20:10:13:55 D-1 Detailed Cost of Plant Gas Utility 20:10:13:56 D-2 Book Changes in Gas Plant in Service

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1 Docket No. NG15- Index Statement or Rule Schedule Description 2:1:13:51 A Balance Sheet 2:1:13:52 B Income Statement 2:1:13:53 c Retained Earnings 2:1:13:54 D Plant in Service Gas Utility 2:1:13:55 D-1 Detailed Cost of Plant Gas Utility 2:1:13:56 D-2 Book Changes in Gas Plant in Service 2:1:13:57 D-3 Plant in Service Average Gas Utility 2:1:13:58 D-4 Book Changes in Gas Plant in Service- Previous Years 2:1:13:59 D-5 Methods and Procedures Followed in Capitalizing AFUDC and Other Construction Overheads 2:1:13:6 D-6 Significant Changes in Intangible Plant 2:1:13:61 D-7 Working papers on Plant Not Used and Useful 2:1:13:62 D-8 Description of Property Records 2:1:13:63 D-9 Gas Plant Acquisitions Without Regulatory Approval 2:1:13:64 E Accumulated Reserve for Depreciation 2:1:13:65 E-1 Book Changes in Accumulated Provision for Depreciation and Amortization 2:1:13:66 E-2 Procedures Followed in Depreciating or Amortizing Plant and Recording Abandonment 2:1:13:67 E-3 Allocation of Overall Accumulated Reserve Accounts to Functional Groups of Plants 1

2 Docket No. NG15- Index 2:1:13:68 F Working Capital and Other Deductions 2:1:13:69 F-1 Materials and Supplies by Principal Item of Main Account 2:1:13:7 F-2 Materials and Supplies- Previous Years 2:1:13:71 F-3 Customer Advances for Construction 2:1:13:72 G Average Utility Capital Structure 2:1:13:73 Long-Term Debt 2:1:13:74 Preferred Stock 2:1:13:75 Utility Common Equity 2:1:13:76 G-1 Stock Dividends, Stock Splits or Changes in Par or Stated Value 2:1:13:77 G-2 Common Stock Data- Five Years 2:1:13:78 G-3 Reacquisition of Bonds or Preferred Stock- Five Years 2:1:13:8 H Summary of Operation and Maintenance Expenses 2:1:13:81 H-1 Operation and Maintenance Expenses Pro Forma 2:1:13:82 H-2 Cost of Gas 2:1:13:83 H-3 Administrative and General Operation and Maintenance Expenses 2:1:13:84 H-4 Intercompany Transactions 2:1:13:85 Operating Revenues 2:1:13:86 J Summary of Depreciation Expense 2:1:13:87 J-1 Depreciation Expense Charged to Other Than Prescribed Depreciation and Amortization Expense 2:1:13:88 K Income Taxes 2:1:13:89 K-1 Reconciliation of Net Income Per Books with 2

3 Docket No. NG15- Index Taxable Income Per Federal Income Tax Return 2:1:13:9 2:1:13:91 2:1:13:92 2:1:13:93 K-2 Difference in Book and Tax Depreciation K-3 Net Taxable Income (Loss) for Each Company Included in MDU Resources Group Inc.'s 211 Consolidated Federal Income Tax Return K-4 Allowance for Current Tax in Excess of Tax Calculated at Consolidated Tax Rate K-5 Allowance for Current State Income Taxes Calculated at Consolidated Tax Rate 2:1:13:94 L Taxes Other Than Income 2:1:13:95 L-1 Ad Valorem Taxes 2:1:13:96 2:1:13:97 M N Overall Cost of Service Allocated Cost of Service 2:1:13:98 2:1:13:99 Comparison of Cost of Service -1 Derivation of Increased Rates 2:1:13:1 2:1:13:11 2:1:13:12 p Q R Pro Forma Gas Costs Description of Utility Operations Intercompany Transactions 3

4 Docket No. NG15-_ Rule 2:1:13:51 Statement A INDEX Balance Sheet Twelve months ending December 31,213 and 214 Twelve months ending March 31, 214 and 215 Notes to Financial Statements Page Nos

5 MDU RESOURCES GROUP, INC. NONCONSOLIDATED BALANCE SHEET DECEMBER 31,213 AND DECEMBER 31, 214 Docket No. NG15-_ Rule 2:1:13:51 Statement A Page 1 of 4 Assets and Other Debits Utility Plant Construction Work in Progress Less Ace. Provision for Depreciation and Amortization Net Utility Plant Gas Stored Underground- Noncurrent Other Property and Investments Nonutility Property (Less) Accum. Prov. for Depr. And Amort. Investment in Subsidiary Companies Other investments Net Other Property and Investments Current and Accrued Assets Cash Special Deposits Working Fund Temporary Cash Investments Customer Accounts Receivable Other Accounts Receivable (Less) Accum.Prov. For Uncollectible Acct. -Credit Notes Receivable from Assoc. Companies Accounts Receivable from Assoc. Companies Fuel Stock Plant Materials and Operating Supplies Merchandise Stores Expense Undistributed Gas Stored Underground - Current Prepayments Accured Utility Revenues Miscellaneous Current and Accrued Assets Total Current and Accrued Assets Deferred Debits Unamortized Debt Expenses Unrecovered Plant and Regulatory Study Costs Other Regulatory Assets Prelim. Survey and Investigation Charges (Electric) Prelim. Survey and Investigation Charges (Natural Gas) Clearing Accounts Miscellaneous Deferred Debits Unamortized Loss on Reaquired Debt Accumulated Deferred Income Taxes Unrecovered Purchased Gas Costs Total Deferred Debits Total Assets and Other Debits 213 $1,618,679,7 151,552,8 76,97,889 1,9,26,189 1,558,796 15,629,869 2,91,889 2,38,828,521 6,687,111 2,454,243,612 4,718,52 26,55 332,668 29,796,719 4,43,59 443,629 31,371,687 4,751,688 19,97,488 75,479 5,386,681 5,74,231 49,648,1 154,473,637 1,219,12 3,698,596 83,915,12 336,423 61,412 (6,513) 26,225,949 7,47,81 49,133,86 8,19,627 18,1,621 $3,799,546, $1,87,75,33 161,794, '15,735 1,187,719,196 2,539,826 16,86,364 3,483,659 2,59,283,23 64,445,496 2,667,331,431 5,873,534 14,87 246,893 29,467,184 8,855, ,245 32,69,791 4,417,98 19,8,235 16,232 9,35,11 7 6,15,991 47,389, ,743,58 2,19,812 3,35,53 121,494,214 5,3 93,539 55,122 29,214,83 6,687,57 63,779,943 1,651, ,846,95 $4,259,18,9 83

6 MDU RESOURCES GROUP, INC. NONCONSOLIDATED BALANCE SHEET DECEMBER 31, 213 AND DECEMBER 31, Liabilities and Other Credits Proprietary Capital Common Stock Issued $189,868,78 Preferred Stock Issued 15,, Premium on Capital Stock 1,61,253,848 (Less) Capital Stock Expense 4,257,578 Retained Earnings 54,13,52 Unappropriated Undistributed Sub Earnings 1,62,999,41 (Less) Reacquired Capital Stock 3,625,813 Accumulated Other Comprehensive Income (38,24,576) Total Proprietary Capital 2, 823, 164,24 Long-Term Debt Bonds 28,, Other Long-Term Debt 154,75,972 (less) Unamortized Discount on Long-Term Debt-Debit Total Long-Term Debt 434,75,972 Other Noncurrent Liabilities Accumulated Provision for Injuries and Damages 1,355,445 Accumulated Provision for Pensions and Benefits 51,449,261 Accumulated Provision for Rate Refunds 191,185 Asset Retirement Obligations 7,142,915 Total Other Noncurrent Liabilities 6,138,86 Current and Accrued Liabilities Notes Payable Accounts Payable 44,138,862 Accounts Payable to Associated Companies 4,839,83 Customer Deposits 1,428,796 Taxes Accrued 12,336,56 Interest Accrued 4,973,368 Dividends Declared 33,737,48 Tax Collections Payable 1,143,473 Miscellaneous Current and Accrued Liabilities 29,444,73 Total Current and Accrued Assets 132,42,226 Deferred Credits Customer Advances for Construction 18,726,55 Accumulated Deferred Investment Tax Credit 767,331 Other Deferred Credits 62,138,894 Other Regulatory Liabilities 16,286,38 Accumulated Deferred Income Taxes 251,576,492 Total Deferred Credits 349,495,647 Total Liabilities and Equity $3,799,546,855 Docket No. NG15-_ Rule 2:1:13:51 Statement A Page 2 of $194,754,812 15,, 1,213,676,764 6,488, ,934,822 1,26,892,28 3,625,813 (42, 1 3,297) 3,134,4,893 58,273,56 58,273,56 3,736,56 54,64,98 45, 6,59,617 65,335,771 46,83,236 3,863,9 1,51,515 (41,641,535) 7,431,466 35,66,942 1,257,661 24,99,61 16,767,895 22,623,499 2,411,735 96,422,495 9,5, ,299, ,762,918 $4,259,18,983

7 MDU RESOURCES GROUP, INC. NONCONSOLIDATED BALANCE SHEET MARCH 31, 214 AND MARCH 31, 215 Docket No. NG15-_ Rule 2:1:13:51 Statement A Page 3 of 4 Assets and Other Debits Utility Plant Construction Work in Progress Less Ace. Provision for Depreciation and Amortization Net Utility Plant Gas Stored Underground- Noncurrent Other Property and Investments Nonutility Property (Less) Accum. Prov. for Depr. And Amort. Investment in Subsidiary Companies Other investments Net Other Property and Investments Current and Accrued Assets Cash Special Deposits Working Fund Temporary Cash Investments Customer Accounts Receivable Other Accounts Receivable (Less) Accum.Prov. For Uncollectible Acct.- Credit Notes Receivable from Assoc. Companies Accounts Receivable from Assoc. Companies Fuel Stock Plant Materials and Operating Supplies Merchandise Stores Expense Undistributed Gas Stored Underground - Current Prepayments Accrued Utility Revenues Miscellaneous Current and Accrued Assets Total Current and Accrued Assets Deferred Debits Unamortized Debt Expenses Unrecovered Plant and Regulatory Study Costs Other Regulatory Assets Prelim. Survey and Investigation Charges (Electric) Prelim. Survey and Investigation Charges (Natural Gas) Clearing Accounts Miscellaneous Deferred Debits Unamortized Loss on Reaquired Debt Accumulated Deferred Income Taxes Unrecovered Purchased Gas Costs Total Deferred Debits Total Assets and Other Debits 214 $1,628,16, ,348, ,34,37 4 1,27,114, ,16 15,635,135 3,46,618 2,429,415,93 61,153,556 2,53,157,976 5,716,453 26,55 942,211 48,381,427 2,94,27 824,964 29,255,524 4,859,794 17,341,932 73,433 5, ,465 2,661,331 41,794, ,531,8 1 '171,677 3,61,925 85,49, ,553 61,477 (626, 168) 26,278,449 7,227,23 51,28,84 16,12,253 19,864,97 $3,875,321, $1,821,329, ,8, ,568,639 1,212,561,15 2,539,826 15,442,499 3,238,6 2,24,149,417 65,699,893 2,318,53,83 4,144,34 14,87 177,856 35,834,228 7,989,73 795,481 33,57,349 5,259,432 18,897,481 12,369 13,21 54,59 3,492,272 3,528,68 139,13,854 1,95,923 3,261,749 12,41,428 51,63 17, ,235 29,588,248 6,57,692 63,881,128 (611,57) 226,268,621 $3,898,554,254

8 MDU RESOURCES GROUP, INC. NONCONSOLIDATED BALANCE SHEET MARCH 31, 214 AND MARCH 31, Liabilities and Other Credits Proprietary Capital Common Stock Issued 191,838,72 Preferred Stock Issued 15,, Premium on Capital Stock 1 '115,349,954 (Less) Capital Stock Expense 5,128,938 Retained Earnings 551,489,41 Unappropriated Undistributed Sub Earnings 1,74,23,56 (Less) Reacquired Capital Stock 3,625,813 Accumulated Other Comprehensive Income (37,538,245) Total Proprietary Capital 2,91,588,279 Long-Term Debt Bonds Other Long-Term Debt 49,779,87 (Less) Unamortized Discount on Long-Term Debt-Debit Total Long-Term Debt 49,779,87 Other Noncurrent Liabilities Accumulated Provision for Injuries and Damages 1,34,499 Accumulated Provision for Pensions and Benefits 51,47,317 Accumulated Provision for Rate Refunds (1,283) Asset Retirement Obligations 7,231,3 Total Other Noncurrent Liabilities 59,977,536 Current and Accrued Liabilities Notes Payable Accounts Payable 48,16,568 Accounts Payable to Associated Companies 4,556,56 Customer Deposits 1,42,13 Taxes Accrued 12,146,965 Interest Accrued 1,5,929 Dividends Declared 33,979,625 Tax Collections Payable 1,783,81 Miscellaneous Current and Accrued Liabilities 45,554,64 Total Current and Accrued Assets 149,49,218 Deferred Credits Customer Advances for Construction 18,25,222 Accumulated Deferred Investment Tax Credit 1,64,77 Other Deferred Credits 61,63,772 Other Regulatory Liabilities 16,21,934 Accumulated Deferred Income Taxes 257,77,863 Total Deferred Credits 354,926,868 Total Liabilities and Equity $3,875,321,78 Docket No. NG15-_ Rule 2:1:13:51 Statement A Page 4 of ,191,129 15,, 1,221,375,348 6,58, ,759, ,459,958 3,625,813 (4,923,744) 2,81,728,31 471,771, ,771,216 1,991,727 54,42,57 879,2 6,592,51 63,883,818 32,534,965 6,628,383 1,526,172 (1,572,643) 3,535,58 35,686,64 1,379,32 38,375,246 19,93,339 21,381,65 2,372,837 99,49,87 8,634,733 32,279,48 452,77' 85 $3,898,554,254

9 NOTES TO THE FINANCIAL STATEMENTS Docket No. NG15-_ Rule 2:1:13:51 Statement A

10 1v1uu r<esources uroup, mc. \,, ~,--..,, '-'''::f111cll (2) D A Resubmission NOTES TO FINANCIAL STATEMENTS 12/31/214 t:na or 214/4 1. Use the space below for important notes regarding the Balance Sheet, Statement of Income for the year, Statement of Retained Earnings for the year, and Statement of Cash Flows, or any account thereof. Classify the notes according to each basic statement, providing a subheading for each statement except where a note is applicable to more than one statement. 2. Furnish particulars (details) as to any significant contingent assets or liabilities existing at end of year, including a brief explanation of any action initiated by the Internal Revenue Service involving possible assessment of additional income taxes of material amount, or of a claim for refund of income taxes of a material amount initiated by the utility. Give also a brief explanation of any dividends in arrears on cumulative preferred stock. 3. For Account 116, Utility Plant Adjustments, explain the origin of such amount, debits and credits during the year, and plan of disposition contemplated, giving references to Corm mission orders or other authorizations respecting classification of amounts as plant adjustments and requirements as to disposition thereof. 4. Where Accounts 189, Unamortized Loss on Reacquired Debt, and 257, Unamortized Gain on Reacquired Debt, are not used, give an explanation, providing the rate treatment given these items. See General Instruction 17 of the Uniform System of Accounts. 5. Give a concise explanation of any retained earnings restrictions and state the amount of retained earnings affected by such restrictions. 6. If the notes to financial statements relating to the respondent company appearing in the annual report to the stockholders are applicable and furnish the data required by instructions above and on pages , such notes may be included herein. 7. For the 3Q disclosures, respondent must provide in the notes sufficient disclosures so as to make the interim information not misleading. Disclosures which would substantially duplicate the disclosures contained in the most recent FERC Annual Report may be omitted. 8. For the 3Q disclosures, the disclosures shall be provided where events subsequent to the end of the most recent year have occurred which have a material effect on the respondent. Respondent must include in the notes significant changes since the most recently completed year in such items as: accounting principles and practices; estimates inherent in the preparation of the financial statements; status of long-term contracts; capitalization including significant new borrowings or modifications of existing financing agreements; and changes resulting from business combinations or dispositions. However were material contingencies exist, the disclosure of such matters shall be provided even though a significant change since year end may not have occurred. 9. Finally, if the notes to the financial statements relating to the respondent appearing in the annual report to the stockholders are applicable and furnish the data required by the above instructions, such notes may be included herein. PAGE 1221NTENTIONALLY LEFT BLANK SEE PAGE 123 FOR REQUIRED INFORMATION.

11 Name of Respondent This Report is: Date of Report Year/Period of Report (1) X An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 Definitions NOTES TO FINANCIAL STATEMENTS (Continued) The following abbreviations and acronyms used in the Notes are defined below: Abbreviation or Acronym AFUDC ASC BART Big Stone Station Cascade Centennial Company Coyote Station EBITDA FASB FERC GAAP Great Plains Intermountain K-Plan MDU Energy Capital MNPUC Montana-Dakota MTPSC MW NDPSC SDPUC Stock Purchase Plan Wygen III WYPSC Allowance for funds used during construction FASB Accounting Standards Codification Best available retrofit technology 475-MW coal-fired electric generating facility near Big Stone City, South Dakota (22.7 percent ownership) Cascade Natural Gas Corporation, an indirect wholly owned subsidiary of MDU Energy Capital Centennial Energy Holdings, Inc., a direct wholly owned subsidiary of the Company MDU Resources Group, Inc. 427-MW coal fired electric generating facility near Beulah, North Dakota (25 percent ownership) Earnings before interest, taxes, depreciation and amortization Financial Accounting Standards Board Federal Energy Regulatory Commission Accounting principles generally accepted in the United States of America Great Plains Natural Gas Co., a public utility division of the Company Intermountain Gas Company, an indirect wholly owned subsidiary of MDU Energy Capital Company's 4l{k} Retirement Plan MDU Energy Capital, LLC, a direct wholly owned subsidiary of the Company Minnesota Public Utilities Commission Montana-Dakota Utilities Co., a public utility division of the Company Montana Public Service Commission Megawatt North Dakota Public Service Commission South Dakota Public Utilities Commission Company's Dividend Reinvestment and Direct Stock Purchase Plan 1-MW coal-fired electric generating facility near Gillette, Wyoming (25 percent ownership) Wyoming Public Service Commission lferc FORM NO.1 (ED ) Page 123.1

12 Name of Respondent This Report is: (1) X An Original MDU Resources Group, Inc. (2) A Resubmission NOTES TO FINANCIAL STATEMENTS (Continued) Date of Report Year/Period of Report (Mo, Da, Yr) 12/31/ /4 Notes to Financial Statements Note 1 - Summary of Significant Accounting Policies Basis of presentation The Company is a diversified natural resource company, which was incorporated under the laws of the state of Delaware in Montana-Dakota and Great Plains are public utility divisions of the Company. Montana-Dakota generates, transmits, and distributes electricity and distributes natural gas in Montana, North Dakota, South Dakota, and Wyoming. Great Plains distributes natural gas in western Minnesota and southeastern North Dakota. These operations also supply related value-added services. The Company provides service to more than 138, electric and 286, natural gas residential, commercial, industrial and municipal customers in 277 communities and adjacent rural areas as of December 31, 214. Montana-Dakota is subject to regulation by the FERC, NDPSC, MTPSC, SDPUC, and WYPSC. Great Plains is subject to regulation by the MNPUC and the NDPSC. The Company owns two wholly owned subsidiaries, Centennial and MDU Energy Capital, as well as ownership interests in the assets, liabilities and expenses of jointly owned electric generating facilities. The financial statements were prepared in accordance with the accounting requirements of the FERC set forth in its applicable Uniform System of Accounts and published accounting releases, which is a comprehensive basis of accounting other than GAAP. These requirements differ from GAAP related to the presentation of certain items including, but not limited to, the current portion of long-term debt, deferred income taxes, cost of removal liabilities, and current unrecovered purchased gas costs. As required by the FERC for Form 1 report purposes, the Company reports its subsidiary investments using the equity method rather than consolidating the assets, liabilities, revenues and expenses of the subsidiaries, as required by GAAP. If GAAP were followed, utility plant, other property and investments would increase by $1.8 billion; current and accrued assets would increase by $1. billion; deferred debits would increase by $732.5 million; long-term debt would increase by $1.3 billion; other noncurrent liabilities and current and accrued liabilities would increase by $796.6 million; deferred credits would increase by $1.3 billion; and capital would increase by $115.7 million as of December 31, 214. Furthermore, operating revenues would increase by $4. billion and operating expenses, excluding income taxes, would increase by $3.6 billion for the twelve months ended December 31, 214. In addition, net cash provided by operating activities would increase by $46.8 million; net cash used in investing activities would increase by $611. million; net cash provided by financing activities would increase by $239.9 million; the effect of exchange rate changes on cash would decrease by $155,; and the net change in cash and cash equivalents would be a increase of $35.6 million for the twelve months ended December 31, 214. Reporting its subsidiary investments using the equity method rather than GAAP has no effect on net income or retained earnings. The Notes to Financial Statements accompanying this FERC Form No. 1 relate to the nonconsolidated parent company and its two public utility divisions. For information on disclosures of the subsidiary companies, refer to the Company's Form 1-K. Montana-Dakota and Great Plains are regulated businesses which account for certain income and expense items under the provisions of regulatory accounting, which requires these businesses to defer as regulatory assets or liabilities certain items that would have otherwise been reflected as expense or income, respectively, based on the expected regulatory treatment in future rates. The expected recovery or flowback of these deferred items generally is based on specific raternaking decisions or precedent for each item. Regulatory assets and liabilities are being amortized consistently with the regulatory treatment established by the FERC and the applicable state public service commissions. See I FERC FORM NO. 1 (ED ) Page 123.2

13 Name of Respondent This Report is: Date of Report Year/Period of Report (1) X An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) Note 3 for more information regarding the nature and amounts of these regulatory deferrals. Management has also evaluated the impact of events occurring after December 31, 214, up to the date of issuance of these consolidated financial statements. Cash and cash equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Accounts receivable and allowance for doubtful accounts Accounts receivable consists primarily of trade receivables from the sale of goods and services which are recorded at the invoiced amount. The total balance of receivables past due 9 days or more was $8, and $623, at December 31, 214 and 213, respectively. The allowance for doubtful accounts is determined through a review of past due balances and other specific account data. Account balances are written off when management determines the amounts to be uncollectible. The Company's allowance for doubtful accounts at December 31, 214 and 213 was $485, and $444,, respectively. Inventories and natural gas in storage Inventories, other than natural gas in storage, were stated at the lower of average cost or market value. Natural gas in storage is carried at cost using the last-in, first-out method. The portion of the cost of natural gas in storage expected to be used within one year was included in inventories. Inventories at December 31 consisted of: (In thousands) Plant materials and operating supplies $ 19,8 $ 19,97 Gas stored underground-current 9,35 5,387 Fuel stock 4,418 4,752 Merchandise Total $ 33,584 $ 29,311 The remainder of natural gas in storage, which largely represents the cost of gas required to maintain pressure levels for normal operating purposes, was $2.5 million and $1.6 million at December 31, 214 and 213, respectively. Investments The Company's investments include its investment in subsidiary companies, the cash surrender value of life insurance policies, an insurance contract, and other miscellaneous investments. The Company measures its investment in the insurance contract at fair value with any unrealized gains and losses recorded on the Statement of Income. The Company has not elected the fair value option for its other investments. For more information, see Notes 4 and 11. Property, plant and equipment Additions to property, plant and equipment are recorded at cost. When regulated assets are retired, or otherwise disposed of in the ordinary course of business, the original cost of the asset is charged to accumulated depreciation. With respect to the retirement or disposal of all other assets, the resulting gains or losses are recognized as a component of income. The Company is permitted to capitalize AFUDC on regulated construction projects and to include such amounts in rate base when the related facilities are placed in service. I FERC FORM NO. 1 (ED ) Page 123.3

14 Name of Respondent This Report is: Date of Report Year/Period of Report (1) X An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) The amount of AFUDC and interest capitalized for the years ended December 31 was as follows: (In thousands) AFUDC- borrowed $ 2,92 $ I,937 AFUDC - equity $ 3,988 $ 3,71 Property, plant and equipment are depreciated on a straight-line basis over the average useful lives of the assets. The Company collects removal costs for plant assets in regulated utility rates. These amounts are included in accumulated provision for depreciation, amortization and depletion. Property, plant and equipment at December 31 was as follows: Weighted Average Depreciable Life in Years Electric: Generation $ Distribution Transmission Construction in progress Other Natural gas distribution: Distribution Construction in progress Other Less accumulated depreciation, depletion and amortization Net utility plant $ (Dollars in tl1usands, where applicable) 627,952 $ 57, ,692 38, , , , ,365 1,94 94, , , ,35 1,219 15,117 1, ,151 76,971 1,187,719 $ I,9,26 N onutility property $ Less accumulated depreciation~ dep1etion and amortization Net nonutility property s 16,86 $ 15,63 3,484 2,92 12,62 $ 12,728 Impairment of long-lived assets The Company reviews the carrying values of its long-lived assets, excluding goodwill, whenever events or changes in circumstances indicate that such carrying values may not be recoverable. The determination of whether an impairment has occurred is based on an estimate of undiscounted future cash flows attributable to the assets, compared to the carrying value of the assets. If impairment has occurred, the amount of the impairment recognized is determined by estimating the fair value of the assets and recording a loss if the carrying value is greater than the fair value. No impairment losses were recorded in 214 and 213. Unforeseen events and changes in circumstances could require the recognition of impairment losses at some future date. Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination. Goodwill is required to be tested for impairment annually, which is completed in the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. I FERC FORM NO. 1 (ED ) Page 123.4

15 Name of Respondent This Report is: Date of Report Year/Period of Report (1) X An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) The goodwill impairment test is a two-step process performed at the reporting unit level. The Company has determined that the reporting units for its goodwill impairment test are its operating segments, or components of an operating segment, that constitute a business for which discrete financial information is available and for which segment management regularly reviews the operating results. The first step of the impairment test involves comparing the fair value of each reporting unit to its carrying value. If the fair value of a reporting unit exceeds its carrying value, the test is complete and no impairment is recorded. If the fair value of a reporting unit is less than its carrying value, step two of the test is performed to determine the amount of impairment loss, if any. The impairment is computed by comparing the implied fair value of the reporting unit's goodwill to the carrying value of that goodwill. If the carrying value is greater than the implied fair value, an impairment loss must be recorded. For the years ended December 31, 214 and 213, there were no impairment losses recorded. At December 31, 214, the fair value of the natural gas distribution reporting unit substantially exceeded its carrying value. For more information on goodwill, see Note 2. Determining the fair value of a reporting unit requires judgment and the use of significant estimates which include assumptions about the Company's future revenue, profitability and cash flows, amount and timing of estimated capital expenditures, inflation rates, weighted average cost of capital, operational plans, and current and future economic conditions, among others. The fair value of each reporting unit is determined using a weighted combination of income and market approaches. The Company uses a discounted cash flow methodology for its income approach. Under the income approach, the discounted cash flow model determines fair value based on the present value of projected cash flows over a specified period and a residual value related to future cash flows beyond the projection period. Both values are discounted using a rate which reflects the best estimate of the weighted average cost of capital at each reporting unit. The weighted average cost of capital of 5. percent, and a long-term growth rate projection of 3.1 percent were utilized in the goodwill impairment test performed in the fourth quarter of 214. Under the market approach, the Company estimates fair value using multiples derived from comparable sales transactions and enterprise value to EBITDA for comparative peer companies for each respective reporting unit. These multiples are applied to operating data for each reporting unit to arrive at an indication of fair value. In addition, the Company adds a reasonable control premium when calculating the fair value utilizing the peer multiples, which is estimated as the premium that would be received in a sale in an orderly transaction between market participants. The Company believes that the estimates and assumptions used in its impairment assessments are reasonable and based on available market information, but variations in any of the assumptions could result in materially different calculations of fair value and determinations of whether or not an impairment is indicated. Revenue recognition Revenue is recognized when the earnings process is complete, as evidenced by an agreement between the customer and the Company, when delivery has occurred or services have been rendered, when the fee is fixed or determinable and when collection is reasonably assured. The Company recognizes utility revenue each month based on the services provided to all utility customers during the month. Accrued utility revenues represent revenues recognized in excess of amounts billed. Accrued utility revenues were $47.4 million and $49.6 million at December 31, 214 and 213, respectively. The Company recognizes all other revenues when services are rendered or goods are delivered. The Company presents revenues net of taxes collected from customers at the time of sale to be remitted to governmental authorities, including sales and use taxes. Asset retirement obligations The Company records the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the Company capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost )FERC FORM NO.1 (ED ) Page 123.5

16 Name of Respondent This Report is: Date of Report Year/Period of Report (1) 2S. An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) is depreciated over the useful life of the related asset. Upon settlement of the liability, the Company either settles the obligation for the recorded amount or incurs a regulatory asset or liability. For more information on asset retirement obligations, see Note 6. Legal costs The Company expenses external legal fees as they are incurred. Natural gas costs recoverable or refundable through rate adjustments Under the terms of certain orders of the applicable state public service commissions, the Company is deferring natural gas commodity, transportation and storage costs that are greater or less than amounts presently being recovered through its existing rate schedules. Such orders generally provide that these amounts are recoverable or refundable through rate adjustments over a 12 month period. Natural gas costs recoverable or refundable, as applicable, through rate adjustments were $1.7 million and $8. million at December 31, 214 and 213, respectively, which is included in unrecovered purchased gas costs. Income taxes The Company and its subsidiaries file consolidated method federal income tax returns and combined and separate state income tax returns. Federal income taxes paid by the Company, as parent of the consolidated group, are allocated to the individual subsidiaries based on the ratio of the separate company computations of tax. The Company makes a similar allocation for state income taxes paid in connection with combined state filings. The Company provides deferred federal and state income taxes on all temporary differences between the book and tax basis of the Company's assets and liabilities. Taxes recoverable from customers have been recorded as regulatory assets. Taxes refundable to customers and excess deferred income tax balances associated with the Company's rate-regulated activities have been recorded as regulatory liabilities. These regulatory assets and liabilities are expected to be recovered from or refunded to customers in future rates in accordance with applicable regulatory procedures. The Company uses the deferral method of accounting for investment tax credits and amortizes the credits on regulated electric and natural gas distribution plant over various periods that conform to the raternaking treatment prescribed by the applicable state public service commissions. Tax positions taken or expected to be taken in an income tax return are evaluated for recognition using a more-likely-than-not threshold, and those tax positions requiring recognition are measured as the largest amount of tax benefit that is greater than 5 percent likely of being realized upon ultimate settlement with a taxing authority. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in interest and penalties, respectively. Use of estimates The preparation of financial statements in conformity v1ith GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates are used for items such as impairment testing of long-lived assets and goodwill; fair values of acquired assets and liabilities under the acquisition method of accounting; property depreciable lives; tax provisions; uncollectible accounts; environmental and other loss contingencies; accumulated provision for revenues subject to refund; unbilled revenues; actuarially determined benefit costs; asset retirement obligations; and the valuation of stock-based compensation. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates. IFERC FORM NO.1 (ED ) Page 123.6

17 Name of Respondent This Report is: Date of Report Year/Period of Report (1) 2S. An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) Cash flow information Cash expenditures for interest and income taxes for the years ended December 31 were as follows: Interest, net of amount capitalized Income taxes paid (refunded), net $ $ 214 (In thousands) 17,398 $ 18,561 $ 213 I 6,152 (11,453) Noncash investing transactions at December 31 were as follows: (In thousands) Property, plant and equipment additions in accounts payable $ 6,451 $ 7,75 New accounting standards Revenue rom Contracts with Customers In May 214, the FASB issued guidance on accounting for revenue from contracts with customers. The guidance provides for a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. This guidance will be effective for the Company on January 1, 217. Entities will have the option of using either a full retrospective or modified retrospective approach to adopting the guidance. Under the modified approach, an entity would recognize the cumulative effect of initially applying the guidance with an adjustment to the opening balance of retained earnings in the period of adoption. In addition, the modified approach will require additional disclosures. The Company is evaluating the effects the adoption of the new revenue guidance will have on its results of operations, financial position, cash flows and disclosures, as well as its method of adoption. Reporting of Amounts Rec~assified Out o Accumu~ated Other Comprehensive Income In February 213, the FASB issued guidance on the reporting of amounts reclassified out of accumulated other comprehensive income. This guidance requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required to be reclassified in its entirety to net income. Entities may present this information either on the face of the statement where net income is presented or in the notes. This guidance was effective for the Company on January 1, 214, and is to be applied prospectively. The guidance required additional disclosures, however it did not impact the Company's results of operations, financial position or cash flows. Comprehensive income (loss) Comprehensive income (loss) is the sum of net income (loss) as reported and other comprehensive income (loss). The Company's other comprehensive loss resulted from postretirement liability adjustments and other comprehensive loss recorded by its subsidiaries. The postretirement liability adjustment in other comprehensive income was $465, and $454,, net of tax of $ (285, ) and $ (34, ), for the years ended December 31, 214 and 213, respectively. I FERC FORM NO. 1 (ED ) Page 123.7

18 Name of Respondent This Report is: Date of Report Year/Period of Report (1) 25o An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Conlinued) The after-tax changes in the components of accumulated other comprehensive loss were as follows: Total Subsidiary Accumulated Postretirement Other Other Liabiliry Comprehensive Comprehensive Twelve Months Ended December 3I, 2I4 Adiustment Loss Loss (In thousands) Balance atdecember 3I, 2I3 $ {4,459) $ (33, 746) $ (38,25) Other comprehensive income (loss) before reclassifications 5I9 (I3,244) (I2,725) Amounts reclassified from accumulated other comprehensive loss (54) I,679 I,625 Amounts reclassified from accumulated other comprehensive loss to a regulatory asset 7,22 7,22 Net current-period other comprehensive income (loss) 465 (4,363) (3,898) Balance at December 31,214 $ (3,994) $ (38,19) $ (42,13) Total Subsidiary Accumulated Postretirement Other Other Liability Comprehensive Comprehensive Twelve Months Ended December 3 I, 213 Adjustment Loss Loss (In thousands) Balance at December 31, 2I2 $ (4,913) $ (43,88) $ (48,72I) Other comprehensive income before reclassifications ,14 12,452 Amounts reclassified from accumulated other comprehensive loss I6 (2,D42) (I,936) Net current-period other comprehensive income 454 1,62 I,516 Balance at December 3 I, 2I 3 $ (4,459) $ (33,746) $ (38,25) Reclassifications out of accumulated other comprehensive loss were as follows: Twelve Months Ended December 31, Amortization of postretirement liability losses included in net periodic benefit cost Subsidiary reclassifications out of accumulated other comprehensive loss $ 214 (In thousands) 87 $ (33) 54 (1,679) Total reclassifications $ (1,625) $ I,936 (a) Included in net periodic benefit cost (credit). For more information, see Note II. 213 Location on Statement of Income (176) (a) 7 Income taxes (16) Equity in earnings of Subsidiary 2,42 Companies IFERC FORM NO.1 (ED ) Page 123.8

19 Name of Respondent This Report is: Date of Report Year/Period of Report (1) ~An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) Note 2 - Goodwill and Other Intangible Assets The carrying amount of goodwill, which is related to the natural gas distribution business, remained unchanged at $4.8 million for the years ended December and 213. This amount is included in miscellaneous deferred debits. No impairments have been recorded in any periods. Note 3 - Regulatory Assets and Liabilities The following table summarizes the individual components of unamortized regulatory assets and liabilities as of December 31: Estimated Recovery Period* (In thousands) Regulatory assets: Pension and postretirement benefits (a) (t) $ 13,851 $ 67,13 Taxes recoverable from customers (a) Over plant lives 12,963 I,92 Unrecovered purchased gas costs Up to 12 months 1,651 8,2 Unamortized loss on required debt Up to 12 years 6,688 7,47 Costs related to identifying generation development (a) (e) Up to 12 years 4,165 4,512 Plant costs (a) Up to 2 years 3,953 4,333 Other (a) (b) (g) Largely within I year 7,676 6,26 Total regulatory assets 149,947 I 8,33 Regulatory liabilities: Plant removal and decommissioning costs (c) 131,529 I 1,79 Taxes refundable to customers (d) 6,955 7,82 Accumulated provision for rate refunds Pension and postretirement benefits (d) 91 8,17 Other (h) 7,989 2,369 Total regulatory liabilities 147,14 129,169 Net regulatory position $ 2,933 $ (2,839) * Estimated recovery period for regulatory assets currently being recovered in rates charged to customers. (a) Included in other regulatory assets on the Comparative Balance Sheet. (b) Included in prepayments on the Comparative Balance Sheet. (c) Included in accumulated provision for depreciation, amortization and depletion and asset retirement obligations on the Comparative Balance Sheet. (d) Included in other regulatory liabilities on the Comparative Balance Sheet. (e) Included in unrecovered plant and regulatory study costs on the Comparative Balance Sheet. (f) Recovered as expense is incurred. (g) Included in miscellaneous deferred debits on the Comparative Balance Sheet. (h) Included in miscellaneous deferred debits, accumulated deferred investment tax credits and other regulatory assets on the Comparative Balance Sheet. The regulatory assets are expected to be recovered in rates charged to customers. A portion of the Company s regulatory assets are not earning a return; however, these regulatory assets are expected to be recovered from customers in future rates. As of December 31, 214 and 213, approximately $119.2 million and $92.8 million respectively, of regulatory assets were not earning a rate of return. If, for any reason, the Company s regulated business ceases to meet the criteria for application of regulatory accounting for all or part of their operations, the regulatory assets and liabilities relating to those portions ceasing to meet such criteria would be JFERC FORM NO.1 (ED ) Page 123.9

20 Name of Respondent This Report is: Date of Report Year/Period of Report (1) X An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) removed from the balance sheet and included in the statement of income or accumulated other comprehensive income (loss) in the period in which the discontinuance of regulatory accounting occurs. Note 4 - Fair Value Measurements The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income. The Company anticipates using these investments, which consist of an insurance contract, to satisfy its obligations under its unfunded, nonqualified benefit plan for executive officers and certain key management employees, and invests in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation. These investments, which totaled $43.9 million and $41.6 million as of December 31, 214 and 213, respectively, are classified as Other Investments on the Comparative Balance Sheet. The net unrealized gains on these investments for the years ended December 31, 214 and were $2.3 million and $9. million 1 respectively. The change in fair value, which is considered part of the cost of the plan, is classified in Other Income and Deductions as Life Insurance on the Statement of Income. The fair value of the Company 1 s money market funds approximates cost. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability {an exit price) in an orderly transaction between market participants at the measurement date. The ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the Company's assets and liabilities measured on a recurring basis are determined using the market approach. The Company 1 s Level 2 money market funds consist of investments in short-term unsecured promissory notes and the value is based on comparable market transactions taking into consideration the credit quality of the issuer. The estimated fair value of the Company's Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data. Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the years ended December and 213, there were no transfers between Levels l and 2. IFERC FORM NO.1 (ED ) Page 123.1

21 Name of Respondent This Report is: Date of Report Year/Period of Report (1) ~An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12131/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) The Company's assets and liabilities measured at fair value on a recurring basis were as follows: Quoted Prices In Active Markets for Identical Assets (Level I) Fair Value Measurements at December 31,214, Using Significant Other Observable Inputs (Level?) Significant Unobservable Inputs (Level3) Balance at December 31, 214 (In thousands) Assets: Money market funds Insurance contract* $ $ ,87 $ $ ,87 Total assets measured at fair value $ $ 44,53 $ $ 44,53 * The insurance contract invests approximately 2 percent in common stock of mid-cap companies, 18 percent in common stock of small-cap companies, 29 percent in common stock of large-cap companies, 32 percent in fixed-income investments and 1 percent in cash equivalents. Quoted Prices In Active Markets for Identical Assets (Level I) Fair Value Measurements at December 31,213, Using Significant Other Observable Inputs (Leve12) Significant Unobservable Inputs (Level 3) Balance at December 31, 213 {In thousands) Assets: Money market funds Insurance contract* $ $ I,II 41,564 $ $ 1,11 41,564 Total assets measured at fair value $ $ 42,674 $ $ 42,674 * The insurance contract invests approximately 29 percent in common stock of mid-cap companies, 28 percent in common stock of small-cap companies, 28 percent in common stock of large-cap companies and 15 percent in fixed-income investments. The Company s long-term debt is not measured at fair value on the Comparative Balance Sheet and the fair value is being provided for disclosure purposes only. The fair value was based on discounted future cash flows using current market interest rates. The estimated fair value of the Company s Level 2 long-term debt at December 31 was as follows: Long-term debt $ 214 Carrying Amount 58,274 $ 213 Carrying Fair Value Amount Fair Value (In thousands) 572,41 $ 434,76 $ 469,787 The carrying amounts of the Company s remaining financial instruments included in current assets and current liabilities approximate their fair values. JFERC FORM NO.1 (ED ) Page

22 Name of Respondent This Report is: Date of Report Year/Period of Report (1) 2\:An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) Note 5 - Debt Certain debt instruments of the Company, including those discussed later, contain restrictive covenants and provisions. In order to borrow under the respective credit agreement, the Company must be in compliance with the applicable covenants and certain other conditions. In the event the Company does not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued. The following table summarizes the outstanding revolving credit facilities of the Company: Amount Amount Letters of Outstanding at Outstanding at credit at Facility December 31, December 31, December 31, Expiration Company Facility Limit Date (Dollars in millions) Commercial MDU Resources paper/revolving Group, Inc. credit agreement (a)$ 175. $ 77.5 (b)$ 78.9 (b)$ 5/8/19 {a} The commercial paper program is supported by a revolving credit agreement with various banks (provisions allow for increased borrowings, at the option of the Company on stated conditions, up to a maximum of $225. million}. There were no amounts outstanding under the credit agreement. (b) Amount outstanding under commercial paper program included in other long-term debt on the Comparative Balance Sheet. The Company's commercial paper program is supported by a revolving credit agreement. While the amount of commercial paper outstanding does not reduce available capacity under the revolving credit agreement, the Company does not issue commercial paper in an aggregate amount exceeding the available capacity under its credit agreement. The following includes information related to the preceding table. Long-term debt MDU Resources Group, Inc. On May 8, 214, the Company amended the revolving credit agreement to increase the borrowing limit to $175. million and extend the termination date to May 8, 219. The Company's revolving credit agreement supports its commercial paper program. Commercial paper borrowings under this agreement are classified as long-term debt as they are intended to be refinanced on a long-term basis through continued commercial paper borrowings. The credit agreement contains customary covenants and provisions, including covenants of the Company not to permit, as of the end of any fiscal quarter, (A) the ratio of funded debt to total capitalization (determined on a consolidated basis) to be greater than 65 percent or (B) the ratio of funded debt to capitalization (determined with respect to the Company alone, excluding its subsidiaries) to be greater than 65 percent. Other covenants include limitations on the sale of certain assets and on the making of certain loans and investments. There are no credit facilities that contain cross-default provisions between the Company and any of its subsidiaries. I FERC FORM NO. 1 (ED ) Page

23 Name of Respondent This Report is: Date of Report Year/Period of Report (1) ~An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) Long-ter.m Debt Outstanding Long-term debt outstanding at December 31 was as follows: Senior Notes at a weighted average rate of 5.66%, due on dates ranging from September 3, 216toAprill5,244 $ Commercial paper at an interest rate of.4%, supported by revolving credit agreement Credit agreements at a weighted average rate of5.64%, due on dates ranging from January I, 217 to November 3, 238 Total long-term debt $ (In thousands) 43, 77, ,274 $ 355, 78, $ 434,76 The amounts of scheduled long-term debt maturities for the five years and thereafter following December 31, 214, aggregate $19, in 215; $5.1 million in 216; $11, in 217; $1. million in 218; $77.5 million in 219 and $28.4 million thereafter. Note 6 - Asset Retirement Obligations The Company records obligations related to the decommissioning of certain electric generating facilities, special handling and disposal of hazardous materials at certain electric generating facilities, natural gas distribution facilities and buildings, and certain other obligations as asset retirement obligations. A reconciliation of the Company's liability for the years ended December 31 was as follows: Balance at beginning of year Liabilities settled Revisions in estimates Accretion expense Balance at end of year $ $ 214 (In thousands) 7,143 $ (991) (28) 386 6,51 $ 213 6,789 (17) 371 7,143 The Company believes that largely all expenses related to asset retirement obligations at the Company's regulated operations will be recovered in rates over time and, accordingly, defers such expenses as regulatory assets. I FERC FORM NO. 1 (ED ) Page

24 Name of Respondent This Report is: Date of Report (1) K An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/214 NOTES TO FINANCIAL STATEMENTS (Continued) Year/Period of Report 214/4 Note 7 - Preferred Stocks Preferred stocks at December 31 were as follows: Authorized: Preferred- 5, shares, cumulative, par value $1, issuable in series Preferred stock A - 1,, shares, cumulative, without par value, issuable in series (none outstanding) Preference - 5, shares, cumulative, without par value, issuable in series (none outstanding) Outstanding: 4.5% Series- 1, shares 4.7% Series- 5, shares Total preferred stocks (In thousands, except shares and per share amounts) $ $ 1, $ 5, 15, $ 1, 5, 15, For the years 214 and 213, dividends declared on the 4.5% Series and 4.7% Series preferred stocks were $4.5 and $4.7 per share, respectively. The 4.5% Series and 4.7% Series preferred stocks outstanding are subject to redemption, in whole or in part, at the option of the Company with certain limitations on 3 days notice on any quarterly dividend date at a redemption price, plus accrued dividends, of $15 per share and $12 per share, respectively. In the event of a voluntary or involuntary liquidation, all preferred stock series holders are entitled to $1 per share, plus accrued dividends. The affirmative vote of two-thirds of a series of the Company's outstanding preferred stock is necessary for amendments to the Company's charter or bylaws that adversely affect that series; creation of or increase in the amount of authorized stock ranking senior to that series (or an affirmative majority vote where the authorization relates to a new class of stock that ranks on parity with such series); a voluntary liquidation or sale of substantially all of the Company's assets; a merger or consolidation, with certain exceptions; or the partial retirement of that series of preferred stock when all dividends on that series of preferred stock have not been paid. The consent of the holders of a particular series is not required for such corporate actions if the equivalent vote of all outstanding series of preferred stock voting together has consented to the given action and no particular series is affected differently than any other series. Subject to the foregoing, the holders of common stock exclusively possess all voting power. However, if cumulative dividends on preferred stock are in arrears, in whole or in part, for one year, the holders of preferred stock would obtain the right to one vote per share until all dividends in arrears have been paid and current dividends have been declared and set aside. Note 8 - Common Stock For the years 214 and 213, dividends declared on common stock were $.715 and $.695 per common share, respectively. The Company's Stock Purchase Plan provides interested investors the opportunity to make optional cash investments and to reinvest all or a percentage of their cash dividends in shares of the Company's common stock. The K-Plan is partially funded with the Company's IFERC FORM NO.1 (ED ) Page

25 Name of Respondent This Report is: Date of Report Year/Period of Report (1) 2$_ An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) corrunon stock. From January 214 to December 214, the Stock Purchase Plan and K-Plan, with respect to Company stock 1 were funded with shares of authorized but unissued common stock. From January 213 through December 213, purchases of shares of common stock on the open market were used to fund the Stock Purchase Plan and K-Plan. At December 31, 214, there were 14.9 million shares of common stock reserved for original issuance under the Stock Purchase Plan and K-Plan. The Company depends on earnings from its divisions and dividends from its subsidiaries to pay dividends on common stock. The declaration and payment of dividends is at the sole discretion of the board of directors 1 subject to limitations imposed by the Company's credit agreements, federal and state laws 1 and applicable regulatory limitations. In addition, the Company and Centennial are generally restricted to paying dividends out of capital accounts or net assets. The following discusses the most restrictive limitations. Pursuant to a covenant under a credit agreement, Centennial may only make distributions to the Company in an amount up to 1 percent of Centennial's consolidated net income after taxes, excluding noncash write-downs, for the immediately preceding fiscal year. Intermountain and Cascade have regulatory limitations on the amount of dividends each can pay. Based on these limitations, approximately $2.3 billion of the net assets of the Company's subsidiaries were restricted from being used to transfer funds to the Company at December 31, 214. In addition, the Company's credit agreement also contains restrictions on dividend payments. The most restrictive limitation requires the Company not to permit the ratio of funded debt to capitalization {determined with respect to the Company alone, excluding its subsidiaries) to be greater than 65 percent. Based on this limitation, approximately $259 million of the Company's {excluding its subsidiaries) net assets, which represents common stockholders' equity including retained earnings, would be restricted from use for dividend payments at December 31, 214. In addition, state regulatory commissions may require the Company to maintain certain capitalization ratios. These requirements are not expected to affect the Company's ability to pay dividends in the near term. Note 9 - Stock-Based Compensation The Company has several stock-based compensation plans under which it is currently authorized to grant restricted stock and stock. As of December 31, 214, there are 5.6 million remaining shares available to grant under these plans. The Company generally issues new shares of common stock to satisfy restricted stock, stock and performance share awards. Total stock-based compensation expense {after tax), excluding the amount recognized by the Company's subsidiaries, was $717, and $629, in 214 and 213, respectively. As of December 31, total remaining unrecognized compensation expense 1 excluding the amount to be recognized by the Company's subsidiaries, related to stock-based compensation was approximately $1.3 million (before income taxes) which will be amortized over a weighted average period of 1.6 years. Stock awards Nonemployee directors may receive shares of common stock instead of cash in payment for directors' fees under the nonemployee director stock compensation plan. There were 43,88 shares with a fair value of $1.1 million and 36,713 shares with a fair value of $1.1 million issued under this plan during the years ended December 31, 214 and respectively. JFERC FORM NO.1 (ED ) Page

26 Name of Respondent This Report is: Date of Report Year/Period of Report (1) 2S. An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) Performance share awards Since 23, key employees of the Company and its subsidiaries have been awarded performance share awards each year. Entitlement to performance shares is based on the Company's total shareholder return over designated performance periods as measured against a selected peer group. Target grants of performance shares outstanding at December 31, 214, were as follows: Grant Date February 212 March 213 February 214 Performance Period Target Grant of Shares 251,196 24, ,84 Participants may earn from zero to 2 percent of the target grant of shares based on the Company's total shareholder return relative to that of the selected peer group. Compensation expense is based on the grant-date fair value as determined by Monte Carlo simulation. The blended volatility term structure ranges are comprised of 5 percent historical volatility and 5 percent implied volatility. Risk-free interest rates were based on U.S. Treasury security rates in effect as of the grant date. Assumptions used for grants of performance shares issued in 214 and 213 were: Grant-date fair value $ $ 29.1 B I ended volatility range 18.94% 2.43% 16.1% 19.39% Risk-free interest rate range.3%.74%.9%.4% Discounted dividends per share $ 2.15 $ 2.12 The fair value of the performance shares that vested during the year ended December was $16.6 million. There were no performance shares that vested in 213. A summary of the status of the performance share awards for the year ended December , was as follows: Weighted Average Grant-Date Fair Value Nonvested at beginning of period Granted Additional performance shares earned Vested Forfeited Nonvested at end of period Number of Shares 749,991 $ 196,84 236,699 (491,213) (3,862) 688,455 $ IFERC FORM NO.1 (ED ) Page

27 Name of Respondent This Report is: Date of Report Year/Period of Report (1) ~An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) Note 1 - Income Taxes Income before income taxes for the years ended December 31, 214 and 213, respectively was $65,12 and $61,74. Income tax expense {benefit) for the years ended December 31 was as follows: Current: Federal* State Deferred: Income taxes: Federal State Investment tax credit- net $ 214 (In thousands) (24,811) $ (4,859) (29,67) 213 (12.S7) (69) (12,747) 41,27 24,572 3,676 1,81 1,644 (47) 46,527 26,326 Total income tax expense $ 16,857 $ 13,579 *Includes $(95) related to the change in uncertain tax benefits for the year ended December There was no change in uncertain tax benefits for the year ended December 31, 213. Components of deferred tax assets and deferred tax liabilities at December 31 were as follows: Deferred tax assets: Accrued pension costs Compensation-related Customer advances Other Total deferred tax assets Deferred tax liabilities: Depreciation and basis differences on property~ plant and equipment Other Total deferred tax liabilities Net regulatory matters deferred tax asset (liability) Net deferred income tax liability $ $ (In thousands) 38,914 $ 26,146 11,119 12,675 8,597 7,116 3,357 3,974 61,987 49,911 39, , ,125 39, ,151 (2,619) 6,797 (25,52) $ (22,443) As of December 31, 214 and 213, no valuation allowance has been recorded associated with the previously identified deferred tax assets. I FERC FORM NO. 1 (ED ) Page

28 Name of Respondent This Report is: Date of Report Year/Period of Report (1) X An Original (Mo, Da, Yr) MDU Resources Group, lnc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) The following table reconciles the change in the net deferred income tax liability from December 31, 213, to December 31, 214, to deferred income tax expense: Change in net deferred income tax liability from the preceding table Deferred taxes associated with other comprehensive loss Otl1er Deferred income tax expense for the period 214 {In thousands) $ 48,77 (285) (1,265 $ 46,527 Total income tax expense (benefit) differs from the amount computed by applying the statutory federal income tax rate to income (loss) before taxes. The reasons for this difference were as follows: Years ended December 3 I, Amount % Amount % (Dollars in thousands) Computed tax at federal statutory rate $ 22, $ 21, Increases (reductions) resulting from: Federal renewable energy credit (3,587) (5.5) (3,44) (5.5) AFUDC equity (1,396) (2.1) (I,75) (1.7) Deductible K"Plan dividends (1,91) (1.7) (866) (1.4) Nonqualified benefit plan (1,13) (1.6) (3,54) (5.7) Resolution of tax matters and uncertain tax positions (42) (.1) Amortization and deferral of investment tax credit (575) (.9) (47) (.1) State income ta.xes, net of federal income tax benefit 2, , Other (355) (.5) (612) (1.) Tota] income tax expense $ 16, $ 13, The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company is no longer subject to U.S. federal or state and local income tax examinations by tax authorities for years ending prior to 27. The Company and the Internal Revenue Service have agreed to a settlement for the 27 through 29 tax years. A reconciliation of the unrecognized tax benefits (excluding interest} for the years ended December 31 was as follows: Balance at beginning of year Additions for tax positions of prior years Settlements Balance at end of year $ $ (In thousands) 95 $ 95 (95) $ 95 The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate at December 31, 213 was $116,, including approximately $21, for the payment of interest and penalties. IFERC FORM NO.1 (ED ) Page

29 Name of Respondent This Report is: Date of Report Year/Period of Report (1) X An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) For the years ended December 31, 214 and 213, the Company recognized approximately $7, and $8,, respectively, in interest expense. Penalties were not material in 214 and 213. The Company recognized interest income of approximately $18, and $12, for the years ended December 31, 214 and 213, respectively. The Company had accrued assets of approximately $667, and $526, at December 31, 214 and 213, respectively, for the receipt of interest income. Note 11 - Employee Benefit Plans Pension and other postretirement benefit plans The Company has noncontributory defined benefit pension plans and other postretirement benefit plans for certain eligible employees. The Company uses a measurement date of December 31 for all of its pension and postretirement benefit plans. Other postretirement plans presented here include certain of the Company's subsidiaries. Defined pension plan benefits to all nonunion and certain union employees hired after December 31, 25, were discontinued. In 21, all benefit and service accruals for nonunion and certain union plans were frozen. Effective June 3, 211, all benefit and service accruals for an additional union plan were frozen. These employees will be eligible to receive additional defined contribution plan benefits. Effective January 1, 21, eligibility to receive retiree medical benefits was modified at certain of the Company's businesses. Employees who had attained age 55 with 1 years of continuous service by December 31, 21 1 will be provided the current retiree medical insurance benefits or can elect the new benefit 1 if desired, regardless of when they retire. All other current employees must meet the new eligibility criteria of age 6 and 1 years of continuous service at the time they retire. These employees will be eligible for a specified company funded Retiree Reimbursement Account. Employees hired after December 31, 29, will not be eligible for retiree medical benefits. In 212, the Company modified health care coverage for certain retirees. Effective January 1, 213, post-65 coverage was replaced by a fixed-dollar subsidy for retirees and spouses to be used to purchase individual insurance through an exchange. IFERC FORM N.1 (ED.12-88) Page

30 Name of Respondent This Report is: Date of Report Year/Period of Report (1) ~An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) Changes in benefit obligation and plan assets for the years ended December 31, 214 and 213, and amounts recognized in the Comparative Balance Sheet at December 31, 214 and 213, were as follows: Other Pension Benefits Postretirement Benefits (In thousands) Change in benefit obligation: Benefitobligation at beginning of year $ 23,279 $ 262,91 $ 43,26 $ 49,593 Service cost Interest cost 1,56 9,24 1,862 1,7 Plan participants' contributions Actuarial (gain) loss 45,38 (24,667) 1,155 (5,998) Benefits paid (16,6) (17,24) (3,824) (3,825) Benefit obli~ation at end of year 269,583 23,279 53,3 43,26 Change in net plan assets: Fair value of plan assets at beginning of year 19, ,81 48,661 43,411 Actual gain on plan assets 14,1 2,324 4,367 7,944 Employer contribution 12,22 1, Plan participants' contributions Benefits paid (16,6) (17,24) (3,824) (3,825) Fair value of net Elan assets at end of~ear 21,78 19,935 5,124 48,661 Funded status'- (under) over $!68,55) $ (39,344) $ (2,879~ $ 5,455 Amounts recognized in the Comparative Balance Sheet at December 31: Other deferred debits (credits) $ (68,55) $ (39,344) $ (2,879) $ 5,455 Net amount reco~nized $ (68,55) $ (39,344) $ (2,879) $ 5,455 Amounts recognized in accumulated other comprehensive (income) loss/regulatory assets (liabilities) consist of: Actuarial loss $ 114,85 $ 74,36 $ 14,638 $ 6,776 Prior service credit (11,156) (1?,13?) Total s 114,85 $ 74,36 $ 3,482 $ (5,356) Employer contributions and benefits paid in the preceding table include only those amounts contributed directly to, or paid directly from, plan assets. The above table includes amounts related to regulated operations, which are recorded as regulatory assets (liabilities) and are expected to be reflected in rates charged to customers over time. For more information on regulatory assets (liabilities), see Note 3. Unrecognized pension actuarial losses in excess of 1 percent of the greater of the projected benefit obligation or the market-related value of assets are amortized on a straight-line basis over the expected average remaining service lives of active participants for non-frozen plans and over the average life expectancy of plan participants for frozen plans. The market-related value of assets is determined using a five-year average of assets. IFERC FORM NO.1 (ED ) Page 123.2

31 Name of Respondent This Report is: Date of Report Year/Period of Report (1) ~An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) The pension plans all have accumulated benefit obligations in excess of plan assets. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for these plans at December 31 were as follows: Projected benefit obligation Accumulated benefit obligation Fair value of plan assets $ $ $ (In thousands) 269,583 $ 23, ,583 $ 23,279 21,78 $ 19,935 Components of net periodic benefit cost for the Company's pension and other postretirement benefit plans for the years ended December 31 were as follows: Other Postretirement Benefits Pension Benefits (In thousands) Components of net periodic benefit cost (credit): Service cost $ -$ $ 787 $ 96 Interest cost 1,56 9,24 1,862 1,7 Expected return on assets (12,177) (11,438) (2,63) (2,546) Amortization of prior service credit (976) (976) Recognized net actuarial loss 2,716 4, Net eeriodic benefit cost (credit) 595 1,83 (41) 45 Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive (income) Joss/regulatory assets (liabilities): Net (gain) loss 43,485 (33,553) 8,391 (11,396) Amortization of actuarial loss (2,716) (4,28) (529) (961) Amortization of prior service credit Total recognized in accumulated other comprehensive (income) loss/re~ulato!:i: assets (liabilities) 4,769 (37,581) 8,838 (11,381) Total recognized in net periodic benefit cost and accumulated other comerehensive (income) loss/re~ulato!:i: assets (liabilities) $ 41,364 $ (35,751) $ 8,437 $ (11,336) The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss or regulatory asset(liability), as applicable, into net periodic benefit cost in 215 is $4. million. The estimated net loss and prior service credit for the other postretirement benefit plans that will be amortized from accumulated other comprehensive loss or regulatory asset(liability), as applicable, into net periodic benefit cost in 215 are $1.4 million and $1.2 million, respectively. Prior service cost is amortized on a straight line basis over the average remaining service period of active participants. Weighted average assumptions used to determine benefit obligations at December 31 were as follows: Other Pension Benefits Postretirement Benefits Discount rate Expected return on plan assets 3.68% 7.% 4.5% 7.% 3.73% 6.% 4.49% 6.% I FERC FORM NO. 1 (ED ) Page

32 Name of Respondent This Report is: Date of Report Year/Period of Report (1) LS. An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) Weighted average assumptions used to determine net periodic benefit cost for the years ended December 31 were as follows: Pension Benefits Discount rate 4.51 % 3.62% Expected return on plan assets 7. ;., 7.% Other Postretirement Benefits % 6.% 3.65% 6.% The expected rate of return on pension plan assets is based on a targeted asset allocation range determined by the funded ratio of the plan. As of December 31, 214, the expected rate of return on pension plan assets is based on the targeted asset allocation range of 4 percent to 5 percent equity securities and 5 percent to 6 percent fixed-income securities and the expected rate of return from these asset categories. The expected rate of return on other postretirement plan assets is based on the targeted asset allocation range of 65 percent to 75 percent equity securities and 25 percent to 35 percent fixed-income securities and the expected rate of return from these asset categories. The expected return on plan assets for other postretirement benefits reflects insurance-related investment costs. Health care rate assumptions for the Company's other postretirement benefit plans as of December 31 were as follows: Health care trend rate assumed for next year Health care cost trend rate - ultimate Year in which ultimate trend rate achieved 4.% 6.% % 6.% 1999 The Company's other postretirement benefit plans include health care and life insurance benefits for certain retirees. The plans underlying these benefits may require contributions by the retiree depending on such retiree's age and years of service at retirement or the date of retirement. The accounting for the health care plans anticipates future cost-sharing changes that are consistent with the Company's expressed intent to generally increase retiree contributions each year by the excess of the expected health care cost trend rate over six percent. Assumed health care cost trend rates may have a significant effect on the amounts reported for the health care plans. A one percentage point change in the assumed health care cost trend rates would have had the following effects at December 31, 214: Effect on total of service and interest cost components Effect on postretirement benefit obligation I Percentage Point Increase $ $ (In thousands) 55 1,263 I Percentage Point Decrease $ $ (49) (1,125) The Company's pension assets are managed by 15 outside investment managers. The Company's other postretirement assets are managed by one outside investment manager. The Company's investment policy with respect to pension and other postretirement assets is to make investments solely in the interest of the participants and beneficiaries of the plans and for the exclusive purpose of providing benefits accrued and defraying the reasonable expenses of administration. The Company strives to maintain investment diversification to assist in minimizing the risk of large losses. The Company's policy guidelines allow for investment of funds in cash equivalents, fixed-income securities and equity securities. The guidelines prohibit investment in commodities and futures contracts, equity private placement, employer securities, leveraged or derivative securities, options, direct real IFERC FORM NO. 1 (ED ) Page

33 Name of Respondent This Report is: Date of Report Year/Period of Report (1) X An Original (Mo, Da, Yr) MDU Resources Group, Inc. I (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) estate investments, precious metals, venture capital and limited partnerships. The guidelines also prohibit short selling and margin transactions. The Company s practice is to periodically review and rebalance asset categories based on its targeted asset allocation percentage policy. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the Company's pension plans' assets are determined using the market approach. The carrying value of the pension plans' Level 2 cash equivalents approximates fair value and is determined using observable inputs in active markets or the net asset value of shares held at year end, which is determined using other observable inputs including pricing from outside sources. Units of this fund can be redeemed on a daily basis at their net asset value and have no redemption restrictions. The assets are invested in high quality, short-term instruments of domestic and foreign issuers. There are no unfunded commitments related to this fund. The estimated fair value of the pension plans' Level 1 equity securities is based on the closing price reported on the active market on which the individual securities are traded. The estimated fait value of the pension plans' Level 1 and Level 2 collective and mutual funds are based on the net asset value of shares held at year end, based on either published market quotations on active markets or other known sources including pricing from outside sources. Units of these funds can be redeemed on a daily basis at their net asset value and have no redemption restrictions. There are no unfunded commitments related to these funds. The estimated fair value of the pension plans' Level 2 corporate and municipal bonds is determined using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, future cash flows and other reference data. The estimated fair value of the pension plans' Level 1 U.S. Government securities are valued based on quoted prices on an active market. The estimated fair value of the pension plans' Level 2 U.S. Government securities are valued mainly using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, to be announced prices, future cash flows and other reference data. Some of these securities are valued using pricing from outside sources. Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the years ended December 31, 214 and 213, there were no transfers between Levels 1 and 2. JFERC FORM NO.1 (ED ) Page

34 Name of Respondent This Report is: Date of Report Year/Period of Report (1) X An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) The fair value of the Company 1 s pension plans' assets (excluding cash) by class were as follows: Assets: Cash equivalents Equity securities: U.S. companies International companies Collective and mutual funds * Corporate bonds Municipal bonds U.S. Government securities Total assets measured at fair value $ $ Fair Value Measurements at December 31,214, Using Quoted Prices Significant in Active Other Markets for Observable Identical Assets Inputs (Level I) (Level 2) (In thousands) $ 3,195 $ 22,174 2,945 75,13 43,947 33,746 5,936 8,512 3,887 18,761 $ 9,711 $ Significant Unobservable Inputs (Level 3) $ $ Balance at December 31, 214 3,195 22,174 2, ,77 33,746 5,936 12, ,472 *Collective and mutual funds invest approximately 13 percent in common stock oflarge~cap U.S. companies, 13 percent in U.S. Government securities, 23 percent in corpomte bonds, 33 percent in common stock of international companies and 18 percent in other investment<;. Fair Value Measurements at December 31,213, Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Balance at Identical Assets Inputs Inputs December 31, (Level I) (Level 2) (Level 3) 213 (In thousands) Assets: Cash equivalents $ 1,454 $ 5,364 $ $ 6,818 Equity securities: U.S. companies 35,696 35,696 International companies 22,488 22,488 Collective and mutual funds * 66,296 24,225 9,521 Corporate bonds 24,36 24,36 Municipal bonds 4,311 4,311 U.S. Government securities 4,269 2,472 6,741 Total assets measured at fair value $ 13,23 $ 6,732 $ $ 19,935 *Collective and mutual funds invest approximately 11 percent in common stock ofmid~cap U.S. companies, 19 percent in common stock oflurge-cap U.S. companies, 12 percent in U.S. Government securities, 27 percent in corporate bonds, 13 percent in common stock of international companies and 18 percent in other investments. T~e estimated fair values of the Company's other postretirement benefit plans' assets are determined using the market approach. The estimated fair value of the other postretirement benefit plans' Level 2 cash equivalents is valued at the net asset value of shares held at year end, based on published market quotations on active markets, or using other known sources including pricing from outside sources. Units of this fund can be redeemed on a daily basis at their net asset value and have no redemption restrictions. The assets are invested in high-quality, short-term money market instruments that consist of municipal obligations. IFERC FORM NO.1 (ED ) Page

35 Name of Respondent This Report is: Date of Report Year/Period of Report (1) ~An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Conlinued) There are no unfunded commitments related to this fund. The estimated fair value of the other postretirement benefit plans' Level 1 equity securities is based on the closing price reported on the active market on which the individual securities are traded. The estimated fair value of the other postretirement benefit plans' Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data. Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the years ended December 31, 214 and 213, there were no transfers between Levels 1 and 2. The fair value of the Company's other postretirement benefit plans' assets (excluding cash) by asset class were as follows: Assets: Cash equivalents Equity securities: U.S. companies Insurance contract* Total assets measured at fair value $ Fair Value Measurements atdecember31, 214, Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level3) (In thousands) 1,54 $ 1,178 $ - $ Balance at December 31, 214 1,178 1,54 47,892 5,124 47,892 $ 1,54 $ 49,7 $ $ *The insurance contract invests approximately 54 percent in common stock oflarge-cnp U.S. companies, 11 percent in U.S. Government securities, 1 percent in mortgage-backed securities, 1 percent in corporate bonds and 15 percent in other investments. Assets: Cash equivalents Equity securities: U.S. companies Insurance contract* Total assets measured at fair value $ Fair Value Measurements at December 31,213, Using Quoted Prices in Active Markets for Identical Assets (Level l) 444 1,6 $ Significant Other Observnble Inputs (Level2) (In thousands) 756 $ 46,41 47,157 $ Significant Unobservable Inputs (Lcvel3) - $ Balnnce at December 31, 213 1,2 1,6 46,41 48,661 $ 1,54 $ $ *The insurance contrnct invests approximately 55 percent in common stock oflargc-cap U.S. companies, 12 percent in U.S. Government securities, 8 percent in mortgage-bucked securities, 8 percent in common stock of mid-cap U.S. companies, 9 percent in corpomtc bonds, and 8 percent in other investments. I FERC FORM NO. 1 (ED ) Page

36 Name of Respondent This Report is: Date of Report Year/Period of Report (1) X An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) The Company expects to contribute approximately $2.2 million to its defined benefit pension plans in 215. The Company does not expect to contribute to its postretirement benefit plans in 215. The following benefit payments, which reflect future service, as appropriate, and expected Medicare Part D subsidies are as follows: Other Expected Pension Postretirement Medicare Years Benefits Benefits Part D Subsidy (In thousands) ?4 Nonqualified benefit plans In addition to the qualified plan defined pension benefits reflected in the table at the beginning of this note, the Company also has unfunded, nonqualified benefit plans for executive officers and certain key management employees that generally provide for defined benefit payments at age 65 following the employee's retirement or to their beneficiaries upon death for a 15-year period. The Company's net periodic benefit cost for these plans was $3.7 million and $4.1 million in 214 and 213, respectively. The total projected benefit obligation for these plans was $66.5 million and $61.9 million at December 31, 214 and 213, respectively. The accumulated benefit obligation for these plans was $61.6 million and $57.2 million at December 31, 214 and 213, respectively. A weighted average discount rate of 3.5 percent and 4.32 percent at December 31, 214 and 213, respectively, and a rate of compensation increase of 4. percent and 4. percent at December 31, 214 and 213, respectively, were used to determine benefit obligations. A discount rate of 4.32 percent and 3.45 percent for the years ended December 31, 214 and 213, respectively, and a rate of compensation increase of 4. percent and 3. percent for the years ended December 31, 214 and 213, respectively 1 were used to determine net periodic benefit cost. $ 14,152 $ 2,768 $ 14,28 2,755 14,476 2,794 14,78 2,842 14,949 2,85 77,548 14,34 The amount of benefit payments for the unfunded, nonqualified benefit plans are expected to aggregate $3.8 million in 215; $3.6 million in 216; $3.8 million in 217; $4. million in 218, $4.2 million in 219 and $22. million for the years 22 through 224. In the Company established a nonqualified defined contribution plan for certain key management employees. Expenses incurred under this plan for 214 and 213 were $17, and $5,, respectively. The Company had investments of $62.1 million and $6.4 million at December 31, 214 and 213, respectively, consisting of equity securities of $36.6 million and $35.6 million, respectively, life insurance carried on plan participants (payable upon the employee's death) of $18.6 million and $17.8 million 1 respectively, and other investments of $6.8 million and $7. million, respectively. The Company anticipates using these investments to satisfy obligations under these plans. Defined contribution plans The Company sponsors various defined contribution plans for eligible employees 1 and costs incurred under these plans were $1.5 million in 214 and $11.1 million in IFERC FORM NO.1 (ED ) Page

37 Name of Respondent This Report is: Date of Report Year/Period of Report (1) 2S_An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) Note 12 - Jointly Owned Facilities The financial statements include the Company's ownership interests in the assets, liabilities and expenses of the Big Stone Station, Coyote Station and Wygen III. Each owner of the stations is responsible for financing its investment in the jointly owned facilities. The Company's share of the stations' operating expenses was reflected in the appropriate categories of operating expenses (fuel, operation and maintenance 1 and taxes, other than income) in the Statement of Income. At December 31, the Company's share of the cost of utility plant in service and related accumulated depreciation for the stations was as follows: (In thousands) Big Stone Station: Utility plant in service $ 64,283 $ 63,89 Less accumulated depreciation 43,43 41,323 $ 21,24 $ 22,567 Coyote Station: Utility plant in service $ 138,81 $ 138,261 Less accumulated depreciation 94,443 89,528 $ 44,367 $ 48,733 Wygen lll: Utility plant in service $ 65,597 $ 64,332 Less accumulated depreciation 5,928 4,639 $ 59,669 $ 59,693 Note 13 - Regulatory Matters and Revenues Subject to Refund On August 11, 214, Montana-Dakota filed an application with the MTPSC for a natural gas rate increase. Montana-Dakota requested a total increase of approximately $3. million annually or approximately 3.6 percent above current rates. The requested increase includes the costs associated with the increased investment in facilities, including ongoing investment in new and replacement distribution facilities, depreciation and taxes associated with the increased investment as well as an increase in Montana-Dakota's operation and maintenance expenses. On February 3, 215, the MTPSC approved an interim increase of $2. million or approximately 2.3 percent, subject to refund, to be effective with service rendered on and after February 6, 215. A Stipulation Agreement covering all issues in the rate case was reached between the Company and the Montana Consumer Counsel and submitted to the MTPSC on March 18, 215. If approved, the Stipulation will result in an annual increase in revenues of $2.5 million or approximately 2.99 percent. This is an increase of approximately $514, over the interim increase authorized in February of 215. An amended Stipulation reflecting minor changes in rate design was submitted on March 25, 215. A decision is pending with the MTPSC. On October 3, 214, Montana-Dakota filed an application with the WYPSC for a natural gas rate increase. Montana-Dakota requested a total increase of approximately $788, annually or approximately 4.1 percent above current rates. The requested increase includes the costs associated with the increased investment in facilities, including ongoing investment in new and replacement distribution facilities and the associated operation and maintenance expenses, depreciation and taxes associated with the increase in investment. The WYPSC has scheduled a hearing for this matter on May 19, 215. On November 14, 214, Montana-Dakota filed an application with the NDPSC for approval to lferc FORM NO.1 (ED ) Page

38 Name of Respondent This Report is: Date of Report Year/Period of Report (1) 2$.An Original (Mo, Da, Yr) MDU Resources Group, Inc. (2) A Resubmission 12/31/ /4 NOTES TO FINANCIAL STATEMENTS (Continued) implement the rate adjustment associated with the electric generation resource recovery rider approved by the NDPSC on August 2, 214. On January 7, 215, the NDPSC approved the rate adjustments of $5.3 million annually to be effective with service rendered on and after January 9, 215. On December 22, 214, Montana-Dakota filed an application for advance determination of prudence and a certificate of public convenience and necessity with the NDPSC for the Thunder Spirit Wind project. This project will provide energy, capacity and renewable energy credits to Montana-Dakota's electric customers in North Dakota, Montana and South Dakota. The NDPSC has scheduled a hearing for this matter on May 14, 215. On February 6, 215, Montana-Dakota filed an application with the NDPSC for a natural gas rate increase. Montana-Dakota requested a total increase of approximately $4.3 million annually or approximately 3.4 percent above current rates. The requested increase includes the costs associated with the increased investment in facilities, including ongoing investment in new and replacement distribution facilities, depreciation and taxes associated with the increased investment as well as an increase in Montana-Dakota's operation and maintenance expenses. Montana-Dakota requested an interim increase of $4.3 million or 3.4 percent, subject to refund. On March 11, 215 the Commission issued an Order approving interim rates to increase annual revenues by $4.3 million to be effective with service rendered on an after April 7, 215. The NDPSC also scheduled public input sessions to be held at six locations in Montana-Dakota's North Dakota service territory on April 13-14, 215. A technical hearing has been scheduled for July 2-21, 215. Note 14 - Commitments and Contingencies Claims and Litigation The Company is party to claims and lawsuits arising out of its business. The Company accrues a liability for those contingencies when the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss. The Company had accrued liabilities of $3.7 million and $1.4 million for contingencies related to litigation as of December 31, 214 and 213, respectively. Operating leases The Company leases certain equipment, facilities and land under operating lease agreements. The amounts of annual minimum lease payments due under these leases as of December 31, 214, were $3.9 million in 215, $3.7 million in 216, $2.7 million in 217, $1.9 million in 218, $1. million in 219 and $19.8 million thereafter. Rent expense was $4.2 million and $3.3 million for the years ended December 31, 214 and 213, respectively. Purchase commitments The Company has entered into various commitments, largely natural gas and coal supply, purchased power, and natural gas transportation and storage contracts, some of which are subject to variability in volume and price, and a purchase agreement of electric wind generation. These commitments range from one to 1 years. The commitments under these contracts as of December 31, 214, were $294.2 million in 215, $77.9 million in 216, $37.3 million in 217, $15.9 million in 218, $12.5 million in 219 and $55.2 million thereafter. These commitments were not reflected in the Company's financial statements. Amounts purchased under various commitments for the years ended December 31, 214 and 213, were $344.7 million and $35.9 million, respectively. IFERC FORM NO.1 (ED ) Page

39 Docket No. NG15-_ Rule 2:1:13:52 Statement B INDEX Income Statement Twelve months ending December 31, 214 Three months ending March 31, 215 Page Nos

40 MDU RESOURCES GROUP, INC. NONCONSOLIDATED INCOME STATEMENT TWELVE MONTHS ENDING DECEMBER 31, 214 Docket No. NG15-_ Rule 2:1:13:52 Statement B Page 1 of 4 Operating I nco me Electric Utility Operating Revenues Operating Expenses: Operation Expenses Maintenance Expenses Depreciation Expenses Taxes Other Than Income Taxes Income Taxes: Federal Taxes on Income State Taxes on I nco me Deferred Income Taxes Total Electric Expenses Net Electric Operation Gas Utility Operating Revenues Operating Expenses: Operation Expenses Maintenance Expenses Depreciation Expenses Taxes Other Than Income Taxes Income Taxes: Federal Taxes on Income State Taxes on Income Deferred Income Taxes Total Gas Expenses Net Gas Operation Net Utility Operating Income Revenues from Merchandising, Jobbing and Contract Work (less) Costs and Exp. Of Merch., Jobbing and Contract Work Revenues from Nonutility Operations (Less) Expense from Nonutility Operations Equity in Earnings of Subsidiary Companies Interest and Dividend Income Allowance for Other Funds Used During Construction Miscellaneous Nonoperating Income Gain on Disposition of Property Total Other Income Loss on Disposition of Property Miscellaneous Income Deductions Total Other Income Deductions $275,19,692 15,378,718 19,911,45 34,787,813 1,98,231 (16,22,674) (1,679,838) 3,842, ,928,278 $46,262,414 $347,31, ,83,491 4,932,557 16,81,151 8,8,98 (6,61,475) (72,77) 12,537, ,49,567 $13,982,367 $6,244,781 $736, ,818 4,54,46 3,27,544 25,78,156 1,893,371 3,987,83 29,688 1,213, ,768,186 6, , ,442

41 MDU RESOURCES GROUP, INC. NONCONSOLIDATED INCOME STATEMENT TWELVE MONTHS ENDING DECEMBER 31, 214 Docket No. NG15-_ Rule 2:1:13:52 Statement B Page 2 of4 Taxes other than I nco me Taxes Income Taxes- Federal Income Taxes- State Provision for Deferred Income Taxes Investment Tax Credits Total Taxes on Other Income and Deductions 278,444 (1,98,896) (2,475,829) 1,52,866 (1,644,44) (1,31,11) Net Other Income and Deductions Interest On Long-Term Debt Amortization of Debt Discount and Expense Amortization of Loss on Reacquired Debt Other Interest Expense (Less) Allow for Borrowed Funds Used during Canst. Net Interest Charges Net Income $259,69,755 21,947,953 24,35 719,51 266,22 2,92,191 21,81,329 $298,233,27

42 MDU RESOURCES GROUP, INC. NONCONSOLIDATED INCOME STATEMENT THREE MONTHS ENDING MARCH 31,215 Docket No. NG15-_ Rule 2:1:13:52 Statement B Page 3 of 4 Operating Income Electric Utility Operating Revenues Operating Expenses: Operation Expenses Maintenance Expenses Depreciation Expenses Taxes Other Than Income Taxes Income Taxes: Federal Taxes on Income State Taxes on Income Deferred Income Taxes Total Electric Expenses Net Electric Operation Gas Utility Operating Revenues Operating Expenses: Operation Expenses Maintenance Expenses Depreciation Expenses Taxes Other Than Income Taxes Income Taxes: Federal Taxes on Income State Taxes on Income Deferred Income Taxes Total Gas Expenses Net Gas Operation Net Utility Operating I nco me Revenues from Merchandising, Jobbing and Contract Work (less) Costs and Exp. Of Merch., Jobbing and Contract Work Revenues from Non utility Operations (Less) Expense from Non utility Operations Equity in Earnings of Subsidiary Companies Interest and Dividend Income Allowance for Other Funds Used During Construction Miscellaneous Nonoperating Income Gain on Disposition of Property Total Other Income Loss on Disposition of Property Miscellaneous Income Deductions Total Other Income Deductions $71 '183,293 4,18,612 4,848,757 9,311,499 3,27,687 (7,97,465) (83,299) 1,371,967 59,74,758 $11,442,535 $122,299,628 12,896,792 1,416,886 4,344,186 2,326,935 7,827,9 998,634 (5,214,769) 114,596,564 $7,73,64 $19,145,599 $289, ,614 1,557, ,146 (321,764,37) 649, ,996 65,596 (319,374,363) (149, 12) (149, 12)

43 MDU RESOURCES GROUP, INC. NONCONSOLIDATED INCOME STATEMENT THREE MONTHS ENDING MARCH 31,215 Docket No. NG15-_ Rule 2:1:13:52 Statement B Page 4 of 4 Taxes other than Income Taxes Income Taxes- Federal I nco me Taxes - State Provision for Deferred Income Taxes Investment Tax Credits Total Taxes on Other Income and Deductions Net Other Income and Deductions Interest On Long-Term Debt Amortization of Debt Discount and Expense Amortization of Loss on Reacquired Debt Other Interest Expense (Less) Allow for Borrowed Funds Used during Canst. Net Interest Charges Net Income 74,18 (312,637) (43,228) 91,356 (38,898) (229,227) ($318,996,16) 6,237,76 68, ,877 45, ,76 6,66,785 ($35,917,22)

44 MDU RESOURCES GROUP, INC. STATEMENT OF RETAINED EARNINGS DECEMBER 31, 214 Docket No. NG15-_ Rule 2:1:13:53 Statement C Page1 of 1 Retained Earnings at December 31, 213 Unappropriated Undistributed Subsidiary Earnings at December 31, 213 Retained Earnings at December 31, 213 Net Income from Income Statement for the Twelve Months ended December 31, 214 Adjustments to Retained Earnings for the Twelve Months ended December 31, 214 Dividend Appropriation of Surplus: 4.5% Preferred Stock 4. 7% Preferred Stock Common Stock Retained Earnings at December 31, 214 $45,3 235, 137,896,482 $54,13,52 1,62,999,41 1,63,129, ,233,27 45, ,581,485 $1,762,827,12

45 Docket No. NG15-_ Rule 2:1:13:54 Statement D Page 1 of 5 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF PLANT IN SERVICE GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDED DECEMBER 31, 214 Function Distribution General General Intangible Common Common Intangible Total Average Balance@ Balance@ Pro Forma 12/31/13 12/31/14 12/31/14 Adjustments 1 I 75,712,659 78,3,744 76,871,72 2,492,359 13,195,275 13,93,282 13,144,278 1,61,16 148, ,23 146,81 148,646 3,124,375 2,869,23 2,996,789 86,15 6,879,33 6,424,762 6,651,897 (27,85) $99,59,92 $1,563,14 $99,811,467 $3,76,375 Average Balance@ 12/31/15 79,364,61 14,25, ,447 3,82,84 6,624,92 $13,571,842 1/ See Rule 2:1:13.54, Statement D, page 2.

46 PLANT IN SERVICE GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDED DECEMBER 31, 214 Average Pro Forma Additions Function 12/31/13 12/31/14 12/31/14 to Plant 1/ 12/31/15 Distribution $75,712,659 $78,3,744 $76,871,72 $2,666,633 $8,697,377 General 13,195,275 13,93,282 13,144,278 2,224,313 15,317,595 General Intangible 148, ,23 146,81 3, ,87 Common 3,124,375 2,869,23 2,996, ,23 3,296,46 Common Intangible 6,879,33 6,424,762 6,651, ,66 6,823,422 Total $99,59,92 $1,563,14 $99,811,467 $6,17,656 $16,58,67 Average 12/31/15 $79,364,61 14,25, ,447 3,82,84 6,624,92 $13,571,842 Pro Forma Adjustment $2,492,359 1,61 '16 148,646 86,15 (27,85) $3,76,375 1/ See Rule 2:1:13.56, Statement D, Schedule D-2, pages 3 through 5. "OUJ::OO m... co co ~-o co coma N3~m_ 8-~~z ~ao rno~z!'?gj 1~... 1 '

47 PLANT IN SERVICE GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31, 214 ADJUSTMENT A Acct. No. Account Distribution Plant Land Rights of Way 375 Structures & Improvements 376 Mains 378 Meas. & Reg. Equip.-General 379 Meas. & Reg. Equip.-City Gate 38 Services 381 Positive Meters 383 Service Regulators 385 Ind. Meas. & Reg. Station Eqpt Cathodic Protection Equip Other Distribution Equip. Total Distribution Plant Balance@ 12/31/13 12/31/14 $76,95 124, ,849 41,272,362 8,788 1,286,868 15,432,664 14,394,77 1,722,596 63, ,382 92,38 $75,712,659 $76,95 127,139 18,3 42,191, ,38 1,281,566 16,421,82 14,619,152 1,883,673 64, ,382 92,379 $78,3,744 Average Balance@ 12/31/14 $76,95 125,715 18,926 41,732,78 813,913 1,284,217 15,927,242 14,56,614 1,83,135 64, ,382 92,38 $76,871,72 Plant Additions 1/ $1,83,752 18, , ,68 13,463 39,221 $2,666,633 Balance@ 12/31/15 $76,95 127,139 18,3 43,275, ,13 1,281,566 17,275,974 15,96,22 1,987,136 64,894 33,63 92,379 $8,697,377 Pro Forma Average Balance@ 12/31/15 $76,95 127,139 18,3 42,733, ,526 1,281,566 16,848,897 14,857,686 1,935,44 64, ,993 92,379 $79,364,61 Adjustment $1,424 (923) 1,1,591 67,613 (2,651) 921, ,72 132, ,611 ( 1) $2,492,359 General Plant 389 Land 39 Structures and Improvements Furniture and Fixtures Computer Equip. - PC Trans. Equip., Non-Unitized Trans. Equip., Unitized 393 Stores Equipment Tools,Shop&Gar. Eq.-Non-Un. 395 Laboratory Equipment Work Equipment Trailers $1,236,277 6,133, '158 35, ,312 2,16,884 43, ,453 3,4 197,53 $1,236,781 6,149, , ,22 118,65 2,15,54 36,97 639,752 19,218 19,213 $1,236,529 6,141,776 2,164 78, ,189 2,61,212 4,117 61,63 24,89 193,858 $44, ,188 64,21 $1,236,781 6,194, , ,22 118,65 2,734,728 36,97 73,773 19,218 19,213 $1,236,781 6,171, , ,22 118,65 2,42,134 36,97 671,762 19,218 19,213 $252 3,96 (995) 43,48 (5,124) 358,922 (3,21 ) 61,159 (5,591) (3,645) -ocn::oo OJ... c ( ~-(1 rororo,.. w3~!llo CD.. Z -~~ c.no:_:..z ~Gl '-"~... "' I'

48 PLANT IN SERVICE GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31,214 ADJUSTMENT A Pro Forma Average Average Acct. Balance@ Balance@ Plant Balance@ Balance@ No. Account 12/31/13 12/31/14 12/31/14 Additions 1/ 12/31/15 12/31/15 Adjustment Power Operated Equip. 2,299,847 1,894,981 2,97,414 1,277,465 3,172,446 2,533, , Radio Comm. Equip.-Fixed 93,87 187,788 14,829 29,28 396, ,32 151, Radio Comm. Equip.-Mobile 132, ,62 133, ,62 135,62 1, General Tele. Comm. Equip. 4,389 4,389 4,389 4,389 4, Network Equipment 8,486 5,746 7,116 5,746 5,746 (1,37) 398 Miscellaneous Equipment 15,164 12,83 13,623 12,83 12,83 (1,54) Total General Plant $13,195,275 $13,93,282 13,144,278 $2,224,313 $15,317,595 $14,25,438 $1,61,16 33 Intangible Plant- General $148,578 $145,23 $146,81 $3,847 $445,87 $295,447 $148,646 Common Plant 389 Land $88,511 $82,212 $85,362 $82,212 $82,212 ($3, 15) 39 Structures and Improvements 1,457,634 1,357,566 1,47,6 $36,694 1,394,26 1,375,913 (31,687) Furniture and Fixtures 24, , ,758 47,34 178, ,645 (13,113) Computer Equip. - PC 155, , ,33 114, ,76 176,262 38, Computer Equip. -Other 27, ,871 22,794 11,535 29,46 23, Trans. Equip., Non-Unitized (1 ) Trans. Equip., Unitized 253, ,754 27,51 114,144 41, ,826 74, Aircraft 445, , , , ,635 (17,18) 393 Stores Equipment (13) Tools, Shop & Gar. Equip. 12,721 8,766 1, ,683 9,224 (1,52) Vehicle Maint. Equip. 5,899 5,449 5,674 5,449 5,449 (225) Vehicle Refueling Equip. 1 '12 1,18 1,6 1,18 1,18 (42) Radio Comm. Equip.-Fixed 79,24 74,8 76,516 72, ,35 11,179 33, Radio Comm. Equip.-Mobile 21,178 31,625 26,41 31,625 31,625 5, General Tele. Comm. Equip. 39,917 27,6 33,462 22,399 49,45 38,25 4,743 "OCIJ::UO Ol,...CO (Q ~- COCOCD::::r\.e.-3~!]. o~:_;_z... oo O'lo:...;.z tog) "'~, """'

49 PLANT IN SERVICE GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31, 214 ADJUSTMENT A Acct. No. Account Supervisory & Tele. Equip Network Equipment 398 Miscellaneous Equipment Total Common Plant Average Balance@ Balance@ Plant 12/31/13 12/31/14 12/31/14 Additions 1/ 1,562 2,538 2,5 18,933 23,558 21,245 4,53 13,376 17, ,47 3,89 $3,124,375 $2,869,23 $2,996,789 $427,23 Pro Forma Average Balance@ Balance@ 12/31/15 12/31/15 2,538 2,538 27,611 25,585 11,87 19,263 $3,296,46 $3,82,84 Adjustment 488 4,34 (9,784) $86,15 33 Intangible Plant- Common $6,879,33 $6,424,762 $6,651,897 $398,66 $6,823,422 $6,624,92 ($27,85) Total Gas Plant in Service $99,59,92 $1,563,14 $99,811,467 $6,17,656 $16,58,67 $13,571,842 $3,76,375 1/ See Rule 2:1:13.56, Statement D, pages 2 through 5. "OS'2;:oo ruruco ta... roo (3(1)1\.)~ <n o~ o~:...;.z _... ao cno:...;.z '-':'GJ (]>~ -"<n '

50 DETAILED COST OF PLANT GAS UTILITY FOR THE TWELVE MONTHS ENDED DECEMBER 31, 214 Acct. No. Account 1/1/214 Additions Retirements Transfers 12/31/214 Distribution Plant Land $253,954 $829,42 (27,863) 1,55, Rights of Way 968,954 (553,97) 15,568 43, Structures & Improvements 749,822 55,69 (1,847) 83, Mains 151,145,132 16,165,584 (1,433,242) 22,46, ,338, Meas. & Reg. Equip.-General 4,51,99 (946,988) (17,276) 3,87, Meas. & Reg. Equip.-City Gate 5,194,963 (27,141) (17,714) 78,566 4,985, Services 79,564,242 8,958,533 (286,52) (15,) 88,86, Positive Meters 63,53,244 3,67,769 (37,91 ) 66,74, Service Regulators 7,784,199 84,425 (27,584) 8,561,4 385 Ind. Meas. & Reg. Station Eqpt. 786,53 187, , Misc. Property on Customer Premise 1,68 1, Other Property on Gust. Premise 261,88 261, Cathodic Protection Equip. 2,842,711 78,642 (14,981) 2,96, Other Distribution Equip. 587, ,151 Total Distribution Plant $317,696,425 $28,916,458 ($2, 169,66) $22,377,11 $366,82,387 General Plant 389 Land $1,519,439 $1,519, Structures and Improvements 8,999,51 4,535 (25,386) (1,417) 9,3, Furniture and Fixtures 297,348 (4,27) 293, Computer Equip. - PC 21,21 (2,5) 185,7 365, Trans. Equip., Non-Unitized 475,389 (18, 787) 456, Trans. Equip., Unitized 8,181, ,61 (293,262) (135,511) 8,29, Stores Equipment 63,65 {6,422) 57, Miscellaneous Tools- Utilized 2,477, ,226 (26,525) 2,676, Vehicle Maintenance Equipment 5,923 5, Vehicle Refueling Equipment 12,444 (12,444) "tj(/)(1):: WOfilCO 395 Laboratory Equipment 217,351 24,3 (41,115) 3,827 24,363 cgffirom~ Work Equipment Trailers 669,41 151,715 (7,181) 813, g-3~~ o-cd z -co~c;o N.. ~ ~z.. G) "'~ "'"' '

51 DETAILED COST OF PLANT GAS UTILITY FOR THE TWELVE MONTHS ENDED DECEMBER 31, 214 Acct. No. Account 1/1/214 Additions Retirements Transfers 12/31/ General Telephone Comm. Equipment 51,238 (3,61 ) 47, Network Equipment 22,598 (16,852) 5, Miscellaneous Equipment 62,966 (28,844) 11,343 45,465 Total General Plant $32,529,763 $4,423,423 ($4,112,193) $35,314 $33,191,37 33 Intangible Plant- General 3,864,647 81,946 3,946,593 Common Plant- Gas 1/ 24,993,129 22,279,596 Common Intangible Plant 2/ 29,18,174 9,99,926 Acquisition Adjustment 97,266 97,266 Total Gas Plant in Service $48,289,44 $33,421,827 ($6,281 '799) $22,727,424 $436,326,75 1/ Common plant is either directly assigned or allocated to gas and electric plant Total common plant additions, retirements, transfers and adjustments for the twelve months ended December 31, 214 are $12,294,289, ($1,817, 766) and ($718,345) respectively. 2/ Common intangible plant is either directly assigned or allocated to gas and electric plant Total common intangible plant additions, retirements, transfers and adjustments for the twelve months ended December 31, 214 are $1,136,356, ($3,813,824) and $9,883 respectively. 'ljcjjcjj;;oo ruoorco ~ ffirom~ rvg-3~~ o-co z -nco~~o "'oo... ~ ~z.. GJ "'~ "'"' '

52 BOOK CHANGES IN GAS PLANT IN SERVICE TWELVE MONTHS ENDING DECEMBER 31, 214 Work Construction Date Placed Beginning Order# Description Location Period In Service Balance Major Additions Major Retirements Major Transfers Ending Balance $354,9,836 FP lnstall1" Gas Main to Heskett Ill Gas Turbine NO $22,377,11 FP-2816 Install 12" Gas Loop Line in Williston NO /31/ ,935,196 FP Install 12" Gas Loop Line in Williston NO / ,496,97 FP-3866 Sale of 12" Gas Main in Dickinson NO (99,) FP-3176 Install 6" Gas Loop Line in Watford City NO 7/16/ /31/214 35,251 FP-3336 Install 2" & 4" Main in Alexander NO 914/13-9/ ,351 Major Projects Subtotal 354,9,836 6,13,895 (99,) 22,377,11 Miscellaneous Projects Subtotal $354,9,836 Common Plant Allocated to Gas 54,11,32 Total Gas Plant $48,192,138 27,29,932 (5,372,799) $33,421,827 ($6,281,799) 35,314 $22,727,424 $43,958,288 59,645,711 $463,63,999 "Ucncn;oo WOQ)CO 'g ~rom~ ---~.g-3~~ g.ro~:...;.z ~ao cno.., ~z N "!G) "'~ men '

53 PLANT ADDITIONS SUMMARY GAS UTILITY- SOUTH DAKOTA PRO FORMA Docket No. NG15-_ Rule 2:1:13:56 Statement D Schedule D-2 Page 2 of 5 Total Distribution $2,666,633 General Other 1,55,514 Structures & Improvements 44,611 Transportation 629,188 Total General Plant 2,224,313 General Intangible 3,847 Common Other 145,781 Structures & Improvements 36,694 Computer Equipment 13,584 Transportation 114,144 Total Common Plant 427,23 Intangible Plant Common 398,66 Total Additions $6,17,656

54 Docket No. NG15-_ Rule 2:1:13:56 Statement D Schedule D-2 MONTANA-DAKOTA UTILITIES CO. Page 3 of PLANT ADDITIONS GAS UTILITY- SOUTH DAKOTA South Project No. Acct. Description Region Dakota Distribution Replace Mt. Rushore Road Black Hills $6, Replace Mains Dakota Heartland Replace Mains Black Hills 896, Main Replacement- Deadwood Hwy 85 Black Hills 126,67 Total Acct ,83, Measuring and Regulating Equipment Dakota Heartland 41, Measuring and Regulating Equipment Black Hills 67,433 Total Acct , Service Lines Dakota Heartland 157, Service Lines Black Hills 696,81 Total Acct , Meters General Office 452, Install Gas Meter Read ERTs General Office 25,25 Total Acct , Regulators General Office 13, Cathodic Protection Black Hills 39,221 Total Distribution $2,666,633 General Replace carpet- Rapid City office Black Hills 1, Replace gate- Rapid City office Black Hills 6, Install gas to construction yard- Spearfish Black Hills 6, Upgrade lighting- Rapid City office Black Hills 13, Upgrade weld shop ventilation- Rapid City office Black Hills 8,44 Total Acct , Gas Vehicles General Office 629, Minor Work Equipment Dakota Heartland 1, Minor Work Equipment Black Hills 53,859 Total Acct , Gas Work Equipment General Office 1,277, Communication Equipment Black Hills 25, Install RTU at border stations 183,623 Total Acct ,28 Total General $2,224,313 General Intangible Purchase GMS software General Office 298, Develop large volume customer website General Office 2,575 Total Acct. 33 $3,847

55 Docket No. NG15-_ Rule 2:1:13:56 Statement D Schedule D-2 MONTANA-DAKOTA UTILITIES CO. Page 4 of PLANT ADDITIONS GAS UTILITY- SOUTH DAKOTA South Project No. Acct. Description Region Dakota Common Replace roof on Annex building General Office $9, Replace boilers in general office General Office 24, Purchase water fountains in general office and annex General Office 2,66 Total Acct , Office Equipment General Office 9, Purchase furniture for GIS staff General Office 3, Purchase furniture for general office staff General Office 33, Purchase workstation General Office 68 Total Acct , Personal Computers General Office 14, Replace data center networking eqpt. General Office 27, Exadata infrastructure expansion General Office 73,334 Total Acct , Purchase UPS batteries General Office Replace scanner in Payment Processing General Office 9, Pruchase Kyocera multi-function copiers General Office 1,4 Total Acct , Vehicles General Office 114, Purchase Quantifit test system General Office Communication Equipment Dakota Heartland 6, Communication Equipment General Office 65,628 Total Acct , Purchase Call Record System -Credit Center General Office 3, Purchase VOIP General Office 8, Upgrade VOIP General Office 4, Replace Avaya switch General Office 5,39 Total Acct , Replace WAN routers General Office 1, Purchase wirelesss access points General Office 2,123 Total Acct , Purchase offset envelop press General Office 3,89 Total Common $427,23

56 Project No. Acct MONTANA-DAKOTA UTILITIES CO. 215 PLANT ADDITIONS GAS UTILITY- SOUTH DAKOTA Description Common - Intangible Replace mobile workforce software Replace customer information system Upgrade Endpoint Link Pro GIS data conversion Upgrade ECM software Purchase additional CC&B licenses Implement PowerPian CPI Tax Purchase CC&B migration manager Total Common Intangible Region General Office General Office General Office General Office General Office General Office General Office General Office Docket No. NG15-_ Rule 2:1:13:56 Statement D Schedule D-2 Page 5 of 5 South Dakota $22, ,47 9,23 1,95 8,455 17,1 2,554 4,232 $398,66 Total Plant Additions $6,17,656

57 PLANT IN SERVICE-AVERAGE GAS UTILITY -SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31,214 Acct. ~ Account Janua!_Y Februa:,y March AQril Ma~ June July August SeQtember October November December 12 Month Avg. Distribution Plant Land $76,95 576,95 $76,95 $76,95 576,95 576,95 $76, Rights of Way 124, , , , , , , Structures & Improvements 181, , , ,849 18,3 18,3 18,3 376 Mains 41,262,929 41,268,599 41,274,819 41,299,547 41,369,21 41,432,955 41,487, Meas. & Reg. Equip.-General 8,788 8,788 8,788 89,213 89,59 87,842 86, Meas. & Reg. Equip.-City Gate 1,286,868 1,288,54 1,281,253 1,281,524 1,281,566 1,281,566 1,281, Services 15,459,329 15,493,33 15,524,126 15,578,6 15,671,551 15,799,92 15,928, Positive Meters 14,22,681 14,292,649 14,339,349 14,412,597 14,263,812 14,34,85 14,4, Service Regulators 1,719,552 1,732,51 1,756,512 1,769,874 1,785,39 1,797,758 1,831, Ind. Meas. & Reg. Station Equip. 63,497 63,429 63,429 63,429 63,429 63,429 63, Cathodic Protectlon Equip. 264, , , , , , , Other Distribution Equip. 92,38 92,379 92,379 92,379 92,379 92,379 92,379 Total Distribution Plant 75,535,451 75,679,615 75,78,82 75,954,59 75,982,76 75,226,217 76,536, ,95 $76,95 576,95 124, , ,291 18,3 18,3 18,3 41,542,453 41,66,578 41,613,26 86,54 86,55 86,54 1,281,566 1,281,556 1,281,566 16,42,445 16,176,87 16,262,645 14,493,145 14,591,313 14,573,368 1,844,239 1,843,718 1,854,724 64,894 64,894 64, , , ,382 92,379 92,379 92,379 76,812,756 77,18,171 77,194,417 $76,95 124,291 18,3 41,887, ,772 1,281,566 16,338,24 14,613,66 1,863,851 64, ,382 92,379 77,614, ,95 576,95 127, ,528 18,3 18,618 42,191,793 41,519, ,38 88,913 1,281,566 1,282,556 16,421,82 15,891,376 14,619,152 14,425,567 1,883,673 1,86,925 64,894 64,45 264, ,382 92,379 92,379 78,3,744 76,537,979 General Plant 389 Land 1,236,781 1,236,781 1,236,781 1,236,781 1,236,781 1,236,781 1,236, Structures and Improvements 6,137,224 6,137,224 6,137,224 6,144,759 6,144,281 6,144,281 6,143, Office Furniture & Equipment 21,36 199, , , , , , Persona! Computers 35,822 35,822 35, ,22 122,22 122,22 122, Trans. Equip., Non-Unitized 128,41 128,41 128,43 128,44 128,44 128,44 121, Trans. Equip., Unitized 2,14,299 2,14,299 2,4,311 2,39,942 2,93,16 2,65,764 2,24, Stores Equipment 43,328 43,328 43,328 36,97 36,97 36,97 36, Miscellaneous Tools- Nonunitize 579, , , ,45 595, , , Laboratory Equipment 3,39 3,39 3,39 17,67 17,67 17,67 17, Work Equipment Trailers 197, , , , , , , Power Operated Equip. 3,152,319 2,981,57 2,969,26 2,979,66 3,67,675 2,989,19 2,781, Fixed Radio Comm. Equip. 93,87 9,95 9,95 174, , , , Mobile Radio Comm. Equip. 132, ,29 132, , ,63 135,63 135, General Tele. Comm. Equip. 4,389 4,389 4,389 4,389 4,389 4,389 4, Network Equipment 8,486 5,746 5,746 5,746 5,746 5,746 5, Miscellaneous Equipment 15,149 15,149 15,149 12,221 12,221 12,221 12,221 Total General Plant 14,46,779 13,87,614 13,891,574 14,59,866 14,26,176 14,117,222 13,863,942 1,236,781 1,236,781 1,236,781 6,126,335 6,133,11 6,144, , , , ,22 122,22 122,22 121, ,65 118,65 2,21,73 2,22,949 2,12,915 36,97 36,97 36,97 617,72 617, ,458 17,67 17,67 17,67 19,213 19,213 19,213 2,733,925 2,733,925 2,733, , , , ,63 135,63 135,63 4,389 4,389 4,389 5,746 5,746 5,746 12,83 12,83 12,83 13,795,913 13,8,225 13,914,681 1,236,781 6,144, , ,22 118,65 2,11,924 36,97 625,68 17,67 19,213 2,755, , ,63 4,389 5,746 12,83 13,92,512 1,236,781 1,236,781 6,149,566 6,14, , , ,22 1, ,65 123,679 2,15,54 2,55,46 36,97 38, ,752 67,727 19,218 2,557 19, ,42 1,894,981 2,814, , , ,63 134,139 4,389 4,389 5,746 5,974 12,83 12,896 13,93,283 13,881, Intangible Plant- Genera! 144, , ,23 145,23 145,23 145,23 145,23 145,23 145,23 145,23 145,23 145,23 145,19 -oujuj::uo tllc"lq}co tg ~rom~,.g-3~m. s_rn~~z ~oo NOo ' ~z VJ ~G) "'~ ""\';"

58 PLANT IN SERVICE-AVERAGE GAS UTILITY-SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31,214 Accl ~ Account Janua!Y Februa!Y March AQri! Ma:i June Jul:i August SeQtember October November December 12 Month Avg. Common Plant 389 Land 82,169 82,169 82,212 82,212 82,212 82,212 82, Structures and Improvements 1,354,86 1,354,868 1,355,565 1,357,967 1,358,17 1,358,15 1,358, Office Fumllure & Equipment 187, ,597 14,54 14,93 139, ,258 14, Personal Computers 144,44 144, ,335 14,475 13, , , Other Computer Equipment 191, , , , , , , Trans. Equip., Non-Unitized Trans. Equip., Unitized 275, , , , ,492 27,43 27, Aircraft Equipment 411,42 411,42 411, , , , , Stores Equipment Miscellaneous Tools 12,23 9,126 9,13 8,766 8,766 8,766 8, Vehicle Main!. Equip. 5,446 5,445 5,449 5,449 5,449 5,448 5, Vehicle Refueling Equip. 1,17 1,17 1,18 1,18 1,18 1,18 1, Fixed Radio Comm. Equip_ 76,627 76,751 77,27 47,261 47,451 47,457 47, Mobile Radio Comm. Equip. 2,297 2,297 2,35 21,85 24,2 24,58 24, General Tele. Comm. Equip. 29,571 29,571 29,485 26,716 26,716 26,716 26, Supervisory & Telemetering 1,442 1,442 1,442 1,442 1,443 2,391 2, Network Equipment 18,258 17,71 17,125 17,14 17,14 17,14 17, Miscellaneous Equipment 117, ,94 117,97 19,376 19,579 99,14 99,142 T a tal Common Plant 2,931,513 2,875,713 2,88,867 2,82,595 2,82,635 2,84,622 2,83, Intangible Plant- Common 6,652,919 6,685,749 6,724,31 6,724,31 6,133,22 6,161,797 6,198,539 T a tal Gas Plant in Service $99,311,659 $99,256,688 $99,421, ,686,375 $99,269,13 599,454, ,548,28 82,212 82,212 82,212 82,212 82,212 82,25 1,356,761 1,356,761 1,356,761 1,356,761 1,357,566 1,356,827 14, ,563 13,986 13, , , , ,17 122,74 118,17 118, , , , , , , , ,51 288,131 29, ,74 287, ,58 411, , , , , , ,766 8,766 8,766 8,766 8,766 9,115 5,449 5,448 5,449 5,448 5,448 5,448 1,18 1,18 1,18 1,18 1,18 1,18 56,767 54,415 54,415 57,174 74,8 59,734 24,58 24,169 24,169 24,169 31,625 23,524 26,716 26,716 26,716 26,715 27,6 27,447 2,538 2,537 2,537 2,537 2,538 2,69 17,142 17,142 17,141 22,88 23,558 18,234 99,285 17,23 17,16 17,571 17,718 18,331 2,831,66 2,843,354 2,833,799 2,835,499 2,869,22 2,842,892 6,23, ,174 6,285,72 6,335,776 6,424,762 6,41,36 599,814,817 51,155,947 $1,372,992 51,851,522 $1,563,14 $99,88,93 "1J(I)(});!JO ruoarco ~ ffiroro~ r-vg-3~m. s.ro~:...;.z ~ao N.. W ~z.. G) "'~ '

59 BOOK CHANGES IN GAS PLANT IN SERVICE TWELVE MONTHS ENDING DECEMBER 31, 21 Work Construction Date Placed Beginning Order# Description Localion Period In Service Balance Major Additions Major Retirements Transfers Ending Balance $262,81,751 J Develop gas production in Billings Landfill MT /7/ $1,28,26 J Purchase Office/Service Center in Minot ND ,283,437 J Install 6" Main Loop Line in Sheridan WY / /15/21 739,726 J16461 Replace 2" Main and Services in Bismarck ND 5/ /9/9 12/9/29 374,2 J Install gas ERT's meters in Montana MT 4/1/1-9/3/1 9/3/21 341,395 J Replace 19 Ground Beds in Wyoming WY 1/1/9-12/1/1 12/1/ Major Projects Subtotal 262,81,751 13,246,727 Miscellaneous Projects Subtotal $262,81,751 Common Plant Allocated to Gas 3,314,365 Total Gas Plant $292,396,116 12,439,122 (4,17,561) $25,685,849 ($4,17,561) (16,14) ($16,14) $283,59,25 3,367,215 $313,957,24 '1Jcncn;:uo roo orca ~ ffi ro ro R _..g-3~m. o-ro.. z -.ro~c;o ""~oi;;z:.. G) c.n~ "'l'f

60 BOOK CHANGES IN GAS PLANT IN SERVICE TWELVE MONTHS ENDING DECEMBER 31,211 Work Construction Date Placed Beginning Order# Description Location Period In Service Balance Major Additions Major Retirements Transfers Ending Balance $283,59,25 J1839 Install main extension to Craven grain elevator SD 5/23/11-1/7/11 1/7/211 1,637,62 J15591 Install main and purchase 2 laterals from WBI SD 4/1/11-11/3/11 11/3/211 in Rapid City 1,353,325 J16975 Upgrade main in downtown Buffalo WY 1 /15/9-9/2/11 9/2/211 $589,651 J Develop gas production in Billings Landfill MT 8/31/8-12/7/1 12/7/21 497,97 J17684 lntall gas ERT's meters 1/ 4/1/11-9/9/11 9/9/ ,844 J Replace main by Highway 83 bypass in Minot ND 8/1/11-1/1/11 1/1/ ,12 Major Projects Subtotal 283,59,25 5,4,43 Miscellaneous Projects Subtotal 283,59,25 Common Plant Allocated to Gas 3,367,215 Total Gas Plant $313,957,24 16,246,36 (4,987,513) 21,286,467 (4,987,513) (51,78) (51,78) 299,837,272 3,96,64 $33,797,876 1 I Located in various locations. -ocncn::oo OJOO)co ~ ffirom~ N -3~m_ o-co z -co~~a..,.oo. ' ~z... "?GJ c.n~ (l)l'f

61 BOOK CHANGES IN GAS PLANT IN SERVICE TWELVE MONTHS ENDING DECEMBER 31, 212 Work Construction Date Placed Beginning Order# Description Location Period In Service Balance J19228 Install 12" Main Loop Line in Williston NO 2/2/12-11/12/12 11/12/212 J19615 Install Town Border Stations in NO NO / J Replace Loop Line in Lovell WY / /7/212 J18886 Install 8" Main in Williston NO 11/21/11-511/12 5/1/212 J19248 Install Border Station in Dickinson NO 2/17/12-12/21/12 12/21/212 J19233 Install Border Station in Williston NO 2/2/12-12/21/ /212 $299,837,272 Major Projects Subtotal 299,837,272 Miscellaneous Projects Subtotal 299,837,272 Common Plant Allocated to Gas 3,96,64 Total Gas Plant $33,797,876 Major Major Additions Retirements Transfers 3,23,14 838, ,72 56, , ,958 6,334,922 23,619,13 (5,235,48) 26,361 29,954,25 (5,235,48) 26,361 Ending Balance 324,762,25 34,599,66 $359,361,856 "OCIJCIJ;;GO ruoorco ~~rom~ w -3~~ o-rn.. z...,rn~c;o... ~oi;;z:.. G) Ul~ CX>Ul '

62 BOOK CHANGES IN GAS PLANT IN SERVICE TWELVE MONTHS ENDING DECEMBER 31, 213 Work Construction Date Placed Beginning Order# Description Location Period In Service Balance Major Additions Major Retirements Transfers Ending Balance 324,762,25 FP-1679 Install main loop line in west Dickinson NO 2/17/12-12/22/12 12/22/212 5,852,654 FP-144 Install and upgrade town border stations in NO 3/2/12-1 /31/13 1/31/213 western NO 3,83,836 FP-3176 Install main loop line in Watford City NO 7/16/12-12/19/13 12/19/213 2,196,768 FP-3492 Install main and regulator station in Fairmount NO 9/1/12-12/31/12 12/31/212 1,15,781 FP-1482 Extend main in NW Minot NO 5/1/12-12/2/12 12/2/ ,362 FP-3175 Replace main near Rimrock Road in Billings MT 2/4/13-9/15/13 9/15/ ,21 Major Projects Subtotal 324,762,25 14,337,422 Miscellaneous Projects Subtotal 324,762,25 Common Plant Allocated to Gas 34,599,66 Total Gas Plant $359,361,856 27,448,577 (1,611,565) 41,785,999 (1,611,565) (1,845,848) (1,845,848) 354,9,836 54,11,32 $48,192,138 -ocncn::uo run area ~ ffirom~ ~ -3r:5~ o-cd -z _ro;:;~o... oo... ' ~z... ~Gl ex> "'~ en '

63 Docket No. NG15-_ Rule 2:1:13:59 Statement D Schedule D-5 Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. METHODS AND PROCEDURES FOLLOWED IN CAPITALIZING THE ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION AND OTHER CONSTRUCTION OVERHEADS Montana-Dakota's Allowance for Funds Used During Construction (AFUDC) policy statement sets forth the procedure used to determine work order charges AFUDC should be applied to. 1. The AFUDC rate is calculated at the beginning of the accounting year and applied to work order balances, including AFUDC, each month. The estimated AFUDC rate will be reviewed quarterly. 2. Work order eligible for AFUDC application are those that provide a construction duration of at least thirty (3) calendar days and a budget estimate of at least $25,. 3. AFUDC is applied to eligible work orders in the month following the first month any charges are applied to the work order. The current AFUDC policy became effective in August 211. The changes in the policy were made to align the procedure with industry standards and to align the procedure at the companies within the MDU Resources Utility Group.

64 Docket No. NG15- Rule 2:1:13:6 - Statement D Schedule D-6 Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. SIGNIFICANT CHANGES IN INTANGIBLE PLANT There have been significant changes in Common intangible plant during the five year period ending December 31, 214. These changes are all due to computer software additions and upgrades as summarized below: Customer Care and Billing software upgraded ($27.2M) PowerPian accounting software installed ($2.2M) Utilities International forecasting software retired 214 (-$3.3M) Mobile Workforce Management software upgraded ($2.M) Mobile Workforce Management software retired 214 (-$3.3M) GIS system software upgraded ($1.6M) There have been significant changes in Gas intangible plant during the five year period ending December 31, 214. There were gas border station upgrades in December 212 in Dickinson, Watford City, and Tioga, North Dakota for which WBI Energy Transmission required a contribution from Montana-Dakota. The three contributions amounted to $1.3 million.

65 Docket No. NG15-_ Rule 2:1:13:61 Statement D Schedule D-7 Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. WORKING PAPERS ON PLANT NOT USED & USEFUL Montana-Dakota has no such plant.

66 Docket No. NG15-_ Rule 2:1:13:62 Statement D Schedule D-8 Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. DESCRIPTION OF PROPERTY RECORDS The Company's Continuing Property Records are maintained in accordance with the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission (FERC). The Plant Accounting System, which is computerized, records additions to utility plant at original cost (including overhead costs and an allowance for funds used during construction) through charges to work orders maintained in the Plant Accounting Construction Work in Progress (CWIP) System. As plant is placed into service, the costs accumulated in related work orders are transferred to the appropriate sub plant account of Account 16, Completed Construction Not Classified. As construction projects are completed the costs accumulated in related work orders including any amounts previously transferred to Account 16 are unitized and transferred to the appropriate sub plant account of Account 11, Plant in Service. Such costs are recovered from utility customers through depreciation charges to cost of service. Upon retirement or other disposition of the plant property units, in the ordinary course of business, the original cost is transferred from Account 11 and charged to Account 18, Accumulated Provision for Depreciation of Utility Plant, plus or minus any net salvage.

67 Docket No. NG15-_ Rule 2:1:13:63 Statement D Schedule D-9 Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. GAS PLANT ACQUISTIONS WITHOUT REGULATORY APPROVAL TWELVE MONTHS ENDING DECEMBER 31, 214 None.

68 Docket No. NG15-_ Rule 2:1:13:64 Statement E Page 1 of 3 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF ACCUMULATED RESERVE FOR DEPRECIATION GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31, 214 Function Distribution General General Intangible Common Common Intangible Total Average Balance@ Balance@ Pro Forma 12/31/13 12/31/14 12/31/14 Adjustment 1/ $4,482,7 43 $42,642,555 $41,562,649 $2,459,451 4,533,271 3,898,16 4,215,716 (137,612) 148, ,23 146,8 13,266 1,343,436 1,245,113 1,294,275 31,786 2,48,393 1,973,362 2,19,877 (14,22) $48,916,421 $49,94,213 $49,41,317 $2,352,689 Average Balance@ 12/31/15 $44,22,1 4,78,14 16,66 1,326,61 2,176,675 $51,763,6 1/ See Rule 2:1:13:64, Statement E, page 2.

69 SUMMARY OF ACCUMULATED RESERVE FOR DEPRECIATION GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31,214 ADJUSTMENT B Average Pro Forma Balance@ Balance@ Provis lon for Balance@ Function 12/31/13 12/31/14 12/31/14 Depreciation 1/ 12/31/15 Distribution $4,482,743 $42,642,555 $41,562,649 $2,759,9 $45,41,645 General 4,533,271 3,898,16 4,215, ,889 4,258,49 General Intangible 148, ,23 146,8 3,85 175,18 Common 1,343,436 1,245,113 1,294, ,896 1,47,9 Common Intangible 2,48,393 1,973,362 2,19,877 46,625 2,379,987 Total $48,916,421 $49,94,213 $49,41,317 $3,717,585 $53,621,798 Average Balance@ 12/31/15 $44,22,1 4,78,14 16,66 1,326,61 2,176,675 $51,763,6 Pro Forma Adjustment $2,459,451 (137,612) 13,266 31,786 (14,22) $2,352,689 1/ See Rule 2:1 :13:86, Statement J, page 2 for the provision for depreciation. ~~::: tewco CD (jjffio N3t\.J@ aro9...,..:::j-~.z w m... oo... ~z c;,gl l'f..,.~

70 MONTHLY ACCUMULATED PROVISIONS FOR DEPRECIATION BY FUNCTION GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31, 214 Function December 21 ~ Janua~ 214 Februa~ March Af!ril Ma:t June JUI:f AU9USt Sef!lember October November December Distribution $4,482,742 54,599,958 54,812,25 $4,985, ,192,83 541, ,556,129 $41,716, ,13 $42.111,14 542,244,723 $42, $42,642,555 General 4,533,271 4,555,96 4,42,829 4,415,932 4,433,16 4, ,534,645 4,28,796 4,256,716 4,287,294 4,322,111 4,331,348 3,898,16 General Intangible 148, , , ,23 145,23 145, ,23 145, ,23 145,23 145,23 Common 1,343,436 1, ,212,582 1,221,834 1,25,127 1,212,96 1,22,23 1,229,897 1,228,341 1,235,422 1,235,722 1,236,713 1,245,113 Common Intangible 2,48,394 2,268,671 2,298,776 2,33,93 2,361,394 1,751,849 1,785,564 1,816,355 1,847,372 1,878,595 1,91,4 1,941, ,362 Total $48,916, ,826,5 $48,871,434 $49,99,136 $49,337,534 $48,998,99 $49,241,591 $49,188,623 $49,396, ,657,348 $49.857,583 $5,98,917 $49,94,213 -ucn::uo ru... co ( ~- coco CD"' w3~!e. o~:...;.z -...,...oo C,..lm:...;.z ""Gl Ol~ -1>-cn '

71 BOOK CHANGES IN ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION- GAS UTILITY TWELVE MONTHS ENDING DECEMBER 31,214 Gas Utility Account Intangible Beginning Balance Annual Retirements 1/1/214 Provision (Original Cost) Salvage $831,86 $14,825 Removal Costs Reclass/ Transfers Ending Balance 12/31/214 $936,631 Account 18 Distribution 163,337,152 11,328,354 $2,169,66 $762,575 $714, ,543,944 General 13,851, ,574 4,112,193 2,145,382 34,981 (18,569) 12,6,229 Total Account ,189,3 12,59,928 6,281,799 2,97, ,512 (18,569) 185,144,173 Total $178,2,836 $12,164,753 $6,281,799 $2,97,957 $749,512 ($18,569) $186,8,84 Common 1/ $18,671,613 $17,829,354 1/ Common Plant is assigned by state on an actual site and use basis when applicable, and the remainder is allocated by state to gas and electric on a plant in service basis. Total common changes for the twelve months ended December 31, 214 are: Beginning Balance Annual Common Utility 1/1/214 Provision Account 111 $22,181,53 $2,891,726 Account 18 25,348,36 2,568,866 Total Accounts 111 and 18 $47,529,89 $5,46,592 Retirements (Original Cost) Salvage $6,738,26 2,942,644 $1,54,69 $9,68,85 $1,54,69 Removal Costs $32,21 $32,21 Reclass/ Transfers $1,282,218 $1,282,218 Ending Balance 12/31/214 $18,334,573 25,163,899 $43,498,472 -ocncn;:oo OlC'>fi}CO <g ffirom~... g-3~m. o-cd- z _,ro~;:;o... mm. ~ ~z.. Gl Ol~ "'"' '

72 Docket No. NG15- Rule 2:1:13:66 - Statement E Schedule E-2 Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. PROCEDURES FOLLOWED IN DEPRECIATING OR AMORTIZING PLANT AND RECORDING ABANDONMENT There has been no policy change with respect to the methodology employed or Procedures followed in depreciating and amortizing plant investments and Recording plant abandonments since the end of the year reported in the Company's last FERC Form 1.

73 Docket No. NG15-_ Rule 2:1:13:67 Statement E Schedule E-3 Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. ALLOCATION OF OVERALL ACCUMULATED RESERVE ACCOUNTS TO FUNCTIONAL GROUPS OF PLANTS This schedule is not applicable because the Company provides and records its accumulated reserves for depreciation by functional groups of plant accounts.

74 SUMMARY OF WORKING CAPITAL AND OTHER DEDUCTIONS GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31, 214 Docket No. NG15- Rule 2:1:13:68 - Statement F Page 1 of 1 Average Balance@ Pro Forma Pro Forma Working Capital 214 Adjustments Balances Materials and Supplies $513,376 $46,796 $56,172 Prepaid Insurance 31,221 72,61 13,822 Unamortized Loss on Debt 416,648 (111,667) 34,981 Unamortized Rate Case Expense 156, ,68 37,247 Adjustment c D E F Total Working Capital $1,117,424 $158,798 $1,276,222 Customer Advances for Construction $923,817 $73,637 $997,454 G

75 MATERIALS AND SUPPLIES BY PRINCIPAL ITEM OF MAIN ACCOUNT GAS UTILITY- SOUTH DAKOTA DECEMBER 31, 213 AND DECENBER 31, 214 Docket No. NG15-_ Rule 2:1:13:69 Statement F Schedule F-1 Page1of6 Description Balance@ 12/31/213 12/31/214 Natural Gas Material Reserve for Inventory Shrinkage Total $526,299 (16,864) $59,435 $532,535 (15,218) $517,317

76 MATERIALS AND SUPPLIES GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31,214 ADJUSTMENT C Docket No. NG15-_ Rule 2:1:13:69 Statement F Schedule F-1 Page 2 of 6 December 213 January February March April May June July August September October November December 214 Beginning and ending average Thirteen month average Pro Forma Adjustment Per Books $59,435 54, ,43 526, , ,45 6,775 66, , , ,92 538, ,317 $513,376 Pro Forma 1/ $517,317 56,17 515, , , ,45 6,775 66, , , ,92 538, ,317 $56,172 $46,796 1/ Actual balances through March 215.

77 PREPAID INSURANCE GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31, 214 ADJUSTMENT D Docket No. NG15-_ Rule 2:1:13:69 Statement F Schedule F-1 Page 3 of6 Per Books Pro Forma 1/ December 213 $38,346 $24,95 January 231,59 217,66 February 211, ,72 March 173, ,92 April 153,25 156,1 May 133, ,357 June 114,92 116,365 July 95,84 96,373 August 76,778 76,381 September 57,716 56,391 October 38,655 36,41 November 43,345 39,92 December ,95 19,85 Beginning and ending average $31,221 Thirteen month average $13,822 Pro Forma Adjustment $72,61 1/ Reflects actual balances for January-March 215 and April-December 215 reflects pro forma expense.

78 UNAMORTIZED GAIN(LOSS) ON DEBT GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDING JUNE 3, 212 ADJUSTMENT E Docket No. NG15-_ Rule 2:1:13:69 Statement F Schedule F-1 Page 4 of 6 Unamortized Loss on Debt Ace. Deferred Inc. Tax Balance at December 31, 213 $487,775 ($17,721) Balance at December 31, ,52 (12,719) Average Balance $416,648 ($145,72) Pro Forma Amortization (81,79) 28,166 Balance at December 31, ,441 (92,553) Average Balance 34,981 (16,636) Pro Forma Adjustment ($111,667) $39,84

79 UNAMORTIZED RATE CASE EXPENSE GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31, 214 ADJUSTMENT F Docket No. NG15-_ Rule 2:1:13:69 Statement F Schedule F-1 Page 5 of6 Unamortized Rate Case Expense Ace. Deferred Inc. Tax Balance at December 31, 213 $152,55 $53,377 Balance at December 31, ,853 55,949 Average Balance $156,179 $54,663 Pro Forma Amortization (18,818) {6,586) NG15-_ Expense 317,28 111,48 Net activity 298,462 14,462 Balance at December 31, ,641 16,411 Average Balance 37,247 18,18 Pro Forma Adjustment $151,68 $53,517

80 CUSTOMER ADVANCES FOR CONSTRUCTION GAS UTILITY- SOUTH DAKOTA FOR THE TWELVE MONTHS ENDED DECEMBER 31, 214 ADJUSTMENT G Docket No. NG15-_ Rule 2:1:13:69 Statement F Schedule F-1 Page 6 of 6 Per Books Pro Forma 1/ December 213 $838,137 $1,9,496 January 825,31 996,45 February 825,31 996,45 March 881, ,45 April 892, ,45 May 898, ,45 June 897,47 996,45 July 926, ,45 August 947, ,45 September 1,43, ,45 October 1,42,28 996,45 November 1,3, ,45 December 214 1,9, ,45 Beginning and ending average $923, month average $997,454 Pro Forma Adjustment $73,637 1/ Actual balances through March 215.

81 MATERIALS AND SUPPLIES GAS UTILITY- SOUTH DAKOTA MONTHLY BALANCES FOR YEARS ENDED DECEMBER 31, 212 AND DECEMBER 31, 213 Docket No. NG15-_ Rule 2:1:13:7 Statement F Schedule F-2 Page 1 of 1 South Dakota January 212 $428,167 February 446,283 March 426,442 April 483,654 May 481,137 June 58,691 July 535,71 August 552,37 September 536,783 October 519,773 November 51,784 December 489,821 January ,66 February 517,752 March 494,655 April 51,422 May 484,941 June 52,655 July 514,4 August 569,3 September 57,647 October 555,688 November 532,215 December 59,434

82 Docket No. NG15-_ Rule 2:1:13:71 Statement F Schedule F-3 Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. CUSTOMER ADVANCES FOR CONSTRUCTION GAS UTILITY TWELVE MONTHS ENDING DECEMBER 31, 214 Refer to Rule 2:1:13:69, Schedule F-1, page 6.

83 AVERAGE UTILITY CAPITAL STRUCTURE TWELVE MONTHS ENDING DECEMBER 31,214 PRO FORMA Docket No. NG15-_ Rule 2:1:13:72 Statement G Page 1 of Long Term Debt Short Term Debt 1/ Preferred Stock Common Equity Total Balance Ratio Cost $392,969, % 5.87% 37,99, % 1.213% 15,38, % 4.581% 478,46, % 1.% $923,424,381 1.% Required Return 2.498%.49%.76% 5.177% 7.8% Pro Forma Long Term Debt Short Term Debt 1/ Preferred Stock Common Equity Total $55,46, % 5.949% 99,623, % 1.631% 15,258, % 4.579% 68,435, % 1.% $1,228,777,872 1.% 2.447%.132%.57% 4.952% 7.588% 1/ Reflects average monthly balance.

84 AVERAGE LONG-TERM DEBT TWELVE MONTHS ENDING DECEMBER 31, 214 PRO FORMA Docket No. NG15-_ Rule 2:1:13:73 Statement G Page 1 of 5 Balance Outstanding Annual Cost Adjusted Embedded Cost Balance at 12/31/213 $355,, $19,834,125 Minot Air Force Base Payable 473,372 28,42 Amortization of Gain/Loss 43,469 Total@ 12/31/213 $355,473,372 $19,95,996 Balance at 12/31/214 $43,, $26,154,6 Minot Air Force Base Payable 464,96 27,894 Amortization of Gain/Loss 43,469 Total@ 12/31/214 $43,464,96 $26,225,963 Average@ 12/31/214 $392,969,139 $23,65,98 Balance at 12/31/ , 33,84,6 Minot Air Force Base Payable ,355 Amortization of Gain/Loss 43,469 Total@ 12/31/215 $58,455,919 $33,911,424 Average@ 12/31/215 $55,46,413 $3.68,694 1/ 1/ 1/ 5.587% 6.% 5.6% 6.82% 6.% 6.92% 5.87% 5.835% 6.% 5.842% 5.949% 1/ Page 4.

85 LONG-TERM DEBT CAPITAL TWELVE MONTHS ENDING DECEMBER 31, 214 Date of Description Issuance Secured Medium-term Notes, Series A: 5.98% - Senior Note 12/15/ % - Senior Note 8/24/26 6.4% - Senior Note 9/16/ %- Senior Note 9/1/ %- Senior Note 1/1/ %- Senior Note 4/15/ % - Senior Note 4.34% - Senior Note 7/15/214 7/15/214 Total Long-Term Debt Capital Date of Maturity 12/15/233 8/24/226 9/16/218 9/3/216 9/3/216 4/15/244 7/15/224 7/15/226 Principal Interest Amount Gross Rate of Issue Proceeds 5.98% $3,, $3,, 6.33% 1,, 1,, 6.4% 1,, 1,, 6.61% 25,, 25,, 6.66% 25,, 25,, 5.18% 5,, 5,, 4.24% 6,, 6,, 4.34% 4,, 4,, $43,, $43,, Underwriters' Commission %Gross Amount Proceeds $624, ,61 362,432 68,38 68,38 239, , ,691 $2,192, %.344%.362%.273%.273%.478%.483%.489% Loss on Reacquirement Redemption and Issuance Expense %Gross Amount Proceeds 1,532,9 517, ,287 $11,566,583.% 1.532%.% 2.69% 2.69%.%.%.% Net Proceeds Description Amount Per Unit Secured Medium-term Notes, Series A: 5.98% - Senior Note $29,375, % 6.33% - Senior Note 89,123, % 6.4% - Senior Note 99,637, % 6.61% - Senior Note 24,414, % 6.66% - Senior Note 24,414, % 5. 18% - Senior Note 49,76, % 4.24%- Senior Note 59,71, % 4.34% -Senior Note 39,84, % Total Long-Term Debt Capital $416,241,61 Cost of Principal Money 1/ Outstanding Annual Cost 6.21% $3,, 1,863, 7.514% 1,, 7,514, 6.181% 1,, 6,181, 7.12% 25,, 1,78, 7.172% 25,, 1,793, 5.28% 5,, 2,64, 4.346% 6,, 2,67,6 4.44% 4,, 1,776, $43,, $26,154,6 Embedded Cost 6.82% 1/ Yield to maturity based upon the life, net proceeds and semiannual compunding of stated interest rate. -ucn;uo Wr-+co (QDl_C1 co rom=" N3~m. CD Z --+~:::J Oo c.nc;;:...;.z "?GJ...,~ "'"' '

86 LONG-TERM DEBT CAPITAL TWELVE MONTHS ENDING DECEMBER 31, 215 Principal Date of Date of Interest Amount Gross Description Issuance Maturity Rate of Issue Proceeds Underwriters' Commission %Gross Amount Proceeds Loss on Reacquirement Redemption and Issuance Expense %Gross Amount Proceeds Secured Medium-term Notes, Series A: 5. 98% - Senior Note 12/15/23 12/15/ % $3,, $3,, 6.33% - Senior Note 8/24/26 8/24/ % 1,, 1,, 6.4% - Senior Note 9/16/28 9/16/ % 1,, 1,, 6.61%- Senior Note 9/1/29 9/3/ % 25,, 25,, 6.66% - Senior Note 1/1/29 9/3/ % 25,, 25,, 5.18% - Senior Note 4/15/214 4/15/ % 5,, 5,, 4.24% -Senior Note 7/15/214 7/15/ % 6,, 6,, 4.34% - Senior Note 7/15/214 7/15/ % 4,, 4,, 5.%- Senior Note 4/15/215 4/15/225 5.% 15,, 15,, Total Long-Term Debt Capital $58,, $58,, $624, ,61 362,432 68,38 68,38 239, , , ,391 $2,554, %.344%.362%.273%.273%.478%.483%.489%.242% 1,532,9 517, ,287 $11,566,583.% 1.532%.% 2.69% 2.69%.%.%.%.% Net Proceeds Cost of Principal Description Amount Per Unit Money 1/ Outstanding Annual Cost Embedded Cost Secured Medium-term Notes, Series A: 5.98% - Senior Note $29,375, % 6.21% $3,, 1,863, 6.33% - Senior Note 89,123, % 7.514% 1,, 7,514, 6.4% - Senior Note 99,637, % 6.181% 1,, 6,181, 6.61% -Senior Note 24,414, % 7.12% 25,, 1,78, 6.66% -Senior Note 24,414, % 7.172% 25,, 1,793, 5.18%- Senior Note 49,76, % 5.28% 5,, 2,64, 4.24%- Senior Note 59,71, % 4.346% 6,, 2,67,6 4.34% -Senior Note 39,84, % 4.44% 4,, 1,776, 5.% -Senior Note 149,637, % 5.124% 15,, 7,686, Total Long-Term Debt Capital $565,878,67 $58,, $33,84,6 1/ Yield to maturity based upon the life, net proceeds and semiannual compunding of stated interest rate % -o(jl::oo Dl... c (Q ~- romeo,. VJ3~~ o~:..;.z """""... oo O'IG):..;.z ~G)...,~ "'c.n '

87 AMORTIZATION OF LOSS ON REACQUIRED DEBT TWELVE MONTHS ENDING DECEMBER 31, 214 PRO FORMA Docket No. NG15-_ Rule 2:1:13:73 Statement G Page 4 of 5 Acct Unamortized Loss Amortization PCN Notes Loss/Unamortized Expense $43,469 PCN Notes Loss/Unamortized Expense ,469 PCN Notes Loss/Unamortized Expense ,469

88 AVERAGE SHORT-TERM DEBT TWELVE MONTHS ENDING DECEMBER 31,214 PRO FORMA Docket No. NG15-_ Rule 2:1:13:73 Statement G Page 5 of 5 Balance Outstanding 214 Average Balance 1/ $37,99,969 Amortization of Fees 2/ Total $37,99,969 Annual Cost $132, ,2 $45,154 Average Cost.358% 1.213% Pro Foram Average Balance 1/ $99,623,527 Amortization of Fees 2/ Total $99,623,527 $1,273, ,826 $1,624, % 1.631% 1/ Twelve month average balance. 2/ Negotiation and commitment fees.

89 AVERAGE PREFERRED STOCK TWELVE MONTHS ENDING DECEMBER 31, 214 PRO FORMA Docket No. NG15-_ Rule 2:1:13:74 Statement G Page 1 of 3 Adjusted Balance Annual Embedded Description Outstandin9 Cost Cost Balance at 12/31/213 $15,38,6 $71, % 214 Redemptions 5.1% Series Balance at 12/31/214 $15,38,6 $71, % Average@ 12/31/214 $15,38,6 $71, % 215 Redemptions 5.1% Series (1,) (5,285) 5.285% Balance at 12/31/215 $15,28,6 $696, % Average@ 12/31/215 $15,258,6 $698, %

90 PREFERRED STOCK CAPITAL DECEMBER 31,214 Call Gross Underwriters' Commission Issuance Expense Date of (Redemption) Dividend Par Value Proceeds %Gross %Gross Description Issuance Price Rate of Issue (DOD's) Amount Proceeds Amount Proceeds 4.5% Series 1/1/51 $15 4.5% $1 $1, 4.7% Series 12/7/ % 1 5, 5.1% Series 5/23/61 1/12 5.1% 1 5, $25,.5% $27, % Net Proceeds December 31, 214 Method Amount Cost of Principal Annual Embedded of Description (ODD's) Per Unit Money 1/2/ Outstanding Cost Cost Offering 4.5% Series $1, 1.% 4.5% $1,, $45, Public 4.7% Series 5, 1.% 4.7% 5,, 235, Public 5.1% Series 4, % 5.285% 38,6 16,31 Private Total $15,38,6 $71, % 1/ Yield to maturity based upon the life, net proceeds, and quarterly compounding of the stated dividend rate of each issue. 2/ 4.5% Series and 4.7% Series issue expense fully recovered. -ocn;:oo ru... co lo ~- rororo~ N31?5!R O~~z... oo WG>~z '-':'G)...,~ -"en I'

91 PREFERRED STOCK CAPITAL DECEMBER 31, 215 Call Gross Underwriters' Commission Issuance Expense Date of (Redemption) Dividend Par Value Proceeds %Gross %Gross Description Issuance Price Rate of Issue (ODD's) Amount Proceeds Amount Proceeds 4.5% Series 1/1/51 $15 4.5% $1 $1, 4.7% Series 12/7/ % 1 5, 5.1% Series 5/23/61 1/12 5.1% 1 5, $25,.5% $27, % Net Proceeds December 31,215 Method Amount Cost of Principal Annual Embedded of Description (ODD's) Per Unit Money 1/2/ Outstanding Cost Cost OfFering 4.5% Series $1, 1.% 4.5% $1,, $45, Public 4.7% Series 5, 1.% 4.7% 5,, 235, Public 5.1% Series 4, % 5.285% 28,6 11,25 Private Total $15,28,6 $696, % 1/ Yield to maturity based upon the life, net proceeds, and quarterly compounding of the stated dividend rate of each issue. 2/ 4.5% Series and 4. 7% Series issue expense fully recovered. "UUl::OO ru--co co~- mmro,_ w3~m. o~:...;.z...,,...oo WG):...;.z "!G)...,~... ()1 '

92 AVERAGE UTILITY COMMON EQUITY TWELVE MONTHS ENDING DECEMBER 31, 214 PRO FORMA Docket No. NG15-_ Rule 2:1:13:75 Statement G Page 1 of 3 Description Amount Common Equity- 12/31/213 $2,88,164,24 Investment in Subsidiaries 2,38,828,521 Utility Common Equity- 12/31/213 $427,335,683 Common Equity- 12/31/214 $3,119,68,447 Investment in Subsidiaries 2,59,922,784 Utility Common Equity- 12/31/214 $528,757,663 Average@ 12/31/214 $478,46,673 Common Equity- 12/31/215 $3,275,82, Investment in Subsidiaries 2,587,689, Utility Common Equity- 12/31/215 $688,113, Average@ 12/31/215 $68,435,332

93 MDU RESOURCES GROUP INC. EQUITY (COMMON STOCK) ISSUANCE Period Shares Beginning Balance Jan-1 Feb-1 56,149 Mar-1 29,355 Apr-1 May-1 Jun-1 Jul-1 o Aug-1 Sep-1 Oct-1 Nov-1 Dec-1 Jan-11 Feb-11 7,515 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 11,222 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Acquisition Dollars $1,17, ,671 14, ,711 Flotation Costs Equity Draw Down Employee Stock Exercise/Awards 1/ Flotation Flotation Shares Dollars Costs Shares Dollars Costs 12,6 $166, ,929 (92,793) 33,714 76, ,848 2,66 35,164 34,25 452,124 14,5 389, ,874 64, ,889 4, ,235 64,89 847,27 265,572 3,512, ,19 2,23,65 25, ,851 Shares Outstanding 188,389, ,41, ,592, ,656,12 188,669, ,669, ,672, ,76, ,72, ,732,2 188,796, ,837,29 188,91, ,166, ,332, ,332, ,332, ,332, ,332, ,332, ,332, ,332, ,332, ,332, ,332, ,332, ,369,45 189,369,45 189,369,45 189,369,45 189,369,45 189,369,45 189,369,45 -osq:::2? m m!:::.. o CO,... CD X comtvm 3o~ N CD Z O::J-l.o (J.) GL... ~ z "'GJ """~ 11 '

94 MDU RESOURCES GROUP INC. EQUITY (COMMON STOCK) ISSUANCE Acquisition Equity Draw Down Employee Stock Exercise/Awards 1/ Flotation Flotation Flotation Shares Period Shares Dollars Costs Shares Dollars Costs Shares Dollars Costs Outstanding Sep ,369,45 Oct ,369,45 Nov ,369,45 Dec ,369,45 Jan ,369,45 Feb ,369,45 Mar ,369,45 Apr ,369,45 May ,369,45 Jun ,369,45 Jul ,369,45 Aug ,369,45 Sep ,369,45 Oct ,369,45 Nov ,33 14,71, ,868,78 Dec-13 1,624 5, ,87,44 Jan ,617 4,516,712 19,33,21 Feb-14 1,58,699 5,877, ,838,72 Mar-14 32,861 1,35,53 192,141,581 Apr-14 49,312 16,473, ,631,893 May-14 1,56,761 5,675,18 194,138,654 Jun-14 32,747 1,41, ,441,41 Jul-14 99,157 3,111, ,54,558 Aug-14 7,831 23, ,548,389 Sep-14 97,469 2,672, ,645,858 Oct-14 48,1 1,237, ,693,958 Nov-14 6,854 1,398,89 194,754,812 '1J (JJ :: Dec-14 m... co 194,754,812 "' ~ ro" rom "' w3~m. Totals 14,241 $1,921,731 $ 6,261,36 $176,726,983 $ o~:...;.z -... oo W(j):...;_~ UJG) 1/ Includes 41(k), Dribble and DRIP purchases when applicable....,~ "'en '

95 Docket No. NG15- Rule 2:1:13:76 - Statement G Schedule G-1 Page 1 of 1 MDU RESOURCES GROUP, INC. STOCK DIVIDENDS, STOCK SPLITS OR CHANGES IN PAR OR STATED VALUE FOR THE FIVE-YEAR PERIOD ENDING DECEMBER 31,214 MDU Resources Group, Inc. did not issue shares in connection with a stock split or stock dividend during the five years ended December 214.

96 MDU RESOURCES GROUP, INC. COMMON STOCK DATA FOR THE FIVE YEARS ENDED DECEMBER 31, 214 Avg. Number Annual of Shares Diluted Annual Dividend/ Outstanding Earnings Dividends Earnings (DOD's) (per share) (per share) Ratio Year Ended December 31: , % , % ,826 (.1).675 N/A , % , % Twelve Months: January , % February 188, % March 189, % April 189, % May 189, % June 189, % July 19, % August 19, % September 191, % October 191, % November 192, % December 192, % Average Market Price 1/ Price/ Earnings Ratio Dividend/ Price Ratio 3.1% 3.1% 3.1% 2.6% 2.3% 2.2% 2.1% 2.1% 2.% 2.% 2.1% 2.1% 2.3% 2.4% 2.7% 2.7% 3.1% 1/ The average market price is based on monthly high and low for the year. -ocncn::uo run rue a to ::::r... CD o rococo "..g-3~~ oro~:...;.z oo ~G)Gl... ' ~z 1'-J ~G)... ~ -..Jcn '

97 Docket No. NG15-_ Rule 2:1:13:78 Statement G Schedule G-3 Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. REACQUISITION OF BONDS OR PREFERRED STOCK FOR THE FIVE-YEAR PERIOD ENDING DECEMBER 31,214 First Mortgage Bonds MDU Resources Group, Inc. did not retire any bonds during the five years ended December 214. Preferred Stock 5.1% Preferred Stock Principal Amount $294,4 Reacquisition Cost $291,4 Gain or (Loss) $

98 SUMMARY OF OPERATION AND MAINTENANCE EXPENSES GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31,214 Docket No. NG15-_ Rule 2:1:13:8 Statement H Page 1 of 3 Pro Forma South Dakota Adjustments Cost of Gas $43,342,839 ($1,71,894) Other Gas Supply 97,1 3,626 Distribution 4,18,31 236,42 Customer Accounts 1,649,521 (45,817) Customer Service & lnfor. 17,925 4,525 Sales 52,744 (27,943) Administrative and General 3,623, ,626 Total Operation and Maintenance Expenses $53,116,511 ($1,212,457) Pro Forma $32,64,945 1,627 4,416,73 1,63,74 175,45 24,81 3,941,797 $42,94,54

99 SUMMARY OF OPERATION AND MAINTENANCE EXPENSES GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31, 214 Docket No. NG15-_ Rule 2:1:13:8 Statement H Page 2 of 3 Account Pro Forma No. Description Per Books Adjustments Pro Forma -- Other Gas SUQQiy ExQenses 84 Natural Gas City Gate Purchases $45,1, Purchased Gas Cost Adj. (42,541) 88.1 Gas Withdrawn from Storage 8,34, Gas Delivered to Storage (9,929, 198) 813 Other Gas Supply Expenses 97,1 Total Other Gas Supply Exp. $43,439,84 ($1,698,268) $32,741,572 Distribution ExQenses Qeration 87 Supervision and Engineering $76, Distribution Load Dispatching 27, Mains and Services 76, Meas. & Reg. Station Exp. -General 18,3 876 Meas. & Reg. Station Exp.- Industrial 8, Meas. & Reg. Station Exp.- City Gate 48, Meters and House Regulators 172, Customer Installations 161,82 88 Other Expenses 1,4, Rents 37,229 Total Operation Exp. $3,34,965 Maintenance 885 Supervision & Engineering $21, Structures and Improvements Mains 97, Meas. & Reg. Station Exp. - General 52, Meas. & Reg. Station Exp.- Industrial 23, Meas. & Reg. Station Exp. - CG 28, Services 68, Meters and House Regulators 186, Other Equipment 18,69 Total Maintenance Exp. $839,345 Total Distribution Exp. $4,18,31 $236,42 $4,416,73 Customer Accounts ExQenses Qeration 91 Supervision $3, Meter Reading Expenses 19,75 93 Customer Records and Collection Exp. 1 '1 2, Uncollectible Accounts 284, Misc. Customer Accounts Exp. 122,688 Total Customer Accounts Exp. $1,649,521 ($45,817) $1,63,74

100 SUMMARY OF OPERATION AND MAINTENANCE EXPENSES GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31,214 Docket No. NG15-_ Rule 2:1:13:8 Statement H Page 3 of 3 Account Pro Forma No. Description Per Books Adjustments Pro Forma -- Customer Service & Information Exgenses Ogeration 97 Supervision $18,99 98 Customer Assistance Exp. 11,6 99 Informational and Instructional Exp. 5, Misc. Customer Service & Info. Exp. 2 Total Gust. Service & Info. Exp. $17,925 $4,525 $175,45 Sales Exgenses Ogeration 911 Supervision ($15) 912 Demonstrating and Selling Exp. 2, Advertising Expenses 27, Misc. Sales Expenses 4,99 Total Sales Exp. $52,744 ($27,943) $24,81 Administrative & General Exgenses Ogeration 92 Administrative and General Salaries $939, Office Supplies and Expenses 588, Outside Services Employed 6, Property Insurance 9, Injuries and Damages 238, Employee Pensions and Benefits 1,357, Regulatory Commission Exp. 51,39 93 Miscellaneous General Exp. 95,7 931 Rents 117,683 Total Operation Exp. $3,539,695 Maintenance 935 Maintenance of General Plant $83,476 Total Maintenance Exp. 83,476 Total Ad. & General Exp. $3,623,171 $318,626 $3,941,797 Total Operation & Main. Exp. $53,116,511 ($1,212,457) $42,94,54

101 OPERATION & MAINTENANCE EXPENSE GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31, 214 PRO FORMA Cost of Function Tolal Gas Cost of Gas $32,64,945 $32,64,945 Vehicles & Work Subcontract Labor Benefits Equipment Labor Software Office Materials Maintenance Expense Communications Other Gas Supply 1,627 Disthbution 4,416,73 Customer Accounting 1,63,74 Customer Service & Information 175,45 Sales 24,81 Adnjinistrative and General 3,941,797 Total Other O&M 1,263,19 $82,874 $1,86 $777 3,235,95 36,2 58, ,136 26,579 56, ,913 5,216 16,33 7 1,2,314 $1,495,765 9,366 12,191 5,429,365 1,495, , ,299 $4,589 $388 $25,188 35,814 17, ,756 21, ,239 18,93 142,46 263, ,62 182,276 $54 66,166 33,877 2,177 66, ,91 Total O&M $42,94,54 $32,64,945 $5,429,365 $1,495,765 $348,256 $758,299 $263,757 $173,62 $182,276 $169,91 Adjustment No. 4 Page No '1Jcncn;;oo ruoruco (Q :::r... CD o rocdcd ;:>;;"" ~g-3~~ orofg:...;.z - NII..... oo "'~ ~z --G) "'~ ~Ul '

102 OPERATION & MAINTENANCE EXPENSE GAS UTILITY - SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31, 214 PRO FORMA FunCtion Cost of Gas Rent Company Consumption Uncollectible Accounts Postage Advertising Regulatory Industry Commission Insurance Dues Expense All Other O&M Other Gas Supply Distribution $9,418 Customer Accounting Customer Service & Information Sales Administrative and General $122,147 Total Other O&M 131,565 $52,77 21,741 73,818 $7,843 $1, ,69 212,686 $5, ,716 25, , ,52 75,958 $289,251 $45,869 $95, ,251 45,869 95,216 $1,49 (145,886) 8,494 1,949 6, , ,597 Total O&M $131,565 $73,818 $198,912 $248,52 $75,958 $289,251 $45,869 $95,216 $284,597 Adjustment No. 13 Page No "UWW::UO wnruco < ::rro... ro CDC...CDf\J@ Nc3o,... oro~:...;.z...,.-..oo "'II... N~ ~z "Gl en~ ~1 '

103 COST OF GAS GAS UTILITY- SOUTH DAKOTA ADJUSTMENT NO. 4 Docket No. NG15-_ Rule 2:1:13:81 Statement H Schedule H-1 Page 3 of 22 Dk Adjusted Pro Forma for Distribution Commodity Dk Sales 1/ Losses 2/ Charge 3/ Residential 3,67,26 3,643,697 $4.716 Pro Forma Cost of Gas $17,183,675 Firm General Service 2,95,669 Small Interruptible 21,86 Large Interruptible 378,296 Total 6,958,85 2,98, , , ,28,369 14,55,915 76,555 1,324,8 $32,64,945 Per Books Cost of Gas Pro Forma Adjustment 43,342,839 ($1,71,894) 1/ Rule 2:1:13:85, Statement I, page 2. 2/ Distribution loss factor of 1%. 3/ April 215 PGA adjusted to reflect annual commodity costs.

104 GAS UTILITY- SOUTH DAKOTA LABOR EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 214 ADJUSTMENT NO. 5 Docket No. NG15- Rule2:1:13:81 - Statement H Schedule H-1 Page 4 of22 Other Gas Supply Distribution Customer Accounting Customer Service Sales A&G Total Per Books Gas Utility South Dakota $48,77 $79,267 13,375,233 3,94,34 4,18, , ,11 112, ,427 15,335 4,279,64 975,91 $22,582,33 $5,193,79 Pro Forma South Dakota 1 I $82,874 3,235,95 957, ,913 16,33 1,2,314 $5,429,365 Pro Forma Adjustment $3,67 14,791 41,654 5, ,44 $236,286 1/ Reflects a 4.55% increase which includes a 4. percent increase for union employees effective in May 215 and a 3.5 percent increase to non-union employees effective in December 214 and a three year average ratio to labor for bonuses and incentive pay.

105 BENEFITS EXPENSE GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31, 214 ADJUSTMENT NO. 6 Docket No. NG15-_ Rule 2:1:13:81 Statement H Schedule H-1 Page 5 of 22 Per Books Gas Utility South Dakota Medical/Dental Pension expense Post-retirement 41-K Workers compensation Other benefits $2,824, ,541 (13,857) 2,264, ,846 71,913 $698,964 47,35 (36,83) 548,372 38,797 17,358 Total $5,353,119 $1,313,966 Pro Forma 1/ $727, ,786 24, ,323 4,563 18,148 $1,495,765 Pro Forma Adjustment $28,658 64, '153 24,951 1, $181,799 1/ Reflects the following changes: Medical and dental is an increase of 4.1 percent Pension is an increase of percent Postretirement is an increase of percent 41 K is an increase of 4.55 percent Workers Compensation expense is based on the ratio of worker's compensation to pro forma labor. Other benefits is an increase of 4.55 percent

106 GAS UTILITY- SOUTH DAKOTA VEHICLES AND WORK EQUIPMENT TWELVE MONTHS ENDING DECEMBER 31, 214 ADJUSTMENT NO. 7 Docket No. NG15- Rule 2:1:13:81 - Statement H Schedule H-1 Page 6 of22 Other Gas Supply Distribution Customer Accounting Customer Service Sales A&G Total Per Books Gas Utility South Dakota $5,5 $1,67 1,377,713 3, ,878 26,115 8,36 5,125 9, ,19 9,23 $1,579,53 $342,177 Pro Forma South Dakota 1/ $1,86 36,2 26,579 5, ,366 $348,256 Pro Forma Adjustment $19 5, $6,79 1/ Based on pro forma plant and current depreciation rates.

107 GAS UTILITY- SOUTH DAKOTA SUBCONTRACT LABOR TWELVE MONTHS ENDING DECEMBER 31, 214 ADJUSTMENT NO. 8 Docket No. NG15- Rule 2:1:13:81 - Statement H Schedule H-1 Page 7 of 22 Other Gas Supply Distribution Customer Accounting A&G Total Per Books Gas Utility South Dakota $4,6 $777 2,69, , 26,681 51, , ,86 $3,487,962 $641,611 Pro Forma South Dakota 1/ $777 58,693 56,638 12,191 $758,299 Pro Forma Adjustment $ 111,693 4, $116,688 1/ Subcontract labor for region operations and information systems was lower than normal in 214.

108 GAS UTILITY- SOUTH DAKOTA MATERIALS TWELVE MONTHS ENDING DECEMBER 31,214 ADJUSTMENT NO.9 Docket No. NG15- Rule 2:1:13:81 - Statement H Schedule H-1 Page 8 of 22 Distribution Customer Accounting Customer Service A&G Total Per Books Gas Utility South Dakota $1,242,76 $234,194 5, ,185 $1,312,67 $248,79 Pro Forma South Da kola 1 I $25, ,239 $263,757 Pro Forma Adjustment $15,994 (946) $15,48 1 I Distribution increase is due to lower than normal expenses in 214 and the decrease in A&G is due to a non-recurring expense in 214.

109 GAS UTILITY- SOUTH DAKOTA SOFTWARE MAINTENANCE TWELVE MONTHS ENDING DECEMBER 31, 214 ADJUSTMENT NO. 1 Docket No. NG15- Rule 2:1:13:81 - Statement H Schedule H-1 Page 9 of 22 Other Gas Supply Distribution Customer Accounting A&G Total Per Books Gas Utility South Dakota $23,663 $4, ,963 34,691 1,772 22,18 451,199 13,516 $632,597 $164,94 Pro Forma South Dakota 1/ $4,589 35,814 23,756 18,93 $173,62 Pro Forma Adjustment $ 1 '123 1,648 5,387 $8,158 1/ Increase in software fees and fixed network.

110 GAS UTILITY SOUTH DAKOTA OFFICE EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 214 ADJUSTMENT NO. 11 Docket No. NG15- Rule 2:1:13:81 - Statement H Schedule H-1 Page 1 of 22 Other Gas Supply Distribution Customer Accounting Customer Service Sales A&G Total Per Books Pro Forma Gas Utilit~ South Dakota South Dakota 11 $2,2 $388 $388 15,35 17,24 17,748 14,39 2, '139 1, , , ,46 $841,643 $178,687 $182,276 Pro Forma Adjustment $ $3, Information systems expense was lower than normal in 214. Increase associated with a new copier purchased in 214.

111 GAS UTILITY SOUTH DAKOTA COMMUNICATION EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 214 ADJUSTMENT NO. 12 Docket No. NG15- Rule 2:1:13:81 - Statement H Schedule H-1 Page 11 of 22 Other Gas Supply Distribution Customer Accounting Customer Service Sales A&G Total Per Books Pro Forma Gas Utili!~ South Dakota South Dakota 1/ $2,599 $54 $54 284,218 65,598 66, ,427 35,154 33, ,392 2,946 2, ,331 66,37 66,367 $733,18 $17,572 $169,91 Pro Forma Adjustment $ 568 (1,277) (769) (3) ($1,481) 1/ 214 included expense incorrectly recorded. Also additional phones and increased cost for district operations.

112 GAS UTILITY- SOUTH DAKOTA RENT EXPENSE TWELVE MONTHS ENDING DECEMBER 31,214 ADJUSTMENT NO. 13 Docket No. NG15-_ Rule 2:1:13:81 Statement H Schedule H-1 Page 12 of 22 Distribution A&G Total Per Books Gas Utility South Dakota $192,564 $33, ,43 117,683 $689,967 $151,11 Pro Forma South Dakota 1/ $9, ,147 $131,565 Pro Forma Adjustment ($24,) 4,464 ($19,536) 1/ Distribution decrease is to reflect one-fifth of payment of five year lease recorded in 214. Increase in A&G is for additional office space.

113 COMPANY CONSUMPTION GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31,214 ADJUSTMENT NO. 14 Docket No. NG15- Rule 2:1:13:81 - Statement H Schedule H-1 Page 13 of22 Total Distribution A&G Total Per Books Gas Utility South Dakota $341,89 11,543 $443,352 $63,859 23,297 $87,156 Pro Forma 1/ $52,77 21,741 $73,818 Pro Forma Adjustment ($11,782) (1,556) ($13,338) Electric Distribution A&G Total Electric $123,63 71,848 $194,911 $12,273 16,484 $28,757 $12,273 16,484 $28,757 $ $ Gas Distribution A&G Total Gas $218,746 29,695 $248,441 $51,586 6,813 $58,399 $39,84 5,257 $45,61 ($11,782) (1,556) ($13,338) 1/ Reflects a 22.84% decrease to reflect normalized firm sales revenue at current rates.

114 GAS UTILITY- SOUTH DAKOTA UNCOLLECTIBLE ACCOUNTS TWELVE MONTHS ENDING DECEMBER 31,214 ADJUSTMENT NO. 15 Docket No. NG15-_ Rule 2:1:13:81 Statement H Schedule H-1 Page 14 of 22 Distribution Customer Accounting Total Per Books Gas Utility South Dakota $29,763 $11,673 1,16, ,373 $1,189,98 $296,46 Pro Forma South Dakota 1/ $7, ,69 $198,912 Pro Forma Adjustment ($3,83) (93,34) ($97,134) 1/ Based on three year average of write-offs to revenues applied to pro forma revenues.

115 GAS UTILITY- SOUTH DAKOTA POSTAGE TWELVE MONTHS ENDING DECEMBER 31,214 ADJUSTMENT NO. 16 Docket No. NG15-_ Rule 2:1:13:81 Statement H Schedule H-1 Page 15 of22 Distribution Customer Accounting Sales A&G Total Per Books Gas Utility South Dakota $8,94 $1, , , ,49 $1 '127,627 $247,65 Pro Forma South Dakota 1/ $1, , ,716 $248,52 Pro Forma Adjustment $ $42 1/ Reflects increase in postage rates to be effective in 215 and reduction in number of customer bills moving to electonic billing.

116 Informational Promotional Institutional Total MONTANA-DAKOTA UTILITIES CO. ADVERTISING EXPENSE GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31,214 ADJUSTMENT NO. 17 Per Books Gas Utility South Dakota Pro Forma 1/ $223,249 $5,873 $5, ,525 27,874 8,54 26,766 25,783 $452,828 $15,513 $75,958 Docket No. NG15-_ Rule 2:1:13:81 Statement H Schedule H-1 Page 16 of 22 Pro Forma Adjustment ($698) (27,874) (983) ($29,555) 1/ Eliminates promotional advertising expenses and informational and institutional expenses not applicable to South Dakota gas operations.

117 INSURANCE EXPENSE GAS UTILITY SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31, 214 ADJUSTMENT NO. 18 Docket No. NG15- Rule 2:1:13:81 - Statement H Schedule H-1 Page 17 of 22 Per Books A&G Expense for Insurance Gas Utili!~ South Dakota Director's & Officer's Liability Insurance $73,531 $16,87 Excess Liability Fiduciary & Employee Benefits Liability 23,63 5,421 Public Liab. & Property Ins. Damage of Others 514, ,76 All Risk 393,21 9,212 Blanket Crime 2, Special Contingency Self Insurance 63,933 14,668 Total $1,72,325 $246,17 Pro Forma Pro Forma 1/ Adjustment $17,171 $31 5, ,425 18,349 9,59 (153) (5) 39,95 24,427 $289,251 $43,234 1/ Adjusted to reflect insurance expense at current levels.

118 INDUSTRY DUES GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31, 214 ADJUSTMENT NO. 19 Docket No. NG15-_ Rule 2:1:13:81 Statement H Schedule H-1 Page 18 of 22 Per Books Pro Forma American Gas Association $17,426 $16,677 1/ Belle Fourche Chamber of Commerce / Belle Fourche Development Corp 5 5 1/ Black Hills & Badlands Tourism Black Hills Community Economic Development Black Hills Home Builders Association Common Ground Alliance (CGA) Construction Industry Center Deadwood Chamber of Commerce 6 6 1/ Energy Solutions Center 1,524 1,524 Fort Pierre Development Corporation 5 5 1/ Gettysburg Chamber of Commerce 28 3 High Plains Western Heritage 1 1/ Ipswich Commercial Club 1 2 1/ Lead Area Chamber of Commerce / Midwest Energy Association, Inc. 4,94 4,256 1/ Mobridge Chamber of Commerce National Association of Regulatory Commissions National Energy & Utility Afford ability Coalition Pierre Area Chamber of Commerce / Pierre Economic Dev. Corporation 1, 1, Rapid City Area Chamber of Commerce 7,79 7,84 1/ Rapid City Area Economic Development 5, 5, 1/ SD Chamber of Economic Dev. Council / Selby Community Club / Spearfsh Chamber of Commerce / Spearfsh Downtown Business Association 5 1/ Spearfish Economic Dev. 1, 1, 1/ Sturgis Area Chamber of Commerce 7 7 1/ Sturgis Economic Dev. Council 5 5 1/ Utility Telecom Council Utility Solid Waste Activities Group / Whitewood Chamber of Commerce 5 5 Other 3,297 Total Industry Dues $5,849 $45,869 Pro Forma Adjustment ($749) (648) (635) (3,297) ($4,98) 1/ Reflects 215 amount.

119 REGULATORY COMMISSION EXPENSE GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31,214 ADJUSTMENT NO. 2 Docket No. NG 15- Rule 2:1:13:81 - Statement H Schedule H-1 Page 19 of22 A&G Per Books $51,38 ProForma 1/ $95,216 Pro Forma Adjustment $44,178 1/ Reflects five year amortization of remaining balance from Docket No. NG12-8, this case (Docket No. NG15-_) and a three year average of ongoing regulatory commission expenses.

120 OTHERO&M GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31,214 Docket No. NG15- Rule2:1:13:81- Statement H Schedule H-1 Page 2 of22 Per Books Items Adjusted Function OtherO & M Individual!~ Other Gas Supply $97,1 $86,592 Distribution 4,18,31 4,326,196 Customer Accounting 1,649,521 1,569,27 Customer Service & lnformat 17, ,976 Sales 52,744 46,582 Administrative and General 3,623,171 3,291,72 Total Other O&M $9,773,672 $9,489,75 Other O&M $1,49 (145,886) 8,494 1,949 6, ,469 $284,597

121 ITEMS ADJUSTED INDIVIDUALLY GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31, 214 Cost of Function Per Books Gas Cost of Gas $43, $43.342,839 Vehicles & Work Subcontract Labor Benefits Equipment Labor Software Office Materials Maintenance Expense Communications Other Gas Supply 97,1 Distribution 4,18,31 CuStomer Accounting CuStomer Service & Information Sales 52,744 Administrative and General 3,623,171 Total Other O&M $79,267 $1,67 $777 3, , , ,91 $ , ,313, , ,611 $4.589 $ , , ,185 $ , , $ ,946 66,37 17,572 Total O&M $53, $43, $5.193,79 $1,313,966 $ $641,611 $248,79 $164,94 $178,687 $17,572 -ocncn;uo woruc:o ~ ffimrnq. Ng-3~m_ ~-co.. z aco::::s~ -:r:,...o9 f\,jii:_;,z "'~.. w Gl >~ ~1 '

122 ITEMS ADJUSTED INDIVIDUALLY GAS UTILITY- SOUTH DAKOTA TWELVE MONTHS ENDING DECEMBER 31,214 Company Function Rent Consumption Cost of Gas Uncollectible Accounts Postage Advertising Insurance Industry Dues Regulatory Commission Expense Total items adjusted individually $43,342,839 All Other O&M Other Gas Supply Distribution $33,418 $63,859 CuStomer Accounting CuStomer Service & Information Sales Administrative and General $117,683 23,297 Total Other O&M 151,11 87,156 $11,673 $1, , ,66 $5, ,874 33,49 26,766 $246,17 296,46 247,65 15, ,17 $5,849 $51,38 5,849 51,38 86,592 $1,49 4,326,196 (145,886) 1,569,27 8, ,976 1,949 46,582 6,162 3,291,72 331,469 9,489,75 284,597 Total O&M $151,11 $87,156 $296,46 $247,65 $15,513 $246,17 $5,849 $51,38 $52,831,914 $284,597 -ucncn::oo ruoruco ~~mrorrvg-3~~ 1\.)ro~~z Q.I.-..q9 N1I--3.z N~ W --Gl ""~ ~1 '

123 Docket No. NG15- Rule 2:1:13:82 - Statement H Schedule H-2 Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. COST OF GAS -GAS UTILITY FOR THE TWELVE MONTHS ENDING DECEMBER 31,214 Please see Rule 2:1:13:8, Statement H, page 1 and Rule 2:1:13:81, Schedule H-1, page 3 for the cost of gas for the twelve months ending December 31' 214.

124 Docket No. NG15-_ Rule 2:1:13:83 Statement H Schedule H-3 Page 1 of 4 MONTANA-DAKOTA UTILITIES CO. ADMINISTRATIVE AND GENERAL OPERATION AND MAINTENANCE EXPENSES GAS UTILITY FOR THE TWELVE MONTHS ENDING DECEMBER 31, 214 Please see the following pages: Advertising - Please see pages 2-4 for samples of advertising and Rule 2:1:13:81, Statement H, Schedule H-1, page 16 for the advertising expenses. Benefits- Please see Rule 2:1:13:81, Statement H, Schedule H-1, page 5 for the detail of benefits. Regulatory Commission Expense- Please see Rule 2:1:13:81, Statement H, Schedule H-1, page 19 for the regulatory commission expense.

125 Docket No. NG15- Rule 2:1:13:83 - Statement H :.schedule H-3 Page 2 of 4

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