Pandemic and warmer weather lead to lower ONEGAS 1Q revenue

ONE Gas, Inc. reported a drop in its first quarter 2020 net income which totaled nearly $92 million compared to about $94 million a year ago, some blamed on warmer weather and some blamed on the coronavirus pandemic.

The Tulsa company said the first quarter 2020 net income translated to $1.72 per share, down four cents from the diluted share reported in the first quarter of 2019. Natural gas sales volumes for the first quarter were 16% lower than a year ago and the company blamed warmer weather for the decline.

The company ended the quarter with $474.7 million of commercial paper and $1.2 million in letters of credit outstanding, leaving $224.1 million available in its commercial paper program.

Earlier this month, ONE Gas entered into a $250 million, 364-day revolving credit agreement.

The board of directors also declared a quarterly dividend of 54-cents a share or $2.16 a share on an annualized basis.

ONEGas credited some of its income to a $7.9 million increase in new rates primarily in Kansas and Texas and a $2.5 million increase due to net residential customer growth.

There was also a $0.9 million increase in rider and surcharge recoveries because of a higher ad-valorem surcharge in Kansas which was offset by a $3.9 million drop due to lower sales volumes. Not as much home heating gas was used in Kansas and Oklahoma because of warmer weather this year compared to 2019. Heating degree days in Kansas were 19% lower and 21% down in Oklahoma compared to a year ago.

“In the midst of the COVID-19 pandemic, our focus remains on continuing to protect our workforce and customers while operating our systems safely during this difficult time,” said Pierce H. Norton II, president and chief executive officer. “Our employees have displayed unwavering courage and resolve during these unprecedented times.”

In April 2020, the Public Utility Division of the Oklahoma Corporation Commission is expected to file an application to allow all utilities in Oklahoma to defer, as a regulatory asset, incremental expenses, including increased bad debt expenses and/or impacts to revenue that are outside the utility’s control or a direct result of the utility’s COVID-19 response, beginning March 13, 2020. Regulatory action on the proposed application is expected in the second quarter 2020.

In February 2020, Oklahoma Natural Gas filed its fourth annual Performance-Based Rate Change (PBRC) application following the general rate case that was approved in January 2016. The filing includes a requested base rate increase of $11.8 million and a $12.2 million credit associated with EDIT. If approved, new rates are expected to become effective in the third quarter of 2020, and EDIT is expected to be credited to customers in the first quarter 2021.

Kansas

In April 2020, Kansas Gas Service filed an application with the Kansas Corporation Commission for an Accounting Authority Order to accumulate and defer certain incremental costs incurred, including bad debt expenses and lost revenues, as well as associated carrying costs related to COVID-19 beginning March 1, 2020, for recovery in Kansas Gas Services’ next rate case filing. Regulatory action on the proposed application is expected in the second quarter 2020.

Texas

In April 2020, the Railroad Commission of Texas issued an order authorizing utilities to use an accounting mechanism and a subsequent process through which Texas Gas Service may seek future recovery of incremental expenses resulting from the effects of COVID-19, including bad debt and associated credit and collections costs, and other reasonable and necessary incremental costs to address the impact of COVID-19, beginning March 13, 2020.

 

Source: ONEGAS Inc.