company”, “Unitil”, “we”, and “our” refer to Unitil Corporation and its subsidiaries, unless the context requires otherwise.

Unitil is a public utility holding company incorporated under the laws of the State of New Hampshire in 1984.

24 unchanged sentences

(Unitil Resources)

Non-regulated

Energy Services

Non-regulated Energy Services

Unitil and its subsidiaries are subject to regulation as a holding company system by the Federal Energy Regulatory Commission (FERC) under the Energy Policy Act of 2005.

12 unchanged sentences

Unitil had an investment in Net Utility Plant of $1,257.2 million at December 31, 2021.

Unitil’s total operating revenue was $418.6 million in 2020.

Unitil’s operating revenue is substantially derived from regulated natural gas and electric distribution utility operations.

A fifth utility subsidiary, Unitil Power, formerly functioned as the full requirements wholesale power supply provider for Unitil Energy, but

currently has limited business and operating activities.

In connection with the implementation of electric industry restructuring in New Hampshire, Unitil Power ceased being the wholesale supplier for Unitil Energy in 2003 and divested substantially all of its long-term power supply contracts through the sale of the entitlements to the electricity associated with those contracts.

Unitil has three other wholly-owned non-utility

subsidiaries:

The Company’s total operating revenue was $473.3 million in 2021.

Unitil’s operating revenue is substantially derived from regulated electric and natural gas distribution utility operations.

A fifth utility subsidiary, Unitil Power, formerly functioned as the full requirements wholesale power supply provider for Unitil Energy.

In connection with the implementation of electric industry restructuring in New Hampshire, on

May 1, 2003 Unitil Power ceased being the wholesale supplier of Unitil Energy and divested its long-term power supply contracts through the sale of the entitlements to the electricity associated with various electric power supply contracts it had acquired to serve Unitil Energy’s customers.

In the period since, Unitil Power continued to flow revenues and expenses from remaining contracts to Unitil Energy under the Amended Unitil System Agreement.

The last of those contracts expired October 31, 2020, and the Company no longer has material revenues or expenses associated with those contracts.

Unitil has three other wholly-owned non-utility subsidiaries:

Unitil Service, Unitil Realty, and Unitil Resources.

1 unchanged sentence

Unitil Realty owns and manages the Company’s corporate office in Hampton, New Hampshire.

Unitil Resources is the Company’s wholly-owned non-regulated

Unitil Resources is the Company’s wholly-owned non-regulated subsidiary.

Usource, Inc.

2 unchanged sentences

Usource provided energy brokering and advisory services to large commercial and industrial customers in the northeastern United States.

See additional discussion of the divestiture of Usource in “Divestiture of Non-Regulated

Business Subsidiary” in Note 1 (Summary of Significant Accounting Policies) to the Consolidated Financial Statements.

See additional discussion of the divestiture of Usource in “Divestiture of Non-Regulated Business Subsidiary” in Note 1 (Summary of Significant Accounting Policies) to the Consolidated Financial Statements.

For segment information relating to each segment’s revenue, earnings and assets, see Note 2 (Segment Information) to the Consolidated Financial Statements included in Part II, Item 8 (Financial Statements and Supplementary Data) of this report.

All of the Company’s revenues are attributable to customers in the United States of America and all its long-lived assets are located in the United States of America.

Electric Distribution Utility Operations

Unitil’s electric distribution operations are conducted through two of the Company’s utilities, Unitil Energy and Fitchburg.

Revenue from Unitil’s electric utility operations was $248.5 million in 2021, which represents about 53% of Unitil’s total operating revenue.

The Company’s GAAP Electric Gross Margin was $71.5 million in 2021.

The Company’s Electric Adjusted Gross Margin (a non-GAAP financial measure) was $97.4 million in 2021, or 42% of Unitil’s total Adjusted Gross Margin.

See “Results of Operations” in Part II, Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) for a discussion of the non-GAAP financial measures presented in this Annual Report on Form 10-K, including a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures for the periods presented.

The primary business of Unitil’s electric utility operations is the local distribution of electricity to customers in its service territory in New Hampshire and Massachusetts.

All of Unitil Energy’s and Fitchburg’s electric customers are entitled to purchase their supply of electricity from third-party competitive suppliers, while Unitil Energy and Fitchburg remain their electric distribution company.

Both Unitil Energy and Fitchburg supply electricity to those customers who do not obtain their supply from third-party competitive suppliers, with the approved costs associated with electricity supply being recovered on a pass-through basis through regulated reconciling rate mechanisms that are periodically adjusted.

Unitil Energy distributes electricity to 77,646 customers in New Hampshire in the capital city of Concord as well as parts of 12 surrounding towns, and all or part of 18 towns in the southeastern and seacoast regions of New Hampshire, including the towns of Hampton, Exeter, Atkinson and Plaistow.

Unitil Energy’s service territory consists of approximately 408 square miles.

Unitil Energy’s service territory encompasses retail and recreation centers for the central and southeastern parts of the state and includes the Hampton Beach recreational area.

These areas serve diversified commercial and industrial businesses, including manufacturing firms engaged in the production of electronic components, wire and plastics, as well as firms engaged in the aviation, defense, healthcare and education sectors.

Unitil Energy’s 2021 electric operating revenue was $172.3 million, of which approximately 56% was derived from residential sales and 44% from commercial and industrial (C&I) sales.

Fitchburg is engaged in the distribution of both electricity and natural gas in the greater Fitchburg area of north central Massachusetts.

Fitchburg’s service territory encompasses approximately 170 square miles.

Electricity is distributed by Fitchburg to 30,034 customers in the communities of Fitchburg, Ashby, Townsend and Lunenburg.

Fitchburg’s industrial customers include paper manufacturing and paper products companies, rubber and plastics manufacturers, precision machining and molding, non-lethal ballistics manufacturing, specialty chemicals compounding, cannabis growing and processing facilities, printing, and educational institutions.

Fitchburg’s 2021 electric operating revenue was $76.2 million, of which approximately 58% was derived from residential sales and 42% from C&I sales.

Natural Gas Operations

2 unchanged sentences

The Company’s GAAP Gas Gross Margin was $100.4 million in 2021.

The Company’s Gas Adjusted Gross Margin (a non-GAAP

measure) was $122.6 million in 2020, or 57% of Unitil’s total Adjusted Gross Margin.

See “Results of Operations” in Part II, Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) for a discussion of the non-GAAP

measures presented in this Annual Report on Form 10-K,

including a reconciliation of the non-GAAP

measures to the most comparable GAAP measures for the periods presented.

The Company’s Gas Adjusted Gross Margin (a non-GAAP financial measure) was $133.1 million in 2021, or 58% of Unitil’s total Adjusted Gross Margin.

Natural Gas Distribution Utility Operations

6 unchanged sentences

Commercial businesses include healthcare, education, government and retail.

Northern Utilities’ industrial base includes manufacturers in the auto, housing, rubber, printing, textile, pharmaceutical, electronics, wire and food production industries as well as a military installation.

Northern Utilities’ industrial base includes manufacturers in the auto, housing, paper, printing, textile, pharmaceutical, electronics, wire and food production industries as well as a military installation.

Northern Utilities’ 2021 gas operating revenue was $176.7 million, of which approximately 38% was derived from residential firm sales and 62% from C&I firm sales.

Natural gas is distributed by Fitchburg to 16,197 customers in the communities of Fitchburg, Lunenburg, Townsend, Ashby, Gardner and Westminster, all located in Massachusetts.

industrial customers include paper manufacturing and paper products companies, rubber and plastics manufacturers, chemical products companies and printing, publishing and associated industries.

Fitchburg’s industrial customers include paper manufacturing and paper products companies, rubber and plastics manufacturers, cannabis growing and processing facilities, printing, educational institutions.

Fitchburg’s 2021 gas operating revenue was $40.1 million, of which approximately 58% was derived from residential firm sales and 42% from C&I firm sales.

4 unchanged sentences

Granite State derives its revenues principally from the transportation services provided to Northern Utilities and to third-party suppliers.

Electric Distribution Utility Operations

Unitil’s electric distribution operations are conducted through two of the Company’s utilities, Unitil Energy, and Fitchburg.

Revenue from Unitil’s electric utility operations was $227.2 million in 2020, which represents about 54% of Unitil’s total operating revenue.

The Company’s GAAP Electric Gross Margin was $69.1 million in 2020.

The Company’s Electric Adjusted Gross Margin (a non-GAAP

measure) was $92.9 million in 2020, or 43% of Unitil’s total Adjusted Gross Margin.

See “Results of Operations” in Part II, Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) for a discussion of the non-GAAP

measures presented in this Annual Report on Form 10-K,

including a reconciliation of the non-GAAP

measures to the most comparable GAAP measures for the periods presented.

The primary business of Unitil’s electric utility operations is the local distribution of electricity to customers in its service territory in New Hampshire and Massachusetts.

All of Unitil Energy’s and Fitchburg’s electric customers are entitled to choose to purchase their supply of electricity from third-party competitive suppliers, while Unitil Energy and Fitchburg remain their electric distribution company.

Unitil Energy distributes electricity to 77,204 customers in New Hampshire in the capital city of Concord as well as parts of 12 surrounding towns, and all or part of 18 towns in the southeastern and seacoast regions of New Hampshire, including the towns of Hampton, Exeter, Atkinson and Plaistow.

Unitil Energy’s service territory consists of approximately 408 square miles.

Unitil Energy’s service territory encompasses retail and recreation centers for the central and southeastern parts of the state and includes the Hampton Beach recreational area.

These areas serve diversified commercial and industrial businesses, including manufacturing firms engaged in the production of electronic components, wire and plastics, healthcare and education.

Unitil Energy’s 2020 electric operating revenue was $159.4 million, of which approximately 58% was derived from residential sales and 42% from C&I sales.

Fitchburg is engaged in the distribution of both electricity and natural gas in the greater Fitchburg area of north central Massachusetts.

Fitchburg’s service territory encompasses approximately 170 square miles.

Electricity is distributed by Fitchburg to 29,873 customers in the communities of Fitchburg, Ashby, Townsend and Lunenburg.

Fitchburg’s industrial customers include paper manufacturing and paper products companies, rubber and plastics manufacturers, chemical products companies, printing, publishing and associated industries, and educational institutions.

Fitchburg’s 2020 electric operating revenue was $67.8 million, of which approximately 61% was derived from residential sales and 39% from C&I sales.

The Company’s results of operations are expected to reflect the seasonal nature of the natural gas business.

Annual gas revenues are substantially realized during the colder weather seasons of the year as a result of higher sales of natural gas used for heating related purposes.

Accordingly, the results of operations

are historically most favorable in the first and fourth quarters.

Annual gas revenues are substantially realized during the colder weather seasons of the year as a

result of higher sales of natural gas used for heating-related purposes.

Accordingly, the results of operations are historically most favorable in the first and fourth quarters.

Fluctuations in seasonal weather conditions may have a significant effect on the result of operations.

Sales of electricity are generally less sensitive to weather than natural gas sales, but may also be affected by the weather conditions and the temperature in both the winter and summer seasons.

Sales of electricity are generally less sensitive to weather than natural gas sales, but may also be affected by weather conditions and the temperature in the winter and summer seasons.

Unitil Energy, Fitchburg and Northern Utilities are not dependent on a single customer, or a few customers, for their electric and natural gas sales.

Non-Regulated

and Other Non-Utility

Unitil’s non-regulated

operations were conducted through Usource, a subsidiary of Unitil Resources.

Non-Regulated and Other Non-Utility Operations

Unitil’s non-regulated operations were conducted through Usource, a subsidiary of Unitil Resources.

The Company divested Usource in the first quarter of 2019.

Usource provided energy brokering and advisory services to large commercial and industrial customers in the northeastern United States.

See additional discussion of the divestiture of Usource in “Divestiture of Non-Regulated

Business Subsidiary” in Note 1 (Summary of Significant Accounting Policies) to the Consolidated Financial Statements.

The results of Unitil’s other non-utility

subsidiaries, Unitil Service and Unitil Realty, and the holding company, are included in the Company’s consolidated results of operations.

The results of these non-utility

operations are principally derived from income earned on short-term investments and real property owned for Unitil’s and its subsidiaries’ use and are reported, after intercompany eliminations, in Other segment income.

The results of Unitil’s other non-utility subsidiaries, Unitil Service and Unitil Realty, and the holding company, are included in the Company’s consolidated results of operations.

The results of these non-utility operations are principally derived from income earned on short-term investments and real property owned for Unitil’s and its subsidiaries’ use and are reported, after intercompany eliminations, in Other segment income.

For segment information, see Note 2 (Segment Information) to the Consolidated Financial Statements included in Part II, Item 8 (Financial Statements and Supplementary Data) of this report.

10 unchanged sentences

Unitil’s distribution utilities deliver electricity and/or natural gas to all customers in their service territory, at rates established under cost of service regulation.

Under this regulatory structure, Unitil’s distribution utilities recover the cost of providing distribution service to their customers based on a historical test year, and earn a return on their capital investment in utility assets.

Under this regulatory structure, Unitil’s distribution utilities are provided the opportunity to recover the cost of providing distribution service to their customers based on a historical test year, and earn a return on their capital investment in utility assets.

In addition, the Company’s distribution utilities and its natural gas transmission pipeline company may recover certain base rate costs, including capital project spending and enhanced reliability and vegetation management programs, through annual step adjustments and cost tracking rate mechanisms.

4 unchanged sentences

The Company estimates that revenue decoupling applies to approximately 27% and 11% of Unitil’s total annual electric and natural gas sales volumes, respectively.

Also see Note 7 (Energy Supply) and Note 8 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements for additional information on rates and regulation.

Also see Note 6 (Energy Supply) and Note 7 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements for additional information regarding rates and regulation.

Unitil’s commitment to excellence begins with its employees.

3 unchanged sentences

The Company strives to be the employer of choice in the communities it serves—regardless of race, religion, color, gender, or sexual orientation.

The Company works diligently to attract the best talent from a diverse range of sources in order to meet the current and future demands of our business.

The Company works diligently to attract the best talent from a diverse range of sources to meet the current and future demands of our business.

To attract and retain a talented workforce, Unitil provides employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge and geographic location.

15 unchanged sentences

AVAILABLE INFORMATION

The Internet address for the Company’s website is www.unitil.com

On the Investors section of the Company’s website, the Company makes available, free of charge, its Securities and Exchange Commission (SEC) reports, including annual reports on Form 10-K,

quarterly reports on Form 10-Q,

current reports on Form 8-K

and other reports, as well as amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practical after the Company electronically files such material with, or furnishes such material to, the SEC.

The Internet address for the Company’s website is unitil.com

On the Investors section of the Company’s website, the Company makes available, free of charge, its Securities and Exchange Commission (SEC) reports, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports, as well as amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practical after the Company electronically files such material with, or furnishes such material to, the SEC.

The Company’s current Code of Ethics was approved by Unitil’s Board of Directors on January 15, 2004.

24 unchanged sentences

Direct Registration:

For information, please contact Computershare at 800-935-9330

or the Company’s Investor Relations Representative at 800-999-6501.

For information, please contact Computershare at 800-935-9330 or the Company’s Investor Relations Representative at 800-999-6501.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business