8-K
ATMOS ENERGY CORP (ATO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
November 11, 2020
Date of Report (Date of earliest event reported)
ATMOS ENERGY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
| Texas | and | Virginia | 1-10042 | 75-1743247 |
|---|---|---|---|---|
| --------------------------------- | ------------------------ | ---------------------- | ||
| (State or Other Jurisdiction | (Commission File | (I.R.S. Employer | ||
| of Incorporation) | Number) | Identification No.) | ||
| 1800 Three Lincoln Centre | ||||
| --- | --- | --- | ||
| 5430 LBJ Freeway | ||||
| Dallas | Texas | 75240 | ||
| ---------------------------------------------------- | ----------------- | |||
| (Address of Principal Executive Offices) | (Zip Code) |
(972) 934-9227
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
| Title of each class | Trading Symbol | Name of each exchange on which registered | |
|---|---|---|---|
| Common stock | No Par Value | ATO | New York Stock Exchange |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On Wednesday, November 11, 2020, Atmos Energy Corporation (the “Company”) issued a news release in which it reported the Company’s financial results for the fourth quarter and full 2020 fiscal year, which ended September 30, 2020, and that certain of its officers would discuss such financial results in a conference call on Thursday, November 12, 2020 at 10 a.m. Eastern Time. In the release, the Company also announced that the call would be webcast live and that slides for the webcast would be available on its website for all interested parties.
A copy of the news release is furnished as Exhibit 99.1. The information furnished in this Item 2.02 and in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall such information be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
| (d) Exhibits | Exhibit Number | Description | |
|---|---|---|---|
| 99.1 | News Release dated November 11, 2020 (furnished under Item 2.02) | ||
| 101.INS | XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema | ||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | ||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | ||
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase | ||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | ||
| 104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ATMOS ENERGY CORPORATION | ||
|---|---|---|
| (Registrant) | ||
| DATE: | November 12, 2020 | By: /s/ CHRISTOPHER T. FORSYTHE |
| Christopher T. Forsythe | ||
| Senior Vice President and | ||
| Chief Financial Officer |
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Exhibit
Exhibit 99.1
| News Release |
|---|
Analysts and Media Contact:
Dan Meziere (972) 855-3729
Atmos Energy Corporation Reports Earnings for Fiscal 2020;
Initiates Fiscal 2021 through Fiscal 2025 Guidance; Raises Dividend 8.7 Percent
DALLAS (November 11, 2020) - Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its fourth fiscal quarter ended September 30, 2020.
Highlights
| • | Earnings per diluted share: |
|---|---|
| ◦ | $4.89 for the year ended September 30, 2020 |
| --- | --- |
| ◦ | $0.53 for the quarter ended September 30, 2020 |
| --- | --- |
| • | Consolidated net income: |
| --- | --- |
| ◦ | $601.4 million for the year ended September 30, 2020 |
| --- | --- |
| ◦ | $65.3 million for the quarter ended September 30, 2020 |
| --- | --- |
| • | Adjusted net income and adjusted diluted earnings per share, which excludes a $21.0 million one-time tax benefit related to the remeasurement of net deferred tax liabilities was $580.5 million and $4.72 for the year ended September 30, 2020. |
| --- | --- |
| • | Capital expenditures rose 14 percent to $1,935.7 million for the year ended September 30, 2020, with approximately 88 percent of capital spending related to system safety and reliability investments. |
| --- | --- |
Outlook
| • | Earnings per diluted share for fiscal 2021 is expected to be in the range of $4.90 to $5.10. |
|---|---|
| • | Capital expenditures are expected to be in the range of $2.0 billion to $2.2 billion in fiscal 2021. |
| --- | --- |
| • | The company's Board of Directors has declared a quarterly dividend of $0.625 per common share. The indicated annual dividend for fiscal 2021 is $2.50, which represents an 8.7% increase over fiscal 2020. |
| --- | --- |
“I am extremely proud of every employee for their commitment to deliver safe and reliable natural gas service paired with exceptional customer service. The preparation and dedication of our employees and leadership has served us and our customers well as we have continued to perform at the highest levels on every facet of our business during this pandemic,” said Kevin Akers, president and chief executive officer of Atmos Energy Corporation. “As we continue to execute our strategy of modernizing our natural gas distribution, transmission and storage systems to improve safety, reliability and
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environmental performance along with providing exceptional customer service at an affordable price, we remain well positioned to continue delivering annual earnings per share growth in the six to eight percent range,” Akers concluded.
Results for the Fiscal Year Ended September 30, 2020
Consolidated operating income increased $78.0 million to $824.1 million for the year ended September 30, 2020, compared to $746.1 million in the prior year, which primarily reflects rate outcomes in both segments and customer growth and lower operation and maintenance expense in our distribution business, partially offset by lower through system revenue and higher operation and maintenance expense in our pipeline and storage segment and increased depreciation and property tax expense.
Distribution operating income increased $57.4 million to $528.2 million for the year ended September 30, 2020, compared with $470.8 million in the prior year. The increase reflects a net $86.8 million increase in rates and customer growth of $13.7 million, partially offset by a $30.6 million increase in depreciation and property tax expenses associated with increased capital investments. Due to the timing of our fiscal year, the economic impacts from COVID-19 had a limited impact on our operating income.
Pipeline and storage operating income increased $20.6 million to $295.9 million for the year ended September 30, 2020, compared with $275.3 million in the prior year. This increase is primarily attributable to a $53.2 million increase from our GRIP filings approved in fiscal 2019 and 2020, partially offset by a $13.6 million decrease in through system revenues, a $6.8 million increase in operation and maintenance expense primarily due to well integrity costs and spending on hydro testing and in-line inspections and a $12.5 million increase in depreciation expense due to increased capital investments.
Capital expenditures increased $242.2 million to $1,935.7 million for the year ended September 30, 2020, compared with $1,693.5 million in the prior year, due to continued spending for infrastructure replacements and enhancements.
For the year ended September 30, 2020, the company generated operating cash flow of $1,038.0 million, a $69.2 million increase compared with the year ended September 30, 2019. The year-over-year increase reflects the positive cash effects of rate case outcomes achieved in fiscal 2020 and working capital changes, primarily as a result of the timing of gas cost recoveries under our purchase gas cost mechanisms.
Our equity capitalization ratio at September 30, 2020 was 60.0%, compared with 59.0% at September 30, 2019. The increase primarily reflects the absence of short-term debt balances at September 30, 2020.
Results for the Three Months Ended September 30, 2020
Consolidated operating income increased $11.1 million to $100.8 million for the three months ended September 30, 2020, from $89.7 million in the prior-year quarter. Rate case outcomes in both segments and customer growth in our distribution segment were partially offset by lower through system revenue in our pipeline and storage segment, decreased service order revenue in our distribution segment and higher depreciation expense.
Distribution operating income increased $8.2 million to $31.9 million for the three months ended September 30, 2020, compared with $23.7 million in the prior-year quarter. The
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increase primarily reflects a net $16.0 million increase in rates and a $3.4 million increase due to net customer growth, partially offset by a $10.5 million increase in operating expenses primarily related to increased bad debt expense and a $3.1 million decrease in service order revenues.
Pipeline and storage operating income increased $2.9 million to $68.9 million for the three months ended September 30, 2020, compared with $66.0 million in the prior-year quarter. This increase is primarily attributable to a $13.3 million increase in rates, due to the GRIP filing approved in fiscal 2020, partially offset by a $5.0 million decrease in through system revenues and a $4.2 million increase in depreciation expense due to increased capital investments.
Conference Call to be Webcast November 12, 2020
Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2020 fourth quarter financial results on Thursday, November 12, 2020, at 10:00 a.m. Eastern Time. The domestic telephone number is 877-407-3088 and the international telephone number is 201-389-0927. Kevin Akers, President and Chief Executive Officer, and Chris Forsythe, Senior Vice President and Chief Financial Officer, will participate in the conference call. The conference call will be webcast live on the Atmos Energy website at www.atmosenergy.com. A playback of the call will be available on the website later that day.
Forward-Looking Statements
The matters discussed in this news release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this news release are forward-looking statements made in good faith by the company and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used in this news release or any of the company’s other documents or oral presentations, the words “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “goal”, “intend”, “objective”, “plan”, “projection”, “seek”, “strategy” or similar words are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in this presentation, including the risks relating to regulatory trends and decisions, the company’s ability to continue to access the credit and capital markets, and the other factors discussed in the company’s reports filed with the Securities and Exchange Commission. These risks and uncertainties include the following: federal, state and local regulatory and political trends and decisions, including the impact of rate proceedings before various state regulatory commissions; increased federal regulatory oversight and potential penalties; possible increased federal, state and local regulation of the safety of our operations; the impact of greenhouse gas emissions or other legislation or regulations intended to address climate change; possible significant costs and liabilities resulting from pipeline integrity and other similar programs and related repairs; the inherent hazards and risks involved in distributing, transporting and storing natural gas; the availability and accessibility of contracted gas supplies, interstate pipeline and/or storage services; increased competition from energy suppliers and alternative forms of energy; adverse weather conditions; the impact of climate change; the inability to continue to hire, train and retain operational, technical and managerial personnel; increased dependence on technology that may hinder the Company's business if such technologies fail; the threat of
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cyber-attacks or acts of cyber-terrorism that could disrupt our business operations and information technology systems or result in the loss or exposure of confidential or sensitive customer, employee or Company information; natural disasters, terrorist activities or other events and other risks and uncertainties discussed herein, all of which are difficult to predict and many of which are beyond our control; the capital-intensive nature of our business; our ability to continue to access the credit and capital markets to execute our business strategy; market risks beyond our control affecting our risk management activities, including commodity price volatility, counterparty performance or creditworthiness and interest rate risk; the concentration of our operations in Texas; the impact of adverse economic conditions on our customers; changes in the availability and price of natural gas; increased costs of providing health care benefits, along with pension and postretirement health care benefits and increased funding requirements; the outbreak of COVID-19 and its impact on business and economic conditions.
Accordingly, while we believe these forward-looking statements to be reasonable, there can be no assurance that they will approximate actual experience or that the expectations derived from them will be realized. Further, the company undertakes no obligation to update or revise any of our forward-looking statements whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
During our fiscal third quarter we remeasured our deferred income tax balance as a result of Kansas House Bill 2585 and an update to the state deferred tax rate. As a result, we recorded a non-cash income tax benefit of $21.0 million for the year ended September 30, 2020. Due to the non-recurring nature of this benefit, we believe that net income and diluted net income per share before the non-cash income tax benefit provide a more relevant measure to analyze our financial performance than net income and diluted net income per share in order to allow investors to better analyze our core results and allow the information to be presented on a comparative basis to the prior year. Accordingly, the discussion and analysis of our financial performance herein will reference adjusted net income and adjusted diluted net income per share, non-GAAP measures, which are calculated as follows:
| Year Ended September 30 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | Change | ||||||
| (In thousands, except per share data) | ||||||||
| Net income | $ | 601,443 | $ | 511,406 | $ | 90,037 | ||
| Non-cash income tax benefit | (20,962 | ) | — | (20,962 | ) | |||
| Adjusted net income | $ | 580,481 | $ | 511,406 | $ | 69,075 | ||
| Diluted net income per share | $ | 4.89 | $ | 4.35 | $ | 0.54 | ||
| Diluted EPS from non-cash income tax benefit | (0.17 | ) | — | (0.17 | ) | |||
| Adjusted diluted net income per share | $ | 4.72 | $ | 4.35 | $ | 0.37 |
About Atmos Energy
Atmos Energy Corporation is the nation’s largest fully regulated, natural gas-only distributor of safe, clean, efficient and affordable energy. As part of our vision to be the safest provider of natural gas services, we are modernizing our business and our infrastructure while continuing to invest in safety, innovation, environmental sustainability and our communities.
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An S&P 500 company headquartered in Dallas, Atmos Energy serves more than 3 million distribution customers in over 1,400 communities across eight states and manages proprietary pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas. Find us online at http://www.atmosenergy.com, Facebook, Twitter, Instagram and YouTube.
This news release should be read in conjunction with the attached unaudited financial information.
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Atmos Energy Corporation
Financial Highlights (Unaudited)
| Statements of Income | Year Ended September 30 | |||||
|---|---|---|---|---|---|---|
| (000s except per share) | 2020 | 2019 | ||||
| Operating revenues | ||||||
| Distribution segment | $ | 2,626,993 | $ | 2,745,461 | ||
| Pipeline and storage segment | 609,339 | 567,024 | ||||
| Intersegment eliminations | (415,195 | ) | (410,637 | ) | ||
| 2,821,137 | 2,901,848 | |||||
| Purchased gas cost | ||||||
| Distribution segment | 1,071,227 | 1,268,591 | ||||
| Pipeline and storage segment | 1,548 | (360 | ) | |||
| Intersegment eliminations | (413,921 | ) | (409,394 | ) | ||
| 658,854 | 858,837 | |||||
| Operation and maintenance expense | 629,601 | 630,308 | ||||
| Depreciation and amortization | 429,828 | 391,456 | ||||
| Taxes, other than income | 278,755 | 275,189 | ||||
| Operating income | 824,099 | 746,058 | ||||
| Other non-operating income | 7,171 | 7,404 | ||||
| Interest charges | 84,474 | 103,153 | ||||
| Income before income taxes | 746,796 | 650,309 | ||||
| Income tax expense | 145,353 | 138,903 | ||||
| Net income | $ | 601,443 | $ | 511,406 | ||
| Basic net income per share | $ | 4.89 | $ | 4.36 | ||
| Diluted net income per share | $ | 4.89 | $ | 4.35 | ||
| Cash dividends per share | $ | 2.30 | $ | 2.10 | ||
| Basic weighted average shares outstanding | 122,788 | 117,200 | ||||
| Diluted weighted average shares outstanding | 122,872 | 117,461 | ||||
| Year Ended September 30 | ||||||
| --- | --- | --- | --- | --- | ||
| Summary Net Income by Segment (000s) | 2020 | 2019 | ||||
| Distribution | $ | 395,664 | $ | 328,814 | ||
| Pipeline and storage | 205,779 | 182,592 | ||||
| Net income | $ | 601,443 | $ | 511,406 |
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Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
| Statements of Income | Three Months Ended September 30 | |||||
|---|---|---|---|---|---|---|
| (000s except per share) | 2020 | 2019 | ||||
| Operating revenues | ||||||
| Distribution segment | $ | 430,176 | $ | 403,793 | ||
| Pipeline and storage segment | 156,918 | 147,706 | ||||
| Intersegment eliminations | (112,180 | ) | (107,816 | ) | ||
| 474,914 | 443,683 | |||||
| Purchased gas cost | ||||||
| Distribution segment | 128,641 | 120,993 | ||||
| Pipeline and storage segment | 1,258 | 184 | ||||
| Intersegment eliminations | (111,868 | ) | (107,507 | ) | ||
| 18,031 | 13,670 | |||||
| Operation and maintenance expense | 180,072 | 177,736 | ||||
| Depreciation and amortization | 111,746 | 100,919 | ||||
| Taxes, other than income | 64,220 | 61,643 | ||||
| Operating income | 100,845 | 89,715 | ||||
| Other non-operating income (expense) | (1,962 | ) | 9,250 | |||
| Interest charges | 15,494 | 28,763 | ||||
| Income before income taxes | 83,389 | 70,202 | ||||
| Income tax expense | 18,056 | 11,796 | ||||
| Net income | $ | 65,333 | $ | 58,406 | ||
| Basic net income per share | $ | 0.53 | $ | 0.49 | ||
| Diluted net income per share | $ | 0.53 | $ | 0.49 | ||
| Cash dividends per share | $ | 0.575 | $ | 0.525 | ||
| Basic weighted average shares outstanding | 124,096 | 119,345 | ||||
| Diluted weighted average shares outstanding | 124,100 | 119,824 | ||||
| Three Months Ended September 30 | ||||||
| --- | --- | --- | --- | --- | ||
| Summary Net Income by Segment (000s) | 2020 | 2019 | ||||
| Distribution | $ | 19,944 | $ | 9,838 | ||
| Pipeline and storage | 45,389 | 48,568 | ||||
| Net income | $ | 65,333 | $ | 58,406 |
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Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
| Condensed Balance Sheets | September 30, | September 30, | ||
|---|---|---|---|---|
| (000s) | 2020 | 2019 | ||
| Net property, plant and equipment | $ | 13,355,347 | $ | 11,787,669 |
| Cash and cash equivalents | 20,808 | 24,550 | ||
| Accounts receivable, net | 230,595 | 230,571 | ||
| Gas stored underground | 111,950 | 130,138 | ||
| Other current assets | 107,905 | 72,772 | ||
| Total current assets | 471,258 | 458,031 | ||
| Goodwill | 731,257 | 730,706 | ||
| Deferred charges and other assets | 801,170 | 391,213 | ||
| $ | 15,359,032 | $ | 13,367,619 | |
| Shareholders' equity | $ | 6,791,203 | $ | 5,750,223 |
| Long-term debt | 4,531,779 | 3,529,452 | ||
| Total capitalization | 11,322,982 | 9,279,675 | ||
| Accounts payable and accrued liabilities | 235,775 | 265,024 | ||
| Other current liabilities | 546,461 | 479,501 | ||
| Short-term debt | — | 464,915 | ||
| Current maturities of long-term debt | 165 | — | ||
| Total current liabilities | 782,401 | 1,209,440 | ||
| Deferred income taxes | 1,456,569 | 1,300,015 | ||
| Regulatory excess deferred taxes | 697,764 | 705,101 | ||
| Deferred credits and other liabilities | 1,099,316 | 873,388 | ||
| $ | 15,359,032 | $ | 13,367,619 |
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Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
| Condensed Statements of Cash Flows | Year Ended September 30 | |||||||
|---|---|---|---|---|---|---|---|---|
| (000s) | 2020 | 2019 | ||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 601,443 | $ | 511,406 | ||||
| Depreciation and amortization | 429,828 | 391,456 | ||||||
| Deferred income taxes | 155,322 | 132,004 | ||||||
| One-time income tax benefit | (20,962 | ) | — | |||||
| Other | 6,044 | 10,589 | ||||||
| Changes in assets and liabilities | (133,676 | ) | (76,686 | ) | ||||
| Net cash provided by operating activities | 1,037,999 | 968,769 | ||||||
| Cash flows from investing activities | ||||||||
| Capital expenditures | (1,935,676 | ) | (1,693,477 | ) | ||||
| Proceeds from the sale of discontinued operations | — | 4,000 | ||||||
| Debt and equity securities activities, net | 491 | (2,784 | ) | |||||
| Other, net | 9,667 | 8,601 | ||||||
| Net cash used in investing activities | (1,925,518 | ) | (1,683,660 | ) | ||||
| Cash flows from financing activities | ||||||||
| Net decrease in short-term debt | (464,915 | ) | (110,865 | ) | ||||
| Proceeds from issuance of long-term debt, net of premium/discount | 999,450 | 1,045,221 | ||||||
| Net proceeds from equity offering | 624,302 | 694,103 | ||||||
| Issuance of common stock through stock purchase and employee retirement plans | 19,548 | 19,323 | ||||||
| Settlement of interest rate swaps | (4,426 | ) | (90,141 | ) | ||||
| Repayment of long-term debt | — | (575,000 | ) | |||||
| Cash dividends paid | (282,444 | ) | (245,717 | ) | ||||
| Debt issuance costs | (7,738 | ) | (11,254 | ) | ||||
| Net cash provided by financing activities | 883,777 | 725,670 | ||||||
| Net increase (decrease) in cash and cash equivalents | (3,742 | ) | 10,779 | |||||
| Cash and cash equivalents at beginning of period | 24,550 | 13,771 | ||||||
| Cash and cash equivalents at end of period | $ | 20,808 | $ | 24,550 | ||||
| Three Months Ended September 30 | Year Ended September 30 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Statistics | 2020 | 2019 | 2020 | 2019 | ||||
| Consolidated distribution throughput (MMcf as metered) | 66,447 | 66,184 | 439,037 | 470,554 | ||||
| Consolidated pipeline and storage transportation volumes (MMcf) | 167,725 | 204,810 | 621,371 | 721,998 | ||||
| Distribution meters in service | 3,333,181 | 3,291,835 | 3,333,181 | 3,291,835 | ||||
| Distribution average cost of gas | $ | 3.75 | $ | 3.68 | $ | 3.67 | $ | 4.02 |
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