Leases
Most of the leases the Company enters into are for equipment, buildings, easements and vehicles as part of their ongoing operations. The Company also leases certain equipment to third parties through its utility and construction services businesses. The Company determines if an arrangement contains a lease at inception of a contract and accounts for all leases in accordance with ASC 842 - Leases.
The recognition of leases requires the Company to make estimates and assumptions that affect the lease classification and the assets and liabilities recorded. The accuracy of lease assets and liabilities reported on the Consolidated Financial Statements depends on, among other things, management's estimates of interest rates used to discount the lease assets and liabilities to their present value, as well as the lease terms based on the unique facts and circumstances of each lease.
Lessee accounting
The leases the Company has entered into as part of its ongoing operations are considered operating leases and are recognized on the Consolidated Balance Sheets as operating lease right-of-use assets, current operating lease liabilities and noncurrent liabilities - operating lease liabilities. The corresponding lease costs are included in operation and maintenance expense on the Consolidated Statements of Income.
Generally, the leases for vehicles and equipment have a term of five years or less and buildings and easements have a longer term of up to 35 years or more. To date, the Company does not have any residual value guarantee amounts probable of being owed to a lessor, financing leases or material agreements with related parties.
The following tables provide information on the Company's operating leases at and for the years ended December 31:
| | | | | | | | | | | |
| 2023 | 2022 | 2021 |
| (In thousands) |
| Lease costs: | | | |
| Short-term lease cost | $ | 101,610 | | $ | 104,447 | | $ | 79,433 | |
| Operating lease cost | 29,257 | | 27,016 | | 24,708 | |
| Variable lease cost | 1,891 | | 1,641 | | 1,431 | |
| $ | 132,758 | | $ | 133,104 | | $ | 105,572 | |
| | | | | | | | | | | | | |
| 2023 | 2022 | 2021 | | |
| (Dollars in thousands) | |
| Weighted average remaining lease term | 3.20 years | 3.17 years | 3.27 years | | |
| Weighted average discount rate | 4.92 | % | 4.04 | % | 3.48 | % | | |
Cash paid for amounts included in the measurement of lease liabilities | $ | 29,678 | $ | 26,572 | | $ | 21,575 | | | |
The reconciliation of future undiscounted cash flows to operating lease liabilities presented on the Consolidated Balance Sheet at December 31, 2023, was as follows:
| | | | | |
| (In thousands) |
| 2024 | $ | 25,916 | |
| 2025 | 17,573 | |
| 2026 | 11,143 | |
| 2027 | 6,555 | |
| 2028 | 3,805 | |
| Thereafter | 25,724 | |
| Total | 90,716 | |
| Less discount | 16,187 | |
| Total operating lease liabilities | $ | 74,529 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.