þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
District of Columbia and Virginia | 53-0162882 | |||||
(State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer [ü] | Smaller Reporting Company o | |||
Emerging growth company o |
PART I. Financial Information | ||
Item 1. | Financial Statements (Unaudited) | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. Other Information | ||
Item 1. | ||
Item 1A. | ||
Item 4. | ||
Item 6. | ||
• | the inability to successfully integrate into the operations of AltaGas and a failure to realize anticipated benefits; |
• | the effect of the consummation of the merger (as defined below) on our ability to maintain supplier relationships, keep customers, and retain and hire key personnel; |
• | unexpected costs incurred in connection with the merger; |
• | the inability to meet commitments under various orders and agreements associated with regulatory approvals for the merger, which could have a detrimental impact on our business, financial condition, operating results and prospects; |
• | the loss of certain administrative and management functions and services provided by AltaGas; |
• | potential litigation in connection with the merger; |
• | changes in AltaGas’ strategy or relationship with Washington Gas that could affect our performance or operations; |
• | changes in our credit rating, WGL’s, or AltaGas’ credit ratings, and disruptions in credit market conditions or other factors that may affect our access to and cost of capital; |
• | the level and rate at which we incur costs and expenses, and the extent to which we are allowed to recover from customers, through the regulatory process, such costs and expenses relating to constructing, operating and maintaining our distribution system; |
• | the availability of natural gas supply, interstate pipeline transportation and storage capacity; |
• | leaks, mechanical problems, incidents or other operational issues in our natural gas distribution system, including the effectiveness of our efforts to mitigate the effects of receiving low-HHC natural gas; |
• | changes in laws and regulations affecting our business, including in the areas of the environment, pipeline integrity, and employment; |
• | changes in energy commodity market conditions, including the relative prices of alternative forms of energy such as electricity, fuel oil and propane; |
• | disruptions or decline in the local economy in which Washington Gas operates; |
• | strikes or work stoppages by unionized employees; |
• | adjustment to the cost of providing retirement plan benefits; |
• | changes to government fiscal and trade policies; |
• | security breaches of our information technology infrastructure, including cyber-attacks and cyber-terrorism; |
• | acts of nature and catastrophic events, including terrorist acts; |
• | the credit-worthiness of customers; suppliers and derivatives counterparties; |
• | changes in the value of derivative contracts and the availability of suitable derivative counterparties; |
• | rules implementing the derivatives transaction provisions of the Dodd-Frank Act may impose costs on our derivatives activities; |
• | unusual weather conditions and changes in natural gas consumption patterns; |
• | legislative, regulatory, and judicial mandates or decisions affecting our operations, including interpretations of the Tax Cuts and Jobs Act of 2017 (Tax Act); |
• | our ability to manage the outsourcing of several business processes; |
• | the outcome of new and existing matters before courts, regulators, government agencies or arbitrators, including that relating to the August 2016 explosion and fire at an apartment complex in Silver Spring, Maryland; |
• | changes in accounting principles and the effect of accounting pronouncements issued periodically by accounting standard-setting bodies. |
March 31, | December 31, | ||||||
(In thousands) | 2019 | 2018 | |||||
ASSETS | |||||||
Property, Plant and Equipment | |||||||
At original cost | $ | 5,791,505 | $ | 5,702,927 | |||
Accumulated depreciation and amortization | (1,541,093 | ) | (1,513,590 | ) | |||
Net property, plant and equipment | 4,250,412 | 4,189,337 | |||||
Current Assets | |||||||
Cash and cash equivalents | 2,142 | 6,082 | |||||
Receivables | |||||||
Accounts receivable | 325,144 | 292,871 | |||||
Gas costs and other regulatory assets | 12,754 | 6,020 | |||||
Unbilled revenues | 130,316 | 189,497 | |||||
Allowance for doubtful accounts | (33,512 | ) | (29,461 | ) | |||
Net receivables | 434,702 | 458,927 | |||||
Materials and supplies—principally at average cost | 18,459 | 19,727 | |||||
Storage gas | 38,044 | 103,929 | |||||
Prepaid taxes | 25,156 | 27,193 | |||||
Other prepayments | 27,124 | 28,232 | |||||
Receivables from associated companies | 4,570 | 4,819 | |||||
Derivatives | 13,006 | 19,488 | |||||
Other | 4,247 | 20,347 | |||||
Total current assets | 567,450 | 688,744 | |||||
Deferred Charges and Other Assets | |||||||
Regulatory assets | |||||||
Gas costs | 78,677 | 141,636 | |||||
Pension and other post-retirement benefits | 81,614 | 86,493 | |||||
Other | 92,548 | 99,105 | |||||
Prepaid post-retirement benefits | 251,077 | 249,462 | |||||
Right of use asset | 41,944 | — | |||||
Derivatives | 18,585 | 11,318 | |||||
Other | 50,706 | 50,490 | |||||
Total deferred charges and other assets | 615,151 | 638,504 | |||||
Total Assets | $ | 5,433,013 | $ | 5,516,585 | |||
CAPITALIZATION AND LIABILITIES | |||||||
Capitalization | |||||||
Common shareholder’s equity | $ | 1,654,504 | $ | 1,562,573 | |||
Preferred stock | 28,173 | 28,173 | |||||
Long-term debt | 1,034,942 | 1,035,033 | |||||
Total capitalization | 2,717,619 | 2,625,779 | |||||
Current Liabilities | |||||||
Current maturities of long-term debt | 50,000 | 50,000 | |||||
Notes payable and project financing | 220,460 | 311,460 | |||||
Accounts payable and other accrued liabilities | 208,924 | 288,376 | |||||
Wages payable | 19,447 | 22,629 | |||||
Accrued interest | 3,782 | 14,504 | |||||
Dividends declared | 25,330 | 24,567 | |||||
Customer deposits and advance payments | 38,849 | 54,370 | |||||
Gas costs and other regulatory liabilities | 88,567 | 75,151 | |||||
Accrued taxes | 31,683 | 28,451 | |||||
Payables to associated companies | 39,567 | 95,228 | |||||
Operating lease liability | 3,726 | — | |||||
Derivatives | 7,770 | 20,295 | |||||
Other | 7,263 | 7,507 | |||||
Total current liabilities | 745,368 | 992,538 | |||||
Deferred Credits | |||||||
Unamortized investment tax credits | 3,068 | 3,233 | |||||
Deferred income taxes | 483,091 | 454,248 | |||||
Accrued pensions and benefits | 157,559 | 156,210 | |||||
Asset retirement obligations | 303,336 | 300,769 | |||||
Regulatory liabilities | |||||||
Accrued asset removal costs | 263,071 | 264,556 | |||||
Other post-retirement benefits | 117,382 | 121,345 | |||||
Excess deferred taxes and other | 431,255 | 431,913 | |||||
Operating lease liability | 55,192 | — | |||||
Derivatives | 110,137 | 116,847 | |||||
Other | 45,935 | 49,147 | |||||
Total deferred credits | 1,970,026 | 1,898,268 | |||||
Commitments and Contingencies (Note 10) | |||||||
Total Capitalization and Liabilities | $ | 5,433,013 | $ | 5,516,585 |
Three Months Ended March 31, | |||||||
(In thousands) | 2019 | 2018 | |||||
OPERATING REVENUES | $ | 593,653 | $ | 532,040 | |||
OPERATING EXPENSES | |||||||
Utility cost of gas | 242,263 | 205,296 | |||||
Operation and maintenance | 111,002 | 93,805 | |||||
Depreciation and amortization | 35,189 | 33,468 | |||||
General taxes and other assessments | 52,619 | 50,493 | |||||
Total Operating Expenses | 441,073 | 383,062 | |||||
OPERATING INCOME | 152,580 | 148,978 | |||||
Other income (expense) — net | 4,522 | 1,594 | |||||
Interest expense | 14,876 | 14,672 | |||||
INCOME BEFORE INCOME TAXES | 142,226 | 135,900 | |||||
INCOME TAX EXPENSE | 29,230 | 27,816 | |||||
NET INCOME | $ | 112,996 | $ | 108,084 | |||
Dividends on preferred stock | 330 | 330 | |||||
NET INCOME APPLICABLE TO COMMON STOCK | $ | 112,666 | $ | 107,754 |
Three Months Ended March 31, | |||||||
(In thousands) | 2019 | 2018 | |||||
NET INCOME | $ | 112,996 | $ | 108,084 | |||
OTHER COMPREHENSIVE INCOME BEFORE INCOME TAXES: | |||||||
Pension and other post-retirement benefit plans | |||||||
Change in prior service cost | (162 | ) | (273 | ) | |||
Change in actuarial net gain | 4,904 | 530 | |||||
Total pension and other post-retirement benefit plans | $ | 4,742 | $ | 257 | |||
INCOME TAX EXPENSE RELATED TO OTHER COMPREHENSIVE INCOME | 477 | 74 | |||||
OTHER COMPREHENSIVE INCOME | $ | 4,265 | $ | 183 | |||
COMPREHENSIVE INCOME | $ | 117,261 | $ | 108,267 |
Three Months Ended March 31, | Three Months Ended March 31, | |||||
(In thousands) | 2019 | 2018 | ||||
OPERATING ACTIVITIES | ||||||
Net income | $ | 112,996 | $ | 108,084 | ||
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||
Depreciation and amortization | 35,189 | 33,468 | ||||
Amortization of: | ||||||
Other regulatory assets and liabilities—net | 1,730 | 1,914 | ||||
Debt related costs | 373 | 402 | ||||
Deferred income taxes—net | 29,394 | 45,503 | ||||
Accrued/deferred pension and other post-retirement benefit cost | 3,885 | 2,887 | ||||
Compensation expense related to stock-based awards | 1,185 | 3,843 | ||||
Provision for doubtful accounts | 7,489 | 8,295 | ||||
Unrealized (gain) loss on derivative contracts | (7,148 | ) | (12,292 | ) | ||
Amortization of investment tax credits | (165 | ) | (179 | ) | ||
Other non-cash charges (credits)—net | 208 | (283 | ) | |||
Changes in operating assets and liabilities (Note 15) | 3,632 | 34,829 | ||||
Net Cash From Operating Activities | 188,768 | 226,471 | ||||
FINANCING ACTIVITIES | ||||||
Debt issuance costs | (209 | ) | (1 | ) | ||
Notes payable issued (retired)—net | (91,000 | ) | (127,000 | ) | ||
Dividends on common stock and preferred stock | (24,567 | ) | (22,170 | ) | ||
Net Cash From Financing Activities | (115,776 | ) | (149,171 | ) | ||
INVESTING ACTIVITIES | ||||||
Capital expenditures (excluding AFUDC) | (92,739 | ) | (70,228 | ) | ||
Net Cash From Investing Activities | (92,739 | ) | (70,228 | ) | ||
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (19,747 | ) | 7,072 | |||
Cash, Cash Equivalents, and Restricted Cash at Beginning of the Period | 71,423 | 6,652 | ||||
Cash, Cash equivalents and Restricted Cash at End of the Period | $ | 51,676 | $ | 13,724 | ||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Note 15) |
ACCOUNTING STANDARDS ADOPTED IN CALENDAR YEAR 2019 | ||||||
Standard | Description | Date of adoption | Effect on the financial statements or other significant matters | |||
ASU 2016-02, Leases (Topic 842), ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, ASU 2018-11, Targeted Improvements, and ASU 2018-20, Narrow-Scope Improvements for Lessors | ASU 2016-02 requires recognition of a right-to-use asset and lease liability by lessees on the statement of financial position and disclosure of key information about leasing arrangements. Lessor accounting remains substantially unchanged but the standard modifies what qualifies as a sales-type and direct financing lease and eliminated real-estate specific provisions. The standard requires application using a modified retrospective approach. ASU 2018-01 provides an optional election not to evaluate existing and expired land easements not previously accounted for as a lease. ASU 2018-11 allows entities to elect to report comparative periods presented after adoption under the old lease standard (ASC Topic 840, Leases) and recognize a cumulative effect adjustment to the opening balance at the date of adoption. The update also provides lessors a practical expedient not requiring the separation of lease and non-lease components provided that certain conditions are met. ASU 2018-20 allows lessors to include and exclude certain costs from variable payments. The ASU also requires lessors to allocate certain variable payments to the lease and non-lease components when the changes in facts and circumstances on which the variable payments are based occur. | January 1, 2019 | Leases, with terms longer than 12 months, for which Washington Gas is the lessee have been reflected on the balance sheet by recording an increase to non- current assets and an increase to deferred credits net of the current portion that is recorded in current liabilities. Upon adoption, Washington Gas recorded lease liabilities of $58.9 million and a right-of-use asset of $43.2 million, net of lease incentives and prepaid or deferred rent balances of $15.7 million. Washington Gas utilized the transition practical expedients which allow entities to not have to reassess whether an arrangement contains a lease and the lease classification under the provisions of ASC Topic 842, land easements, and not separating out the lease and non-lease components for certain classes of assets. As a result of the transition practical expedients, Washington Gas’ operating leases on transition are consistent with its conclusions under ASC 840. Washington Gas has also elected to present prior comparative information under ASC 840. See Note 3 - Leases for further information and the new required lease disclosures. |
ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted improvements to Accounting for Hedging Activities and ASU 2018-16, Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes | ASU 2017-12 amends the hedge accounting and recognition requirements by expanding an entity’s ability to hedge non-financial and financial risk components and reduce the complexity in fair value hedges of interest rate risk. Additionally, this standard eliminates the requirement to separately measure and disclose the ineffective portion of the hedge with the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. Early adoption is permitted. ASU 2018-16 adds the OIS rate based on SOFR as a fifth U.S. benchmark interest rate for hedge accounting purposes. This standard should be adopted in conjunction with ASU 2017-12 if not early adopted. | January 1, 2019 | The guidance will only have an impact on new transactions that are entered into and where hedge accounting is elected. | |||
ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) | The update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements to capitalize implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Capitalized implementation costs should be presented in the statement of financial position as a prepaid expense and amortized over the term of the hosting arrangement, presented in the statements of income in the same line items as prepayment of fees associated with the hosting arrangement. The updates in this standard may be applied on a prospective or retrospective basis. Early adoption is permitted. | January 1, 2019 | We early adopted this standard on a prospective basis. The adoption of this ASU did not have a material effect on our financial statements. |
OTHER NEWLY ISSUED ACCOUNTING STANDARDS | ||||||
Standard | Description | Required date of adoption | Effect on the financial statements or other significant matters | |||
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, including other subsequent ASUs clarifying the guidance. | For credit losses on financial instruments, this standard changes the current incurred loss impairment methodology to an expected loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. Early adoption is permitted. | January 1, 2020 | We are in the process of evaluating the impact the adoption of this standard will have on our financial statements. | |||
ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement | This update modifies the disclosure requirements on fair value measurements. Early adoption is permitted. | January 1, 2020 | It is not expected that the adoption of this standard will have a material effect on our financial statements. | |||
ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities | This standard provides a private-company scope exception to the VIE guidance for certain entities under common control and clarify that indirect interest held through related parties under common control will be considered on a proportional basis when determining whether fees paid to decision makers and service providers are variable interests. Early adoption is permitted. | January 1, 2020 | We are in the process of evaluating this new accounting standard but it is expected that the adoption of this standard will not have a material effect on our financial statements. | |||
ASU 2019-01, Leases (Topic 842) Codification Improvements | This update addresses the determination of the fair value of the underlying asset by lessors that are not manufacturers or dealers, provides guidance for the presentation of the statement of cash flows for sales-type and direct financing leases, and clarifies transition disclosures related to Topic 250. | January 1, 2020 | We do not anticipate that adoption of this standard will have a material effect on our financial statements. | |||
ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans | This standard modifies the disclosure requirements related to defined benefit pension and other postretirement plans. Early adoption is permitted. | December 31, 2020 | We do not anticipate that adoption of this standard will have a material effect on our financial statements. |
Disaggregated Revenue by Type of Service | |||
(In millions) | Three Months Ended March 31, 2019 | ||
Revenue from contracts with customers | |||
Gas and transportation sales | |||
Gas sold and delivered | $ | 109.4 | |
Gas delivered for others | 462.1 | ||
Other | 13.6 | ||
Other revenues | 1.1 | ||
Total revenue from contracts with customers | $ | 586.2 | |
Other sources of revenue | |||
Revenue from alternative revenue programs (a) | $ | 4.0 | |
Leasing revenue (b) | 0.2 | ||
Other | 3.3 | ||
Total revenue from other sources | 7.5 | ||
Total Operating Revenue | $ | 593.7 |
Maturity of Operating Lease Liabilities | |||
(In millions) | March 31, 2019 | ||
2019 | $ | 2.4 | |
2020 | 5.8 | ||
2021 | 5.4 | ||
2022 | 5.3 | ||
2023 | 5.4 | ||
Thereafter | 50.7 | ||
Total lease payments | $ | 75.0 | |
Less: Interest | (16.1 | ) | |
Present Value of Lease Liabilities | $ | 58.9 |
Supplemental Cash Flow Information Related to Operating Leases | |||
(Dollar amounts in millions) | Three Months Ended March 31, 2019 | ||
Cash paid for amounts included in the lease liabilities in the operating cash flows | $ | 0.5 | |
Operating lease cost (including variable lease costs of $0.6 million) | $ | 1.9 | |
Weighted average remaining lease term | 13.7 years | ||
Weighted average discount rate | 3.32 | % |
Maturity of Operating Lease Payments(a) | |||
(In millions) | March 31, 2019 | ||
2019 | $ | 0.6 | |
2020 | 0.6 | ||
2021 | 0.6 | ||
2022 | 0.6 | ||
2023 | 0.6 | ||
Thereafter | 58.3 | ||
Total lease payments | $ | 61.3 |
March 31, | December 31, | |||||
(In millions) | 2019 | 2018 | ||||
Accounts payable—trade | $ | 166.6 | $ | 228.9 | ||
Employee benefits and payroll accruals | 11.5 | 28.0 | ||||
Other accrued liabilities | 30.8 | 31.5 | ||||
Total | $ | 208.9 | $ | 288.4 |
Committed Credit Available | |||
($ in millions) | March 31, 2019 | December 31, 2018 | |
Committed credit agreements | |||
Unsecured revolving credit facility, expires December 19, 2019(a) | $350.0 | $350.0 | |
Less: Commercial Paper | (205.0) | (296.0) | |
Net committed credit available | $145.0 | $54.0 | |
Weighted average interest rate | 2.84% | 2.93% |
Long Term Debt Outstanding | ||||||
March 31, 2019 | December 31, 2018 | |||||
Total Long-Term Debt(a) | $ | 1,096.0 | $ | 1,096.0 | ||
Unamortized discount | (2.9 | ) | (2.9 | ) | ||
Unamortized debt expense | (8.2 | ) | (8.1 | ) | ||
Less—current maturities | 50.0 | 50.0 | ||||
Total Long-Term Debt | $ | 1,034.9 | $ | 1,035.0 | ||
Weighted average interest rate(b) | 4.77 | % | 4.77 | % |
Components of Total Equity | |||||||||||||||||||||
(In thousands, except shares) | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss), Net of Taxes | Total | ||||||||||||||||
Shares | Amount | ||||||||||||||||||||
Balance at December 31, 2018 | 46,479,536 | $ | 46,479 | $ | 979,273 | $ | 543,448 | $ | (6,627 | ) | $ | 1,562,573 | |||||||||
Net income | — | — | — | 112,996 | — | $ | 112,996 | ||||||||||||||
Other comprehensive income | — | — | — | — | 4,265 | $ | 4,265 | ||||||||||||||
Dividends declared: | |||||||||||||||||||||
Common stock | — | — | — | (25,000 | ) | — | $ | (25,000 | ) | ||||||||||||
Preferred stock | — | — | — | (330 | ) | — | $ | (330 | ) | ||||||||||||
Balance at March 31, 2019 | 46,479,536 | 46,479 | 979,273 | 631,114 | (2,362 | ) | 1,654,504 | ||||||||||||||
Balance at December 31, 2017 | 46,479,536 | $ | 46,479 | $ | 583,185 | $ | 670,580 | $ | (4,330 | ) | $ | 1,295,914 | |||||||||
Net income | — | — | — | 108,084 | — | $ | 108,084 | ||||||||||||||
Other comprehensive income | — | — | — | — | 183 | $ | 183 | ||||||||||||||
Stock-based compensation(a) | — | — | 1,411 | — | — | $ | 1,411 | ||||||||||||||
Dividends declared: | |||||||||||||||||||||
Common stock | — | — | — | (21,960 | ) | — | $ | (21,960 | ) | ||||||||||||
Preferred stock | — | — | — | (330 | ) | — | $ | (330 | ) | ||||||||||||
Balance at March 31, 2018 | 46,479,536 | 46,479 | 584,596 | 756,374 | (4,147 | ) | 1,383,302 |
Components of Net Periodic Benefit Costs (Income) | ||||||||||||
Three Months Ended March 31, | ||||||||||||
2019 | 2018 | |||||||||||
(In millions) | Pension Benefits | Health and Life Benefits | Pension Benefits | Health and Life Benefits | ||||||||
Service cost | $ | 3.0 | $ | 1.3 | $ | 3.7 | $ | 1.3 | ||||
Interest cost | 10.2 | 3.0 | 9.8 | 2.9 | ||||||||
Expected return on plan assets | (10.7 | ) | (6.1 | ) | (10.5 | ) | (5.9 | ) | ||||
Recognized prior service cost (credit) | 0.1 | (3.9 | ) | 0.1 | (4.4 | ) | ||||||
Recognized actuarial loss | 1.3 | — | 3.9 | — | ||||||||
Settlement charge(a) | 4.3 | — | — | — | ||||||||
Net periodic benefit cost (income) | 8.2 | (5.7 | ) | 7.0 | (6.1 | ) | ||||||
Allocation to affiliates | (0.4 | ) | 0.7 | (0.8 | ) | 0.7 | ||||||
Adjusted net periodic benefit cost (income) | 7.8 | (5.0 | ) | 6.2 | (5.4 | ) | ||||||
Amount allocated to construction projects(b) | (0.4 | ) | (0.2 | ) | (1.1 | ) | 0.9 | |||||
Amount deferred as regulatory asset (liability)-net allocations(c) | 0.7 | — | 1.5 | — | ||||||||
Amount charged (credited) to expense | $ | 8.1 | $ | (5.2 | ) | $ | 6.6 | $ | (4.5 | ) |
Absolute Notional Amounts | |||||
of Open Positions on Derivative Instruments | |||||
Notional Amounts | |||||
March 31, 2019 | December 31, 2018 | ||||
Natural Gas (In millions of therms) | |||||
Asset optimization & trading | 12,610.0 | 13,051.0 | |||
Other risk-management activities | 1,015.0 | 1,072.0 |
Balance Sheet Classification of Derivative Instruments(b) | |||||||||||
(in millions) | Gross Derivative Assets | Gross Derivative Liabilities | Total(a) | ||||||||
As of March 31, 2019 | |||||||||||
Current Assets—Derivatives | $ | 13.0 | $ | — | $ | 13.0 | |||||
Deferred Charges and Other Assets—Derivatives | 18.6 | — | 18.6 | ||||||||
Current Liabilities—Derivatives | 2.6 | (10.4 | ) | (7.8 | ) | ||||||
Deferred Credits—Derivatives | — | (110.1 | ) | (110.1 | ) | ||||||
Total | $ | 34.2 | $ | (120.5 | ) | $ | (86.3 | ) | |||
As of December 31, 2018 | |||||||||||
Current Assets—Derivatives | $ | 25.7 | $ | (6.2 | ) | $ | 19.5 | ||||
Deferred Charges and Other Assets—Derivatives | 11.3 | — | 11.3 | ||||||||
Current Liabilities—Derivatives | 1.1 | (21.4 | ) | (20.3 | ) | ||||||
Deferred Credits—Derivatives | — | (116.8 | ) | (116.8 | ) | ||||||
Total | $ | 38.1 | $ | (144.4 | ) | $ | (106.3 | ) |
Washington Gas Light Company Gains and (Losses) on Derivative Instruments | |||||||
(In millions) | Three Months Ended March 31, | ||||||
2019 | 2018 | ||||||
Recorded to income | |||||||
Utility cost of gas | 4.0 | 3.0 | |||||
Recorded to regulatory assets | |||||||
Gas costs | 11.9 | 3.5 | |||||
Total | $ | 15.9 | $ | 6.5 |
Potential Collateral Requirements for Derivative Liabilities with Credit-Risk-Contingent Features | ||||
(In millions) | ||||
March 31, 2019 | ||||
Derivative liabilities with credit-risk-contingent features | $ | — | ||
Maximum potential collateral requirements | — | |||
December 31, 2018 | ||||
Derivative liabilities with credit-risk-contingent features | $ | 1.1 | ||
Maximum potential collateral requirements | $ | 1.0 |
Fair Value Measurements Under the Fair Value Hierarchy | |||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
At March 31, 2019 | |||||||||||||||
Assets | |||||||||||||||
Natural gas related derivatives | $ | — | $ | 2.7 | $ | 31.5 | $ | 34.2 | |||||||
Total Assets | $ | — | $ | 2.7 | $ | 31.5 | $ | 34.2 | |||||||
Liabilities | |||||||||||||||
Natural gas related derivatives | $ | — | $ | (2.9 | ) | $ | (117.6 | ) | $ | (120.5 | ) | ||||
Total Liabilities | $ | — | $ | (2.9 | ) | $ | (117.6 | ) | $ | (120.5 | ) | ||||
At December 31, 2018 | |||||||||||||||
Assets | |||||||||||||||
Natural gas related derivatives | $ | — | $ | 9.8 | $ | 28.3 | $ | 38.1 | |||||||
Total Assets | $ | — | $ | 9.8 | $ | 28.3 | $ | 38.1 | |||||||
Liabilities | |||||||||||||||
Natural gas related derivatives | $ | — | $ | (9.5 | ) | $ | (134.9 | ) | $ | (144.4 | ) | ||||
Total Liabilities | $ | — | $ | (9.5 | ) | $ | (134.9 | ) | $ | (144.4 | ) |
Quantitative Information about Level 3 Fair Value Measurements | ||||||||
(In millions) | Net Fair Value March 31, 2019 | Valuation Techniques | Unobservable Inputs | Range | ||||
Natural gas related derivatives | ($86.1) | Discounted Cash Flow | Natural Gas Basis Price (per dekatherm) | ($0.88) - $3.14 | ||||
Net Fair Value December 31, 2018 | ||||||||
Natural gas related derivatives | ($106.6) | Discounted Cash Flow | Natural Gas Basis Price (per dekatherm) | ($1.028)-$5.34 |
Reconciliation of Fair Value Measurements Using Significant Level 3 Inputs | |||
(In millions) | Total - Natural Gas Related Derivatives | ||
Three Months Ended March 31, 2019 | |||
Balance at January 1, 2019 | $ | (106.6 | ) |
Realized and unrealized gains (losses) | |||
Recorded to income | 3.6 | ||
Recorded to regulatory assets—gas costs | 12.5 | ||
Transfers into Level 3 | (3.8 | ) | |
Transfers out of Level 3 | 5.0 | ||
Settlements | 3.2 | ||
Balance at March 31, 2019 | $ | (86.1 | ) |
Three Months Ended March 31, 2018 | |||
Balance at January 1, 2018 | $ | (125.4 | ) |
Realized and unrealized gains (losses) | |||
Recorded to income | (0.7 | ) | |
Recorded to regulatory assets—gas costs | (1.1 | ) | |
Transfers out of Level 3 | 9.0 | ||
Settlements | 29.2 | ||
Balance at March 31, 2018 | $ | (89.0 | ) |
Realized and Unrealized Gains (Losses) Recorded to Income for Level 3 Measurements | |
(In millions) | Total - Natural Gas Related Derivatives |
Three Months Ended March 31, 2019 | |
Utility cost of gas | $3.6 |
Three Months Ended March 31, 2018 | |
Utility cost of gas | $(0.7) |
Unrealized Gains (Losses) Recorded for Level 3 Measurements | |||
(In millions) | Total - Natural Gas Related Derivatives | ||
Three Months Ended March 31, 2019 | |||
Recorded to income | |||
Utility cost of gas | $ | 2.5 | |
Recorded to regulatory assets—gas costs | 10.5 | ||
Total | $ | 13.0 | |
Three Months Ended March 31, 2018 | |||
Recorded to income | |||
Utility cost of gas | $ | 5.0 | |
Recorded to regulatory assets—gas costs | 6.6 | ||
Total | $ | 11.6 |
Fair Value of Financial Instruments | |||||||||||||||
March 31, 2019 | December 31, 2018 | ||||||||||||||
(In millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||
Money market funds(a) | $ | 50.6 | $ | 50.6 | $ | 69.7 | $ | 69.7 | |||||||
Commercial paper (b) | $ | 205.0 | $ | 205.0 | $ | 296.0 | $ | 296.0 | |||||||
Project financing (b) | $ | 15.5 | $ | 15.5 | $ | 15.5 | $ | 15.5 | |||||||
Current maturities of long-term debt | $ | 50.0 | $ | 50.0 | $ | 50.0 | $ | 50.0 | |||||||
Long-term debt(c) | $ | 1,034.9 | $ | 1,116.4 | $ | 1,035.0 | $ | 1,096.3 |
Gas Balancing Service Charges | ||||||
Three Months Ended March 31 | Three Months Ended March 31 | |||||
(In millions) | 2019 | 2018 | ||||
Gas balancing service charge | $ | 8.9 | $ | 8.5 |
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||
Three Months Ended March 31, | |||||||
(In thousands) | 2019 | 2018 | |||||
Beginning Balance | $ | (6,627 | ) | $ | (4,330 | ) | |
Change in prior service cost (a) | (162 | ) | (273 | ) | |||
Change in actuarial gain (loss) (a) | 4,904 | 530 | |||||
Current-period other comprehensive income (loss) | 4,742 | 257 | |||||
Income tax expense (benefit) related to other comprehensive income (loss) | 477 | 74 | |||||
Ending Balance | $ | (2,362 | ) | $ | (4,147 | ) |
Three Months Ended March 31, | Three Months Ended March 31, | |||||
(In thousands) | 2019 | 2018 | ||||
CHANGES IN OPERATING ASSETS AND LIABILITIES | ||||||
Accounts receivable and unbilled revenues | $ | (27,774 | ) | $ | (9,552 | ) |
Receivables from associated companies | 249 | (3,705 | ) | |||
Gas costs and other regulatory assets/liabilities—net | 6,683 | 5,648 | ||||
Storage gas | 65,885 | 57,491 | ||||
Prepaid taxes | 2,037 | 10,312 | ||||
Accounts payable and other accrued liabilities | (77,797 | ) | (26,573 | ) | ||
Payables to associated companies | (2,656 | ) | 3,958 | |||
Customer deposits and advance payments | (15,521 | ) | (7,256 | ) | ||
Accrued taxes | 3,232 | (22,149 | ) | |||
Other current assets | 2,215 | (1,259 | ) | |||
Other current liabilities | (243 | ) | (242 | ) | ||
Deferred gas costs—net | 50,086 | 33,622 | ||||
Deferred assets—other | 14,027 | (4,524 | ) | |||
Deferred liabilities—other | (2,297 | ) | 338 | |||
Pension and other post-retirement benefits | (14,494 | ) | (2,261 | ) | ||
Other—net | — | 981 | ||||
Changes in operating assets and liabilities | $ | 3,632 | $ | 34,829 | ||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||
Income taxes paid (refunded)—net | $ | (1,683 | ) | $ | 5 | |
Interest paid | $ | 25,398 | $ | 25,691 | ||
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||
Capital expenditure accruals included in accounts payable and other accrued liabilities | $ | 32,738 | $ | 23,949 |
(in thousands) | March 31, 2019 | March 31, 2018 | ||||
Cash and cash equivalents | $ | 2,142 | $ | 13,724 | ||
Restricted cash included in Current Assets-Other | $ | 4,094 | $ | — | ||
Restricted cash included in Deferred Charges and Other Assets-Other | $ | 45,440 | $ | — | ||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | 51,676 | $ | 13,724 |
Three Months Ended March 31, | ||||||||||
(In millions) | 2019 | 2018 | Increase/(Decrease) | |||||||
Net income | $ | 113.0 | $ | 108.1 | $ | 4.9 | ||||
Interest expense | 14.9 | 14.7 | 0.2 | |||||||
Income tax expense | 29.2 | 27.8 | 1.4 | |||||||
Depreciation and amortization | 35.2 | 33.5 | 1.7 | |||||||
EBITDA | $ | 192.3 | $ | 184.1 | $ | 8.2 |
• | new base rates in Maryland and Virginia; and |
• | customer growth of approximately 14,000 average active customer meters. |
• | higher operation and maintenance expenses primarily related to Merger-related costs and corporate allocations; and |
• | lower realized margins and lower unrealized mark-to-market valuation gain associated with our asset optimization program. |
Three Months Ended March 31, | ||||||||||
(In millions) | 2019 | 2018 | Increase/(Decrease) | |||||||
Net revenues | ||||||||||
Operating revenues | $ | 593.7 | $ | 532.0 | $ | 61.7 | ||||
Less: Cost of gas | 242.3 | 205.3 | 37.0 | |||||||
Revenue taxes | 32.7 | 30.7 | 2.0 | |||||||
Total net revenues | 318.7 | 296.0 | 22.7 | |||||||
Operation and maintenance | 111.0 | 93.8 | 17.2 | |||||||
General taxes and other assessments | 19.9 | 19.7 | 0.2 | |||||||
Other income (expense)-net | 4.5 | 1.6 | 2.9 | |||||||
EBITDA | $ | 192.3 | $ | 184.1 | $ | 8.2 |
Composition of Changes in Net Revenues | |||
(In millions) | Increase/(Decrease) | ||
Impact of rate cases | $ | 26.7 | |
Asset optimization: | |||
Realized margins | (5.5 | ) | |
Unrealized mark-to-market valuations | (5.1 | ) | |
Customer growth | 3.2 | ||
Other | 3.4 | ||
Total | $ | 22.7 |
Composition of Changes in Operation and Maintenance Expenses | |||
(In millions) | Increase/(Decrease) | ||
Merger-related expenses | $ | 5.3 | |
Corporate allocated services | 4.5 | ||
System safety and integrity | 3.5 | ||
Employee incentives and direct labor costs | 2.8 | ||
Other | 1.1 | ||
Total | $ | 17.2 |
Composition of Interest Expense | ||||||||||
Three Months Ended March 31, | Increase/ | |||||||||
(In millions) | 2019 | 2018 | (Decrease) | |||||||
Interest on long-term debt | $ | 13.4 | $ | 14.4 | $ | (1.0 | ) | |||
Interest on short-term debt | 1.6 | 0.2 | 1.4 | |||||||
Other net, including AFUDC | (0.1 | ) | 0.1 | (0.2 | ) | |||||
Total | $ | 14.9 | $ | 14.7 | $ | 0.2 |
Income Taxes | ||||||||||
Three Months Ended March 31, | Increase/ | |||||||||
(In millions) | 2019 | 2018 | (Decrease) | |||||||
Income before income taxes | $ | 142.2 | $ | 135.9 | $ | 6.3 | ||||
Income tax expense | 29.2 | 27.8 | 1.4 | |||||||
Effective income tax rate | 20.5 | % | 20.5 | % | — |
Gas Deliveries, Weather and Meter Statistics | ||||||||
Three Months Ended March 31, | Increase/ | |||||||
2019 | 2018 | (Decrease) | ||||||
Gas Sales and Deliveries (millions of therms) | ||||||||
Firm | ||||||||
Gas sold and delivered | 452.8 | 452.7 | 0.1 | |||||
Gas delivered for others | 225.0 | 217.3 | 7.7 | |||||
Total firm | 677.8 | 670.0 | 7.8 | |||||
Interruptible | ||||||||
Gas sold and delivered | 0.6 | 1.5 | (0.9 | ) | ||||
Gas delivered for others | 93.8 | 77.0 | 16.8 | |||||
Total interruptible | 94.4 | 78.5 | 15.9 | |||||
Electric generation—delivered for others | 8.0 | 19.8 | (11.8 | ) | ||||
Other—delivered for others | 4.9 | 8.3 | (3.4 | ) | ||||
Total deliveries | 785.1 | 776.6 | 8.5 | |||||
Degree Days | ||||||||
Actual | 2,048 | 2,106 | (58 | ) | ||||
Normal | 2,129 | 2,169 | (40 | ) | ||||
Percent colder (warmer) than normal | (3.8 | ) | % | (2.9 | ) | % | n/a | |
Average active customer meters | 1,187,000 | 1,173,000 | 14,000 | |||||
Ending active customer meters | 1,188,263 | 1,175,517 | 12,746 | |||||
New customer meters added | 2,667 | 2,892 | (225 | ) |
Washington Gas | ||||
Rating Service | Senior Unsecured | Commercial Paper | ||
Fitch Ratings(a) | A | F2 | ||
Moody’s Investors Service(b) | A2 | P-1 | ||
Standard & Poor’s Ratings Services(c) | BBB+ | A-2 |
Three Months Ended March 31 | Increase / (Decrease) | |||||||||
(In millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||
Cash from: | ||||||||||
Operating activities | $ | 188.8 | $ | 226.5 | $ | (37.7 | ) | |||
Financing activities | $ | (115.8 | ) | $ | (149.2 | ) | $ | 33.4 | ||
Investing activities | $ | (92.7 | ) | $ | (70.2 | ) | $ | (22.5 | ) |
Accelerated Pipe Replacement Programs | ||||||
Three Months Ended March 31, | ||||||
(in millions) | 2019 | 2018 | ||||
Capital expenditures(a) | ||||||
District of Columbia | $ | 5.1 | $ | 4.4 | ||
Maryland | 6.1 | 7.7 | ||||
Virginia | 16.9 | 7.9 | ||||
Total | $ | 28.1 | $ | 20.0 | ||
Revenues recognized | ||||||
District of Columbia | 1.4 | 0.8 | ||||
Maryland | 1.8 | 3.6 | ||||
Virginia | — | 1.9 | ||||
Total | $ | 3.2 | $ | 6.3 |
Credit Exposure to Wholesale Counterparties (In millions) | ||||||||||||||||||
Rating(a) | Exposure Before Credit Collateral(b) | Offsetting Credit Collateral Held(c) | Net Exposure | Number of Counterparties Greater Than 10%(d) | Net Exposure of Counterparties Greater Than 10% | |||||||||||||
Investment Grade | $ | 65.9 | $ | — | $ | 65.9 | 3 | $ | 45.8 | |||||||||
Non-Investment Grade | — | — | — | — | — | |||||||||||||
No External Ratings | 7.0 | 0.4 | 6.6 | — | — |
Changes in Fair Value of Energy-Related Derivatives | |||
(In millions) | |||
Net assets (liabilities) at January 1, 2019 | $ | (106.3 | ) |
Net fair value of contracts entered into during the period | (2.1 | ) | |
Other changes in net fair value | 18.0 | ||
Realized net settlement of derivatives | 4.1 | ||
Net assets (liabilities) at March 31, 2019 | $ | (86.3 | ) |
Roll Forward of Energy-Related Derivatives | |||
(In millions) | |||
January 1, 2019 | $ | (106.3 | ) |
Recorded to income | 4.0 | ||
Recorded to regulatory assets/liabilities | 11.9 | ||
Realized net settlement of derivatives | 4.1 | ||
Net assets (liabilities) at March 31, 2019 | $ | (86.3 | ) |
Maturity of Net Assets (Liabilities) Associated with our Energy-Related Derivatives | |||||||||||||||||||||||||||
(In millions) | 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | ||||||||||||||||||||
Level 1 — Quoted prices in active markets | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Level 2 — Significant other observable inputs | (0.2 | ) | — | — | — | — | — | (0.2 | ) | ||||||||||||||||||
Level 3 — Significant unobservable inputs | 9.7 | 3.2 | 1.4 | (2.4 | ) | (0.9 | ) | (97.1 | ) | (86.1 | ) | ||||||||||||||||
Total net assets (liabilities) associated with our energy-related derivatives | $ | 9.5 | $ | 3.2 | $ | 1.4 | $ | (2.4 | ) | $ | (0.9 | ) | $ | (97.1 | ) | $ | (86.3 | ) |
• | revenue from contracts with customers; |
• | accounting for unbilled revenue; |
• | accounting for regulatory operations — regulatory assets and liabilities; |
• | accounting for income taxes; |
• | accounting for contingencies; |
• | accounting for derivatives; |
• | accounting for fair value instruments; |
• | impairment of long-lived assets; and |
• | accounting for pension and other post-retirement benefit plans. |
• | Price Risk |
• | Weather Risk |
• | Interest-Rate Risk |
Schedule/ Exhibit | Description | |
(a)(3) | Exhibits | |
Exhibits Incorporated by Reference: | ||
Distribution Agreement, dated January 8, 2019, by and among Washington Gas Light Company and BB&T Capital Markets, a division of BB&T Securities, LLC, as agent, relating to the issuance and sale from time to time of up to $725,000,000 aggregate principal amount of the Company’s Medium-Term Notes, Series L (incorporated by reference to Exhibit 1.1 to Washington Gas Light Company’s Form 8-K filed January 14, 2019. | ||
Exhibits Filed Herewith: | ||
Certification of Adrian P. Chapman, the President and Chief Executive Officer of Washington Gas Light Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification of Douglas I. Bonawitz, the Senior Vice President, Chief Financial Officer and Treasurer of Washington Gas Light Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification of Adrian P. Chapman, the President and Chief Executive Officer, and Douglas I. Bonawitz, the Senior Vice President, Chief Financial Officer and Treasurer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Schema Document | |
101.CAL | XBRL Calculation Linkbase Document | |
101.LAB | XBRL Labels Linkbase Document | |
101.PRE | XBRL Presentation Linkbase Document | |
101.DEF | XBRL Definition Linkbase Document | |
WASHINGTON GAS LIGHT COMPANY |
(Registrant) |
/s/ Gunnar J. Gode |
Gunnar J. Gode |
Vice President and Controller |
(signing on behalf of the Registrant and as |
Principal Accounting Officer of the Registrant) |
1. | I have reviewed this quarterly report on Form 10-Q of Washington Gas Light Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Adrian P. Chapman | |
Adrian P. Chapman | |
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Washington Gas Light Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Douglas I. Bonawitz | |
Douglas I. Bonawitz | |
Senior Vice President, Chief Financial Officer and Treasurer |
(1) | The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations. |
/s/ Adrian P. Chapman |
Adrian P. Chapman |
President and Chief Executive Officer |
/s/ Douglas I. Bonawitz |
Douglas I. Bonawitz |
Senior Vice President, Chief Financial Officer and Treasurer |
Document and Entity Information - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 30, 2019 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Washington Gas Light Company | |
Entity Central Index Key | 0000104819 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | CY | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 46,479,536 | |
Par Value Per Share | $ 1 |
Statement of Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Statement [Abstract] | ||
OPERATING REVENUES | $ 593,653 | $ 532,040 |
OPERATING EXPENSES | ||
Utility cost of gas | 242,263 | 205,296 |
Operation and maintenance | 111,002 | 93,805 |
Depreciation and amortization | 35,189 | 33,468 |
General taxes and other assessments | 52,619 | 50,493 |
Total Operating Expenses | 441,073 | 383,062 |
OPERATING INCOME | 152,580 | 148,978 |
Other income (expense) —net | 4,522 | 1,594 |
Interest expense | 14,876 | 14,672 |
INCOME BEFORE INCOME TAXES | 142,226 | 135,900 |
INCOME TAX EXPENSE | 29,230 | 27,816 |
NET INCOME | 112,996 | 108,084 |
Dividends on preferred stock | 330 | 330 |
NET INCOME APPLICABLE TO COMMON STOCK | $ 112,666 | $ 107,754 |
Statement of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
NET INCOME | $ 112,996 | $ 108,084 |
Pension and other post-retirement benefit plans | ||
Change in prior service cost | (162) | (273) |
Change in actuarial net gain | 4,904 | 530 |
Total pension and other post-retirement benefit plans | 4,742 | 257 |
INCOME TAX EXPENSE RELATED TO OTHER COMPREHENSIVE INCOME | 477 | 74 |
OTHER COMPREHENSIVE INCOME | 4,265 | 183 |
COMPREHENSIVE INCOME | $ 117,261 | $ 108,267 |
Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Description and Accounting Policies [Text Block] | ACCOUNTING POLICIES Basis of Presentation Washington Gas is an indirect, majority owned subsidiary of, among other entities, of AltaGas and WGL. On July 6, 2018, a merger of WGL into AltaGas was consummated (the Merger). In connection with the Merger, WGL, the former parent entity of Washington Gas, formed Wrangler SPE LLC (Wrangler), a bankruptcy remote, special purpose entity to own the common stock of Washington Gas. Wrangler is a wholly owned subsidiary of WGL, which survived the Merger as an indirect, wholly owned subsidiary of AltaGas. In addition, WGL continues to own all of the shares of common stock of Washington Gas Resources Corporation (Washington Gas Resources) and Hampshire Gas Company (Hampshire). Washington Gas Resources owns all of the shares of common stock of four non-utility subsidiaries that include WGL Energy Services, Inc. (WGL Energy Services), WGL Energy Systems, Inc. (WGL Energy Systems), WGL Midstream, Inc. (WGL Midstream) and WGSW, Inc. (WGSW). Additionally, several subsidiaries of WGL own interests in other entities. Except where the content clearly indicates otherwise, any reference in this report to “Washington Gas,” “we,” “our” or the “Company,” refers to Washington Gas Light Company. References to “WGL” refer to WGL Holdings, Inc. and all of its subsidiaries. The condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Therefore, certain financial information and note disclosures accompanying annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) are omitted in this interim report. The interim condensed financial statements and accompanying notes should be read in conjunction with the Financial Statements on Form 10-K/T for Washington Gas for the three months ended December 31, 2018. Due to the seasonal nature of our business, the results of operations for the periods presented in this report are not necessarily indicative of actual results for the full years ending December 31, 2019 and 2018. The information presented in this report on Form 10-Q are presented solely for the registrant Washington Gas on a stand-alone basis. The accompanying unaudited condensed financial statements for Washington Gas reflect all normal recurring adjustments that are necessary, in our opinion, to present fairly the results of operations in accordance with GAAP. For a complete description of our accounting policies, refer to Note 1-Accounting Policies of the Notes to Financial Statements of the Form 10-K/T for the three months ended December 31, 2018. Leases Lessee We determine if an arrangement is a lease and the lease classification at inception. For our lessee operating leases, a right-of-use (ROU) asset and a lease liability is recognized at the commencement date based on the present value of lease payments over the lease term. We use the rate implicit in the lease when readily determinable. When the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate to determine the present value of the lease payments. Our ROU assets are adjusted for lease incentives and any lease payments made in advance. Lease expenses are recognized on a straight-line basis over the lease term. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. For our lessee building and certain equipment leases, we do not separate the lease and non-lease components. For the leases of multiple office locations classified as operating leases, the lease term begins on the date when construction of the leasehold improvements can start and has allowed us to occupy the respective locations. Leasehold improvement costs are classified as “Property, Plant, and Equipment” on the balance sheets, and are being amortized to “Depreciation and amortization” expense on a straight-line basis over the non-cancelable period of the leases. Lessor We determine if an arrangement is a lease and the lease classification at inception. Lease payments under operating leases are recognized on a straight-line basis over the lease term. For our building leases, we do not separate the lease and non-lease components. Accounting Standards Adopted during the Period and Other Newly Issued Accounting Standards The following tables represent Accounting Standards Updates (ASUs) adopted by Washington Gas during the three months ended March 31, 2019, and other newly issued accounting standards that will be adopted by Washington Gas in the future.
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Revenue from Contracts With Customers |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | REVENUE FROM CONTRACTS WITH CUSTOMERS The Company adopted Accounting Standard Update (ASU) 2014-09, Revenue from Contracts with Customers (Accounting Standard Codification (ASC) 606) and subsequent ASUs clarifying the guidance on October 1, 2018, using the modified retrospective method of adoption. Under this approach, prior year results are not required to be restated. Adoption of this standard did not change the timing or pattern of revenue recognition and a cumulative-effect adjustment was not recorded at October 1, 2018. As a result, comparative disclosures for operating results for the three-month period ended March 31, 2019 are not applicable because implementing the new standard did not change the timing or pattern of revenue recognition. The significant impact of adopting this standard are the additional disclosures around the nature, and uncertainty of revenue and cash flows arising from contracts with customers. Washington Gas sells natural gas and distribution services to residential, commercial, industrial and governmental customers through regulated tariff rates approve by regulatory commissions in the jurisdictions where Washington Gas operates. Customers are billed monthly based on regular meter readings. Customer billings are based on two main components: (i) a fixed service fee and (ii) a variable fee based on usage. For customers who choose to purchase their natural gas from Washington Gas, the bill will include a usage based charge for the cost of the commodity. Revenue is recognized over time as the natural gas is delivered or as the service is performed. As meter readings are performed on a cycle basis, Washington Gas recognizes accrued revenue for any services rendered to its customers but not billed at month-end. The tariff sales are generally considered daily or “at-will” contracts as customers may cancel their service at any time (subject to notification requirements in the tariff), and revenue generally represents the amount Washington Gas is entitled to invoice. There are certain contracts that have terms of one year or longer. For these contracts, revenue is recognized based on the amount Washington Gas is entitled to bill the customer. Customers have the choice to purchase natural gas from competitive service providers. Washington Gas charges the competitive service providers balancing fees to manage the natural gas transportation imbalances. Where regulations require, Washington Gas issues customers a consolidated bill to include the natural gas supplied by the competitive service providers and distribution of natural gas. Washington Gas recognizes revenue only for distribution services that it has provided to the customer, and the balancing fees for the services provided to the competitive service provider. We disaggregate revenue by type of service. The following table disaggregates revenue for the period ended March 31, 2019.
(a) Washington Gas has determined that its Revenue Normalization Adjustment (RNA), Weather Normalization Adjustment (WNA), and Conservation and Ratemaking Efficiency (CARE) Ratemaking Adjustment (CRA) billing adjustment mechanisms and accelerated pipe replacement programs are alternative revenue programs and accounted for under ASC Topic 980. (b) Revenue generated from Washington Gas lessor operating leases accounted for under ASC Topic 842, Leases. See Note 3-Leases for further information on leases. Washington Gas accrues unbilled revenues for gas delivered, but not yet billed at the end of each accounting period due to our customer billing cycles. “Unbilled revenues” represent performance obligations that have been satisfied and Washington Gas has an unconditional right to payment, except for contract assets related to the Washington Gas’ area-wide contract which requires project acceptance by government for the right to payment to occur. For the contract asset amounts reported in unbilled receivables, see Project Financing in Note 5-Short-Term Debt. Washington Gas did not have any contract liabilities at March 31, 2019. The Company does not have transaction price amounts allocated to future performance obligations. The Company applies the practical expedient available under ASC Topic 606 and does not disclose information about the remaining performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for performance completed, and (iii) contracts with variable consideration that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation. |
Leases |
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Lessee and Lessor, Operating Leases | LEASES The Company adopted ASU 2016-02, Leases (ASC 842) and the following subsequent ASUs which amended the guidance: ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, ASU 2018-10, Codification Improvements, and ASU 2018-11, Leases Targeted Improvements, and ASU 2018-20, Narrow-Scope Improvements for Lessors, on January 1, 2019. The new leasing standard requires lessees to recognize a ROU asset and lease liability for leases classified as an operating lease. The significant effects of adopting this standard and the qualitative and quantitative disclosures required to enable users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases are included in Note 1 - Accounting Policies and below. Adoption of the new standard had a material impact to our balance sheet but did not have a material impact to our income statement. On January 1, 2019, the Company recorded ROU assets of $43.2 million (net of lease incentives and prepaid or deferred rent of $15.7 million), current lease liability of $2.8 million and non current lease liability of $56.1 million related to our operating leases. The Company currently does not have finance leases. We elected to implement the new leasing standard retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment. Under this approach, prior year results are not required to be restated and disclosures associated with prior periods are reported under ASC 840. Lessee Leases In transition, the Company elected to use the transition practical expedient which allows an entity not to reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, and the initial direct costs for any existing leases. The practical expedient which allows an entity not to reassess whether existing or expired land easements that were not previously accounted for as a lease under Topic 840 was also elected. The company has also elected not to separate lease and non-lease components for its building leases and has elected not to record a ROU asset and lease liability for short-term leases with a lease term of 12 months or less at the commencement date, including extension options that are reasonably certain of being exercised, and do not include an option to purchase the underlying asset. Short-term lease costs for the period were not material. Washington Gas has operating leases for our corporate headquarters and other corporate offices, communication tower space, and certain office equipment. Our leases have remaining lease terms from 1 to 15 years. Some of the leases include options to extend the lease terms for 1 to 5 years with prior written notice or automatically renew if either party does not provide intent not to renew. The leases generally have options to terminate the leases with notice prior to the end of the lease term based on the contract terms. The following table provides our operating lease payment at March 31, 2019.
The following table provides supplemental cash flow information related to operating leases for the three months ended March 31, 2019 and other information related to operating leases.
Lessor Leases The Company also has lessor leases for land, office space and communication tower space that are classified as operating leases. The accounting for these operating leases remained unchanged. Washington Gas has elected not to separate the lease and non-lease components for its building leases. Our leases have remaining lease terms ranging from less than a year to 82 years. Some of the leases include options to extend the lease terms for 1 to 5 years with prior written notice or automatically renew if lessee does not provide intent not to renew. The leases generally have options to terminate the leases with notice prior to the end of the lease term based on the contract terms. The lease agreements do not contain material residual value guarantees. The following table summarizes of the future minimum lease payments associated with these leases.
(a) The payments are presented on an undiscounted basis The property, plant and equipment associated with these leases are not material. For information on the lease income recognized during the period, see the Disaggregated Revenue by Type of Service table in Note 2 - Revenue From Contracts with Customers. During the three months ended March 31, 2019, Washington Gas did not record any impairments related to our leased assets. |
Accounts Payable and Other Accrued Liabilities |
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Accounts Payable and Other Accrued Liabilities | ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES The table below provides details for the amounts included in “Accounts payable and other accrued liabilities” on the balance sheets.
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Short-Term Debt |
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Short-Term Debt | SHORT-TERM DEBT Washington Gas satisfies the short-term financing requirements through the sale of commercial paper, financing arrangements with third-party lenders, or through bank borrowings. Due to the seasonal nature of our operations, short-term financing requirements can vary significantly during the year. Revolving credit agreements are maintained to support outstanding commercial paper and to permit short-term borrowing flexibility. The policy of Washington Gas is to maintain bank credit facilities in amounts equal to or greater than the expected maximum commercial paper position. The following is a summary of committed credit available at March 31, 2019 and December 31, 2018.
(a) Washington Gas has the right to request extensions with the banks’ approval. Washington Gas’ revolving credit facility permits it to borrow an additional $100 million, with the banks’ approval, for a total of $450 million. At March 31, 2019 and December 31, 2018, there were no outstanding bank loans from Washington Gas’ revolving credit facilities. Project Financing Washington Gas previously obtained third-party project financing on behalf of the federal government to provide funds during the construction of certain energy management services projects entered into under Washington Gas’ area-wide contract. The construction work is performed by WGL Energy Systems on behalf of Washington Gas. As the third party financier funds the project, Washington Gas establishes a financing obligation to the third party financier and transfers the funds to WGL Energy Systems. As work is performed, Washington Gas establishes a contract asset representing the government’s obligation to remit principal and interest. The financing obligation in “Notes payable and project financing” and contract assets in “Unbilled revenues” are typically equal to each other at the end of the construction period, but there could be timing differences in the recognition during the construction period. When these projects are formally “accepted” by the government and deemed complete, Washington Gas assigns the ownership of the contract asset to the third party financier in satisfaction of the associated financing obligation to the third party financier and removes both the contract asset and the financing obligation related to the project from its financial statements. If project acceptance does not occur by a specified date, the lender may require Washington Gas to make interim interest payments or repurchase the contract payments plus a termination fee. In March 2016, the Commonwealth of Virginia State Corporation Commission (SCC of VA) denied Washington Gas’ further participation in the third-party financing arrangement but allowed existing debt arrangements to remain intact until the related obligations were satisfied. As a result, WGL Energy Systems entered into an agreement to obtain third-party financing and receive funds directly from a third-party financier during the construction period associated with the related energy management service projects. As a result, Washington Gas is no longer liable under future third-party financing arrangements. Washington Gas continues to record a contract asset representing the governments obligation and records an “Payable to associated company” to WGL Energy Systems for the construction work performed for the same amount. In October 2018, WGL Energy Systems repaid $53.0 million drawn by Washington Gas from a third-party lender for a specific project for which the lender demanded repayment due to delays in achieving final acceptance from the federal government agency customer. The $53.0 million was included in “Payables to associated companies” on Washington Gas’ balance sheet as of December 31, 2018. On January 16, 2019, the federal government agency customer provided notification of final acceptance as of December 14, 2018. In February 2019, WGL sold the receivables, and accordingly, Washington Gas reversed the associated amount in “Payables to associated companies” and “Unbilled revenue” on its balance sheet. At March 31, 2019, there was one financing contract that had not been novated to WGL Energy Systems for which draws totaling $15.5 million were reflected on the Washington Gas balance sheet as a short-term obligation to third-party lenders in “Notes payable and project financing”. As of March 31, 2019, Washington Gas recorded $34.6 million of contract assets in “Unbilled revenues,” $15.5 million in a corresponding short-term financing to third-party lenders in “Notes payable and project financing,” and $19.1 million accounts payable to WGL Energy Systems in “Payables to associated companies” for energy management services projects that were not complete. As of December 31, 2018, Washington Gas recorded $85.3 million of contract assets in “Unbilled revenues,” $15.5 million in a corresponding short-term financing to third-party lenders in “Notes payable and project financing,” and $69.7 million accounts payable to WGL Energy Systems in “Payables to associated companies” for energy management services projects that were not complete. Washington Gas did not record a corresponding reserve for bad debts related to these contract assets at March 31, 2019 and December 31, 2018 based on our previous collection experience with receivables that have been financed for government agencies with minimal credit risk. |
Long-Term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | LONG-TERM DEBT Unsecured Notes Washington Gas issues long-term debt in the form of medium-term notes (MTNs), unsecured long-term notes and private placement notes with individual terms regarding interest rates, maturities and call or put options. These notes can have maturity dates of one or more years from the date of issuance. The following tables show the outstanding notes as of March 31, 2019 and December 31, 2018.
(a) Includes MTNs and private placement notes. The amount represents face value of long-term debt including current maturities. (b) Weighted average interest rate is for the long-term debt including current maturities. There were no issuances or retirements for the three months ended March 31, 2019 and March 31, 2018. |
Components of Total Equity |
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Components of Total Equity | COMPONENTS OF TOTAL EQUITY The table below reflects the components of “Total equity” for the three months ended March 31, 2019 and 2018.
(a) Stock-based compensation is based on the stock awards of WGL that are allocated to Washington Gas Light Company for its pro-rata share and includes implementation of ASU 2016-09. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||
Income Taxes | INCOME TAXES Through July 6, 2018, and prior to the Merger with AltaGas, WGL and its wholly owned subsidiaries, including Washington Gas, filed a consolidated federal income tax return and various state income tax returns where they had a business presence. WGL and each of its subsidiaries participated in a tax sharing agreement that established the method for allocating tax benefits from losses that are utilized on the consolidated income tax return. The consolidated tax has been apportioned among the subsidiaries on the separate return method and losses are allocated to the subsidiaries that have taxable income on pro-rata basis. During the three months ended March 31, 2019, Washington Gas did not make any payment to WGL’s other subsidiaries related to the legacy WGL tax sharing agreement. During the three months ended December 31, 2018, Washington Gas paid $8.3 million to WGL’s other subsidiaries under this agreement. Effective with the Merger and beginning July 7, 2018, our tax year end changed to December 31 and Washington Gas will be included with AltaGas’ wholly owned US subsidiaries’ consolidated income tax return with AltaGas Services (U.S.) Inc. (ASUS), the parent company of the consolidated AltaGas US group. Accordingly, Washington Gas will file a final return as part of WGL‘s consolidated income tax return for the short tax year from October 1, 2017 to July 6, 2018. WGL and its wholly owned subsidiaries will be included in the ASUS consolidated income tax returns beginning with the period from July 7, 2018 to December 31, 2018. We have established a new tax sharing policy with ASUS. The tax sharing policy provides allocation of consolidated tax liabilities and benefits based on amounts participants would incur as standalone corporations. State income tax returns are filed on a separate company basis in most states and on a unitary basis as required, where we or the consolidated ASUS group have operations and/or a requirement to file. Amounts of Interest and Penalties Recognized Washington Gas recognizes any accrued interest associated with uncertain tax positions in interest expense and recognizes any accrued penalties associated with uncertain tax positions in other expenses in the statements of income. During the three months ended March 31, 2019 and March 31, 2018, there were no accrued interest expenses or penalties associated with uncertain tax positions. |
Pension and Other Post-Retirement Benefit Plans |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Post-Retirement Benefit Plans | PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS The following table shows the components of net periodic benefit costs (income) recognized in our financial statements during the three months ended March 31, 2019 and 2018:
(a) Amount relates to a one time partial settlement charge associated with a lump sum payment to Washington Gas’ defined benefit supplemental executive retirement plan (DB SERP) that was paid in the first quarter of 2019. (b)On October 1, 2018, Washington Gas adopted ASU 2017-07. As a result, only the service cost component of net periodic benefit costs (income) is eligible for capitalization. (c)Amount represents the amortization of previously unrecovered costs of the applicable pension benefits or the health and life benefits as approved in the District of Columbia through 2019. At March 31, 2019 and December 31, 2018, the rabbi trust balance associated with the DB SERP and non-funded defined benefit restoration plan (DB restoration) plans was $46.8 million and $60.8 million, respectively. $4.1 million and $20.2 million was recorded in “Current Assets-Other” and $42.7 million and $40.6 million was recorded in “Deferred Charges and Other Assets - Other” respectively, along with other rabbi trust balances. On October 1, 2018, Washington Gas adopted ASU 2017-07. This standard requires entities to report the service cost component in the same financial statement line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are to be presented separately from service cost and outside of operating income. In addition, only the service cost component of net benefit cost is eligible for capitalization. Changes to the presentation of service costs and other components of net benefit cost were applied retrospectively. As a result of the retrospective adoption, we reclassified $2.8 million of net periodic benefit income from “Operation and maintenance” expense to “Other income (expense)-net” on the March 31, 2018 Statement of Income. Changes in capitalization practices were implemented prospectively. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | ||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Contractual Obligations Washington Gas has certain contractual obligations incurred in the normal course of business that require fixed and determinable payments in the future. These commitments include long-term debt, lease obligations, unconditional purchase obligations for pipeline capacity, transportation and storage services, certain natural gas and our commitments related to the business process outsourcing program. Reference is made to the “Contractual Obligations, Off-Balance Sheet Arrangements and Other Commercial Commitments” section of Management’s Discussion and Analysis in Washington Gas’ Form 10-K/T. Note 6 to the Financial Statements in Form 10-K/T includes a discussion of long-term debt, including debt maturities. Note 12 to the Financial Statements in Form 10-K/T reflects information about the various contracts of Washington Gas. There were no significant changes to contractual obligations during the three months ended March 31, 2019. Silver Spring, Maryland Incident On April 23, 2019, the NTSB held a hearing during which it found, among other things, that the probable cause of the August 10, 2016, explosion and fire at an apartment complex on Arliss Street in Silver Spring, Maryland “was the failure of an indoor mercury service regulator with an unconnected vent line that allowed natural gas into the meter room where it accumulated and ignited from an unknown ignition source. Contributing to the accident was the location of the mercury service regulators where leak detection by odor was not readily available.” Washington Gas disagrees with the NTSB’s probable cause findings. A total of 40 civil actions related to the incident have been filed against WGL and Washington Gas in the Circuit Court for Montgomery County, Maryland. All cases have been consolidated for discovery purposes. All of these suits seek unspecified damages for personal injury and/or property damage. The one action seeking class action status has been amended to assert property damage and loss of use claims and is no longer seeking class status. The trial date for the civil actions has been scheduled for December 2, 2019. Washington Gas maintains excess liability insurance coverage from highly-rated insurers, subject to a nominal self-insured retention. Washington Gas believes that this coverage will be sufficient to cover any significant liability that may result from this incident. Given the early stage of the litigation, the outcome is not yet determinable and management is unable to make an estimate of any potential loss or range of potential losses that are reasonably possible of occurring. As a result, management has not recorded a reserve associated with this incident. Regulatory Contingencies Certain legal and administrative proceedings incidental to our business, including regulatory contingencies, involve Washington Gas. In our opinion, we have recorded an adequate provision for probable losses or refunds to customers for regulatory contingencies related to these proceedings. Merger Commitments In connection with the Merger, AltaGas and WGL made commitments related to the terms of the Public Service Commission of the District of Columbia (PSC of DC) settlement agreement and the conditions of approval from the Public Service Commission of Maryland (PSC of MD) and the SCC of VA. Among other things, these commitments include rate credits distributable to both residential and non-residential customers, gas expansion and other programs, various public interest commitments, and safety programs. The cumulative amount expensed as of March 31, 2019 was $136.1 million, of which $113.4 million has been paid, including $2.3 million paid in the quarter ended March 31, 2019. In March 2019, the PSC of MD issued an order finalizing that the $3.9 million Most Favored Nation adjustment, originally recorded as a commitment expense, should be used to offset future rates under Washington Gas’ natural gas expansion program in Maryland. As a result, Washington Gas reversed the commitment expense in the first quarter of 2019. In addition, there are certain additional regulatory commitments which will be recorded when the costs are incurred in the future, including the hiring of damage prevention trainers in each jurisdiction for a total of $2.4 million over 5 years, investment of up to $70.0 million over a 10 year period to further extend natural gas service, spending $8.0 million for leak mitigation within three years of the Merger close, and developing 15 megawatts of either electric grid energy storage or Tier 1 renewable resources within five years. Application for Approval of Reduction of Distribution Rates On January 12, 2018, Washington Gas filed applications to reduce customer rates in Maryland, Virginia, and the District of Columbia to reflect the impact of the Tax Act, including both the impact of the re-measurement of deferred tax assets and liabilities and reduction of the federal tax rate to 21%. Washington Gas began tracking the impact of the Tax Act on revenue requirements beginning January 1, 2018, recording all impacts to regulatory assets and liabilities. In Maryland, the PSC of MD approved the application for an annual reduction in Washington Gas’ distribution rates of $14.8 million, effective for bills rendered on or after February 1, 2018. The PSC of DC approved the settlement agreement on June 29, 2018, reflecting an annual reduction in Washington Gas’ distribution rates of $8.3 million, effective for service rendered on or after July 1, 2018, which was refunded to customers. In Virginia, the application was dismissed on March 15, 2018 and Washington Gas filed a new general rate case in July 2018 incorporating the effects of the Tax Act, which the Company filed on July 31, 2018 and is still pending (see discussion below). Washington Gas has recorded regulatory liabilities, representing the amounts owed to customers for reduced rates between January 1, 2018 and March 31, 2019 of $17.5 million for Virginia. Virginia Jurisdiction Virginia Rate Case. On July 31, 2018, Washington Gas filed an application with the SCC of VA to increase its base rates for natural gas service by $37.6 million, which includes $14.7 million of revenue associated with natural gas pipeline replacement initiatives previously approved by the Commission and paid by customers through a monthly rider. Additionally, the requested revenue increase incorporates the effects of The Tax Act. On August 23, 2018, the SCC of VA issued an order setting a procedural schedule and appointing a Hearing Examiner. Interim rates became effective, subject to refund, for usage in the January 2019 billing cycle. On February 4, 2019, the Hearing Examiner granted an extension of time for Intervenor and Staff testimonies and Washington Gas rebuttal. On March 13, 2019, the Staff filed its Direct testimony. On April 12, 2019, Washington Gas filed rebuttal testimony and revised its original return on equity down from 10.6% to 10.3% and its overall rate of return down from 7.94% to 7.81%. Hearings are scheduled to begin on April 30, 2019. Financial Guarantees At March 31, 2019 and December 31, 2018, there were no guarantees to external parties. Environmental Matters We are subject to federal, state and local laws and regulations related to environmental matters. These laws and regulations may require expenditures over a long time frame to control environmental effects. Almost all of the environmental liabilities we have recorded are for costs expected to be incurred to remediate sites where we or a predecessor affiliate operated manufactured gas plants (MGPs). Washington Gas has identified up to ten sites where it or its predecessors may have operated MGPs. Washington Gas last used any such plant in 1984. In connection with these operations, we are aware that coal tar and certain other by-products of the gas manufacturing process are present at or near some former sites and may be present at others. At March 31, 2019 and December 31, 2018, Washington Gas reported a liability of $10.7 million and $11.3 million on an undiscounted basis related to future environmental response costs. These estimates principally include the minimum liabilities associated with a range of environmental response costs expected to be incurred. At both March 31, 2019 and December 31, 2018, Washington Gas estimated the maximum liability associated with all of its sites to be approximately $29.4 million. The estimates were determined by Washington Gas’ environmental experts, based on experience in remediating MGP sites and advice from legal counsel and environmental consultants. The variation between the recorded and estimated maximum liability primarily results from differences in the number of years that will be required to perform environmental response processes and the extent of remediation that may be required. Washington Gas is currently remediating its East Station property, which is adjacent to the Anacostia River, including ground water pump and treat, tar recovery, soil encapsulation and other treatment. Washington Gas is conducting a remedial investigation and feasibility study under a 2012 consent decree with the District of Columbia and the federal government and additional remediation may be required. In addition, manufactured gas waste was discovered at an adjoining property, a parcel of land adjacent to East Station. Washington Gas has agreed to work with the owners of the adjoining property to perform a site investigation, ground water sampling, and report on the contamination at the site pursuant to oversight by the District of Columbia Department of Energy and Environment. Washington Gas received a letter in February 2016 from the District of Columbia and National Park Service regarding the Anacostia River Sediment Project, indicating that the District of Columbia is conducting a separate remedial investigation and feasibility study of the river to determine if and what cleanup measures may be required and to prepare a natural resource damage assessment. The sediment project draft remedial investigation report issued on March 30, 2018 identifies East Station as one of seventeen potential environmental cleanup sites. We are not able to estimate the total amount of potential damages or timing associated with the District of Columbia’s environmental investigation on the Anacostia River at this time. While an allocation method has not been established, Washington Gas has accrued an amount for study costs based on a potential range of estimates. Regulatory orders issued by the PSC of MD allow Washington Gas to recover the costs associated with the sites applicable to Maryland over the period ending in 2025. Rate orders issued by the PSC of DC allow Washington Gas a three-year recovery of prudently incurred environmental response costs and allow Washington Gas to defer additional costs incurred between rate cases. Regulatory orders from the SCC of VA have generally allowed the recovery of prudent environmental remediation costs to the extent they were included in the underlying financial data supporting an application for rate change. At March 31, 2019 and December 31, 2018, Washington Gas reported a regulatory asset of $5.6 million and $5.8 million for the portion of environmental response costs that are expected to be recoverable in future rates. For further information on our Environmental activities refer to Note 11 - Environmental Matters in Washington Gas’ 10-K/T for the three months ended December 31, 2018. |
Derivative and Weather Related Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative and Weather-Related Instruments | DERIVATIVES Derivative Instruments Washington Gas enters into contracts that qualify as derivative instruments and are accounted for under ASC Topic 815. These derivative instruments are recorded at fair value on our balance sheets and Washington Gas does not currently designate any derivatives as hedges under ASC Topic 815. Washington Gas’ derivative instruments relate to: (i) Washington Gas’ asset optimization program; (ii) managing price risk associated with the purchase of gas to serve utility customers and (iii) managing interest rate risk. Asset Optimization. Washington Gas optimizes the value of its long-term natural gas transportation and storage capacity resources during periods when these resources are not being used to physically serve utility customers. Specifically, Washington Gas utilizes its transportation capacity assets to benefit from favorable natural gas prices between different geographic locations and utilizes its storage capacity assets to benefit from favorable natural gas prices between different time periods. As part of this asset optimization program, Washington Gas enters into physical and financial derivative transactions in the form of forward, futures and option contracts with the primary objective of securing operating margins that Washington Gas will ultimately realize. The derivative transactions entered into under this program are subject to mark-to-market accounting treatment under ASC Topic 820. Regulatory sharing mechanisms provide for the annual realized profit from these transactions to be shared between Washington Gas’ shareholders and customers; therefore, changes in fair value are recorded through earnings, or as regulatory assets or liabilities to the extent that it is probable that realized gains and losses associated with these derivative transactions will be included in the rates charged to customers when they are realized. Unrealized gains and losses recorded to earnings may cause significant period-to-period volatility; this volatility does not change the operating margins that Washington Gas expects to ultimately realize from these transactions through the use of its storage and transportation capacity resources. All physically and financially settled contracts under our asset optimization program are reported on a net basis in the statements of income in “Utility cost of gas.” Total net margins recorded to “Utility cost of gas” after sharing and management fees associated with all asset optimization transactions for the three months ended March 31, 2019 was a net gain of $8.2 million including an unrealized gain of $7.2 million. During the three months ended March 31, 2018, we recorded a net gain of $18.8 million including an unrealized gain of $12.3 million. Managing Price Risk. To manage price risk associated with acquiring natural gas supply for utility customers, Washington Gas enters into physical and financial derivative transactions in the form of forward, option and other contracts, as authorized by its regulators. Any gains and losses associated with these derivatives are recorded as regulatory liabilities or assets, respectively, to reflect the rate treatment for these economic hedging activities. Managing Interest-Rate Risk. Washington Gas may utilize derivative instruments that are designed to minimize the risk of interest-rate volatility associated with planned issuances of debt securities. Any gains and losses associated with these types of derivatives are recorded as regulatory liabilities or assets, respectively, and amortized in accordance with regulatory requirements, typically over the life of the related debt. As of March 31, 2019 and December 31,2018, Washington Gas does not have any interest rate swaps in derivatives. Operations The following table presents the balance sheet classification for all derivative instruments as of March 31, 2019 and December 31, 2018.
The following table presents the balance sheet classification for all derivative instruments as of March 31, 2019 and December 31, 2018.
(a) Washington Gas has elected to offset the fair value of recognized derivative instruments against the right to reclaim or the obligation to return collateral for derivative instruments executed under the same master netting arrangement in accordance with ASC Topic 815. All recognized derivative contracts and associated financial collateral subject to a master netting arrangement or similar that is eligible for offset under ASC Topic 815 have been presented net in the balance sheet. (b) Washington Gas did not have derivative instruments outstanding that were designated as hedging instruments at March 31, 2019 or December 31, 2018. The following tables present all gains and losses associated with derivative instruments for the three months ended March 31, 2019 and 2018.
Collateral Washington Gas utilizes standardized master netting agreements, which facilitate the netting of cash flows into a single net exposure for a given counterparty. As part of these master netting agreements, cash, letters of credit and parent company guarantees may be required to be posted or obtained from counterparties in order to mitigate credit risk related to both derivatives and non-derivative positions. Under Washington Gas’ offsetting policy, collateral balances are offset against the related counterparties’ derivative positions to the extent the application would not result in the over-collateralization of those derivative positions on the balance sheet. Any collateral posted that is not offset against derivative assets and liabilities is included in “Other prepayments” in the accompanying balance sheets. Collateral received and not offset against derivative assets and liabilities is included in “Customer deposits and advance payments” in the accompanying balance sheets. At March 31, 2019 and December 31, 2018, Washington Gas had $6.3 million and $7.4 million, respectively, in collateral deposits posted with counterparties that are not offset against derivative asset and liabilities. At March 31, 2019 and December 31, 2018, Washington Gas had $0.7 million and $0.2 million, respectively, cash collateral held representing an obligation, and are not offset against derivative asset and liabilities. Certain derivative instruments of Washington Gas contain contract provisions that require collateral to be posted if the credit rating of Washington Gas falls below certain levels or if counterparty exposure to Washington Gas exceeds a certain level (credit-related contingent features). At March 31, 2019 and December 31, 2018, Washington Gas was not required to post collateral related to a derivative liability that contained a credit-related contingent feature. The following table shows the aggregate fair value of all derivative instruments with credit-related contingent features that are in a liability position, as well as the maximum amount of collateral that would be required if the most intrusive credit-risk-related contingent features underlying these agreements were triggered on March 31, 2019, Washington Gas had a minimal requirement to post collateral related to a derivative liability that contained a credit-related contingent feature. There was no such collateral at December 31, 2018, respectively.
We do not enter into derivative contracts for speculative purposes. Concentration of Credit Risk We are exposed to credit risk from derivative instruments with wholesale counterparties, which is represented by the fair value of these instruments at the reporting date. We actively monitor and work to minimize counterparty concentration risk through various practices. At March 31, 2019, three counterparties each represented over 10% of Washington Gas’ credit exposure to wholesale derivative counterparties for a total credit risk of $45.8 million. |
Fair Value Measurements |
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Fair Value Measurements | FAIR VALUE MEASUREMENTS Recurring Basis We measure the fair value of our financial assets and liabilities using a combination of the income and market approaches in accordance with ASC Topic 820. These financial assets and liabilities primarily consist of derivatives recorded on our balance sheet under ASC Topic 815 and short-term investments, commercial paper and long-term debt outstanding required to be disclosed at fair value. Under ASC Topic 820, fair value is defined as the exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To value our financial instruments, we use market data or assumptions that market participants would use, including assumptions about credit risk (both our own credit risk and the counterparty’s credit risk) and the risks inherent in the inputs to valuation. We enter into derivative contracts in the futures and over-the-counter (OTC) wholesale and retail markets. These markets are the principal markets for the respective wholesale and retail contracts. Our relevant market participants are our existing counterparties and others who have participated in energy transactions at our delivery points. These participants have access to the same market data as Washington Gas. Valuations are generally based on pricing service data or indicative broker quotes depending on the market location. We measure the net credit exposure at the counterparty level where the right to set-off exists. The net exposure is determined using the mark-to-market exposure adjusted for collateral, letters of credit and parent guarantees. We use published default rates from Standard & Poor’s Ratings Services and Moody’s Investors Service as inputs for determining credit adjustments. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy under ASC Topic 820 are described below: Level 1. Level 1 of the fair value hierarchy consists of assets or liabilities that are valued using observable inputs based upon unadjusted quoted prices in active markets for identical assets or liabilities at the reporting date. Washington Gas did not have any Level 1 derivatives at March 31, 2019 or December 31, 2018. Level 2. Level 2 of the fair value hierarchy consists of assets or liabilities that are valued using directly or indirectly observable inputs either corroborated with market data or based on exchange traded market data. Level 2 includes fair values based on industry-standard valuation techniques that consider various assumptions: (i) quoted forward prices, including the use of mid-market pricing within a bid/ask spread; (ii) discount rates; (iii) implied volatility and (iv) other economic factors. Substantially all of these assumptions are observable throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the relevant market. At March 31, 2019 and December 31, 2018, Level 2 financial assets and liabilities included energy-related physical and financial derivative transactions such as forward, option and other contracts for deliveries at active market locations. Level 3. Level 3 of the fair value hierarchy consists of assets or liabilities that are valued using significant unobservable inputs at the reporting date. These unobservable assumptions reflect our assumptions about estimates that market participants would use in pricing the asset or liability, including natural gas basis prices and annualized volatilities of natural gas prices. A significant change to any one of these inputs in isolation could result in a significant upward or downward fluctuation in the fair value measurement. These inputs may be used with industry standard valuation methodologies that result in our best estimate of fair value for the assets or liabilities at the reporting date. Our Risk Analysis and Mitigation (RA&M) Group determines the valuation policies and procedures. The RA&M Group reports to Washington Gas’ Chief Financial Officer. In accordance with Washington Gas valuation policy, we may utilize a variety of valuation methodologies to determine the fair value of Level 3 derivative contracts, including internally developed valuation inputs and pricing models. The prices used in our valuations are corroborated using multiple pricing sources, and we periodically conduct assessments to determine whether each valuation model is appropriate for its intended purpose. The RA&M Group also evaluates changes in fair value measurements on a daily basis. At March 31, 2019 and December 31, 2018, Level 3 derivative assets and liabilities included: (i) physical contracts valued at illiquid market locations with no observable market data; (ii) long-dated positions where observable pricing is not available over the majority of the life of the contract; (iii) contracts valued using historical spot price volatility assumptions and (iv) valuations using indicative broker quotes for inactive market locations. The following tables set forth financial instruments recorded at fair value as of March 31, 2019 and December 31, 2018, respectively. A financial instrument’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy.
The following table includes quantitative information about the significant unobservable inputs used in the fair value measurement of our Level 3 financial instruments and the respective fair values of the net derivative asset and liability positions, by contract type, as of March 31, 2019 and December 31, 2018.
The following tables are a summary of the changes in the fair value of our derivative instruments that are measured at net fair value on a recurring basis in accordance with ASC Topic 820 using significant Level 3 inputs during the three months ended March 31, 2019 and March 31, 2018, respectively.
Transfers between different levels of the fair value hierarchy may occur based on fluctuations in the valuation inputs and on the level of observable inputs used to value the instruments from period to period. It is our policy to show both transfers into and out of the different levels of the fair value hierarchy at the fair value as of the beginning of the period. Transfers out of Level 3 during the three months ended March 31, 2019 and March 31, 2018 were due to valuations that experienced an increase in observable market inputs. Transfers into Level 3 during the three months ended March 31, 2019 and March 31, 2018 were due to an increase in unobservable market inputs, primarily pricing points. The table below sets forth the line items on the statements of income to which amounts are recorded for the three months ended March 31, 2019 and March 31, 2018, respectively, related to fair value measurements using significant Level 3 inputs.
Unrealized gains (losses) attributable to derivative assets and liabilities measured using significant Level 3 inputs were recorded as follows for the fiscal years ended March 31, 2019 and March 31, 2018, respectively.
The following tables presents the carrying amounts recorded at amortized cost and estimated fair values of our financial instruments at March 31, 2019 and December 31, 2018.
(a) The balance as of March 31, 2019 includes $1.1 million money market funds located in “Cash and cash equivalents,” $4.1 million rabbi trust investment located in “Current Assets-Other,” and $45.4 million rabbi trust investments located in “Deferred Charges and Other Assets-Other” of the accompanying balance sheets; The balance as of December 31, 2018 includes $4.4 million money market funds located in “Cash and cash equivalents,” $20.2 million rabbi trust investment located in “Current Assets-Other” and $45.1 million rabbi trust investments located in “Deferred Charges and Other Assets-Other.” The amounts in cash and cash equivalent may be offset by outstanding checks. (b) Balance is located in “Notes payable and project financing” in the accompanying balance sheets. (c) Includes adjustments for current maturities and unamortized discounts, as applicable. Our money market funds are Level 1 valuations and their carrying amount approximates fair value. The maturity of our commercial paper outstanding at both March 31, 2019 and December 31, 2018 is under 30 days. Due to the short term nature of these notes, the carrying cost of our commercial paper approximates fair value using Level 2 inputs. Due to the nature of our project financing arrangements, the carrying cost approximates fair value using Level 2 inputs. Due to the short term nature of current maturities of long-term debt, the carrying cost approximates fair value using Level 2 inputs, Washington Gas’ long-term debt is not actively traded. The fair value of long-term debt was estimated based on valuation techniques when observable market data is not available. Our long-term debt fair value measurement is classified as Level 3. Non Recurring Basis Washington Gas does not have financial instruments recorded at fair value on a non-recurring basis as of March 31, 2019 and December 31, 2018. |
Related Party Transactions |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | RELATED PARTY TRANSACTIONS Corporate Service Allocation As a subsidiary of AltaGas and effective with the close of the Merger on July 6, 2018, Washington Gas is charged a proportionate share of corporate governance and other shared services costs from AltaGas, primarily related to human resources, employee benefits, finance, legal, accounting, tax, information technology services, and office services. AltaGas charges Washington Gas for the total shared service costs attributable to WGL and its affiliates and Washington Gas in turn allocates a portion of the costs to WGL’s other subsidiaries based on methodologies further described below. Washington Gas records a payable of the total shared service costs allocated to all WGL’s subsidiaries in “Payable to associated companies” and a receivable of the shared service costs allocated to WGL’s other subsidiaries in “Receivables from associated companies” on the balance sheet. As of March 31, 2019, WGL recorded a $5.8 million liability to “Payables to associated companies,” reflecting Washington Gas’ unpaid shared service cost payable to AltaGas. Washington Gas recorded a receivable of $1.3 million to “Receivables from associated companies” on the balance sheet related to the shared service costs allocated to WGL’s subsidiaries, and $4.5 million of net expenses were included in “Operation and maintenance” on the statements of income for the three months ended March 31, 2019, reflecting the shared service cost allocated to Washington Gas. As of December 31, 2018, Washington Gas recorded a receivable of $0.6 million to “Receivables from associated companies” on the balance sheet related to the shared service costs allocated to WGL’s subsidiaries, and $4.5 million of net expenses were included in “Operation and maintenance” of statements of income for the three months ended December 31, 2018, reflecting the shared service cost allocated to Washington Gas. There was no payable balance related to the shared service cost as of December 31, 2018. In addition, Washington Gas provides accounting, treasury, legal and other administrative and general support to WGL’s subsidiaries, and files consolidated tax returns that include affiliated taxable transactions. Effective upon the approval by the SCC of Virginia on December 17, 2018, and beginning in January 2019, Washington Gas also provides accounting, legal, tax and other administrative and general support to various AltaGas U.S. entities. Washington Gas bills affiliates to which it provides services in accordance with regulatory requirements for the actual cost of providing these services, which approximates their market value. To the extent such billings are outstanding, they are reflected in “Receivables from associated companies” on Washington Gas’ balance sheets. Washington Gas assigns or allocates these costs directly to its affiliates and, therefore, does not recognize revenues or expenses associated with providing these services. Washington Gas believes that allocations based on broad measures of business activity are appropriate for allocating expenses resulting from common services. Affiliate entities are allocated a portion of common services based on a formula driven by appropriate indicators of activity, as approved by management. Refer to Note 8-Income Taxes of the Notes to Financial Statements for discussions of related party income taxes. Project Financing Washington Gas previously obtained third-party project financing on behalf of the federal government to provide funds during the construction of certain energy management services projects entered into under Washington Gas’ area-wide contract. In December 2016, WGL Energy Systems entered into an agreement to obtain third-party financing and receive funds directly from the third-party lender during the construction period associated with the related energy management service projects. Washington Gas continued to record a receivable in “Unbilled revenues” representing the government’s obligation and recorded an account payable to WGL Energy Systems in “Payable to associated companies” for the construction work performed for the same amount. Refer to Note 5-Short Term Debt of the Notes to Financial Statements for further discussions of the project financing. Related Party Transactions with Hampshire Hampshire owns full and partial interests in underground natural gas storage facilities, including pipeline delivery facilities located in and around Hampshire County, West Virginia, and operates those facilities to serve Washington Gas, which purchases all of the storage services of Hampshire. Washington Gas includes the cost of these services in the bills sent to its customers and records the cost of the services in “Operation and maintenance” in its statements of income. Hampshire operates under a “pass-through” cost of service-based tariff approved by the Federal Energy Regulatory Commission (FERC) and adjusts its billing rates to Washington Gas on a periodic basis to account for changes in its investment in utility plant and associated expenses. During the three months ended March 31, 2019 and 2018, Washington Gas recorded $2.1 million and $1.6 million of expenses related to the cost of services provided by Hampshire in Washington Gas’ Statements of Income. The outstanding balance not cleared between Washington Gas and Hampshire at the end of the reporting period was recorded in “Receivables from associated companies” on Washington Gas’ balance sheet. Other Related Party Transactions In connection with billing for unregulated third-party marketers, including WGL Energy Services and with other miscellaneous billing processes, Washington Gas collects cash on behalf of affiliates and transfers the cash in a reasonable time period. Cash collected by Washington Gas on behalf of its affiliates but not yet transferred is recorded in “Payables to associated companies” on Washington Gas’ balance sheets. Washington Gas provides gas balancing services related to storage, injections, withdrawals and deliveries to all energy marketers participating in the sale of natural gas on an unregulated basis through the customer choice programs that operate in its service territory. These balancing services include the sale of natural gas supply commodities related to various peaking arrangements contractually supplied to Washington Gas and then partially allocated and assigned by Washington Gas to the energy marketers, including WGL Energy Services. Washington Gas records revenues for these balancing services pursuant to tariffs approved by the appropriate regulatory bodies. The following table shows the amounts Washington Gas charged WGL Energy Services for balancing services.
As a result of these balancing services, an imbalance is created for volumes of natural gas received by Washington Gas that are not equal to the volumes of natural gas delivered to customers of the energy marketers. Washington Gas recorded a $2.1 million and $0.7 million receivable from WGL Energy Services, at March 31, 2019 and December 31, 2018, respectively, related to an imbalance in gas volumes. The receivable and payable are recorded in “Account receivable” and “Account payable and other accrued liabilities” on Washington Gas’ balance sheet. Refer to Note 1—Accounting Policies of the Notes to Financial Statements on Form 10-K/T for the three months ended December 31, 2018 for further discussion of these imbalance transactions. Washington Gas participates in a purchase of receivables (POR) program as approved by the PSC of MD and the PSC of DC, whereby it purchases receivables from participating energy marketers, including WGL Energy Services, at approved discount rates. Washington Gas implemented the POR program in the District of Columbia beginning in January 2019. The receivables purchased by Washington Gas are included in “Accounts receivable” in the accompanying balance sheet. At March 31, 2019 and December 31, 2018, Washington Gas had balances of $10.0 million and $6.4 million, respectively, of purchased receivables from WGL Energy Services. |
Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table shows the changes in accumulated other comprehensive income (loss) by component for three months ended March 31, 2019, and 2018.
(a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 9—Pension and other post-retirement benefit plans for additional details. |
Supplemental Cash Flow Information |
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Supplemental Cash Flow Information | SUPPLEMENTAL CASH FLOW INFORMATION The following table details the changes in operating assets and liabilities from operating activities, cash payments that have been included in the determination of earnings and non-cash investing and financing activities.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within Washington Gas’ balance sheets that sums to the total of such amounts shown on the statements of cash flows.
Restricted cash included in “Current assets—Other” and “Deferred charges and other assets—Other” on the balance sheets represents amount of investment in rabbi trusts to fund deferred compensation, pension and other post-retirement benefits for certain management personnel and directors. The funds in the rabbi trusts can only be used to pay for plan participant benefits and other plan expenses such as investment fees or trustee fees. The funds are invested in money market funds as of March 31, 2019. We did not have any restricted cash as of March 31, 2018. Refer to Note 9-Pension and Other Post-Retirement Benefit Plans for further discussion of rabbi trusts. |
Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Consolidation | The condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Therefore, certain financial information and note disclosures accompanying annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) are omitted in this interim report. Washington Gas is an indirect, majority owned subsidiary of, among other entities, of AltaGas and WGL. On July 6, 2018, a merger of WGL into AltaGas was consummated (the Merger). In connection with the Merger, WGL, the former parent entity of Washington Gas, formed Wrangler SPE LLC (Wrangler), a bankruptcy remote, special purpose entity to own the common stock of Washington Gas. Wrangler is a wholly owned subsidiary of WGL, which survived the Merger as an indirect, wholly owned subsidiary of AltaGas. In addition, WGL continues to own all of the shares of common stock of Washington Gas Resources Corporation (Washington Gas Resources) and Hampshire Gas Company (Hampshire). Washington Gas Resources owns all of the shares of common stock of four non-utility subsidiaries that include WGL Energy Services, Inc. (WGL Energy Services), WGL Energy Systems, Inc. (WGL Energy Systems), WGL Midstream, Inc. (WGL Midstream) and WGSW, Inc. (WGSW). Additionally, several subsidiaries of WGL own interests in other entities. |
Basis of Accounting, Policy | The condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Therefore, certain financial information and note disclosures accompanying annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) are omitted in this interim report. The accompanying unaudited condensed financial statements for Washington Gas reflect all normal recurring adjustments that are necessary, in our opinion, to present fairly the results of operations in accordance with GAAP. |
Operating Leases | We determine if an arrangement is a lease and the lease classification at inception. Lease payments under operating leases are recognized on a straight-line basis over the lease term. For our building leases, we do not separate the lease and non-lease components. For the leases of multiple office locations classified as operating leases, the lease term begins on the date when construction of the leasehold improvements can start and has allowed us to occupy the respective locations. Leasehold improvement costs are classified as “Property, Plant, and Equipment” on the balance sheets, and are being amortized to “Depreciation and amortization” expense on a straight-line basis over the non-cancelable period of the leases. |
Accounting Standards Adopted Current Fiscal Year [Policy Text Block] | ACCOUNTING STANDARDS ADOPTED IN CALENDAR YEAR ASU 2016-02, Leases (Topic 842), ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, ASU 2018-11, Targeted Improvements, and ASU 2018-20, Narrow-Scope Improvements for Lessors ASU 2016-02 requires recognition of a right-to-use asset and lease liability by lessees on the statement of financial position and disclosure of key information about leasing arrangements. Lessor accounting remains substantially unchanged but the standard modifies what qualifies as a sales-type and direct financing lease and eliminated real-estate specific provisions. The standard requires application using a modified retrospective approach. ASU 2018-01 provides an optional election not to evaluate existing and expired land easements not previously accounted for as a lease. ASU 2018-11 allows entities to elect to report comparative periods presented after adoption under the old lease standard (ASC Topic 840, Leases) and recognize a cumulative effect adjustment to the opening balance at the date of adoption. The update also provides lessors a practical expedient not requiring the separation of lease and non-lease components provided that certain conditions are met. ASU 2018-20 allows lessors to include and exclude certain costs from variable payments. The ASU also requires lessors to allocate certain variable payments to the lease and non-lease components when the changes in facts and circumstances on which the variable payments are based occur. January 1, 2019 Leases, with terms longer than 12 months, for which Washington Gas is the lessee have been reflected on the balance sheet by recording an increase to non- current assets and an increase to deferred credits net of the current portion that is recorded in current liabilities. Upon adoption, Washington Gas recorded lease liabilities of $58.9 million and a right-of-use asset of $43.2 million, net of lease incentives and prepaid or deferred rent balances of $15.7 million. Washington Gas utilized the transition practical expedients which allow entities to not have to reassess whether an arrangement contains a lease and the lease classification under the provisions of ASC Topic 842, land easements, and not separating out the lease and non-lease components for certain classes of assets. As a result of the transition practical expedients, Washington Gas’ operating leases on transition are consistent with its conclusions under ASC 840. Washington Gas has also elected to present prior comparative information under ASC 840. See Note 3 - Leases for further information and the new required lease disclosures. ______________________________________________________________________________________________________ ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted improvements to Accounting for Hedging Activities and ASU 2018-16, Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes ASU 2017-12 amends the hedge accounting and recognition requirements by expanding an entity’s ability to hedge non-financial and financial risk components and reduce the complexity in fair value hedges of interest rate risk. Additionally, this standard eliminates the requirement to separately measure and disclose the ineffective portion of the hedge with the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. Early adoption is permitted. ASU 2018-16 adds the OIS rate based on SOFR as a fifth U.S. benchmark interest rate for hedge accounting purposes. This standard should be adopted in conjunction with ASU 2017-12 if not early adopted. January 1, 2019 The guidance will only have an impact on new transactions that are entered into and where hedge accounting is elected. ____________________________________________________________________________________________________ ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) The update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements to capitalize implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Capitalized implementation costs should be presented in the statement of financial position as a prepaid expense and amortized over the term of the hosting arrangement, presented in the statements of income in the same line items as prepayment of fees associated with the hosting arrangement. The updates in this standard may be applied on a prospective or retrospective basis. Early adoption is permitted. January 1, 2019 We early adopted this standard on a prospective basis. The adoption of this ASU did not have a material effect on our financial statements. ______________________________________________________________________________________________________ |
New Accounting Pronouncements, Policy [Policy Text Block] | OTHER NEWLY ISSUED ACCOUNTING STANDARDS ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, including other subsequent ASUs clarifying the guidance. For credit losses on financial instruments, this standard changes the current incurred loss impairment methodology to an expected loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. Early adoption is permitted. January 1, 2020 We are in the process of evaluating the impact the adoption of this standard will have on our financial statements. _____________________________________________________________________________________________________ ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement This update modifies the disclosure requirements on fair value measurements. Early adoption is permitted. January 1, 2020 It is not expected that the adoption of this standard will have a material effect on our financial statements. _____________________________________________________________________________________________________ ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities This standard provides a private-company scope exception to the VIE guidance for certain entities under common control and clarify that indirect interest held through related parties under common control will be considered on a proportional basis when determining whether fees paid to decision makers and service providers are variable interests. Early adoption is permitted. January 1, 2020 We are in the process of evaluating this new accounting standard but it is expected that the adoption of this standard will not have a material effect on our financial statements. ______________________________________________________________________________________________________ ASU 2019-01, Leases (Topic 842) Codification Improvements This update addresses the determination of the fair value of the underlying asset by lessors that are not manufacturers or dealers, provides guidance for the presentation of the statement of cash flows for sales-type and direct financing leases, and clarifies transition disclosures related to Topic 250. January 1, 2020 We do not anticipate that adoption of this standard will have a material effect on our financial statements. ______________________________________________________________________________________________________ ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans This standard modifies the disclosure requirements related to defined benefit pension and other postretirement plans. Early adoption is permitted. December 31, 2020 We do not anticipate that adoption of this standard will have a material effect on our financial statements. ______________________________________________________________________________________________________ |
Revenue from Contracts With Customers - (Policies) |
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Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Customer billings are based on two main components: (i) a fixed service fee and (ii) a variable fee based on usage. For customers who choose to purchase their natural gas from Washington Gas, the bill will include a usage based charge for the cost of the commodity. Revenue is recognized over time as the natural gas is delivered or as the service is performed. As meter readings are performed on a cycle basis, Washington Gas recognizes accrued revenue for any services rendered to its customers but not billed at month-end. The tariff sales are generally considered daily or “at-will” contracts as customers may cancel their service at any time (subject to notification requirements in the tariff), and revenue generally represents the amount Washington Gas is entitled to invoice. There are certain contracts that have terms of one year or longer. For these contracts, revenue is recognized based on the amount Washington Gas is entitled to bill the customer. Customers have the choice to purchase natural gas from competitive service providers. Washington Gas charges the competitive service providers balancing fees to manage the natural gas transportation imbalances. Where regulations require, Washington Gas issues customers a consolidated bill to include the natural gas supplied by the competitive service providers and distribution of natural gas. Washington Gas recognizes revenue only for distribution services that it has provided to the customer, and the balancing fees for the services provided to the competitive service provider. |
Short-Term Debt (Policies) |
3 Months Ended |
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Mar. 31, 2019 | |
Short-term Debt [Abstract] | |
Short Term Debt Policy | Washington Gas satisfies the short-term financing requirements through the sale of commercial paper, financing arrangements with third-party lenders, or through bank borrowings. Due to the seasonal nature of our operations, short-term financing requirements can vary significantly during the year. Revolving credit agreements are maintained to support outstanding commercial paper and to permit short-term borrowing flexibility. The policy of Washington Gas is to maintain bank credit facilities in amounts equal to or greater than the expected maximum commercial paper position. Washington Gas issues long-term debt in the form of medium-term notes (MTNs), unsecured long-term notes and private placement notes with individual terms regarding interest rates, maturities and call or put options. These notes can have maturity dates of one or more years from the date of issuance. |
Long-Term Debt Long-Term Debt (Policies) |
3 Months Ended |
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Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long Term Debt Policy | Washington Gas satisfies the short-term financing requirements through the sale of commercial paper, financing arrangements with third-party lenders, or through bank borrowings. Due to the seasonal nature of our operations, short-term financing requirements can vary significantly during the year. Revolving credit agreements are maintained to support outstanding commercial paper and to permit short-term borrowing flexibility. The policy of Washington Gas is to maintain bank credit facilities in amounts equal to or greater than the expected maximum commercial paper position. Washington Gas issues long-term debt in the form of medium-term notes (MTNs), unsecured long-term notes and private placement notes with individual terms regarding interest rates, maturities and call or put options. These notes can have maturity dates of one or more years from the date of issuance. |
Income Taxes Income Taxes (Policies) |
3 Months Ended |
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Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Income Taxes Policy | Through July 6, 2018, and prior to the Merger with AltaGas, WGL and its wholly owned subsidiaries, including Washington Gas, filed a consolidated federal income tax return and various state income tax returns where they had a business presence. WGL and each of its subsidiaries participated in a tax sharing agreement that established the method for allocating tax benefits from losses that are utilized on the consolidated income tax return. The consolidated tax has been apportioned among the subsidiaries on the separate return method and losses are allocated to the subsidiaries that have taxable income on pro-rata basis. During the three months ended March 31, 2019, Washington Gas did not make any payment to WGL’s other subsidiaries related to the legacy WGL tax sharing agreement. Effective with the Merger and beginning July 7, 2018, our tax year end changed to December 31 and Washington Gas will be included with AltaGas’ wholly owned US subsidiaries’ consolidated income tax return with AltaGas Services (U.S.) Inc. (ASUS), the parent company of the consolidated AltaGas US group. Accordingly, Washington Gas will file a final return as part of WGL‘s consolidated income tax return for the short tax year from October 1, 2017 to July 6, 2018. WGL and its wholly owned subsidiaries will be included in the ASUS consolidated income tax returns beginning with the period from July 7, 2018 to December 31, 2018. We have established a new tax sharing policy with ASUS. The tax sharing policy provides allocation of consolidated tax liabilities and benefits based on amounts participants would incur as standalone corporations. State income tax returns are filed on a separate company basis in most states and on a unitary basis as required, where we or the consolidated ASUS group have operations and/or a requirement to file. |
Derivative and Weather Related Instruments (Policies) |
3 Months Ended |
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Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives, Policy | Washington Gas enters into contracts that qualify as derivative instruments and are accounted for under ASC Topic 815. These derivative instruments are recorded at fair value on our balance sheets and Washington Gas does not currently designate any derivatives as hedges under ASC Topic 815. Washington Gas’ derivative instruments relate to: (i) Washington Gas’ asset optimization program; (ii) managing price risk associated with the purchase of gas to serve utility customers and (iii) managing interest rate risk. Asset Optimization. Washington Gas optimizes the value of its long-term natural gas transportation and storage capacity resources during periods when these resources are not being used to physically serve utility customers. Specifically, Washington Gas utilizes its transportation capacity assets to benefit from favorable natural gas prices between different geographic locations and utilizes its storage capacity assets to benefit from favorable natural gas prices between different time periods. As part of this asset optimization program, Washington Gas enters into physical and financial derivative transactions in the form of forward, futures and option contracts with the primary objective of securing operating margins that Washington Gas will ultimately realize. The derivative transactions entered into under this program are subject to mark-to-market accounting treatment under ASC Topic 820. Regulatory sharing mechanisms provide for the annual realized profit from these transactions to be shared between Washington Gas’ shareholders and customers; therefore, changes in fair value are recorded through earnings, or as regulatory assets or liabilities to the extent that it is probable that realized gains and losses associated with these derivative transactions will be included in the rates charged to customers when they are realized. Unrealized gains and losses recorded to earnings may cause significant period-to-period volatility; this volatility does not change the operating margins that Washington Gas expects to ultimately realize from these transactions through the use of its storage and transportation capacity resources. |
Risk, Policy | Managing Price Risk. To manage price risk associated with acquiring natural gas supply for utility customers, Washington Gas enters into physical and financial derivative transactions in the form of forward, option and other contracts, as authorized by its regulators. Any gains and losses associated with these derivatives are recorded as regulatory liabilities or assets, respectively, to reflect the rate treatment for these economic hedging activities. Managing Interest-Rate Risk. Washington Gas may utilize derivative instruments that are designed to minimize the risk of interest-rate volatility associated with planned issuances of debt securities. Any gains and losses associated with these types of derivatives are recorded as regulatory liabilities or assets, respectively, and amortized in accordance with regulatory requirements, typically over the life of the related debt. |
Collateral, Policy | We are exposed to credit risk from derivative instruments with wholesale counterparties, which is represented by the fair value of these instruments at the reporting date. We actively monitor and work to minimize counterparty concentration risk through various practices. Washington Gas utilizes standardized master netting agreements, which facilitate the netting of cash flows into a single net exposure for a given counterparty. As part of these master netting agreements, cash, letters of credit and parent company guarantees may be required to be posted or obtained from counterparties in order to mitigate credit risk related to both derivatives and non-derivative positions. Under Washington Gas’ offsetting policy, collateral balances are offset against the related counterparties’ derivative positions to the extent the application would not result in the over-collateralization of those derivative positions on the balance sheet. Any collateral posted that is not offset against derivative assets and liabilities is included in “Other prepayments” in the accompanying balance sheets. Collateral received and not offset against derivative assets and liabilities is included in “Customer deposits and advance payments” in the accompanying balance sheets. Concentration of Credit Risk We are exposed to credit risk from derivative instruments with wholesale counterparties, which is represented by the fair value of these instruments at the reporting date. We actively monitor and work to minimize counterparty concentration risk through various practices. Washington Gas utilizes standardized master netting agreements, which facilitate the netting of cash flows into a single net exposure for a given counterparty. As part of these master netting agreements, cash, letters of credit and parent company guarantees may be required to be posted or obtained from counterparties in order to mitigate credit risk related to both derivatives and non-derivative positions. Under Washington Gas’ offsetting policy, collateral balances are offset against the related counterparties’ derivative positions to the extent the application would not result in the over-collateralization of those derivative positions on the balance sheet. |
Fair Value Measurements Fair Value (Policies) |
3 Months Ended |
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Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Fair Value Measurement Policy | Recurring Basis We measure the fair value of our financial assets and liabilities using a combination of the income and market approaches in accordance with ASC Topic 820. These financial assets and liabilities primarily consist of derivatives recorded on our balance sheet under ASC Topic 815 and short-term investments, commercial paper and long-term debt outstanding required to be disclosed at fair value. Under ASC Topic 820, fair value is defined as the exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To value our financial instruments, we use market data or assumptions that market participants would use, including assumptions about credit risk (both our own credit risk and the counterparty’s credit risk) and the risks inherent in the inputs to valuation. We enter into derivative contracts in the futures and over-the-counter (OTC) wholesale and retail markets. These markets are the principal markets for the respective wholesale and retail contracts. Our relevant market participants are our existing counterparties and others who have participated in energy transactions at our delivery points. These participants have access to the same market data as Washington Gas. Valuations are generally based on pricing service data or indicative broker quotes depending on the market location. We measure the net credit exposure at the counterparty level where the right to set-off exists. The net exposure is determined using the mark-to-market exposure adjusted for collateral, letters of credit and parent guarantees. We use published default rates from Standard & Poor’s Ratings Services and Moody’s Investors Service as inputs for determining credit adjustments. A financial instrument’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy. Our Risk Analysis and Mitigation (RA&M) Group determines the valuation policies and procedures. The RA&M Group reports to Washington Gas’ Chief Financial Officer. In accordance with Washington Gas valuation policy, we may utilize a variety of valuation methodologies to determine the fair value of Level 3 derivative contracts, including internally developed valuation inputs and pricing models. The prices used in our valuations are corroborated using multiple pricing sources, and we periodically conduct assessments to determine whether each valuation model is appropriate for its intended purpose. The RA&M Group also evaluates changes in fair value measurements on a daily basis. |
Fair Value Transfer, Policy | Transfers between different levels of the fair value hierarchy may occur based on fluctuations in the valuation inputs and on the level of observable inputs used to value the instruments from period to period. It is our policy to show both transfers into and out of the different levels of the fair value hierarchy at the fair value as of the beginning of the period. Transfers out of Level 3 during the three months ended March 31, 2019 and March 31, 2018 were due to valuations that experienced an increase in observable market inputs. Transfers into Level 3 during the three months ended March 31, 2019 and March 31, 2018 were due to an increase in unobservable market inputs, primarily pricing points. |
Fair Value of Financial Instruments, Policy | Our money market funds are Level 1 valuations and their carrying amount approximates fair value. The maturity of our commercial paper outstanding at both March 31, 2019 and December 31, 2018 is under 30 days. Due to the short term nature of these notes, the carrying cost of our commercial paper approximates fair value using Level 2 inputs. Due to the nature of our project financing arrangements, the carrying cost approximates fair value using Level 2 inputs. Due to the short term nature of current maturities of long-term debt, the carrying cost approximates fair value using Level 2 inputs, Washington Gas’ long-term debt is not actively traded. The fair value of long-term debt was estimated based on valuation techniques when observable market data is not available. Our long-term debt fair value measurement is classified as Level 3. |
Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting standards adopted in the current fiscal year | The following tables represent Accounting Standards Updates (ASUs) adopted by Washington Gas during the three months ended March 31, 2019, and other newly issued accounting standards that will be adopted by Washington Gas in the future.
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Other newly issued accounting standards |
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Revenue from Contracts With Customers - (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table disaggregates revenue for the period ended March 31, 2019.
(a) Washington Gas has determined that its Revenue Normalization Adjustment (RNA), Weather Normalization Adjustment (WNA), and Conservation and Ratemaking Efficiency (CARE) Ratemaking Adjustment (CRA) billing adjustment mechanisms and accelerated pipe replacement programs are alternative revenue programs and accounted for under ASC Topic 980. (b) Revenue generated from Washington Gas lessor operating leases accounted for under ASC Topic 842, Leases. |
Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | The following table provides our operating lease payment at March 31, 2019.
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Lessee, Operating Lease, Supplemental Information [Table Text Block] | The following table provides supplemental cash flow information related to operating leases for the three months ended March 31, 2019 and other information related to operating leases.
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Lessor, Operating Lease, Payments to be Received, Maturity [Table Text Block] | The following table summarizes of the future minimum lease payments associated with these leases.
(a) The payments are presented on an undiscounted basis |
Accounts Payable and Other Accrued Liabilities (Tables) |
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Accounts Payable and Accrued Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Other Accrued Liabilities | The table below provides details for the amounts included in “Accounts payable and other accrued liabilities” on the balance sheets.
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Short-Term Debt (Tables) |
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Short-term Debt [Abstract] | |||||||||||||||||||||||||||||||||||||
Commited Credit Available | The following is a summary of committed credit available at March 31, 2019 and December 31, 2018.
(a) Washington Gas has the right to request extensions with the banks’ approval. Washington Gas’ revolving credit facility permits it to borrow an additional $100 million, with the banks’ approval, for a total of $450 million. |
Long Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] | The following tables show the outstanding notes as of March 31, 2019 and December 31, 2018.
(a) Includes MTNs and private placement notes. The amount represents face value of long-term debt including current maturities. (b) Weighted average interest rate is for the long-term debt including current maturities. |
Components of Total Equity (Tables) |
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Components of Total Equity Table | The table below reflects the components of “Total equity” for the three months ended March 31, 2019 and 2018.
(a) Stock-based compensation is based on the stock awards of WGL that are allocated to Washington Gas Light Company for its pro-rata share and includes implementation of ASU 2016-09. |
Pension and Other Post-Retirement Benefit Plans (Tables) |
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Components of Net Periodic Benefit Costs (Income) | The following table shows the components of net periodic benefit costs (income) recognized in our financial statements during the three months ended March 31, 2019 and 2018:
(a) Amount relates to a one time partial settlement charge associated with a lump sum payment to Washington Gas’ defined benefit supplemental executive retirement plan (DB SERP) that was paid in the first quarter of 2019. (b)On October 1, 2018, Washington Gas adopted ASU 2017-07. As a result, only the service cost component of net periodic benefit costs (income) is eligible for capitalization. (c)Amount represents the amortization of previously unrecovered costs of the applicable pension benefits or the health and life benefits as approved in the District of Columbia through 2019. |
Derivative and Weather Related Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Absolute Notional Amounts of Open Positions on Derivative Instruments | The following table presents the balance sheet classification for all derivative instruments as of March 31, 2019 and December 31, 2018.
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Balance Sheet Classification of Derivative Instruments | The following table presents the balance sheet classification for all derivative instruments as of March 31, 2019 and December 31, 2018.
(a) Washington Gas has elected to offset the fair value of recognized derivative instruments against the right to reclaim or the obligation to return collateral for derivative instruments executed under the same master netting arrangement in accordance with ASC Topic 815. All recognized derivative contracts and associated financial collateral subject to a master netting arrangement or similar that is eligible for offset under ASC Topic 815 have been presented net in the balance sheet. (b) Washington Gas did not have derivative instruments outstanding that were designated as hedging instruments at March 31, 2019 or December 31, 2018. |
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Gains and (Losses) on Derivative Instruments | The following tables present all gains and losses associated with derivative instruments for the three months ended March 31, 2019 and 2018.
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Potential Collateral Requirements for Derivative Liabilities with Credit-Risk-Contingent Features | The following table shows the aggregate fair value of all derivative instruments with credit-related contingent features that are in a liability position, as well as the maximum amount of collateral that would be required if the most intrusive credit-risk-related contingent features underlying these agreements were triggered on March 31, 2019, Washington Gas had a minimal requirement to post collateral related to a derivative liability that contained a credit-related contingent feature. There was no such collateral at December 31, 2018, respectively.
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements Under the Fair Value Hierarchy | The following tables set forth financial instruments recorded at fair value as of March 31, 2019 and December 31, 2018, respectively. A financial instrument’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy.
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Reconciliation of Fair Value Measurements Using Significant Level 3 Inputs | The following tables are a summary of the changes in the fair value of our derivative instruments that are measured at net fair value on a recurring basis in accordance with ASC Topic 820 using significant Level 3 inputs during the three months ended March 31, 2019 and March 31, 2018, respectively.
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Quantitative Information about Level 3 Fair Value Measurements | The following table includes quantitative information about the significant unobservable inputs used in the fair value measurement of our Level 3 financial instruments and the respective fair values of the net derivative asset and liability positions, by contract type, as of March 31, 2019 and December 31, 2018.
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Realized and Unrealized Gains (Losses) Recorded to Income for Level 3 Measurements | The table below sets forth the line items on the statements of income to which amounts are recorded for the three months ended March 31, 2019 and March 31, 2018, respectively, related to fair value measurements using significant Level 3 inputs.
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Unrealized Gains (Losses) Recorded for Level 3 Measurements | Unrealized gains (losses) attributable to derivative assets and liabilities measured using significant Level 3 inputs were recorded as follows for the fiscal years ended March 31, 2019 and March 31, 2018, respectively.
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Fair Value of Financial Instruments | The following tables presents the carrying amounts recorded at amortized cost and estimated fair values of our financial instruments at March 31, 2019 and December 31, 2018.
(a) The balance as of March 31, 2019 includes $1.1 million money market funds located in “Cash and cash equivalents,” $4.1 million rabbi trust investment located in “Current Assets-Other,” and $45.4 million rabbi trust investments located in “Deferred Charges and Other Assets-Other” of the accompanying balance sheets; The balance as of December 31, 2018 includes $4.4 million money market funds located in “Cash and cash equivalents,” $20.2 million rabbi trust investment located in “Current Assets-Other” and $45.1 million rabbi trust investments located in “Deferred Charges and Other Assets-Other.” The amounts in cash and cash equivalent may be offset by outstanding checks. (b) Balance is located in “Notes payable and project financing” in the accompanying balance sheets. (c) Includes adjustments for current maturities and unamortized discounts, as applicable. |
Related Party Transactions (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Gas Balancing Service Charges | The following table shows the amounts Washington Gas charged WGL Energy Services for balancing services.
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Accumulated Other Comprehensive Income (Loss) (Tables) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table shows the changes in accumulated other comprehensive income (loss) by component for three months ended March 31, 2019, and 2018.
(a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 9—Pension and other post-retirement benefit plans for additional details. |
Supplemental Cash Flow Information (Tables) |
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Supplemental Cash Flow Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information Table | The following table details the changes in operating assets and liabilities from operating activities, cash payments that have been included in the determination of earnings and non-cash investing and financing activities.
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Reconciliation of cash, cash equivalents and restricted cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within Washington Gas’ balance sheets that sums to the total of such amounts shown on the statements of cash flows.
|
Accounting Policies (Narrative) (Details) $ in Millions |
Mar. 31, 2019
USD ($)
subsidiary
|
Jan. 01, 2019
USD ($)
|
---|---|---|
Lease liabilities | $ 58.9 | $ 58.9 |
Right-of-use asset | 43.2 | |
Lease incentives and prepaid or deferred rent | $ 15.7 | |
Washington Gas Resources | ||
Number of Subsidiaries | subsidiary | 4 |
Leases Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
|
Right-of-use asset | $ 43,200 | ||
Lease incentives and prepaid or deferred rent | 15,700 | ||
Current lease liability | $ 3,726 | 2,800 | $ 0 |
Non current lease liability | $ 55,192 | $ 56,100 | $ 0 |
Lessee, Operating Lease, Description | <div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:6px;text-indent:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Washington Gas has operating leases for our corporate headquarters and other corporate offices, communication tower space, and certain office equipment.</font></div></div> | ||
Lessee, Operating Lease, Option to Terminate | <div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:6px;text-indent:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The leases generally have options to terminate the leases with notice prior to the end of the lease term based on the contract terms.</font></div></div> | ||
Lessee, Operating Lease, Option to Extend | <div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:6px;text-indent:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Some of the leases include options to extend the lease terms for 1 to 5 years with prior written notice or automatically renew if either party does not provide intent not to renew.</font></div></div><div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:6px;text-indent:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Some of the leases include options to extend the lease terms for 1 to 5 years with prior written notice or automatically renew if either party does not provide intent not to renew.</font></div></div> | ||
Lessor, Operating Lease, Option to Extend | <div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:0px;text-align:left;text-indent:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Some of the leases include options to extend the lease terms for 1 to 5 years with prior written notice or automatically renew if lessee does not provide intent not to renew.</font></div></div> | ||
Lessor, Operating Lease, Option to Terminate | <div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:0px;text-align:left;text-indent:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The leases generally have options to terminate the leases with notice prior to the end of the lease term based on the contract terms.</font></div></div> | ||
Operating Lease, Impairment Loss | $ 0 | ||
Minimum | |||
Lessee, Operating Lease, Remaining Lease Term | 1 year | ||
Lessor, Operating Lease, Remaining Lease Term | 5 months | ||
Maximum | |||
Lessee, Operating Lease, Remaining Lease Term | 15 years | ||
Lessor, Operating Lease, Remaining Lease Term | 82 years |
Maturity of Operating Lease Liabilities (Lessee) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Jan. 01, 2019 |
---|---|---|
Operating Lease Liabilities, Payment Due [Abstract] | ||
2019 | $ 2.4 | |
2020 | 5.8 | |
2021 | 5.4 | |
2022 | 5.3 | |
2023 | 5.4 | |
Thereafter | 50.7 | |
Total lease payments | 75.0 | |
Less: Interest | (16.1) | |
Present Value of Lease Liabilities | $ 58.9 | $ 58.9 |
Supplemental Cash Flow Information Related to Operating Leases (Lessee) (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Cash paid for amounts included in the lease liabilities in the operating cash flows | $ 0.5 |
Operating lease cost | 1.9 |
Variable lease cost | $ 0.6 |
Weighted average remaining lease term | 13 years 8 months |
Weighted average discount rate | 3.32% |
Maturity of Operating Lease Payments (Lessor) (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Maturity of Operating Lease Payments [Abstract] | |
2019 | $ 0.6 |
2020 | 0.6 |
2021 | 0.6 |
2022 | 0.6 |
2023 | 0.6 |
Thereafter | 58.3 |
Total lease payments | $ 61.3 |
Accounts Payable and Other Accrued Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||
Accounts payable—trade | $ 166.6 | $ 228.9 |
Employee benefits and payroll accruals | 11.5 | 28.0 |
Other accrued liabilities | 30.8 | 31.5 |
Total | $ 208.9 | $ 288.4 |
Short-Term Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Oct. 01, 2018 |
---|---|---|---|
Short Term Debt [Line Items] | |||
Less: Commercial Paper | $ (220,460) | $ (311,460) | |
Revolving credit facility additional borrowings | 100,000 | ||
Revolving credit facility maximum borrowing capacity | 450,000 | ||
Payables to associated companies | 39,567 | 95,228 | $ 53,000 |
Energy management services projects not complete | |||
Short Term Debt [Line Items] | |||
Payables to associated companies | 19,100 | 69,700 | |
Notes payable and project financing | 15,500 | 15,500 | |
Unbilled revenues | 34,600 | 85,300 | |
Government agency with minimal credit risk [Member] | |||
Short Term Debt [Line Items] | |||
Reserve for bad debt | 0 | 0 | |
Committed credit | |||
Short Term Debt [Line Items] | |||
Unsecured revolving credit facility | 350,000 | 350,000 | |
Less: Commercial Paper | (205,000) | (296,000) | |
Net committed credit available | $ 145,000 | $ 54,000 | |
Weighted average interest rate | 2.84% | 2.93% | |
Outstanding bank loans | $ 0 | $ 0 |
Long Term Debt (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
---|---|---|---|
Long Term Debt [LIne Items] | |||
Long-Term Debt | $ 1,096,000,000 | $ 1,096,000,000 | |
Unamortized discount | (2,900,000) | (2,900,000) | |
Unamortized Debt Issuance Expense | (8,200,000) | (8,100,000) | |
Less-current maturities | 50,000,000 | 50,000,000 | |
Total Long term debt | $ 1,034,900,000 | $ 1,035,000,000 | |
Weighted Average Interest Rate | 4.77% | 4.77% | |
Issuances | |||
Long Term Debt [LIne Items] | |||
Long-Term Debt | $ 0 | $ 0 | |
Retirements | |||
Long Term Debt [LIne Items] | |||
Long-Term Debt | $ 0 | $ 0 |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
---|---|---|---|
Income Tax Disclosure [Abstract] | |||
Tax sharing - amount paid to other subsidiaries | $ 0.0 | $ 8.3 | |
Accrued interest expense or penalties | $ 0.0 | $ 0.0 |
Pension and Other Post-retirement Benefit Plans (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Restricted cash included in Current assets-Other | $ 4,247 | $ 20,347 | |
Restricted cash included in Deferred Charges and Other Assets-Other | 50,706 | 50,490 | |
Reclass to Other income | 4,522 | $ 1,594 | |
ASU 2017-07 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Reclass to Other income | $ 2,800 | ||
Rabbi Trusts | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Restricted Cash - Rabbi Trust Balance | 46,800 | 60,800 | |
Restricted cash included in Current assets-Other | 4,100 | 20,200 | |
Restricted cash included in Deferred Charges and Other Assets-Other | $ 42,700 | $ 40,600 |
Derivative and Weather Related Instruments Narrative (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019
USD ($)
Counterparties
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Asset Optimization [Abstract] | |||
Gain (Loss) on Asset Optimization Transactions Net Pretax | $ 8.2 | $ 18.8 | |
Unrealized Gains (Loss) On Asset Optimization Derivative Instruments Net Pretax | 7.2 | $ 12.3 | |
Derivative, Collateral [Abstract] | |||
Right to Reclaim Cash | 6.3 | $ 7.4 | |
Derivative, Collateral, Obligation to Return Cash | $ 0.7 | $ 0.2 | |
Concentration of Credit Risk [Abstract] | |||
Number of Counterparties | Counterparties | 3 | ||
Percentage Of Credit Exposure | 10.00% | ||
Obligation to counterparties | $ 45.8 |
Derivative and Weather Related Instruments (Gains and Losses) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Gains and (Losses) on Derivative Instruments | ||
Total | $ 15,900 | $ 6,500 |
Interest Expense | 14,876 | 14,672 |
Utility cost of gas | ||
Gains and (Losses) on Derivative Instruments | ||
Recorded to income | 4,000 | 3,000 |
Gas costs | ||
Gains and (Losses) on Derivative Instruments | ||
Recorded to regulatory assets | $ 11,900 | $ 3,500 |
Potential Collateral Requirements for Derivative Liabilities with Credit-Risk-Contingent Features (Details) - Credit Risk Contract - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivative [Line Items] | ||
Derivative liabilities with credit-risk-contingent features | $ 0.0 | $ 1.1 |
Maximum potential collateral requirements | $ 0.0 | $ 1.0 |
Absolute Notional Amounts of Open Positions on Derivative Instruments (Details) - MMBTU MMBTU in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Asset Optimization [Member] | ||
Derivative [Line Items] | ||
Natural Gas Derivative Transaction, Volume | 1,261,000,000 | 1,305,100,000 |
Other risk-management activities | ||
Derivative [Line Items] | ||
Natural Gas Derivative Transaction, Volume | 101,500,000 | 107,200,000 |
Balance Sheet Classification of Derivative Instruments (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivative [Line Items] | ||
Gross Derivative Assets | $ 34.2 | $ 38.1 |
Gross Derivative Liabilities | (120.5) | (144.4) |
Total | (86.3) | (106.3) |
Current Assets—Derivatives | ||
Derivative [Line Items] | ||
Gross Derivative Assets | (13.0) | (25.7) |
Gross Derivative Liabilities | (6.2) | |
Total | 13.0 | 19.5 |
Deferred Charges and Other Assets—Derivatives | ||
Derivative [Line Items] | ||
Gross Derivative Assets | (18.6) | (11.3) |
Total | 18.6 | 11.3 |
Current Liabilities—Derivatives | ||
Derivative [Line Items] | ||
Gross Derivative Assets | (2.6) | (1.1) |
Gross Derivative Liabilities | (10.4) | (21.4) |
Total | (7.8) | (20.3) |
Deferred Credits—Derivatives | ||
Derivative [Line Items] | ||
Gross Derivative Liabilities | (110.1) | (116.8) |
Total | $ (110.1) | $ (116.8) |
Fair Value Measurements (Quantitative information) (Details) - Natural Gas Related Derivatives - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|---|
Fair Value Measurements Details [Line Items] | |||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis with Unobservable Inputs | $ (86,100,000) | $ (106,600,000) | $ (89,000,000) | $ (125,400,000) | |
Discounted Cash Flow | |||||
Fair Value Measurements Details [Line Items] | |||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis with Unobservable Inputs | (86,100,000) | $ (106,600,000) | |||
Discounted Cash Flow | Maximum | Natural Gas Basis Price | |||||
Fair Value Measurements Details [Line Items] | |||||
Input Price | 3.14 | 5.34 | |||
Discounted Cash Flow | Minimum | Natural Gas Basis Price | |||||
Fair Value Measurements Details [Line Items] | |||||
Input Price | $ (0.88) | $ (1.028) |
Fair Value Measurements (Reconciliation with Level 3 Inputs) (Details) - Natural Gas Related Derivatives - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Reconciliation of Fair Value Measurements Using Significant Level 3 Inputs | ||
Beginning Balance | $ (106.6) | $ (125.4) |
Recorded to Income | 3.6 | (0.7) |
Recorded to regulatory assets - gas costs | 12.5 | (1.1) |
Transfers into Level 3 | (3.8) | |
Transfers out of Level 3 | 5.0 | 9.0 |
Settlements | 3.2 | 29.2 |
Ending Balance | $ (86.1) | $ (89.0) |
Fair Value Measurements (Realized and Unrealized Gains and Losses with Level 3 Measurements) (Details) - Natural Gas Related Derivatives - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Unrealized Gains (Losses) Recorded for Level 3 Measurements | ||
Recorded to regulatory assets - gas costs | $ 12.5 | $ (1.1) |
Total Unrealized Gains (Losses) | 13.0 | 11.6 |
Utility cost of gas | ||
Realized and Unrealized Gains (Losses) Recorded to Income for Level 3 Measurements | ||
Recorded to income | 3.6 | (0.7) |
Unrealized Gains (Losses) Recorded for Level 3 Measurements | ||
Recorded to income | 2.5 | 5.0 |
Regulatory asset-gas costs member | ||
Unrealized Gains (Losses) Recorded for Level 3 Measurements | ||
Recorded to regulatory assets - gas costs | $ 10.5 | $ 6.6 |
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
AOCI, Net of Tax [Roll Forward] | ||
Beginning Balance | $ (6,627) | $ (4,330) |
Change in prior service cost | (162) | (273) |
Change in actuarial gain (loss) | 4,904 | 530 |
Current-period other comprehensive income (loss) | 4,742 | 257 |
Income tax expense (benefit) related to other comprehensive income (loss) | 477 | 74 |
Ending Balance | $ (2,362) | $ (4,147) |
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