ONE Gas, Inc. announced first quarter financial results showing increased net income due in part to increased rate hikes compared to a year earlier and at the same time its subsidiaries are asking to rate increases in Kansas, Oklahoma and Texas.
Income was $119.4 million or $1.98 per share compared with $99.3 million or $1.75 per share in the first quarter of 2024.
“We achieved strong financial results in the first quarter due to our effective regulatory strategy and a disciplined approach to managing expenses,” said Robert S. McAnnally, president and chief executive officer.
2025 FINANCIAL GUIDANCE
The company expects to achieve the upper half of the 2025 financial guidance shared on Dec. 5, 2024, which provided for net income in the range of $254 million to $261 million and earnings per diluted share of $4.20 to $4.32.
Capital investments, including asset removal costs, are expected to be approximately $750 million in 2025, primarily targeted for system integrity and replacement projects. Capital investments for extensions to new customers are expected to be approximately $180 million.
- While weather across the Company’s service areas was 5 percent colder than normal and 16 percent colder than the first quarter last year, the impact on operating income was largely tempered by regulatory weather normalization mechanisms; and
- The board of directors declared a quarterly dividend of $0.67 per share ($2.68 annualized), payable on June 3, 2025, to shareholders of record at the close of business on May 19, 2025.
FIRST QUARTER 2025 FINANCIAL PERFORMANCE
ONE Gas reported operating income of $180.5 million in the first quarter, compared with $145.9 million in the first quarter 2024, which primarily reflects:
- an increase of $51.9 million from new rates; and
- an increase of $2.3 million in residential sales due primarily to net customer growth in Oklahoma and Texas.
The increase was partially offset by:
- an increase of $5.1 million in depreciation and amortization expense from additional capital investment;
- an increase of $4.7 million in ad valorem taxes, primarily due to regulatory outcomes which took effect during the quarter;
- an increase of $3.2 million in employee-related costs, due primarily to strategic investments in the Company’s workforce and ongoing in-sourcing efforts, which have strengthened operational oversight and improved overall expense management; and
- a net decrease of $6.5 million due to the impact of weather normalization mechanisms, largely offset by higher sales volumes.
Excluding interest related to KGSS-I securitized bonds, net interest expense increased $4.7 million for the three months ending March 31, 2025. The increase in interest expense is due primarily to the reopening of the outstanding 5.10 percent senior notes in August 2024 to issue an additional $250 million and higher average commercial paper balances.
Income tax expense reflects credits for amortization of the regulatory liability associated with excess deferred income taxes (EDIT) of $8.1 million and $10.1 million for the three months ended March 31, 2025, and 2024, respectively.
Capital expenditures and asset removal costs were $177.7 million for the first quarter 2025 compared with $179.4 million in the same period last year, primarily representing expenditures for system integrity and extension of service to new areas.
REGULATORY ACTIVITIES UPDATE
In April 2025, Kansas Gas Service submitted an application to the Kansas Corporation Commission (KCC) requesting an increase of approximately $7.2 million related to its Gas System Reliability Surcharge. The KCC has until August 2025 to issue an order.
In April 2025, Texas Gas Service made Gas Reliability Infrastructure Program filings for all customers in the Rio Grande Valley service area, requesting a $3.2 million increase to be effective in September 2025.
In February 2025, Oklahoma Natural Gas filed its annual Performance-Based Rate Change application for the test year ended December 2024. The filing includes a requested $41.5 million base rate revenue increase, $2.4 million energy efficiency incentive and $13.2 million of EDIT to be credited to customers in 2026. A hearing is scheduled for June 12, 2025.
In February 2025, Texas Gas Service made Gas Reliability Infrastructure Program filings for customers in each of the Central-Gulf and West-North service areas, requesting increases of $15.4 million and $8.2 million, respectively, to be effective in June 2025.
