Due to the extraordinary gas costs related to Winter Storm Uri, Atmos reported “negative operating cash flow” for the six months ending March 31.
The company also reported capital expenditures totaling $845.7 million for the six months ending March 31, with approximately 87 percent going to system safety and reliability investments.
Atmos, a gas utility company, serves three million distribution customers across eight states — including 2 million customers in its Atmos Mid-Tex, West Texas and Atmos Pipeline-Texas divisions. The company’s newly released financial information was included in a May 6 call with investment analysts.
During that call, Atmos officials projected capital expenditures across its entire multi-state system in the range of $2 billion to $2.2 billion for the 2021 fiscal year.
NEGATIVE OPERATING CASH
However, for the six months ending March 31, the company likewise reported “negative operating cash flow” of $1.4 billion. This represents a greater than $2 billion decrease in cash flow, as compared with the six months ending March 31, 2020, according to the company. The year-over-year decrease is primarily due to extraordinary gas fuel costs incurred by Atmos during Winter Storm Uri.
Under ordinary circumstances, Atmos would have passed those costs directly to its customers as discrete charges on bills. However, in order to head off customer rate shock (and with the authorization of regulators), Atmos instead has logged them as “regulatory assets” — meaning that the company will recover those extraordinary costs through a future rate proceeding. The Texas Legislature also has under consideration “securitization” legislation that will allow Atmos and other Texas gas utilities to receive up-front payment for those gas costs through the use of long-term debt instruments secured by customer rates.
REVENUE AND DIVIDENDS
Overall, the company reported that it receives 66 percent of its revenue through residential rates, 27 percent from commercial rates, 2 percent from industrial rates, and 5 percent from the transportation of gas or through other sources.
The indicated annual dividend for FY 2021 is $2.50, representing an 8.7 percent increase over FY 2020. This marks the 37th consecutive year of rising dividends for Atmos shareholders.
In Texas, in FY 2021 through May 5, the company received additional revenues through an $82.6 million rate review mechanism (“RRM”) case in the Atmos Mid-Tex division and a $5.6 million Atmos West Texas RRM.
The company also enumerated the following proceedings as “in progress” that will increase its revenues: a $44 million Atmos Pipeline GRIP; a $29.7 million Mid-Tex RRM; a $15.9 million Mid-Tex Dallas Annual Rate Review; a $15.8 million Mid-Tex GRIP; $1.7 million in West Texas GRIPs; a $900,000 West Texas RRM; and a $5.1 million West Texas ALDC Statement of Intent.