RGC Resources(US:RGCO)2024-12-05 03:00Revenue and Rate Changes - Roanoke Gas implemented interim non-gas base rates effective January 1, 2023, aimed at generating an additional $8.55 million in annual revenues due to higher operating costs[96]. - The SCC approved a final non-gas base rate increase of $7.45 million on December 19, 2023, with a refund of excess revenues collected during interim rates to be issued in February 2024[96]. - The SAVE Plan revenues decreased to approximately $461,000 in fiscal 2024 from approximately $1,104,000 in fiscal 2023, reflecting the reset of the SAVE Plan and Rider effective January 1, 2023[100]. - The WNA mechanism generated approximately $3,761,000 in additional revenues for fiscal 2024 due to weather being approximately 20% warmer than normal[102]. - Gas utility revenues decreased by $12,792,206, or 13%, to $84,533,101 for the year ended September 30, 2024, compared to $97,325,307 in 2023[117]. Operating Performance - Total operating revenues for the year ended September 30, 2024, decreased by 13% to $84,641,232, primarily due to lower natural gas commodity prices and reduced deliveries[114]. - Natural gas commodity prices for fiscal 2024 purchases declined by 43% per DTH compared to the prior year, contributing to a 29% decrease in total gas costs[116]. - The operation of the RNG facility resulted in total RNG revenue increasing from approximately $712,000 in fiscal 2023 to $1,629,000 in fiscal 2024[104]. - ICC revenues decreased from approximately $967,000 in fiscal 2023 to $728,000 in fiscal 2024, attributed to lower natural gas commodity prices[103]. - The total delivered volumes of regulated natural gas decreased by 1% to 10,048,770 DTH for the year ended September 30, 2024[114]. Financial Metrics - Net income increased by $461,614 from the prior year, driven by AFUDC and earnings from the MVP, despite inflationary pressures on operating expenses[110]. - Gross utility margin increased by $2,982,525, or 7%, reaching $48,565,114 in fiscal 2024, primarily due to new non-gas base rates and increased RNG Rider contributions[117]. - Basic and diluted earnings per share increased to $1.16 in fiscal 2024 from $1.14 in fiscal 2023, while dividends declared per share rose to $0.80 from $0.79[132]. Expenses and Cash Flow - Operations and maintenance expenses increased by $2,450,764, or 15%, primarily due to inflationary effects on personnel costs and increased professional services[122]. - Total interest expense rose by $886,080, or 16%, driven by higher interest rates on variable rate debt, with the average interest rate increasing from 3.83% to 4.27%[128]. - Cash and cash equivalents decreased by approximately $618,000 in fiscal 2024, compared to a decrease of $3.4 million in fiscal 2023[135]. - Operating cash flows decreased by $6.4 million, from $23.8 million in 2023 to $17.4 million in 2024[137]. - The average price of gas in storage decreased from over $6.00 per DTH in 2023 to approximately $4.00 per DTH in 2024, impacting cash flow levels[137]. Capital Expenditures and Financing - Capital expenditures were approximately $22.1 million in 2024, down from $25.3 million in 2023, primarily due to reduced investment in the RNG project[138]. - Financing activities provided approximately $4.0 million in 2024, an increase of $3.8 million from $200,000 in 2023, driven by net borrowings of $6.8 million[143]. - The company's consolidated capitalization was 44.1% equity and 55.9% long-term debt as of September 30, 2024[143]. - The company expects capital expenditures to remain around $22 million annually over the next few years[140]. Investments and Earnings - The equity in earnings of the MVP investment increased by $1,766,881 due to ongoing construction activities, with operational earnings now being recognized[126]. - The first cash distribution from the MVP was approximately $800,000 in October 2024, with similar distributions expected quarterly[146]. - The company recorded equity in earnings of consolidated affiliates of $3.9 million in 2024, up from $2.1 million in 2023[152]. Pension and Postretirement Plans - The pension plan's funded status improved to 104% as of September 30, 2024, up from 100% in 2023, with a fair value of assets at $31,054,138 and a benefit obligation of $29,873,428[165]. - The postretirement plan's funded status increased to 139% as of September 30, 2024, compared to 116% in 2023, with a fair value of assets at $15,078,281 and a benefit obligation of $10,842,455[165]. - The long-term rate of return assumptions for the pension plan increased from 4.50% in fiscal 2024 to 4.95% for fiscal 2025, while the postretirement plan's rate rose from 4.21% to 4.95%[166]. - The company does not expect to make contributions to its pension and postretirement plans in fiscal 2025 due to their funded positions[167]. - The pension plan's sensitivity analysis indicates a $106,000 increase in pension costs with a 0.25% decrease in the discount rate[169]. Asset Allocation and Risk Management - The company transitioned the pension plan's asset allocation from 60% equity and 40% fixed income to 25% equity and 75% fixed income since January 2017[162]. - The postretirement plan's asset allocation was revised from 50% equity and 50% fixed income to 30% equity and 70% fixed income[163]. - A 25 basis point decrease in the yield curve would result in a $228,248 decrease in the fair value of the company's interest rate swaps[170]. - The company will continue to evaluate its benefit plan funding levels and make adjustments as necessary to avoid benefit restrictions[167].