ONE Gas reported a drop in second quarter net income compared to a year ago. The Tulsa-based company said its net income for the year is also below what it recorded last year.
It is still waiting on rate hike decisions before regulators in Oklahoma, Kansas and Texas.
The 2024 net income was $27.3 million and 48 cents a share compared to $32.7 million and 58 cents a share in the second quarter of 2023. For the year, ONE Gas reported its net income was $126 million or $2.23 a share, also lower than a year ago when the year-to-date income was $135.3 million and $2.42 a share.
Still, company leadership expressed optimism.
“The first half of 2024 was in line with our expectations, with active rate cases and interim filings progressing well in all jurisdictions,” said Robert S. McAnnally, president and chief executive officer.
“We head into the second half of the year with positive momentum and remain focused on executing our strategic plan and safely serving our customers.”
ONE Gas is also banking on additional revenue after it received a unanimous settlement agreement on its Kansas Gas Service rate case before the Kansas Corporation Commission. The KCC has yet to vote on the rate hike request.
If the unanimous settlement agreement is approved by the KCC as filed, Kansas Gas Service’s net base rates would increase $35 million. Kansas Gas Service was already recovering $35 million from customers through Gas System Reliability Surcharge (GSRS) filings; therefore, this settlement represents a total base rate increase of $70 million. The unanimous settlement agreement stipulates a GSRS pre-tax carrying charge of 8.97 percent for subsequent GSRS filings. According to the Order Setting Procedural Schedule, the KCC will issue an order by Oct. 25, 2024.
ONE Gas is awaiting approval from the Oklahoma Corporation Commission for its annual Performance-Based Rate Change application for the test year ended December 2023. The filing included a requested $31.8 million base rate revenue increase. On May 31, 2024, a settlement was filed with a proposed revenue increase of $31.4 million. On July 15, 2024, the administrative law judge issued a report to the Oklahoma Corporation Commission (OCC) recommending approval of the settlement agreement. New rates went into effect on June 28, 2024, subject to refund until the OCC issues an order. An order is expected in the third quarter of 2024.
In June 2024, Texas Gas Service filed a rate case for all customers in the Central-Gulf service area, requesting a $25.8 million increase. Texas Gas Service has invested approximately $355 million in its Central-Gulf service area natural gas distribution system since its last Central-Gulf service area rate case was finalized in August 2020.
A portion of this investment,approximately $342 million, is currently recovered through GRIP. The current filing is based on a 10.25 percent return on equity and a 59.6 percent common equity ratio. New rates are expected to take effect in late 2024.
Second quarter operating income was $69.4 million, up from the $64 million a year ago, thanks largely to new rats which brought in $14.7 million more in revenue. The company also credited an increase of $1.6 million in residential sales primarily due to net customer growth in both Oklahoma and Texas where it operates Texas Gas Service.
ONE Gas reaffirmed the financial guidance it issued on Nov. 29, 2023, with 2024 net income expected to be in the range of $214 million to $231 million, or $3.70 to $4.00 per diluted share. Capital expenditures, including asset removal costs, are expected to be approximately $750 million in 2024.
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