Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) (Note references are to the Notes to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.)
You should read the following discussion and analysis together with the consolidated financial statements and related notes included elsewhere herein.
OVERVIEW
Unitil is a public utility holding company headquartered in Hampton, New Hampshire. Unitil is subject to regulation as a holding company system by the FERC under the Energy Policy Act of 2005.
Unitil’s principal business is the local distribution of electricity and natural gas to approximately 215,100 customers throughout its service territory in the states of New Hampshire, Massachusetts and Maine. Unitil is the parent company of five wholly-owned distribution utilities:
i)
Unitil Energy, which provides electric service in the southeastern seacoast and state capital regions of New Hampshire;
ii)
Fitchburg, which provides both electric and natural gas service in the greater Fitchburg area of north central Massachusetts;
iii)
Northern Utilities, which provides natural gas service in southeastern New Hampshire and portions of southern and central Maine, including the city of Portland and the Lewiston-Auburn area;
iv)
Bangor, which provides natural gas service in the greater Bangor area of central Maine; and
v)
Maine Natural, which provides natural gas service in southern and central Maine, including the greater Portland region, as well as the capital city of Augusta.
Unitil Energy, Fitchburg, Northern Utilities, Bangor and Maine Natural are collectively referred to as the “distribution utilities.” Together, the distribution utilities serve approximately 110,100 electric customers and 105,000 natural gas customers in their service territories. The distribution utilities are local “wires and pipes” operating companies.
In addition, Unitil is the parent company of Granite State, a natural gas transmission pipeline, regulated by the FERC, operating 85 miles of underground gas transmission pipeline primarily located in Maine and New Hampshire. Granite State provides Northern Utilities with interconnection to three major natural gas pipelines and access to North American pipeline supplies.
Unitil had an investment in Net Utility Plant of $1.8 billion at December 31, 2025. Unitil’s total revenue was $536.0 million in 2025, which includes revenue to recover the approved cost of purchased electricity and natural gas in rates on a fully reconciling basis. As a result of this reconciling rate structure, the Company’s earnings are not affected by changes in the cost of purchased electricity and natural gas. Earnings from Unitil’s utility operations are derived from the return on investment in the five distribution utilities and Granite State.
The Company’s other subsidiaries include Unitil Service, which provides, at cost, a variety of administrative and professional services to Unitil’s affiliated companies, Unitil Resources, the Company’s non-regulated subsidiary, which currently does not have any activity, Unitil Realty, which owns and manages the Company’s corporate office in Hampton, New Hampshire and also owns land in Kingston, New Hampshire on which Unitil Energy’s solar facility is located, which became operational in May 2025, and Unitil Water which currently does not have any activity. Unitil’s consolidated net income includes the earnings of the holding company and these subsidiaries.
Regulation
Unitil is subject to comprehensive regulation by federal and state regulatory authorities. Unitil and its subsidiaries are subject to regulation as a holding company system by the FERC under the Energy Policy Act of 2005 with regard to certain bookkeeping, accounting and reporting requirements. Unitil’s utility operations related to wholesale and interstate energy business activities are also regulated by the FERC. Unitil’s distribution utilities are subject to regulation by the applicable state public utility commissions, with regard to their rates, issuance of securities and other accounting and operational matters: Unitil
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Energy is subject to regulation by the NHPUC; Fitchburg is subject to regulation by the MDPU; Northern Utilities is regulated by the NHPUC and MPUC; and Bangor and Maine Natural are regulated by the MPUC. Granite State, Unitil’s interstate natural gas transmission pipeline, is subject to regulation by the FERC with regard to its rates and operations. Because Unitil’s primary operations are subject to rate regulation, the regulatory treatment of various matters could significantly affect the Company’s operations, financial position, and cash flows.
Unitil Energy, Fitchburg, Northern Utilities and Maine Natural’s non-Augusta service area deliver electricity and/or natural gas to all customers in their service territories, at rates established under traditional cost of service regulation. Under this regulatory structure, Unitil’s distribution utilities are provided the opportunity to recover the cost of providing distribution service to their customers based on a historical or forward test year, and earn a return on their capital investment in utility assets. In addition, the Company’s distribution utilities and its natural gas transmission pipeline company also may recover certain base rate costs, including capital project spending and enhanced reliability and vegetation management programs, through annual step adjustments and cost tracker rate mechanisms. Bangor and Maine Natural’s Augusta Service Area deliver natural gas customers at rates established under alternative rate plans, which provide multi-year rate changes designed to approximate market-based rates.
Most of Unitil’s customers have the opportunity to purchase their electricity or natural gas supplies from third-party energy suppliers. For customers that choose not to participate in the third-party energy supplier market, Unitil acts as a provider of last resort. Unitil’s distribution utilities purchase electricity or natural gas from unaffiliated wholesale energy suppliers and recover the actual approved costs of these supplies on a pass-through basis, through reconciling rate mechanisms that are periodically adjusted.
The Company’s electric and gas sales in Massachusetts and New Hampshire are decoupled. Revenue decoupling is the term given to the elimination of the dependency of a utility’s distribution revenue on the volume of electricity or gas sales. The difference between distribution revenue amounts billed to customers and the targeted revenue decoupling amounts is recognized as an increase or a decrease in Accrued Revenue, which forms the basis for resetting rates for future cash recoveries from, or credits to, customers. These revenue decoupling targets may be adjusted as a result of rate cases and other authorized adjustments that the Company files with the MDPU and NHPUC.
Also see Regulatory Matters in this section and Note 8 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements for additional information on rates and regulation.
RESULTS OF OPERATIONS
The following discussion of the Company’s financial condition and results of operations should be read in conjunction with the accompanying Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.
The Company’s results of operations are expected to reflect the seasonal nature of the natural gas business. Annual gas revenues are substantially realized during the colder weather seasons of the year as a result of higher sales of natural gas used for heating-related purposes. Accordingly, the results of operations are historically most favorable in the first and fourth quarters. Fluctuations in seasonal weather conditions may have a significant effect on the result of operations. Sales of electricity are generally less sensitive to weather than natural gas sales, but may also be affected by weather conditions and the temperature in the winter and summer seasons.
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Use of GAAP and Non-GAAP Financial Measures
The MD&A includes financial information prepared in accordance with generally accepted accounting principles in the United States (GAAP), as well as certain non-GAAP financial measures. The Company's management believes that the non-GAAP presentations of earnings and Earnings Per Share (EPS) and Electric and Gas Adjusted Gross Margins are a more meaningful representation of the Company's financial performance and provide additional and useful information to readers of this report in analyzing the historical and future performance of the business. The non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.
The Company's earnings discussion includes Adjusted Net Income, a non-GAAP financial measure referencing the Company’s 2025 GAAP Net Income adjusted for certain transaction costs related to the Company's acquisitions of Bangor Natural Gas Company (transaction closed on January 31, 2025), Maine Natural Gas Corporation (transaction closed on October 31, 2025), Aquarion Water Company of Massachusetts, Inc., Aquarion Water Company of New Hampshire, Inc., and Abenaki Water Co., Inc. (the Aquarion Companies) (pending certain regulatory approvals and satisfaction of closing conditions). The Company's management believes that the transaction costs related to the acquisitions of Bangor, Maine Natural and the Aquarion Companies, which are included in Operation and Maintenance expense on the Consolidated Statements of Earnings, are not indicative of the Company's ongoing costs and not directly related to the ongoing operations of the business and therefore are not an indicator of baseline operating performance.
In the following tables the Company has reconciled Adjusted Net Income to GAAP Net Income, which we believe to be the most comparable GAAP financial measure.
(Millions, except per share data)
Twelve Months Ended December 31, 2025
Amount Per Share
Transaction Costs 3.1 0.19
Adjusted Net Income $ 53.3 $ 3.16
Twelve Months Ended December 31, 2024
Amount Per Share
Transaction Costs 0.7 0.04
Adjusted Net Income $ 47.8 $ 2.97
Twelve Months Ended December 31, 2023
Amount Per Share
Transaction Costs — —
Adjusted Net Income $ 45.2 $ 2.82
The Company analyzes operating results using Electric and Gas Adjusted Gross Margins, which are non-GAAP financial measures. Electric Adjusted Gross Margin is calculated as Total Electric Operating Revenue less Cost of Electric Sales. Gas Adjusted Gross Margin is calculated as Total Gas Operating Revenues less Cost of Gas Sales. The Company’s management believes Electric and Gas Adjusted Gross Margins provide useful information to investors regarding profitability. Also, the Company’s management believes Electric and Gas Adjusted Gross Margins are important financial measures to analyze revenue from the Company’s ongoing operations because the approved cost of electric and gas sales are tracked, reconciled and passed through directly to customers in electric and gas tariff rates, resulting in an equal and offsetting amount reflected in Total Electric and Gas Operating Revenue.
In the following tables the Company has reconciled Electric and Gas Adjusted Gross Margin to GAAP Gross Margin, which we believe to be the most comparable GAAP financial measure. GAAP Gross Margin is calculated as Revenue less Cost of Sales, and Depreciation and Amortization. The Company calculates Electric and Gas Adjusted Gross Margin as Revenue less Cost of Sales. The Company believes excluding Depreciation and Amortization, which are period costs and not related to
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volumetric sales, is a meaningful financial measure to inform investors of the Company’s profitability from electric and gas sales in the period.
Twelve Months Ended December 31, 2025 ($ millions)
Electric Gas Other Total
Less: Depreciation and Amortization (31.9 ) (56.8 ) — (88.7 )
Depreciation and Amortization 31.9 56.8 — 88.7
Twelve Months Ended December 31, 2024 ($ millions)
Electric Gas Other Total
Less: Depreciation and Amortization (29.3 ) (46.8 ) — (76.1 )
Depreciation and Amortization 29.3 46.8 — 76.1
Twelve Months Ended December 31, 2023 ($ millions)
Electric Gas Other Total
Less: Depreciation and Amortization (26.0 ) (40.4 ) (1.0 ) (67.4 )
Electric GAAP Gross Margin was $82.7 million in 2025, an increase of $4.7 million compared to 2024. The increase was driven by higher rates and customer growth of $7.3 million, partially offset by higher depreciation and amortization expense of $2.6 million.
Electric GAAP Gross Margin was $78.0 million in 2024, a decrease of $0.1 million compared to 2023. The decrease was driven by higher depreciation and amortization expense of $3.3 million, largely offset by higher rates and customer growth of $3.2 million.
Gas GAAP Gross Margin was $142.3 million in 2025, an increase of $22.2 million compared to 2024. The increase was driven primarily by higher rates and customer growth of $32.2 million, partially offset by higher depreciation and amortization of $10.0 million. The increases attributable to Bangor and Maine Natural for gas operating revenue, cost of gas sales and depreciation and amortization for 2025 were $36.2 million, $19.6 million and $3.3 million, respectively.
Gas GAAP Gross Margin was $120.1 million in 2024, an increase of $6.0 million compared to 2023. The increase was driven primarily by higher rates, and customer growth, of $12.4 million, partially offset by higher depreciation and amortization of $6.4 million.
Net Income and EPS Overview
2025 Compared to 2024—The Company’s GAAP Net Income was $50.2 million, or $2.97 in Earnings Per Share (EPS), for the year ended December 31, 2025, an increase of $3.1 million in Net Income, or $0.04 in EPS, compared to 2024. The Company’s Adjusted Net Income (a non-GAAP financial measure) was $53.3 million, or $3.16 in EPS for the year ended December 31, 2025, an increase of $5.5 million, or $0.19 in EPS, compared to 2024. The Company’s earnings in 2025 reflect higher rates and customer growth.
Electric Adjusted Gross Margin (a non-GAAP financial measure) was $114.6 million in 2025, an increase of $7.3 million compared with 2024. The increase was driven by higher rates and customer growth.
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Gas Adjusted Gross Margin (a non-GAAP financial measure) was $199.1 million in 2025, an increase of $32.2 million compared to 2024. The increase was driven primarily by higher rates, and customer growth. Gas Adjusted Gross Margin included $16.6 million related to Bangor and Maine Natural in 2025.
Operation and Maintenance (O&M) expenses increased $14.9 million in 2025 compared to 2024, reflecting higher utility operating costs of $6.1 million, higher labor and other costs of $5.5 million and higher acquisition costs of $3.3 million. O&M expenses included $4.2 million of utility operating costs for Bangor and Maine Natural in 2025.
Depreciation and Amortization expense increased $12.6 million in 2025 compared to 2024, reflecting higher depreciation rates from recent base rate cases, additional depreciation associated with higher levels of utility plant in service and higher amortization of other deferred costs. Depreciation and Amortization expense included $3.3 million related to Bangor and Maine Natural in 2025.
Taxes Other Than Income Taxes increased $1.4 million in 2025 compared to 2024, reflecting higher local property taxes on higher utility plant in service associated with the Company’s completed acquisitions of Bangor and Maine Natural.
Interest Expense, Net increased $7.4 million in 2025 compared to 2024 primarily reflecting higher interest on higher levels of debt from the acquisitions of Bangor and Maine Natural and lower interest income on regulatory assets and allowance for funds used during construction.
Other Expense (Income), Net decreased $1.2 million in 2025 compared to 2024, reflecting lower retirement benefit costs.
Federal and State Income Taxes increased $1.3 million in 2025 compared to 2024, reflecting higher pre-tax earnings in 2025.
In 2025, Unitil’s annual common dividend was $1.80 per share, representing an unbroken record of quarterly dividend payments since trading began in Unitil’s common stock. At a January 2026 meeting of the Unitil Corporation Board of Directors (the “Board”), the Board declared a quarterly dividend on the Company’s common stock of $0.475 per share, an increase of $0.025 per share on a quarterly basis, resulting in an increase in the effective annualized dividend rate to $1.90 per share from $1.80 per share.
2024 Compared to 2023—The Company’s GAAP Net Income was $47.1 million, or $2.93 in EPS, for the year ended December 31, 2024, an increase of $1.9 million in Net Income, or $0.11 in EPS, compared to 2023. The Company’s Adjusted Net Income (a non-GAAP financial measure) was $47.8 million, or $2.97 in EPS, for the year ended December 31, 2024, an increase of $2.6 million, or $0.15 in EPS, compared to 2023. The Company’s earnings in 2024 reflect higher rates and customer growth.
Electric Revenues, Adjusted Gross Margin and Sales
Electric Operating Revenues and Electric Adjusted Gross Margin (a non-GAAP financial measure)—The following table details Total Electric Operating Revenue and Electric Adjusted Gross Margin for the last three years by major customer class:
Change
Electric Operating Revenue:
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The decrease in Total Electric Operating Revenue of $11.9 million, or 4.8%, in 2025 compared to 2024 reflects lower costs of electric sales due to the increase in the amount of electricity purchased by customers directly from third-party suppliers, which are tracked and reconciled costs as a pass-through to customers, partially offset by higher electric distribution rates.
Electric GAAP Gross Margin is discussed above in the section entitled “Use of GAAP and Non-GAAP Financial Measures”.
Electric Adjusted Gross Margin (a non-GAAP financial measure) was $114.6 million in 2025, an increase of $7.3 million compared with 2024. The increase was driven by higher rates and customer growth.
The decrease in Total Electric Operating Revenue of $58.2 million, or 19.0%, in 2024 compared to 2023 reflects lower costs of electric sales, which are tracked and reconciled costs as a pass-through to customers, partially offset by higher electric distribution rates.
Electric Adjusted Gross Margin (a non-GAAP financial measure) was $107.3 million in 2024, an increase of $3.2 million compared with 2023. The increase was driven by higher rates and customer growth.
Kilowatt-hour Sales—Unitil’s total electric kilowatt-hour (kWh) sales decreased 0.6% in 2025 compared to 2024. Sales to Residential customers increased 4.1% reflecting colder weather for heating purposes in the first and fourth quarter of 2025 compared to the same periods in 2024 and customer growth, partially offset by cooler weather for cooling purposes in the third quarter of 2025 compared to the same period in 2024. Sales to C&I customers decreased 4.0% in 2025 compared to 2024, reflecting the loss of a large industrial customer in the Fitchburg area in 2025, partially offset by customer growth. Based on weather data collected in the Company’s electric service areas, on average there were 13.7% more Heating Degree days and 6.6% less Cooling Degree Days in 2025 compared to 2024. As of December 31, 2025, the number of electric customers served increased by approximately 610 over the previous year. Sales margins derived from decoupled unit sales are not sensitive to changes in electric kWh sales, although those sales margins are sensitive to changes in the number of customers served. Substantially all of the Company's electric kWh sales volumes are decoupled.
Unitil’s total electric kWh sales increased 1.3% in 2024 compared to 2023. Sales to Residential customers increased 1.6% and sales to C&I customers increased 1.1% in 2024 compared to 2023, reflecting warmer weather for cooling purposes in the second quarter of 2024 compared to the same period in 2023, and customer growth. Based on weather data collected in the Company’s electric service areas, on average there were 12.2% more Cooling Degree Days in 2024 compared to 2023. As of December 31, 2024, the number of electric customers served increased by approximately 990 over the previous year.
The following table details total kWh sales for the last three years by major customer class:
Change
Gas Revenues, Adjusted Gross Margin and Sales
Gas Operating Revenues and Adjusted Gross Margin (a non-GAAP financial measure)—The following table details total Gas Operating Revenue and Gas Adjusted Gross Margin for the last three years by major customer class:
Change
Gas Operating Revenue:
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The increase in Total Gas Operating Revenues of $53.1 million, or 21.5%, in 2025 compared to 2024 reflects $36.2 million of sales for Bangor and Maine Natural, higher gas distribution rates and customer growth, the favorable impact of colder winter weather in 2025 and higher costs of gas sales, which are tracked and reconciled as a pass-through to customers.
Gas GAAP Gross Margin is discussed above in the section entitled “Use of GAAP and Non-GAAP Financial Measures”.
Gas Adjusted Gross Margin (a non-GAAP financial measure) was $199.1 million in 2025, an increase of $32.2 million compared to 2024. The increase includes $16.6 million for Bangor and Maine Natural, higher rates gas distribution rates, the favorable impact of winter weather in 2025 and customer growth.
The decrease in Total Gas Operating Revenues of $4.1 million, or 1.6%, in 2024 compared to 2023 reflects lower costs of gas sales, which are tracked and reconciled as a pass-through to customers, and lower sales of gas, partially offset by higher gas distribution rates.
Gas Adjusted Gross Margin (a non-GAAP financial measure) was $166.9 million in 2024, an increase of $12.4 million compared to 2023. The increase was driven primarily by higher rates, and customer growth.
Therm Sales—Unitil’s total gas therm sales increased 26.6% in 2025 compared to 2024. Sales to Residential customers increased 34.0% and sales to C&I customers increased 24.8% in 2025 compared to 2024, reflecting colder winter weather and customer growth. Total gas therm sales included 40.0 million therms related to Bangor and Maine Natural in 2025. Based on weather data collected in the Company’s gas service areas, on average there were 12.2% higher Effective Degree Days (EDD) in 2025 compared to 2024. The Company estimates weather-normalized gas therm sales for Northern Utilities' Maine division, the Company's largest non-decoupled gas service area, increased 3.5% in 2025 compared to 2024. As of December 31, 2025, the number of gas customers served increased by approximately 15,930 over the previous year, with 15,360 customers at Bangor and Maine Natural. Sales margins derived from decoupled unit sales (currently representing approximately 38% of total annual therm sales volume) are not sensitive to changes in gas therm sales, although those sales margins are sensitive to changes in the number of customers served. In 2025, there were 2.7% more EDD than normal. In 2024, there were 9.5% fewer EDD than normal.
Unitil’s total gas therm sales decreased 0.7% in 2024 compared to 2023. Sales to Residential customers decreased 1.4% and sales to C&I customers decreased 0.5% in 2024 compared to 2023, reflecting lower average usage, partially offset by customer growth. As of December 31, 2024, the number of gas customers served increased by approximately 730 over the previous year. Sales margins derived from decoupled unit sales (currently representing approximately 43% of total annual therm sales volume) are not sensitive to changes in gas therm sales, although those sales margins are sensitive to changes in the number of customers served. In 2024 and 2023, there were 9.5% and 11.0% fewer Effective Degree Days (EDD) than normal, respectively.
The following table details total therm sales for the last three years, by major customer class:
Change
The Company transported 53.1 million therms in 2025 to two electric generation facilities in Maine. As these facilities were charged fixed fees and utilized third-party energy suppliers for natural gas, the therms were not included in the above table.
Operating Expenses
Cost of Electric Sales—Cost of Electric Sales includes the cost of electric supply as well as other energy supply related costs and spending on energy efficiency programs. Cost of Electric Sales decreased $19.2 million, or 13.6%, in 2025 compared to 2024. This decrease reflects an increase in the amount of electricity purchased by customers directly from third-party
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suppliers, partially offset by higher wholesale electricity prices. The Company reconciles and recovers the approved Cost of Electric Sales in its rates at cost on a pass through basis and therefore changes in approved expenses do not affect earnings.
In 2024, Cost of Electric Sales decreased $61.4 million, or 30.3%, compared to 2023. This decrease reflects lower wholesale electricity prices and an increase in the amount of electricity purchased by customers directly from third-party suppliers, partially offset by higher electric sales.
Cost of Gas Sales—Cost of Gas Sales includes the cost of natural gas purchased to supply the Company’s total gas supply requirements as well as other energy supply related costs and spending on energy efficiency programs. Cost of Gas Sales increased $20.9 million, or 26.3%, in 2025 compared to 2024. This increase reflects higher gas sales primarily from the Bangor and Maine Natural acquisitions. The Company reconciles and recovers the approved Cost of Gas Sales in its rates at cost on a pass through basis and therefore changes in approved expenses do not affect earnings.
In 2024, Cost of Gas Sales decreased $16.5 million, or 17.2%, compared to 2023. This decrease reflects lower gas sales, lower wholesale gas commodity prices and an increase in the amount of gas purchased by customers directly from third-party suppliers.
Operation and Maintenance—O&M expense includes electric and gas utility operating costs, and the operating costs of the Company’s other subsidiaries. Total O&M expenses increased $14.9 million, or 19.2%, in 2025 compared to 2024, reflecting higher utility operating costs of $6.1 million, higher labor and other costs of $5.5 million and higher acquisition costs of $3.3 million. O&M expenses included $4.2 million of utility operating costs for Bangor and Maine Natural in 2025.
In 2024, total O&M expenses increased $2.0 million, or 2.6%, compared to 2023, reflecting higher labor costs of $2.5 million, partially offset by lower utility operating costs of $0.5 million.
Depreciation and Amortization—Depreciation and Amortization expense increased $12.6 million, or 16.6%, in 2025 compared to 2024, reflecting higher depreciation rates from recent base rate cases, additional depreciation associated with higher levels of utility plant in service and higher amortization of other deferred costs. Depreciation and Amortization expense included $3.3 million related to Bangor and Maine Natural in 2025.
In 2024, Depreciation and Amortization expense increased $8.7 million, or 12.9%, compared to 2023, reflecting higher depreciation rates from recent base rate cases, additional depreciation associated with higher levels of utility plant in service and higher amortization of rate case and other deferred costs.
Taxes Other Than Income Taxes—Taxes Other Than Income Taxes increased $1.4 million, or 4.7%, in 2025 compared to 2024, reflecting higher local property taxes on higher utility plant in service associated with the Company’s completed acquisitions of Bangor and Maine Natural.
In 2024, Taxes Other Than Income Taxes increased $1.4 million, or 4.9%, compared to 2023, reflecting higher local property taxes on higher utility plant in service and higher payroll taxes.
Interest Expense, Net—Interest expense is presented in the Consolidated Financial Statements net of interest income. Interest expense is mainly comprised of interest on long-term debt and short-term borrowings (See Note 4 (Debt and Financing Arrangements) to the accompanying Consolidated Financial Statements). Certain reconciling rate mechanisms used by the Company’s distribution utilities give rise to regulatory assets and regulatory liabilities on which interest is calculated.
Interest Expense, Net increased $7.4 million, or 25.3%, in 2025 compared to 2024 primarily reflecting higher interest on higher levels of debt from the acquisitions of Bangor and Maine Natural and lower interest income on regulatory assets and allowance for funds used during construction.
Interest Expense, Net increased $0.6 million, or 2.1%, in 2024 compared to 2023 primarily reflecting higher interest on higher levels of long-term debt and higher interest on short-term borrowings, partially offset by higher interest income on regulatory assets and other.
Other (Income) Expense, Net—Other Expense (Income), Net decreased $1.2 million in 2025 compared to 2024, reflecting lower retirement benefit costs.
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Other Expense (Income), Net increased $0.2 million in 2024 compared to 2023, reflecting lower retirement benefit costs.
Provision for Income Taxes—Federal and State Income Taxes increased $1.3 million in 2025 compared to 2024, reflecting higher pre-tax earnings in 2025.
Federal and State Income Taxes increased $0.8 million in 2024 compared to 2023, reflecting higher pre-tax earnings in 2024.
LIQUIDITY, COMMITMENTS AND CAPITAL REQUIREMENTS
Sources of Capital
Unitil requires capital to fund utility plant additions, working capital and other utility expenditures recovered in subsequent periods through regulated rates. The capital necessary to meet these requirements is derived primarily from internally generated funds, which consist of cash flows from operating activities. The Company initially supplements internally generated funds through short-term bank borrowings, as needed, under its unsecured revolving Credit Facility. Periodically, the Company replaces portions of its short-term debt with long-term financings more closely matched to the long-term nature of its utility assets. Additionally, from time to time the Company has accessed the public capital markets through public offerings of equity securities. The Company’s utility operations are seasonal in nature and are therefore subject to seasonal fluctuations in cash flows. The amount, type and timing of any future financing will vary from year to year based on capital needs and maturity or redemptions of securities.
On August 18, 2025, the Company issued and sold 1,602,358 shares of its common stock at a price of $46.65 per share in a registered public offering (Offering). The Company’s net increase to Common Equity and Cash proceeds from the Offering was approximately $71.8 million. The proceeds were used to make equity capital contributions to the Company’s regulated utility subsidiaries, to repay debt and for other general corporate purposes. Overall, the results of operations and earnings in 2025 reflect the higher number of average shares outstanding.
On June 3, 2025, the Company entered into an at-the-market equity offering program (the ATM program) with sales agents under which the Company may, from time to time, offer and sell shares of Unitil's common stock having an aggregate offering price of up to $50 million. Sales of common stock under the ATM program, if any, are made pursuant to a shelf registration statement on Form S-3 (File No. 333-287753) and a related prospectus supplement filed with the Securities and Exchange Commission. As of December 31, 2025, the Company had sold an aggregate of 27,620 shares under the ATM program for net proceeds of $1.4 million. As of December 31, 2025, approximately $48.5 million remains available for future sales under the program.
The Company and its subsidiaries are individually and collectively members of the Unitil Cash Pool (Cash Pool). The Cash Pool is the financing vehicle for day-to-day cash borrowing and investing. The Cash Pool allows for an efficient exchange of cash among the Company and its subsidiaries. The interest rates charged to the subsidiaries for borrowing from the Cash Pool are based on actual interest costs from lenders under the Company’s revolving Credit Facility. At December 31, 2025 and December 31, 2024, the Company and all of its subsidiaries were in compliance with the regulatory requirements governing participation in the Cash Pool.
On September 29, 2022, the Company entered into a Third Amended and Restated Credit Agreement with a syndicate of lenders (collectively, the “Credit Facility”), which amended and restated the prior facility in full, and on January 29, 2025, the Company executed an amendment that increased the borrowing limit from $200 million to $275 million and extended the maturity date from September 29, 2027 to September 29, 2028. Unitil may borrow under the Credit Facility through September 29, 2028, with the option for two additional one‐year extensions under certain conditions. The Credit Facility provides for a $275 million borrowing limit, including a $25 million sublimit for standby letters of credit, and permits Unitil to increase the borrowing limit by up to an additional $75 million under certain circumstances. Borrowings under the Credit Facility may bear interest at various rate options, including a daily fluctuating rate equal to the forward‐looking one‐month SOFR term rate (as administered by the Federal Reserve Bank of New York), plus 0.1000%, plus a margin ranging from 1.125% to 1.375% based on Unitil’s credit rating.
The Company utilizes the Credit Facility for cash management purposes related to its short-term operating activities. Total gross borrowings were $476.4 million and $308.4 million for the years ended December 31, 2025 and December 31,
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2024, respectively. Total gross repayments were $412.5 million and $364.6 million for the years ended December 31, 2025 and December 31, 2024, respectively. The following table details the borrowing limits, amounts outstanding and amounts available under the revolving Credit Facility as of December 31, 2025 and December 31, 2024:
December 31,
Revolving Credit Facility (millions) 2025 2024
Short-Term Borrowings Outstanding $ 169.7 $ 105.8
The Credit Facility contains customary terms and conditions for credit facilities of this type, including affirmative and negative covenants. There are restrictions on, among other things, Unitil’s and its subsidiaries’ ability to permit liens or incur indebtedness, and restrictions on Unitil’s ability to merge or consolidate with another entity or change its line of business. The affirmative and negative covenants under the Credit Facility shall apply to Unitil until the Credit Facility terminates and all amounts borrowed under the Credit Facility are paid in full (or with respect to letters of credit, they are cash collateralized).
The only financial covenant in the Credit Facility provides that Unitil’s Funded Debt to Capitalization (as each term is defined in the Credit Facility) cannot exceed 65%, tested on a quarterly basis. At December 31, 2025 and December 31, 2024, the Company was in compliance with the covenants contained in the Credit Facility in effect on that date. (See also “Credit Arrangements” in Note 4 Debt and Financing Arrangements.)
On October 31, 2025, the Company entered into a senior unsecured delayed-draw term loan facility with The Bank of Nova Scotia. The proceeds of the $86.0 million facility were used to initially fund the acquisition of Maine Natural on October 31, 2025. The facility provides that the Company has an option for determining whether interest on loans under the facility will bear interest based on a Base Rate plus an applicable margin of 0.25% or based on a one month Term SOFR plus a SOFR adjustment of 0.10% plus an applicable margin of 1.25%. The Base Rate is equal to the highest of the (a) Federal Funds Rate plus 0.50%, (b) the rate of interest in effect for such day as publicly announced from time to time by The Bank of Nova Scotia as its "prime rate", or (c) one month Term SOFR plus a SOFR adjustment of 0.10% plus 1.00%. The facility has a maturity date of October 31, 2026.
Issuance of Long-Term Debt—On July 8, 2025, Bangor issued $14.0 million of Notes due 2030 at 5.70% and $18.0 million of Notes due 2035 at 6.31%. Bangor used the net proceeds to refinance existing debt and for general corporate purposes. Approximately $0.2 million of costs associated with this issuance were recorded as a reduction of Long-Term Debt for presentation purposes on the Consolidated Balance Sheet in the third quarter of 2025.
On August 21, 2024, Unitil Corporation issued $20.0 million of Notes due 2034 at 5.99%. Fitchburg issued $12.5 million of Notes due 2034 at 5.54% and $12.5 million of Notes due 2044 at 5.99%. Unitil Energy issued $40.0 million of Bonds due 2054 at 5.69%. Northern Utilities issued $25.0 million of Notes due 2034 at 5.54% and $15.0 million of Notes due 2039 at 5.74%. Granite State issued $10.0 million of Notes due 2034 at 5.74%. The Company used the net proceeds from these offerings to refinance existing debt and for general corporate purposes. Approximately $1.0 million of costs associated with this issuance were recorded as a reduction of Long-Term Debt for presentation purposes on the Consolidated Balance Sheet in the third quarter of 2024.
Unitil Corporation and its utility subsidiaries, Fitchburg, Unitil Energy, Northern Utilities, and Granite State are currently rated “BBB+” and Bangor is rated “BBB” by Standard & Poor’s Ratings Services. Unitil Corporation and Granite State are currently rated “Baa2”, and Fitchburg, Unitil Energy and Northern Utilities are currently rated “Baa1” by Moody’s Investors Services.
The continued availability of various methods of financing, as well as the choice of a specific form of security for such financing, will depend on many factors, including, but not limited to: security market conditions; general economic climate; regulatory approvals; the ability to meet covenant issuance restrictions; the level of earnings, cash flows and financial position; and the competitive pricing offered by financing sources. The Company believes it has sufficient sources of working capital to fund its operations.
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Contractual Obligations
The Company and its subsidiaries have material obligations for payment of principal and interest on its long-term debt as well as for operating and capital leases that are discussed in Note 4 (Debt and Financing Arrangements).
The Company and its subsidiaries have material energy supply commitments that are discussed in Note 6 (Energy Supply) and Note 8 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements. Cash outlays for the purchase of electricity and natural gas to serve customers are subject to reconciling recovery through periodic changes in rates, with carrying charges on deferred balances. From year to year, there are likely to be timing differences associated with the cash recovery of such costs, creating under- or over-recovery situations at any point in time. Rate recovery mechanisms are typically designed to collect the under-recovered cash or refund the over-collected cash over subsequent periods of less than one year.
The Company provides limited guarantees on certain energy and natural gas asset management contracts entered into by the distribution utilities. The Company’s policy is to limit the duration of these guarantees. As of December 31, 2025, there were $50.3 million of guarantees outstanding.
Northern Utilities and Bangor enter into asset management agreements under which Northern Utilities and Bangor release certain natural gas pipeline and storage assets, resell the natural gas storage inventory to an asset manager and subsequently repurchase the inventory over the course of the natural gas heating season at the same price at which it sold the natural gas inventory to the asset manager. There was $9.3 million of natural gas storage inventory and corresponding obligations at December 31, 2025, related to these asset management agreements. The amount of natural gas inventory released in December 2025, which was payable in January 2026, was $3.0 million and was recorded in Accounts Payable at December 31, 2025.
Benefit Plan Funding
The Company, along with its subsidiaries, made cash contributions to its Pension Plan in the amounts of $3.9 million and $3.8 million in 2025 and 2024, respectively. The Company, along with its subsidiaries, contributed $2.2 million and $2.5 million to Voluntary Employee Benefit Trusts (VEBTs) in 2025 and 2024, respectively. The Company, along with its subsidiaries, expects to continue to make contributions to its Pension Plan and the VEBTs in 2026 and future years at least at minimum required amounts. See Note 10 (Retirement Benefit Plans) to the accompanying Consolidated Financial Statements.
Off-Balance Sheet Arrangements
The Company and its subsidiaries do not currently use, and are not dependent on the use of, off-balance sheet financing arrangements such as securitization of receivables or obtaining access to assets or cash through special purpose entities or variable interest entities. As of December 31, 2025, other than the energy and natural gas asset management contract guarantees noted above, there were no other guarantees outstanding. See Note 4 (Debt and Financing Arrangements) to the accompanying Consolidated Financial Statements.
Cash Flows
Unitil’s utility operations, taken as a whole, are seasonal in nature and subject to seasonal fluctuations in cash flows. The tables below summarize the major sources and uses of cash (in millions) for 2025 and 2024.
Cash Provided by Operating Activities $ 131.3 $ 125.9
Cash Provided by Operating Activities - Cash Provided by Operating Activities was $131.3 million in 2025, an increase of $5.4 million compared to 2024.
Cash flow from Net Income, adjusted for the total of non-cash charges was $148.5 million in 2025 compared to $136.4 million in 2024, an increase of $12.1 million. The change to Net Income is primarily attributable to increases in electric and gas sales margin partially offset by higher operating expense. The increase in depreciation and amortization of $12.6 million in
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2025 compared to 2024 reflects higher rates and additional depreciation on higher utility plant in service. The decrease in the deferred tax provision of ($3.6) million in 2025 compared to 2024 is primarily driven by lower tax depreciation in 2025.
Changes in working capital items resulted in a ($20.6) million use of cash in 2025 compared to a ($1.6) million use of cash in 2024, representing a decrease in use of cash of ($19.0) million. The change in working capital in 2025 compared to 2024 is primarily related to the net change in accounts receivable, exchange gas receivable, and regulatory liabilities and is reflective of the effect of the current macroeconomic environment and the timing of cash receipts and disbursements in the normal course of business.
Deferred Regulatory and Other Charges changed by $3.3 million in 2025 compared to 2024, primarily driven by changes in Regulatory Assets and Liabilities, and the change in Other, net in 2025 compared to 2024 was $9.0 million.
Cash Used in Investing Activities $ (345.5 ) $ (169.9 )
Cash Used in Investing Activities - Cash Used in Investing Activities was ($345.5) million in 2025 compared to ($169.9) million in 2024, an increase of $175.6 million. The higher spending in 2025 is primarily related to $160.4 million for the acquisitions of Bangor Natural Gas and Maine Natural Gas. Normal utility capital expenditures for electric and gas utility system additions increased $15.2 million compared to 2024. The Company’s projected capital spending for 2026 is $221 million.
Cash Provided by Financing Activities $ 223.5 $ 43.8
Cash Provided by Financing Activities - Cash Provided by Financing Activities was $223.5 million in 2025 compared to cash provided of $43.8 million in 2024. The higher cash provided from financing activities in 2025 compared to 2024 of $179.7 million is primarily attributable to higher proceeds from short-term debt of $206.1 million and higher proceeds from issuance of common stock of $72.4 million. Offsetting these cash sources was lower proceeds from the issuance of long-term debt of $103.0 million compared to 2024. Other changes in financing activities in 2025 provided higher cash of $4.2 million compared to 2024.
FINANCIAL COVENANTS AND RESTRICTIONS
The agreements under which the Company and its subsidiaries issue long-term debt contain various covenants and restrictions. These agreements do not contain any covenants or restrictions pertaining to the maintenance of financial ratios or the issuance of short-term debt. These agreements do contain covenants relating to, among other things, the issuance of additional long-term debt, cross-default provisions, business combinations and covenants restricting the ability to (i) pay dividends, (ii) incur indebtedness and liens, (iii) merge or consolidate with another entity or (iv) sell, lease or otherwise dispose of all or substantially all assets. See Note 4 (Debt and Financing Arrangements) to the accompanying Consolidated Financial Statements.
Unitil’s Credit Facility contains customary terms and conditions for credit facilities of this type, including affirmative and negative covenants. There are restrictions on, among other things, Unitil’s and its subsidiaries’ ability to permit liens or incur indebtedness, and restrictions on Unitil’s ability to merge or consolidate with another entity or change its line of business. The affirmative and negative covenants under the Credit Facility apply to Unitil until the Credit Facility terminates and all amounts borrowed under the Credit Facility are paid in full (or with respect to letters of credit, they are cash collateralized). The only financial covenant in the Credit Facility provides that Unitil’s Funded Debt to Capitalization (as each term is defined in the Credit Facility) cannot exceed 65%, tested on a quarterly basis. At December 31, 2025 and December 31, 2024, the Company was in compliance with the covenants contained in the Credit Facility in effect on that date.
The Company and its subsidiaries are currently in compliance with all such covenants in these debt instruments.
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DIVIDENDS
Unitil’s annual common dividend was $1.80 per common share in 2025, $1.70 per common share in 2024, and $1.62 per common share in 2023. Unitil’s dividend policy is reviewed periodically by the Board. Unitil has maintained an unbroken record of quarterly dividend payments since trading began in Unitil’s common stock. At a January 2026 meeting of the Board, the Board declared a quarterly dividend on the Company’s common stock of $0.475 per share, an increase of $0.025 per share on a quarterly basis, resulting in an increase in the effective annualized dividend rate to $1.90 from $1.80. The amount and timing of all dividend payments are subject to the discretion of the Board and will depend upon business conditions, results of operations, financial conditions and other factors. In addition, the ability of the Company’s subsidiaries to pay dividends or make distributions to Unitil, and, therefore, Unitil’s ability to pay dividends, depends on, among other things:
•
the actual and projected earnings and cash flow, capital requirements and general financial condition of the Company’s subsidiaries;
•
the prior rights of holders of existing and future preferred stock, mortgage bonds, long-term notes and other debt issued by the Company’s subsidiaries;
•
the restrictions on the payment of dividends contained in the existing loan agreements of the Company’s subsidiaries and that may be contained in future debt agreements of the Company’s subsidiaries, if any; and
•
limitations that may be imposed by New Hampshire, Massachusetts and Maine state regulatory agencies.
In addition, before the Company can pay dividends on its common stock, it must satisfy its debt obligations and comply with any statutory or contractual limitations. See Financial Covenants and Restrictions in this report, as well as Note 4 (Debt and Financing Arrangements) to the accompanying Consolidated Financial Statements.
LEGAL PROCEEDINGS
The Company is involved in legal and administrative proceedings and claims of various types, including those which arise in the ordinary course of business. The Company believes, based upon information furnished by counsel and others, that the ultimate resolution of these claims will not have a material effect on its financial position, operating results or cash flows. Refer to “Legal Proceedings” in Note 8 (Commitments and Contingencies) of the Consolidated Financial Statements for a discussion of legal proceedings.
REGULATORY MATTERS
See Note 8 (Commitments and Contingencies) to the Consolidated Financial Statements.
CRITICAL ACCOUNTING POLICIES
The preparation of the Company’s Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America 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 and the reported amounts of revenues and expenses during the reporting period. In making those estimates and assumptions, the Company is sometimes required to make subjective and/or complex judgments about the effect of matters that are inherently uncertain and for which different estimates that could reasonably have been used could have resulted in material differences in its financial statements. If actual results were to differ significantly from those estimates, assumptions and judgment, the financial position of the Company could be materially affected and the results of operations of the Company could be materially different than reported. The following is a summary of the Company’s most critical accounting policies, which are defined as those policies where judgments or uncertainties could materially affect the application of those policies. For a complete discussion of the Company’s significant accounting policies, refer to the financial statements and Note 1 (Summary of Significant Accounting Policies).
Regulatory Accounting—The Company’s principal business is the distribution of electricity and natural gas by the five distribution utilities: Unitil Energy, Fitchburg, Northern Utilities, Bangor and Maine Natural. Unitil Energy and Fitchburg are subject to regulation by the FERC. Fitchburg is also regulated by the MDPU, Unitil Energy is regulated by the NHPUC, Northern Utilities is regulated by the MPUC and NHPUC, and Bangor and Maine Natural are regulated by the MPUC. Granite State, the Company’s natural gas transmission pipeline, is regulated by the FERC. Accordingly, the Company uses the
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Regulated Operations guidance as set forth in the Financial Accounting Standards Board Accounting Standards Codification (FASB Codification). In accordance with the FASB Codification, the Company has recorded Regulatory Assets and Regulatory Liabilities which will be recovered from customers, or applied for customer benefit, in accordance with rate provisions approved by the applicable public utility regulatory commission.
The FASB Codification specifies the economic effects that result from the cause and effect relationship of costs and revenues in the rate-regulated environment and the related accounting for a regulated enterprise. Revenues intended to cover certain costs may be recorded either before or after the costs are incurred. If regulation provides assurance that incurred costs will be recovered in the future, these costs would be recorded as deferred charges or “regulatory assets.” If revenues are recorded for costs that are expected to be incurred in the future, these revenues would be recorded as deferred credits or “regulatory liabilities.”
The Company’s principal regulatory assets and liabilities are included on the Company’s Consolidated Balance Sheet and a summary of the Company’s Regulatory Assets is provided in Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements. Generally, the Company receives a return on investment on its regulated assets for which a cash outflow has been made. Regulatory commissions can reach different conclusions about the recovery of costs, which can have a material effect on the Company’s consolidated financial statements.
The Company believes it is probable that its regulated distribution and transmission utilities will recover their investments in long-lived assets, including regulatory assets. If the Company, or a portion of its assets or operations, were to cease meeting the criteria for application of these accounting rules, accounting standards for businesses in general would become applicable and immediate recognition of any previously deferred costs, or a portion of deferred costs, would be required in the year in which the criteria are no longer met, if such deferred costs were not recoverable in the portion of the business that continues to meet the criteria for application of the FASB Codification topic on Regulated Operations. If unable to continue to apply the FASB Codification provisions for Regulated Operations, the Company would be required to apply the provisions for the Discontinuation of Rate-Regulated Accounting included in the FASB Codification. In the Company’s opinion, its regulated operations will be subject to the FASB Codification provisions for Regulated Operations for the foreseeable future.
Retirement Benefit Obligations—The Company sponsors the Unitil Corporation Retirement Plan (Pension Plan), which is a defined benefit pension plan. Effective January 1, 2010, the Pension Plan was closed to new non-union employees. For union employees, the Pension Plan was closed on various dates between December 31, 2010 and June 1, 2013, depending on the various Collective Bargaining Agreements of each union. The Company also sponsors two non-qualified retirement plans, the Unitil Corporation Supplemental Executive Retirement Plan (SERP), and the Unitil Corporation Deferred Compensation Plan, covering certain executives of the Company, and an employee 401(k) savings plan. Additionally, the Company sponsors the Unitil Employee Health and Welfare Benefits Plan (PBOP Plan), primarily to provide health care and life insurance benefits to retired employees.
The FASB Codification requires companies to record on their balance sheets as an asset or liability the overfunded or underfunded status of their retirement benefit obligations (RBO) based on the projected benefit obligation. The Company has recognized a corresponding Regulatory Asset, to recognize the future collection of the PBOP Plan and SERP obligations in electric and gas rates. The Company has recognized a corresponding Regulatory Liability, to recognize the future flow back of the Pension Plan obligation in electric and gas rates. The Company’s RBO and reported costs of providing retirement benefits are dependent upon numerous factors resulting from actual plan experience and assumptions of future experience. The Company has made critical estimates related to actuarial assumptions, including assumptions of expected returns on plan assets, future compensation, health care cost trends, and appropriate discount rates. The Company’s RBO is affected by actual employee demographics, the level of contributions made to the plans, earnings on plan assets, and health care cost trends. Changes made to the provisions of these plans may also affect current and future costs. If these assumptions were changed, the resulting change in benefit obligations, fair values of plan assets, funded status and net periodic benefit costs could have a material effect on the Company’s financial statements. The discount rate assumptions used in determining retirement plan costs and retirement plan obligations are based on an assessment of current market conditions using high quality corporate bond interest rate indices and pension yield curves. For the year ended December 31, 2025, a change in the discount rate of 0.25% would have resulted in an increase or decrease of approximately $428,700 in the Net Periodic Benefit Cost for the Pension Plan. Similarly, a change of 0.50% in the expected long-term rate of return on plan assets would have resulted in an increase or decrease of approximately $700,300 in the Net Periodic Benefit Cost for the Pension Plan. (See Note 10 (Retirement Benefit Plans) to the accompanying Consolidated Financial Statements.)
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Refer to “Recently Issued Pronouncements” in Note 1 of the Notes of Consolidated Financial Statements for information regarding recently issued accounting standards.
For additional information regarding the foregoing matters, see Note 1 (Summary of Significant Accounting Policies), Note 6 (Energy Supply), and Note 10 (Retirement Benefit Plans) to the Consolidated Financial Statements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Please also refer to Part I, Item 1A. “Risk Factors”.
INTEREST RATE RISK
Unitil meets its external financing needs, in part, by issuing short-term and long-term debt. The majority of debt outstanding represents long-term notes bearing fixed rates of interest. Changes in market interest rates do not affect interest expense resulting from these outstanding long-term debt securities. However, the Company periodically repays its short-term debt borrowings through the issuance of new long-term debt securities. Changes in market interest rates may affect the interest rate and corresponding interest expense on any new issuances of long-term debt securities. In addition, short-term debt borrowings bear a variable rate of interest. As a result, changes in short-term interest rates will increase or decrease interest expense in future periods. For example, if the average amount of short-term debt outstanding was $25 million for the period of one year, a change in interest rates of 1% would result in a change in annual interest expense of approximately $250,000. The average interest rate on short-term borrowings and intercompany money pool transactions was 5.4%, 6.5%, and 6.4% during 2025, 2024, and 2023, respectively.
COMMODITY PRICE RISK
Although Unitil’s five distribution utilities are subject to commodity price risk as part of their traditional operations, the current regulatory framework within which these companies operate allows for full collection of electric power and natural gas supply costs in rates on a pass-through basis. Consequently, there is limited commodity price risk after consideration of the related rate-making. Additionally, as discussed in the section entitled Rates and Regulation in Part I, Item 1 (Business) and in Note 8 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements, the Company has divested its long-term power supply contracts and therefore, further reduced its exposure to commodity risk.
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Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the shareholders and the Board of Directors of Unitil Corporation:
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Unitil Corporation and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of earnings, changes in common stock equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Maine Natural Gas Corporation, which was acquired on October 31, 2025, and whose financial statements constitute approximately 4.9% and 1.5%, respectively, of the Company's consolidated total assets and revenues as of and for the year ended December 31, 2025. Accordingly, our audit of internal control over financial reporting did not include the internal control over financial reporting at Maine Natural Gas Corporation.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
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accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impact of Rate-Regulation on Various Account Balances and Disclosures — Refer to Notes 1 and 8 to the financial statements
Critical Audit Matter Description
The Company’s principal business is the distribution of electricity and natural gas and is subject to regulation by the Massachusetts, New Hampshire and Maine Public Service Commissions as well as the Federal Energy Regulatory Commission (collectively, the “Commissions”). Accordingly, the Company accounts for their regulated operations in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 980, Regulated Operations, and has recorded Regulatory Assets and Regulatory Liabilities which will be recovered from customers, or applied for customer benefit, in accordance with rate provisions approved by the applicable Commission. The Company believes it is probable that its regulated distribution and transmission utilities will recover their investments in long-lived assets, including regulatory assets. If the Company, or a portion of its assets or operations, were to cease meeting the criteria for application of these accounting rules, immediate recognition of any previously deferred costs, or a portion of deferred costs, would be required in the year in which the criteria are no longer met. In the Company’s opinion, its regulated operations will be subject to the FASB Codification provisions for Regulated Operations for the foreseeable future.
Accounting for the economics of rate regulation affects multiple financial statement line items, including property, plant, and equipment; regulatory assets and liabilities; operating revenues; and depreciation expense, and affects multiple disclosures in the Company’s financial statements. While the Company has indicated that it expects to recover costs and a return on its investments, there is a risk that the Commissions’ will not approve full recovery of the costs of providing utility service or recovery of all amounts invested in the utility business and a reasonable return on that investment. As a result, we identified the impact of rate regulation as a critical audit matter due to the high degree of subjectivity involved in assessing the impact of current and future regulatory orders on events that have occurred as of December 31, 2025, and the judgments made by management to support its assertions about impacted account balances and disclosures. Management judgments included assessing the likelihood of (1) recovery in future rates of incurred costs or (2) refunds to customers or future reduction in rates. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments require specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:
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•
We tested the effectiveness of controls over the relevant regulatory account balances and disclosures, including management’s controls over the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
•
We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•
We made inquiries of management and read relevant regulatory orders and settlements issued by the Commissions in Massachusetts, New Hampshire and Maine, regulatory statutes, interpretations, procedural memorandums, filings made by interveners or the Company, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated this external information and compared to management’s recorded regulatory asset and liability balances and searched for any evidence that might contradict management’s assertions.
•
We obtained an analysis from management describing the orders and filings that support management’s assertions regarding the probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery or a future reduction in rates.
/s/ Deloitte & Touche LLP
Boston, MA
February 9, 2026
We have served as the Company's auditor since 2014.
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CONSOLIDATED STATEMENTS OF EARNINGS
(Millions, except per share data)
Operating Revenues:
Operating Expenses:
Other Expense (Income), Net (1.0 ) 0.2 —
Net Income Applicable to Common Shares $ 50.2 $ 47.1 $ 45.2
Earnings per Common Share—Basic and Diluted $ 2.97 $ 2.93 $ 2.82
Weighted Average Common Shares Outstanding - (Basic) 16.8 16.1 16.0
Weighted Average Common Shares Outstanding - (Diluted) 16.8 16.1 16.1
(The accompanying Notes are an integral part of these consolidated financial statements.)
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CONSOLIDATED BALANCE SHEETS (Millions)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 15.6 $ 6.3
Accounts Receivable, Net 98.6 75.0
Exchange Gas Receivable 9.8 6.4
Gas Inventory 1.3 1.1
Materials and Supplies 15.4 14.2
Prepayments and Other 12.4 8.4
Utility Plant:
Construction Work in Progress 101.7 92.9
Less: Accumulated Depreciation 543.7 511.6
Other Noncurrent Assets:
Operating Lease Right of Use Assets 7.0 6.7
Goodwill 4.3 —
Total Other Noncurrent Assets 95.6 66.1
(The accompanying Notes are an integral part of these consolidated financial statements.)
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CONSOLIDATED BALANCE SHEETS (cont.) (Millions, except number of shares)
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Long-Term Debt, Current Portion 37.9 4.9
Regulatory Liabilities 16.7 17.2
Energy Supply Obligations 11.6 10.0
Environmental Obligations 0.8 0.7
Operating Lease Obligations 2.1 1.8
Interest Payable 9.4 8.4
Other Current Liabilities 28.7 30.2
Noncurrent Liabilities:
Retirement Benefit Obligations 32.9 25.5
Regulatory Liabilities 64.1 46.8
Environmental Obligations 7.3 7.1
Operating Lease Obligations 4.9 4.9
Other Noncurrent Liabilities 7.3 5.3
Capitalization:
Long-Term Debt, Less Current Portion 632.6 638.4
Stockholders’ Equity:
Preferred Stock 0.2 0.2
Commitments and Contingencies (Note 8)
TOTAL LIABILITIES AND CAPITALIZATION $ 2,134.2 $ 1,794.5
(The accompanying Notes are an integral part of these consolidated financial statements.)
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CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions)
Operating Activities:
Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:
Changes in Working Capital Items:
Accounts Receivable (18.4 ) — (1.2 )
Regulatory Liabilities (3.3 ) 3.7 (1.5 )
Exchange Gas Receivable (3.4 ) 3.0 8.6
Other Changes in Working Capital Items (2.2 ) 3.7 1.0
Deferred Regulatory and Other Charges (3.6 ) (6.9 ) (8.5 )
Investing Activities:
Property, Plant and Equipment Additions (185.1 ) (169.9 ) (141.0 )
Acquisitions, Net of Cash Acquired (160.4 ) — —
Financing Activities:
Proceeds (Repayment of) from Short-Term Debt, net 149.9 (56.2 ) 46.0
Repayment of Long-Term Debt (4.9 ) (4.9 ) (6.9 )
Long-Term Debt Issuance Costs (0.2 ) (1.1 ) (0.2 )
Increase in Capital Lease Obligations 0.1 — 0.3
Net Increase (Decrease) in Exchange Gas Financing 3.3 (2.6 ) (7.6 )
Proceeds from Issuance of Common Stock 73.5 1.1 1.1
Construction Advances (0.1 ) — —
Cash Provided by Financing Activities 223.5 43.8 31.5
Net Increase (Decrease) in Cash and Cash Equivalents 9.3 (0.2 ) (2.5 )
Cash and Cash Equivalents at Beginning of Year 6.3 6.5 9.0
Cash and Cash Equivalents at End of Year $ 15.6 $ 6.3 $ 6.5
Supplemental Information:
Income Taxes Paid $ 4.9 $ 2.5 $ —
Payments on Capital Leases $ 0.2 $ 0.2 $ 0.2
Capital Expenditures Included in Accounts Payable $ 8.1 $ 11.7 $ 7.5
Right of Use Assets Obtained in Exchange for Lease Obligations $ 1.7 $ 2.6 $ 2.7
(The accompanying Notes are an integral part of these consolidated financial statements.)
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CONSOLIDATED STATEMENTS OF
CHANGES IN COMMON STOCK EQUITY (Millions, except shares data)
CommonEquity RetainedEarnings Total
Dividends ($1.62 per Common Share) (26.2 ) (26.2 )
Shares Issued Under Stock Plans 1.6 1.6
Issuance of 21,321 Common Shares (See Note 5) 1.1 1.1
Dividends ($1.70 per Common Share) (27.5 ) (27.5 )
Shares Issued Under Stock Plans 2.5 2.5
Issuance of 19,510 Common Shares (See Note 5) 1.1 1.1
Dividends ($1.80 per Common Share) (30.1 ) (30.1 )
Shares Issued Under Stock Plans 3.5 3.5
(The accompanying Notes are an integral part of these consolidated financial statements.)
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Note 1: Summary of Significant Accounting Policies
Nature of Operations - Unitil Corporation (Unitil or the Company) is a public utility holding company. Unitil and its subsidiaries are subject to regulation as a holding company system by the Federal Energy Regulatory Commission (FERC) under the Energy Policy Act of 2005. The following companies are wholly-owned subsidiaries of Unitil: Unitil Energy Systems, Inc. (Unitil Energy), Fitchburg Gas and Electric Light Company (Fitchburg), Northern Utilities, Inc. (Northern Utilities), Bangor Natural Gas Company (Bangor), Maine Natural Gas Corporation (Maine Natural), Granite State Gas Transmission, Inc. (Granite State), Unitil Power Corp. (Unitil Power), Unitil Realty Corp. (Unitil Realty), Unitil Service Corp. (Unitil Service), Unitil Resources, Inc. (Unitil Resources) and Unitil Water Corp. (Unitil Water).
The Company’s earnings are seasonal and are typically higher in the first and fourth quarters when customers use natural gas for heating purposes.
Unitil’s principal business is the local distribution of electricity in the southeastern seacoast and capital city areas of New Hampshire and the greater Fitchburg area of north central Massachusetts and the local distribution of natural gas in southeastern New Hampshire, portions of southern Maine to the Lewiston-Auburn area, portions of central Maine including Augusta and the Bangor area, and in the greater Fitchburg area of north central Massachusetts. Unitil has five distribution utility subsidiaries, Unitil Energy, which operates in New Hampshire; Fitchburg, which operates in Massachusetts; Northern Utilities, which operates in New Hampshire and Maine; and Bangor and Maine Natural, which operate in Maine (collectively, the distribution utilities).
Granite State is an interstate natural gas transmission pipeline company, operating 85 miles of underground gas transmission pipeline primarily located in Maine and New Hampshire. Granite State provides Northern Utilities with interconnection to three major natural gas pipelines and access to domestic natural gas supplies in the south and Canadian natural gas supplies in the north. Granite State derives its revenues principally from the transportation services provided to Northern Utilities and, to a lesser extent, third-party marketers.
A seventh utility subsidiary, Unitil Power, formerly functioned as the full requirements wholesale power supply provider for Unitil Energy, but ceased being the wholesale supplier of Unitil Energy with the implementation of industry restructuring and divested its long-term power supply contracts.
Unitil also has four other wholly-owned subsidiaries: Unitil Service, Unitil Resources, Unitil Realty and Unitil Water. Unitil Service provides, at cost, a variety of administrative and professional services, including regulatory, financial, accounting, human resources, engineering, operations, technology, energy management and management services on a centralized basis to its affiliated Unitil companies. Unitil Resources is the Company’s wholly-owned non-regulated subsidiary, which currently does not have any activity. Unitil Realty owns and manages the Company’s corporate office in Hampton, New Hampshire and leases this facility to Unitil Service under a long-term lease arrangement. Unitil Realty also owns land in Kingston, New Hampshire on which Unitil Energy’s solar facility is located, which became operational in May 2025. Unitil Water currently has no activity.
Basis of Presentation
Principles of Consolidation - The Company’s consolidated financial statements include the accounts of Unitil and all of its wholly-owned subsidiaries and all intercompany transactions are eliminated in consolidation.
Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (GAAP) requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and requires disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Fair Value - The Financial Accounting Standards Board (FASB) Codification defines fair value, and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the FASB Codification include:
To the extent valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2 or from Level 2 to Level 3.
There have been no changes in the valuation techniques used during the current period.
Utility Revenue Recognition - Electric Operating Revenues and Gas Operating Revenues consist of billed and unbilled revenue and revenue from rate adjustment mechanisms. Billed and unbilled revenue includes delivery revenue and pass-through revenue, recognized according to tariffs approved by federal and state regulatory commissions which determine the amount of revenue the Company will record for these items. Revenue from rate adjustment mechanisms is accrued revenue, recognized in connection with rate adjustment mechanisms, and authorized by regulators for recognition in the current period for future cash recoveries from, or credits to, customers.
Billed and unbilled revenue is recorded when service is rendered or energy is delivered to customers. However, the determination of energy sales to individual customers is based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each calendar month, amounts of energy delivered to customers since the date of the last meter reading are estimated and the corresponding unbilled revenues are calculated. These unbilled revenues are estimated each month based on estimated customer usage by class and applicable customer rates, taking into account current and historical weather data, assumptions pertaining to metering patterns, billing cycle statistics, and other estimates and assumptions, and are then reversed in the following month when billed to customers.
A majority of the Company’s revenue from contracts with customers continues to be recognized on a monthly basis based on applicable tariffs and customer monthly consumption. Such revenue is recognized using the invoice practical expedient which allows an entity to recognize revenue in the amount that directly corresponds to the value transferred to the customer.
The Company’s billed and unbilled revenue meets the definition of “revenues from contracts with customers” as defined in Accounting Standards Codification (ASC) 606. Revenue recognized in connection with rate adjustment mechanisms is consistent with the definition of alternative revenue programs in ASC 980, as the Company has the ability to adjust rates in the future as a result of past activities or completed events. The rate adjustment mechanisms meet the criteria within ASC 980. In cases where allowable costs are greater than operating revenues billed in the current period for the individual rate adjustment mechanism additional operating revenue is recognized. In cases where allowable costs are less than operating revenues billed in the current period for the individual rate adjustment mechanism, operating revenue is reduced. ASC 606 requires the Company to disclose separately the amount of revenues from contracts with customers and alternative revenue program revenues.
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In the following tables, revenue is classified by the types of goods/services rendered and market/customer type.
Twelve Months Ended
Electric and Gas Operating Revenues (millions): Electric Gas Total
Billed and Unbilled Revenue:
Rate Adjustment Mechanism Revenue 7.3 (6.4 ) 0.9
Total Electric and Gas Operating Revenues $ 236.4 $ 299.6 $ 536.0
Twelve Months Ended
Electric and Gas Operating Revenues (millions): Electric Gas Total
Billed and Unbilled Revenue:
Rate Adjustment Mechanism Revenue (0.5 ) 10.7 10.2
Total Electric and Gas Operating Revenues $ 248.3 $ 246.5 $ 494.8
Twelve Months Ended
Electric and Gas Operating Revenues (millions): Electric Gas Total
Billed and Unbilled Revenue:
Rate Adjustment Mechanism Revenue (5.2 ) (3.2 ) (8.4 )
Total Electric and Gas Operating Revenues $ 306.5 $ 250.6 $ 557.1
The Company’s electric and gas sales in Massachusetts and New Hampshire are largely decoupled. Revenue decoupling is the term given to the elimination of the dependency of a utility’s distribution revenue on the volume of electricity or gas sales. The difference between distribution revenue amounts billed to customers and the targeted revenue decoupling amounts is recognized as an increase or a decrease in Accrued Revenue, which forms the basis for resetting rates for future cash recoveries from, or credits to, customers. These revenue decoupling targets may be adjusted as a result of rate cases and other authorized adjustments that the Company files with the MDPU and NHPUC.
The Company bills its customers for sales tax in Massachusetts and Maine. These taxes are remitted to the appropriate departments of revenue in each state and are excluded from revenues on the Company’s Consolidated Statements of Earnings.
Depreciation and Amortization - Depreciation expense is calculated on a group straight-line basis based on the useful lives of assets, and judgment is involved when estimating the useful lives of certain assets. The Company conducts independent depreciation studies on a periodic basis as part of the regulatory ratemaking process and considers the results presented in these studies in determining the useful lives of the Company’s fixed assets. A change in the estimated useful lives of these assets could have a material effect on the Company’s consolidated financial statements. Provisions for depreciation were equivalent to the following composite rates, based on the average depreciable property balances at the beginning and end of each year: 2025 - 3.45%, 2024 - 3.49% and 2023 - 3.33%.
Stock-based Employee Compensation - Unitil accounts for stock-based employee compensation using the fair value method (See Note 5 Equity).
Income Taxes - The Company is subject to Federal and State income taxes as well as various other business taxes. The Company’s process for determining income tax amounts involves estimating the Company’s current tax liabilities as well as assessing temporary and permanent differences resulting from the timing of the deductions of expenses and recognition of
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taxable income for tax and book accounting purposes. These temporary differences result in deferred tax assets and liabilities, which are included in the Company’s Consolidated Balance Sheets. The Company accounts for income tax assets, liabilities and expenses in accordance with the FASB Codification guidance on Income Taxes. The Company classifies penalties and interest expense related to income tax liabilities as income tax expense and interest expense, respectively, in the Consolidated Statements of Earnings.
Provisions for income taxes are calculated in each of the jurisdictions in which the Company operates for each period for which a statement of earnings is presented. The Company accounts for income taxes in accordance with the FASB Codification guidance on Income Taxes, which requires an asset and liability approach for the financial accounting and reporting of income taxes. Significant judgments and estimates are required in determining the current and deferred tax assets and liabilities. The Company’s deferred tax assets and liabilities reflect its best assessment of estimated future taxes to be paid. In accordance with the FASB Codification, the Company periodically assesses the realization of its deferred tax assets and liabilities and adjusts the income tax provision, the current tax liability and deferred taxes in the period in which the facts and circumstances which gave rise to the revision become known.
In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this new guidance for the year ended December 31, 2025 and it did not have a material effect on the Company’s Consolidated Financial Statements (See Note 9 Income Taxes).
Dividends - The Company’s dividend policy is reviewed periodically by the Board. The amount and timing of all dividend payments is subject to the discretion of the Board and will depend upon business conditions, results of operations, financial conditions and other factors. For the year ended December 31, 2025, the Company paid quarterly dividends of $0.45 per share, resulting in an annualized dividend rate of $1.80 per common share. For the years ended December 31, 2024 and 2023, the Company paid quarterly dividends of $0.425 and $0.405 per common share, respectively, resulting in annualized dividend rates of $1.70 and $1.62 per common share, respectively. At a January 2026 meeting of the Board, the Board declared a quarterly dividend on the Company’s common stock of $0.475 per share, an increase of $0.025 per share on a quarterly basis, resulting in an increase in the effective annualized dividend rate to $1.90 per share from $1.80 per share.
Cash and Cash Equivalents - Cash and Cash Equivalents includes all cash and cash equivalents to which the Company has legal title. Cash equivalents include short-term investments with original maturities of three months or less and interest bearing deposits. The Company’s cash and cash equivalents are held at financial institutions and at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. Under the Independent System Operator—New England (ISO-NE) Financial Assurance Policy (Policy), Unitil’s subsidiaries Unitil Energy, Fitchburg and Unitil Power are required to provide assurance of their ability to satisfy their obligations to ISO-NE. Under this Policy, Unitil’s subsidiaries provide cash deposits covering approximately 2-1/2 months of outstanding obligations, less credit amounts that are based on the Company’s credit rating. On December 31, 2025 and 2024, the Unitil subsidiaries had deposited $8.5 million and $5.0 million, respectively, to satisfy their ISO-NE obligations.
Allowance for Doubtful Accounts - The Company recognizes a provision for doubtful accounts that reflects the Company’s estimate of expected credit losses for electric and gas utility service accounts receivable. The allowance for doubtful accounts is calculated by applying a historical loss rate to customer account balances and management’s assessment of current and expected economic conditions, customer trends, or other factors. The Company also calculates the amount of written-off receivables that are recoverable through regulatory rate reconciling mechanisms. The Company’s distribution utilities which are under traditional cost of service regulation are authorized by regulators to recover the costs of the energy commodity portion of bad debts through rate mechanisms. Also, the electric and gas divisions of Fitchburg are authorized to recover through rates past due amounts associated with protected hardship accounts. Evaluating the adequacy of the allowance for doubtful accounts requires judgment about the assumptions used in the analysis. The Company’s experience has been that the assumptions used in evaluating the adequacy of the allowance for doubtful accounts have proven to be reasonably accurate. (See Note 3 Allowance for Doubtful Accounts).
Accounts Receivable, Net includes $2.1 million and $2.3 million of the Allowance for Doubtful Accounts at December 31, 2025 and December 31, 2024, respectively. Unbilled Revenues, net (a component of Accrued Revenue) includes less than $0.1million and $0.1 million of the Allowance for Doubtful Accounts at December 31, 2025 and December 31, 2024, respectively.
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Accrued Revenue - Accrued Revenue includes the current portion of Regulatory Assets (see “Regulatory Accounting”) and unbilled revenues (see “Utility Revenue Recognition”). The following table shows the components of Accrued Revenue as of December 31, 2025 and 2024.
December 31,
Regulatory Assets—Current $ 78.1 $ 70.1
Unbilled Revenues 8.9 7.3
Total Accrued Revenue $ 87.0 $ 77.4
Exchange Gas Receivable - Northern Utilities, Fitchburg and Bangor have gas exchange and storage agreements whereby natural gas purchases during the months of April through October are delivered to a third-party. The third-party delivers natural gas back to the Company during the months of November through March. The exchange and storage gas volumes are recorded at weighted average cost. The following table shows the components of Exchange Gas Receivable as of December 31, 2025 and 2024.
December 31,
Exchange Gas Receivable (millions) 2025 2024
Northern Utilities $ 8.0 $ 6.0
Bangor 1.3 —
Total Exchange Gas Receivable $ 9.8 $ 6.4
Gas Inventory - The Company uses the weighted average cost methodology to value natural gas inventory. The following table shows the components of Gas Inventory as of December 31, 2025 and 2024.
December 31,
Natural Gas $ 0.4 $ 0.2
Liquefied Natural Gas & Other 0.5 0.5
Total Gas Inventory $ 1.3 $ 1.1
The Company also has an inventory of Materials and Supplies in the amounts of $15.4 million and $14.2 million as of December 31, 2025 and December 31, 2024, respectively. These amounts are recorded at weighted average cost.
Utility Plant - The cost of additions to Utility Plant and the cost of renewals and betterments are capitalized. Cost of additions consists of labor, materials, services and certain indirect construction costs, including an allowance for funds used during construction (AFUDC). The average interest rates applied to AFUDC were 5.39%, 6.22% and 5.48% in 2025, 2024 and 2023, respectively. The costs of current repairs and minor replacements are charged to appropriate operating expense accounts. The original cost of utility plant retired or otherwise disposed of is charged to the accumulated provision for depreciation. The Company includes in its mass asset depreciation rates, which are periodically reviewed as part of its ratemaking proceedings, cost of removal amounts to provide for future negative salvage value. At December 31, 2025 and 2024, the Company has recorded cost of removal amounts of $153.0 million and $139.2 million, respectively, that have been collected in depreciation rates but have not yet been expended, and which represent regulatory liabilities. These amounts are recorded on the Consolidated Balance Sheets in Cost of Removal Obligations.
Regulatory Accounting - The Company’s principal business is the distribution of electricity and natural gas by the five distribution utilities: Unitil Energy, Fitchburg, Northern Utilities, Bangor and Maine Natural. Unitil Energy and Fitchburg are subject to regulation by the FERC. Fitchburg is also regulated by the Massachusetts Department of Public Utilities (MDPU), Unitil Energy is regulated by the New Hampshire Public Utilities Commission (NHPUC), Northern Utilities is regulated by the Maine Public Utilities Commission (MPUC) and NHPUC, Bangor is regulated by the MPUC and Maine Natural is regulated by the MPUC. Granite State, the Company’s natural gas transmission pipeline, is regulated by the FERC. Accordingly, the Company uses the Regulated Operations guidance as set forth in the FASB Codification. The Company has recorded Regulatory Assets and Regulatory Liabilities which will be recovered from customers, or applied for customer benefit, in accordance with rate provisions approved by the applicable public utility regulatory commission. The electric and gas divisions
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of Fitchburg are authorized to recover through rates past due amounts associated with hardship accounts that are protected from shut-off. As of December 31, 2025 and December 31, 2024, the Company has recorded $8.9 million and $7.9 million, respectively, of hardship accounts in Regulatory Assets. These amounts are included in “Other Deferred Charges” in the following table. The Company currently receives recovery in rates or expects to receive recovery of these hardship accounts in future rate cases.
December 31,
Regulatory Assets consist of the following (millions) 2025 2024
Retirement Benefits $ 14.6 $ 14.4
Energy Supply & Other Rate Adjustment Mechanisms 73.1 65.4
Deferred Storm Charges 6.0 8.3
Other Deferred Charges 12.8 14.1
Less: Current Portion of Regulatory Assets(1) 78.1 70.1
Regulatory Assets—noncurrent $ 38.8 $ 41.9
(1)
Reflects amounts included in Accrued Revenue on the Company’s Consolidated Balance Sheets.
December 31,
Regulatory Liabilities consist of the following (millions) 2025 2024
Rate Adjustment Mechanisms and Other $ 11.1 $ 13.6
Derivative Assets 17.7 —
Retirement Benefits 0.9 —
Total Regulatory Liabilities 80.8 64.0
Less: Current Portion of Regulatory Liabilities 16.7 17.2
Regulatory Liabilities—noncurrent $ 64.1 $ 46.8
Generally, the Company receives a return on investment on its regulated assets for which a cash outflow has been made. Included in Regulatory Assets as of December 31, 2025 are $6.5 million of environmental costs, rate case costs and other expenditures to be recovered over varying periods. Regulators have authorized recovery of these expenditures, but without a return. Regulatory commissions can reach different conclusions about the recovery of costs, which can have a material effect on the Company’s Consolidated Financial Statements. The Company believes it is probable that its regulated distribution and transmission utilities will recover their investments in long-lived assets, including regulatory assets. If the Company, or a portion of its assets or operations, were to cease meeting the criteria for application of these accounting rules, accounting standards for businesses in general would become applicable and immediate recognition of any previously deferred costs, or a portion of deferred costs, would be required in the year in which the criteria are no longer met, if such deferred costs were not recoverable in the portion of the business that continues to meet the criteria for application of the FASB Codification topic on Regulated Operations. If unable to continue to apply the FASB Codification provisions for Regulated Operations, the Company would be required to apply the provisions for the Discontinuation of Rate-Regulated Accounting included in the FASB Codification. In the Company’s opinion, its regulated operations will be subject to the FASB Codification provisions for Regulated Operations for the foreseeable future.
Leases - The Company records assets and liabilities on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company has elected the practical expedient to not separate non-lease components from lease components and instead to account for both as a single lease component. The Company’s accounting policy election for leases with a lease term of 12 months or less is to recognize the lease payments as lease expense in the Consolidated Statements of Earnings on a straight-line basis over the lease term. See additional discussion in the “Leases” section of Note 4 (Debt and Financing Arrangements).
Derivatives - The Company’s regulated energy subsidiaries enter into energy supply contracts to serve their electric and gas customers. The Company follows a procedure for determining whether each contract qualifies as a derivative instrument under the guidance provided by the FASB Codification on Derivatives and Hedging. For each contract, the Company reviews and documents the key terms of the contract. Based on those terms and any additional relevant components of the contract, the
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Company determines and documents whether the contract qualifies as a derivative instrument as defined in the FASB Codification. The Company has determined that its energy supply contracts either do not qualify as a derivative instrument under the guidance set forth in the FASB Codification, have been elected as normal purchase, or have contingencies that have not yet been met in order to establish a notional amount.
The Company has contracts that meet the definition of derivatives (see Note 7 Derivatives). Derivatives are recognized on the balance sheet at fair value as either assets or liabilities. The Company considers the amount of the derivative expected to be settled within the next twelve months as current and the remainder as long-term. Derivative instruments are presented on a gross basis in the consolidated balance sheets. Cash flows related to derivative settlements are classified as operating activities in the consolidated statements of cash flows. Regulatory assets or liabilities are recorded to offset the fair value of derivatives, as contract settlement amounts are tracked and reconciled as a pass-through to customers. Costs associated with the Purchase Power Agreement (PPA) are approved by the MDPU to be passed through to customers through the Company’s Long-Term Renewable Contract Adjustment Clause tariff and accounted for per FASB Accounting Standard Codification 980, Regulated Operations. Unrealized gains or losses resulting from the change in fair value are not recognized in the income statement. Instead, they are deferred and recorded as a regulatory asset for losses or a regulatory liability for gains.
The Company recognizes an environmental attribute asset at the allocated contract cost upon receipt of the associated certificates in the applicable registry and derecognizes the asset upon retirement, at which time the related cost is recognized in Cost of Electric Sales, which are tracked and reconciled costs as pass-through to customers. Please see Note 7 (Derivatives) for additional information.
Investments in Marketable Securities - The Company maintains a trust through which it invests in a money market fund and a fixed income fund. These funds are intended to satisfy obligations under the Company’s Supplemental Executive Retirement Plan (SERP). See additional discussion of the SERP in Note 10 Retirement Benefit Plans.
At December 31, 2025 and 2024, the fair value of the Company’s investments in these trading securities, which are recorded on the Consolidated Balance Sheets in Other Assets, were $6.7 million and $6.3 million, respectively, as shown in the following table. These investments are valued based on quoted prices from active markets and are categorized in Level 1 as they are actively traded and no valuation adjustments have been applied. Changes in the fair value of these investments are recorded in Other (Income) Expense, Net.
December 31,
Fair Value of Marketable Securities (millions) 2025 2024
Money Market Funds $ 3.2 $ 2.5
Fixed Income Funds 3.5 3.8
Total Marketable Securities $ 6.7 $ 6.3
The Company also sponsors the Unitil Corporation Deferred Compensation Plan (the DC Plan). The DC Plan is a non-qualified deferred compensation plan that provides a vehicle for participants to accumulate tax-deferred savings to supplement retirement income. The DC Plan, which was effective January 1, 2019, is open to senior management or other highly compensated employees as determined by the Company’s Board of Directors, and may also be used for recruitment and retention purposes for newly hired senior executives. The DC Plan design mirrors the Company’s Tax Deferred Savings and Investment Plan formula, but provides for contributions on compensation above the IRS limit, which will allow participants to defer up to 85% of base salary, and up to 85% of any cash incentive for retirement. The Company may also elect to make discretionary contributions on behalf of any participant in an amount determined by the Company’s Board of Directors. A trust has been established to invest the funds associated with the DC Plan.
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At December 31, 2025 and 2024, the fair value of the Company’s investments in these trading securities related to the DC Plan, which are recorded on the Consolidated Balance Sheets in Other Assets, were $3.5 million and $2.2 million, respectively. These investments are valued based on quoted prices from active markets and are categorized in Level 1 as they are actively traded and no valuation adjustments have been applied. Changes in the fair value of these investments are recorded in Other (Income) Expense, Net.
December 31,
Fair Value of Marketable Securities (millions) 2025 2024
Equity Funds $ 3.1 $ 2.0
Fixed Income Funds 0.3 0.1
Money Market Funds 0.1 0.1
Total Marketable Securities $ 3.5 $ 2.2
Goodwill - In January, the Company completed the acquisition of Bangor Natural Gas Company resulting in the recognition of $1.6 million of goodwill. In October, the Company completed the acquisition of Maine Natural Gas Corporation resulting in the recognition of $2.7 million of goodwill. Goodwill is not amortized but is tested for impairment at least annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company performed the annual impairment assessment of goodwill at November 1, 2025 for the gas reporting unit. The Company generally uses a qualitative analysis assessment to determine if it was more likely than not that the fair value of the reporting unit exceeded its carrying value, including goodwill. The qualitative assessment did not identify any triggering events that would indicate potential impairment of the reporting unit. Therefore, it was determined that the fair value of the reporting unit exceeded its carrying value and no goodwill impairments were recognized during the year ended December 31, 2025.
Energy Supply Obligations - The following discussion and table summarize the nature and amounts of the items recorded as Energy Supply Obligations on the Company’s Consolidated Balance Sheets.
December 31,
Energy Supply Obligations consist of the following (millions) 2025 2024
Renewable Energy Portfolio Standards $ 2.3 $ 4.0
Exchange Gas Obligation 9.3 6.0
Total Energy Supply Obligations $ 11.6 $ 10.0
Renewable Energy Portfolio Standards - Renewable Energy Portfolio Standards (RPS) require retail electricity suppliers, including public utilities, to demonstrate that required percentages of their sales are met with power generated from certain types of resources or technologies. Compliance is demonstrated by purchasing and retiring Renewable Energy Certificates (REC) generated by facilities approved by the state as qualifying for REC treatment. Unitil Energy and Fitchburg purchase RECs in compliance with RPS legislation in New Hampshire and Massachusetts for supply provided to default service customers. RPS compliance costs are a supply cost that is recovered in customer default service rates. Unitil Energy and Fitchburg collect RPS compliance costs from customers throughout the year and demonstrate compliance for each calendar year on the following July 1. Due to timing differences between collection of revenue from customers and payment of REC costs to suppliers, Unitil Energy and Fitchburg typically defer costs for RPS compliance which are recorded within Accrued Revenue with a corresponding liability in Energy Supply Obligations on the Company’s Consolidated Balance Sheets.
Fitchburg has entered into long-term renewable contracts for the purchase of its pro rata share of clean energy and/or RECs under statewide procurement processes pursuant to Massachusetts legislation. The generating facilities associated with some of these contracts have been constructed and are now operating. Please see Note 8 (Commitments and Contingencies) discussion in Regulatory Matters for additional detail.
Exchange Gas Obligation - Northern Utilities and Bangor enter into gas exchange agreements under which Northern Utilities and Bangor release certain natural gas pipeline and storage assets, resell the natural gas storage inventory to an asset manager and subsequently repurchase the inventory over the course of the natural gas heating season at the same price at which it sold the natural gas inventory to the asset manager. The gas inventory related to these agreements is recorded in Exchange Gas Receivable on the Company’s Consolidated Balance Sheets while the corresponding obligations are recorded in Energy Supply Obligations.
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Retirement Benefit Obligations - The Company sponsors the Pension Plan, which is a defined benefit pension plan. Effective January 1, 2010, the Pension Plan was closed to new non-union employees. For union employees, the Pension Plan was closed on various dates between December 31, 2010 and June 1, 2013, depending on the various Collective Bargaining Agreements of each union. The Company also sponsors a non-qualified retirement plan, the SERP, covering certain executives of the Company, and an employee 401(k) savings plan. Additionally, the Company sponsors the PBOP Plan, primarily to provide health care and life insurance benefits to retired employees.
The Company records on its balance sheets as an asset or liability for the overfunded or underfunded status of its retirement benefit obligations (RBO) based on the projected benefit obligations. The Company has recognized a corresponding Regulatory Asset or Regulatory Liability, reflecting ultimate recovery from or refunded to customers through rates. The regulatory asset (or regulatory liability) is amortized as the actuarial gains and losses and prior service cost are amortized to net periodic benefit cost for the Pension and PBOP plans. All amounts are remeasured annually. (See Note 10 Retirement Benefit Plans.)
Commitments and Contingencies - The Company’s accounting policy is to record and/or disclose commitments and contingencies in accordance with the FASB Codification as it applies to an existing condition, situation, or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. As of December 31, 2025, the Company is not aware of any material commitments or contingencies other than those disclosed in Note 8 (Commitments and Contingencies).
Environmental Matters - The Company’s past and present operations include activities that are generally subject to extensive federal and state environmental laws and regulations. The Company has recovered or will recover substantially all the costs of the environmental remediation work performed to date from customers or from its insurance carriers. The Company believes it is in compliance with all applicable environmental and safety laws and regulations, and the Company believes that as of December 31, 2025, there are no material losses that would require additional liability reserves to be recorded other than those disclosed in Note 8 (Commitments and Contingencies). Changes in future environmental compliance regulations or in future cost estimates of environmental remediation costs could have a material effect on the Company’s financial position if those amounts are not recoverable in regulatory rate mechanisms.
Recently Issued Pronouncements - In 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (DISE), requiring public business entities to provide enhanced disclosures about the nature of expenses. The standard mandates a tabular footnote disclosure detailing relevant expense captions into natural expense categories such as purchases of inventory, employee compensation, and depreciation. It also requires disclosure of total selling expenses and, annually, the definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within those periods starting after December 15, 2027; early adoption is permitted. The Company is evaluating the standard's impact on its Consolidated Financial Statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this new guidance for the year ended December 31, 2025, and it did not have a material effect on the Company’s Consolidated Financial Statements (See Note 9 Income Taxes.)
Acquisition of Bangor Natural Gas Company - On January 31, 2025, the Company acquired all issued and outstanding shares of Bangor Natural Gas Company for $71.4 million, which includes an estimated working capital adjustment. Through this acquisition, the Company expanded its service territory to include approximately 8,500 customers in the greater Bangor area of central Maine.
In connection with this acquisition, the Company recorded $66.7 million of net utility plant, $3.8 million working capital, $1.6 million goodwill, $0.2 million noncurrent assets and $0.9 million noncurrent regulatory liabilities. The financial results associated with this acquisition are included within the gas segment. Bangor’s operating revenues of $27.9 million and net income of $2.2 million were included in the consolidated results for the year ended December 31, 2025.
Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired. The goodwill related to Bangor is partially tax deductible. The tax deductible portion of goodwill is $0.4 million and will be amortized over 15 years.
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In connection with Unitil’s acquisition of Bangor, the Company entered into a Transition Services Agreement (TSA) dated January 31, 2025 between Bangor and Hope Utilities, Inc. (Hope Utilities). Pursuant to the TSA, Hope Utilities provided Bangor with certain services at cost, for up to 12 months, in order to continue the operation and maintenance of Bangor substantially consistent with past practices until Unitil has completed the successful transition. The TSA was completed in November 2025.
Acquisition of Maine Natural Gas Corporation - On October 31, 2025, the Company acquired all issued and outstanding shares of Maine Natural for $86.0 million in cash, plus $7.1 million in working capital, subject to certain adjustments as provided in the Purchase Agreement. Through this acquisition, the Company expanded its service territory to include approximately 6,300 customers in the Portland area of central Maine, as well as the capital city of Augusta.
In connection with this acquisition, the Company recorded $82.0 million of net utility plant, $10.4 million working capital, $2.7 million goodwill, $1.4 million noncurrent assets and $3.4 million noncurrent regulatory liabilities. The amounts recorded in conjunction with the acquisition are preliminary, and subject to adjustment based on contractual provisions and purchase accounting adjustments. The financial results associated with this acquisition are included within the gas segment. Maine Natural’s operating revenues of $8.3 million and net income of $2.8 million were included in the consolidated results for the year ended December 31, 2025.
Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired.
In connection with Unitil’s acquisition of Maine Natural, the Company entered into a TSA dated October 31, 2025 between Maine Natural and Avangrid Service Company (Avangrid). Pursuant to the TSA, Avangrid will provide Maine Natural with certain services at cost, for up to 12 months, in order to continue the operation and maintenance of Maine Natural substantially consistent with past practices until Unitil has completed the successful transition. The Company has recorded $0.2 million of TSA costs as of December 31, 2025.
Acquisition of Aquarion Water Companies - On May 6, 2025, Unitil entered into a definitive agreement to acquire Aquarion Water Company of Massachusetts, Inc., Aquarion Water Company of New Hampshire, Inc., and Abenaki Water Co., Inc. (the Aquarion Companies) from the Aquarion Water Authority, a quasi-public corporation and political subdivision of the State of Connecticut and a standalone, newly created water authority alongside the South Central Connecticut Regional Water Authority subject to certain closing adjustments. The aggregate enterprise value of the sale is approximately $100.0 million, which includes approximately $70.0 million in cash and the assumption of approximately $30.0 million of debt. The transaction is subject to approval by the MDPU, the NHPUC and the MPUC.
Subsequent Events - The Company evaluates all events or transactions through the date of the related filing. During the period through the date of this filing, the Company did not have any material subsequent events that would result in adjustment to or disclosure in its Consolidated Financial Statements.
Note 2: Segment Information
The Company’s Chief Operating Decision Maker (CODM), consists of the Company’s Chairman and Chief Executive Officer, President and Chief Administrative Officer, Chief Financial Officer, and Chief Accounting Officer. These individuals assess financial performance and make decisions, including the allocation of resources to the various operating segments, based on meeting with the managers of each segment and through their review of reports and analyses that are regularly provided to the CODM. The CODM uses Net Income Applicable to Common Shares for each segment predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a quarterly basis when making decisions about the allocation of operating and capital resources to each segment. Unitil reports two operating and reportable segments: utility electric operations and utility gas operations.
Unitil’s principal business is the local distribution of electricity in the southeastern seacoast and state capital regions of New Hampshire and the greater Fitchburg area of north central Massachusetts and the local distribution of natural gas in southeastern New Hampshire, portions of southern Maine to the Lewiston-Auburn area, portions of central Maine including Augusta and the Bangor area, and in the greater Fitchburg area of north central Massachusetts. Unitil has five distribution utility subsidiaries, Unitil Energy, which operates in New Hampshire, Fitchburg, which operates in Massachusetts, Northern Utilities, which operates in New Hampshire and Maine, Bangor, which operates in Maine and Maine Natural, which operates in Maine. Unitil Energy and the electric division of Fitchburg are included in the electric segment. Northern Utilities, Bangor, Maine Natural and the gas division of Fitchburg are included in the gas segment. Unitil Energy, Fitchburg, Northern Utilities, Bangor
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and Maine Natural have a well-diversified customer mix and are not dependent on a single customer, or a few customers, for their electric and natural gas sales. Granite State is an interstate natural gas transmission pipeline company, operating 85 miles of underground gas transmission pipeline primarily located in Maine and New Hampshire. Granite State provides Northern Utilities with interconnection to three major natural gas pipelines and access to domestic natural gas supplies in the south and Canadian natural gas supplies in the north. Granite State derives its revenues principally from the transmission services provided to Northern Utilities and, to a lesser extent, third-party marketers. Granite State is included in the utility gas operations segment.
Unitil Corp. (the holding company), and Unitil Resources are included in the “Other” category (ASC 280-10-50-15). The holding company has no operating income of its own. The earnings of the holding company are principally derived from income earned on short-term investments. Unitil Resources is the Company’s wholly-owned non-regulated subsidiary and currently does not have any activity. Unitil Service provides centralized management and administrative services, including information systems management and financial record keeping to support the affiliated Unitil companies. Unitil Realty owns certain real estate, principally the Company’s corporate headquarters in Hampton, New Hampshire and land in Kingston, New Hampshire on which Unitil Energy’s solar facility is located, which became operational in May 2025. Unitil Service’s and Unitil Realty’s costs are allocated to the Electric and Gas segments based on cost allocation factors. Unitil Water does not have any activity.
The segments follow the same accounting policies as described in the Summary of Significant Accounting Policies. Intrasegment sales take place at cost and the effects of all intrasegment and/or intercompany transactions are eliminated in the consolidated financial statements. Segment profit or loss is based on Net Income Applicable to Common Shares. Expenses used to determine operating income before taxes are charged directly to each segment or are allocated based on cost allocation factors included in rate applications approved by the FERC, NHPUC, MDPU, and MPUC. Assets allocated to each segment are based upon specific identification of such assets provided by Company records.
The following tables provide significant segment financial data for the years ended December 31, 2025, 2024 and 2023 (millions):
Year Ended December 31, 2025 Electric Gas Total Reportable Segments Other Total
Interest Income (3.3 ) (3.8 ) (7.1 ) — (7.1 )
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Year Ended December 31, 2024 Electric Gas Total Reportable Segments Other Total
Year Ended December 31, 2023 Electric Gas Total Reportable Segments Other Total
Note 3: Allowance for Doubtful Accounts
Unitil’s distribution utilities which are under traditional cost of service regulation are authorized by regulators to recover the costs of their energy commodity portion of bad debts through rate mechanisms. In 2025, 2024 and 2023, the Company recorded provisions for the energy commodity portion of bad debts of $2.6 million, $1.6 million and $3.8 million, respectively. These provisions were recognized in Cost of Electric Sales and Cost of Gas Sales expense as the associated electric and gas utility revenues were billed. Cost of Electric Sales and Cost of Gas Sales costs are recovered from customers through periodic rate reconciling mechanisms. Also, the electric and gas divisions of Fitchburg are authorized to recover through rates past due amounts associated with hardship accounts that are protected from shut-off. As of December 31, 2025 and 2024, the Company has recorded $8.9million and $7.9 million, respectively, of hardship accounts in Regulatory Assets. The Company currently receives recovery in rates or expects to receive recovery of these hardship accounts in future rate cases.
Accounts Receivable, Net includes $2.1 million and $2.3 million of the Allowance for Doubtful Accounts at December 31, 2025 and December 31, 2024, respectively. Unbilled Revenues, net (a component of Accrued Revenue) includes less than $0.1 million and $0.1 million of the Allowance for Doubtful Accounts at December 31, 2025 and December 31, 2024, respectively.
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The following table shows the balances and activity in the Company’s Allowance for Doubtful Accounts for 2025, 2024 and 2023 (millions):
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Note 4: Debt and Financing Arrangements
The Company funds a portion of its operations through the issuance of long-term debt, and short-term borrowings under its revolving Credit Facility. The Company’s subsidiaries conduct a portion of their operations in leased facilities and lease some of their machinery, vehicles and office equipment.
Long-Term Debt and Interest Expense
Long-Term Debt Structure and Covenants - The debt agreements for Unitil and its utility subsidiaries, Unitil Energy, Fitchburg, Northern Utilities, Bangor and Granite State, contain various covenants and restrictions. These agreements do not contain any covenants or restrictions pertaining to the maintenance of financial ratios or the issuance of short-term debt. These agreements do contain covenants relating to, among other things, the issuance of additional long-term debt, cross-default provisions and business combinations.
The long-term debt of Unitil is issued under Unsecured Promissory Notes with negative pledge provisions. The long-term debt’s negative pledge provisions contain restrictions which, among other things, limit the incursion of additional long-term debt. Accordingly, in order for Unitil to issue new long-term debt, the covenants of the existing long-term agreement(s) must be satisfied, including that Unitil has total funded indebtedness less than 70% of total capitalization, and earnings available for interest equal to at least two times the interest charges for funded indebtedness. Each future senior long-term debt issuance of Unitil will rank pari passu with all other senior unsecured long-term debt issuances. The Unitil long-term debt agreement requires that if Unitil defaults on any other future long-term debt agreement(s), it would constitute a default under Unitil’s present long-term debt agreement. Furthermore, the default provisions are triggered by the defaults of certain Unitil subsidiaries or certain other actions against Unitil subsidiaries.
Substantially all of the property of Unitil Energy is subject to liens of indenture under which First Mortgage Bonds (FMB) have been issued. In order to issue new FMB, the customary covenants of the existing Unitil Energy Indenture Agreement must be met, including that Unitil Energy have sufficient available net bondable plant to issue the securities and earnings available for interest charges equal to at least two times the annual interest requirement. The Unitil Energy agreements further require that if Unitil Energy defaults on any Unitil Energy FMB, it would constitute a default for all Unitil Energy FMB. The Unitil Energy default provisions are not triggered by the actions or defaults of Unitil or its other subsidiaries.
All of the long-term debt of Fitchburg, Northern Utilities, Bangor and Granite State are issued under Unsecured Promissory Notes with negative pledge provisions. Each issue of long-term debt ranks pari passu with its other senior unsecured long-term debt within that subsidiary. The long-term debt’s negative pledge provisions contain restrictions which, among other
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things, limit the incursion of additional long-term debt. Accordingly, in order for Fitchburg, Northern Utilities or Granite State to issue new long-term debt, the covenants of the existing long-term agreements of that subsidiary must be satisfied, including that the subsidiary have total funded indebtedness less than 65% of total capitalization. Additionally, to issue new long-term debt, Fitchburg must maintain earnings available for interest equal to at least two times the interest charges for funded indebtedness. As with the Unitil Energy agreements, the Fitchburg, Northern Utilities, Bangor and Granite State long-term debt agreements each require that if that subsidiary defaults on any of its own long-term debt agreements, it would constitute a default under all of that subsidiary’s long-term debt agreements. None of the Fitchburg, Northern Utilities, Bangor and Granite State default provisions are triggered by the actions or defaults of Unitil or any of its other subsidiaries.
The Unitil, Unitil Energy, Fitchburg, Northern Utilities, Bangor and Granite State long-term debt instruments and agreements contain covenants restricting the ability of each company to incur liens and to enter into sale and leaseback transactions, and restricting the ability of each company to consolidate with, to merge with or into, or to sell or otherwise dispose of all or substantially all of its assets.
Unitil Energy, Fitchburg, Northern Utilities, Bangor and Granite State pay common dividends to their sole common shareholder, Unitil Corporation and these common dividends are the primary source of cash for the payment of dividends to Unitil’s common shareholders. The long-term debt issued by the Company and its subsidiaries contains certain covenants that determine the amount that the Company and each of these subsidiary companies has available to pay for dividends. As of December 31, 2025, in accordance with the covenants, these subsidiary companies had a combined amount of $563.1 million available for the payment of dividends and Unitil Corporation had $318.5 million available for the payment of dividends. As of December 31, 2025, the Company’s balance in Retained Earnings was $191.2 million. Therefore, there were no restrictions on the Company’s Retained Earnings at December 31, 2025 for the payment of dividends.
Issuance of Long-Term Debt - On July 8, 2025, Bangor issued $14.0 million of Notes due 2030 at 5.70% and $18.0 million of Notes due 2035 at 6.31%. Bangor used the net proceeds to refinance existing debt and for general corporate purposes. Approximately $0.2 million of costs associated with this issuance were recorded as a reduction of Long-Term Debt for presentation purposes on the Consolidated Balance Sheet in the third quarter of 2025.
On August 21, 2024, Unitil Corporation issued $20.0 million of Notes due 2034 at 5.99%. Fitchburg issued $12.5 million of Notes due 2034 at 5.54% and $12.5 million of Notes due 2044 at 5.99%. Unitil Energy issued $40.0 million of Bonds due 2054 at 5.69%. Northern Utilities issued $25.0 million of Notes due 2034 at 5.54% and $15.0 million of Notes due 2039 at 5.74%. Granite State issued $10.0 million of Notes due 2034 at 5.74%. The Company used the net proceeds from these offerings to refinance existing debt and for general corporate purposes. Approximately $1.0 million of costs associated with this issuance were recorded as a reduction of Long-Term Debt for presentation purposes on the Consolidated Balance Sheet in the third quarter of 2024.
Debt Repayment -The total aggregate amount of debt repayments relating to bond issues and normal scheduled long-term debt repayments amounted to $4.9 million, $4.9 million and $6.9 million in 2025, 2024, and 2023, respectively.
The aggregate amount of bond repayment requirements and normal scheduled long-term debt repayments for each of the five years following 2025 is: 2026 – $37.9 million; 2027 – $55.7 million; 2028 – $10.7 million; 2029 – $43.7 million; 2030 – $26.5 million and thereafter $499.8 million.
Fair Value of Long-Term Debt - Currently, the Company believes that there is no active market in the Company’s debt securities, which have all been sold through private placements. If there were an active market for the Company’s debt securities, the fair value of the Company’s long-term debt would be estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities. The fair value of the Company’s long-term debt is estimated using Level 2 inputs (valuations based on quoted prices available in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are directly observable, and inputs derived principally from market data). In estimating the fair value of the Company’s long-term debt, the assumed market yield reflects the Moody’s Baa Utility Bond Average Yield. Costs, including
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prepayment costs, associated with the early settlement of long-term debt are not taken into consideration in determining fair value.
December 31,
Estimated Fair Value of Long-Term Debt (millions) 2025 2024
Estimated Fair Value of Long-Term Debt $ 623.4 $ 598.9
Details on long-term debt at December 31, 2025 and 2024 are shown below:
December 31,
Unitil Corporation:
Unitil Energy First Mortgage Bonds:
Fitchburg:
Northern Utilities:
Bangor:
Granite State:
Unitil Realty Corp.:
Less: Unamortized Debt Issuance Costs 3.8 4.0
Total Long-Term Debt, net of Unamortized Debt Issuance Costs 670.5 643.3
Less: Current Portion(1) 37.9 4.9
Total Long-Term Debt, Less Current Portion $ 632.6 $ 638.4
(1)
The Current Portion of Long-Term Debt includes sinking fund payments.
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Interest Expense, Net—Interest expense is presented in the financial statements net of interest income. Interest expense is mainly comprised of interest on long-term debt and short-term borrowings. In addition, certain reconciling rate mechanisms used by the Company’s distribution operating utilities give rise to regulatory assets and regulatory liabilities on which interest is calculated.
Unitil’s utility subsidiaries operate a number of reconciling rate mechanisms to recover specifically identified costs on a pass-through basis. These reconciling rate mechanisms track costs and revenue on a monthly basis. In any given month, this monthly tracking and reconciling process will produce either an under-collected or an over-collected balance of costs. In accordance with the distribution utilities’ rate tariffs, interest is accrued on these balances and will produce either interest income or interest expense.
Consistent with regulatory precedent, interest income is recorded on an under-collection of costs, which creates a regulatory asset to be recovered in future periods when rates are reset. Interest expense is recorded on an over-collection of costs, which creates a regulatory liability to be refunded in future periods when rates are reset. A summary of interest expense and interest income is provided in the following table:
Interest Expense
Regulatory Liabilities & Other 2.0 1.5 1.0
Interest Income
Regulatory Assets (3.5 ) (4.1 ) (3.3 )
AFUDC(1) and Other (3.6 ) (4.3 ) (2.9 )
Subtotal Interest Income (7.1 ) (8.4 ) (6.2 )
Total Interest Expense, Net $ 36.7 $ 29.3 $ 28.7
(1)
AFUDC—Allowance for Funds Used During Construction
Credit Arrangements
On September 29, 2022, the Company entered into a Third Amended and Restated Credit Agreement with a syndicate of lenders (collectively, the “Credit Facility”), which amended and restated the prior credit facility in full, and on January 29, 2025, the Company executed an amendment that increased the borrowing limit under the Credit Facility from $200 million to $275 million and extended the term of the maturity date from September 29, 2027 until September 29, 2028. Unitil may borrow under the Credit Facility until September 29, 2028, subject to two one-year extensions under certain circumstances. The Credit Facility provides for a borrowing limit of $275 million, including a $25 million sublimit for standby letters of credit, and permits Unitil to increase the borrowing limit by up to $75 million under certain circumstances. Borrowings under the Credit Facility may bear interest at various rate options, including a daily fluctuating rate equal to the forward-looking one-month secured overnight financing rate (SOFR) term rate (as administered by the Federal Reserve Bank of New York), plus 0.1000%, plus a margin of 1.125% to 1.375% based on Unitil’s credit rating.
The Company generally utilizes the Credit Facility for cash management purposes related to its short-term operating activities and may use the Credit Facility for certain acquisition financing. Total gross borrowings were $476.4 million and $308.4 million for the years ended December 31, 2025 and December 31, 2024, respectively. Total gross repayments were $412.5 million and $364.6 million for the years ended December 31, 2025 and December 31, 2024, respectively. The following table details the borrowing limits, amounts outstanding and amounts available under the revolving Credit Facility as of December 31, 2025 and December 31, 2024:
December 31,
Revolving Credit Facility (millions) 2025 2024
Short-Term Borrowings Outstanding $ 169.7 $ 105.8