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Note 5 - Regulatory Matters
6 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Public Utilities Disclosure [Text Block]

5. REGULATORY MATTERS

 

As explained in Note 1, Summary of Significant Accounting Policies, the Utilities account for regulated operations in accordance with FASB ASC Topic 980, Regulated Operations. The following regulatory assets and regulatory liabilities were reflected in the balance sheets of the Company, Spire Missouri and Spire Alabama as of March 31, 2024, September 30, 2023, and March 31, 2023.

 

   

March 31,

   

September 30,

   

March 31,

 

Spire

 

2024

   

2023

   

2023

 

Regulatory Assets:

                       

Current:

                       

Unamortized purchased gas adjustments

  $ 81.4     $ 293.2     $ 115.3  

Other

    35.5       55.1       27.7  

Total Current Regulatory Assets

    116.9       348.3       143.0  

Noncurrent:

                       

Pension and postretirement benefit costs

    251.4       261.0       273.1  

Cost of removal

    649.2       633.2       516.4  

Future income taxes due from customers

    146.6       144.5       139.3  

Energy efficiency

    58.2       56.3       59.4  

Unamortized purchased gas adjustments

          23.0       181.3  

Other

    167.3       131.2       147.2  

Total Noncurrent Regulatory Assets

    1,272.7       1,249.2       1,316.7  

Total Regulatory Assets

  $ 1,389.6     $ 1,597.5     $ 1,459.7  

Regulatory Liabilities:

                       

Current:

                       

Unamortized purchased gas adjustments

  $ 19.8     $     $  

Other

    5.3       7.3       5.3  

Total Current Regulatory Liabilities

    25.1       7.3       5.3  

Noncurrent:

                       

Deferred taxes due to customers

    120.9       128.0       135.8  

Pension and postretirement benefit costs

    192.6       185.2       161.0  

Accrued cost of removal

    133.5       126.6       34.6  

Unamortized purchased gas adjustments

    90.8       11.2        

Other

    19.9       21.4       28.9  

Total Noncurrent Regulatory Liabilities

    557.7       472.4       360.3  

Total Regulatory Liabilities

  $ 582.8     $ 479.7     $ 365.6  

 

   

March 31,

   

September 30,

   

March 31,

 

Spire Missouri

 

2024

   

2023

   

2023

 

Regulatory Assets:

                       

Current:

                       

Unamortized purchased gas adjustments

  $ 81.0     $ 269.4     $ 58.7  

Other

    8.2       23.7       4.0  

Total Current Regulatory Assets

    89.2       293.1       62.7  

Noncurrent:

                       

Future income taxes due from customers

    138.5       136.2       130.9  

Pension and postretirement benefit costs

    183.6       189.1       195.5  

Energy efficiency

    58.2       56.3       59.4  

Unamortized purchased gas adjustments

          23.0       181.3  

Cost of removal

    97.0       97.0       24.2  

Other

    153.2       116.0       130.7  

Total Noncurrent Regulatory Assets

    630.5       617.6       722.0  

Total Regulatory Assets

  $ 719.7     $ 910.7     $ 784.7  

Regulatory Liabilities:

                       

Noncurrent:

                       

Deferred taxes due to customers

  $ 108.3     $ 114.8     $ 121.3  

Pension and postretirement benefit costs

    165.4       156.5       132.7  

Accrued cost of removal

    95.8       90.4        

Unamortized purchased gas adjustments

    90.8       11.2        

Other

    15.0       16.5       22.9  

Total Noncurrent Regulatory Liabilities

    475.3       389.4       276.9  

Total Regulatory Liabilities

  $ 475.3     $ 389.4     $ 276.9  

 

   

March 31,

   

September 30,

   

March 31,

 

Spire Alabama

 

2024

   

2023

   

2023

 

Regulatory Assets:

                       

Current:

                       

Unamortized purchased gas adjustments

  $     $ 21.7     $ 53.6  

Other

    14.9       19.9       11.2  

Total Current Regulatory Assets

    14.9       41.6       64.8  

Noncurrent:

                       

Future income taxes due from customers

    1.9       2.0       2.0  

Pension and postretirement benefit costs

    64.2       67.8       73.1  

Cost of removal

    552.2       536.2       492.2  

Other

    0.8       0.9       1.0  

Total Noncurrent Regulatory Assets

    619.1       606.9       568.3  

Total Regulatory Assets

  $ 634.0     $ 648.5     $ 633.1  

Regulatory Liabilities:

                       

Current:

                       

Unamortized purchased gas adjustments

  $ 18.7     $     $  

Total Current Regulatory Liabilities

    18.7              

Noncurrent:

                       

Pension and postretirement benefit costs

    16.8       17.9       18.0  

Other

    3.3       3.3       3.5  

Total Noncurrent Regulatory Liabilities

    20.1       21.2       21.5  

Total Regulatory Liabilities

  $ 38.8     $ 21.2     $ 21.5

 

 

A portion of the Company’s and Spire Missouri’s regulatory assets are not earning a return, as shown in the table below:

 

   

March 31,

   

September 30,

   

March 31,

 
   

2024

   

2023

   

2023

 

Spire

                       

Pension and postretirement benefit costs

  $ 133.8     $ 133.4     $ 127.8  

Future income taxes due from customers

    144.7       142.5       137.2  

Unamortized purchased gas adjustments

    81.0       292.4       240.0  

Other

    127.7       104.2       102.4  

Total Regulatory Assets Not Earning a Return

  $ 487.2     $ 672.5     $ 607.4  
                         

Spire Missouri

                       

Pension and postretirement benefit costs

  $ 133.8     $ 133.4     $ 127.8  

Future income taxes due from customers

    138.5       136.2       130.9  

Unamortized purchased gas adjustments

    81.0       292.4       240.0  

Other

    127.7       104.2       102.4  

Total Regulatory Assets Not Earning a Return

  $ 481.0     $ 666.2     $ 601.1  

 

Like all the Company’s regulatory assets, these regulatory assets as of March 31, 2024 are expected to be recovered from customers in future rates. The recovery period for the future income taxes due from customers and pension and other postretirement benefit costs could be 20 years or longer, based on current Internal Revenue Service guidelines and average remaining service life of active participants, respectively. The recovery period for the PGA assets is less than two years. The other items not earning a return are expected to be recovered over a period not to exceed 15 years, consistent with precedent set by the MoPSC, except for certain debt costs expected to be recovered over the related debt term, up to 35 years. Spire Alabama does not have any regulatory assets that are not earning a return.

 

Spire Missouri

 

In 2022, the MoPSC initiated their annual ACA dockets (GR-2022-0135 and GR-2022-0136) to audit gas commodity and transportation costs for the 2020-2021 heating season, which included the impact of a period of unusually severe cold weather in mid- February 2021 (“Winter Storm Uri”) on Spire Missouri’s natural gas portfolio. In December 2022, the MoPSC staff filed its Reports and Recommendations in these cases proposing various disallowances relating to imbalance cash-outs and an off-system sale. In  January 2023, Spire Missouri filed its response to this proposal setting forth its position that there is no basis in law or fact for either disallowance. In  November 2023, Spire Missouri filed an unopposed settlement stipulation by which the MoPSC Staff agreed to withdraw its recommendation of a proposed disallowance relating to imbalance cash-outs. In April 2024, Spire Missouri and the MoPSC Staff reached an agreement in principle to resolve the proposed off-system sale disallowance, and the parties are working to finalize a settlement stipulation which is not expected to impact historically reported results.

 

The Infrastructure System Replacement Surcharge (ISRS) allows Spire Missouri expedited recovery for its investment to replace qualifying components of its infrastructure without the necessity of a formal rate case. All prior ISRS revenues were reset to zero as of December 26, 2022 as a result of Spire Missouri’s most recent base rate case. In  April 2023, the MoPSC approved an annual ISRS revenue increase of $7.7, effective May 6, 2023, reflecting eligible pipe replacement from October 2022 through February 2023. In October 2023, the MoPSC approved an incremental annual ISRS revenue increase of $12.4, effective October 23, 2023, reflecting eligible pipe replacement from March 2023 through August 2023. On January 17, 2024, Spire Missouri initiated an ISRS case reflecting eligible capital projects from September 2023 through February 2024. After Spire Missouri's true-up filing in March 2024, the MoPSC approved in April 2024, an incremental revenue increase of $16.8, for a total cumulative ISRS revenue of $36.9, tentatively expected to be effective in May 2024.

 

In fiscal 2023, the MoPSC approved increases in the PGA in Spire Missouri’s tariff effective in November 2022 and January 2023. In fiscal 2024, the MoPSC approved a slight decrease in the PGA in Spire Missouri’s western service territory tariff effective in November 2023 and no change in the eastern service territory. These modifications reflect changes in natural gas commodity prices. Deferred gas balances remaining from prior periods were also reflected in the recently approved tariff rates and have been almost fully recovered as of March 31, 2024.

 

Spire Alabama

 

In the first quarter of fiscal 2023, Spire Alabama made its annual Rate Stabilization and Equalization (RSE) rate filing with the APSC, presenting the utility’s budget for the fiscal year ended September 30, 2023, and new rates designed to provide an annual revenue increase of $15.0 became effective January 1, 2023. On October 26, 2023, Spire Alabama made its annual RSE rate filing, presenting the utility’s budget for the fiscal year ending September 30, 2024. After an amended filing on December 27, 2023, new rates designed to provide an annual revenue increase of $14.3 became effective January 1, 2024.

 

Spire Alabama’s rate schedules for natural gas distribution charges contain a GSA rider which permits the pass-through to customers of changes in the cost of gas supply. In fiscal 2023, GSA rate increases were effective December 1, 2022 and  January 1, 2023, and in fiscal 2024, GSA rate decreases were effective October 1, 2023,  January 1, 2024, and April 1, 2024, primarily attributable to changes in natural gas commodity prices.

 

Spire

 

In addition to those discussed above for Spire Missouri and Spire Alabama, Spire is affected by the following regulatory matters.

 

On October 26, 2022, Spire Gulf made its annual RSE filing (based on its budget for fiscal 2023), which was reviewed by the APSC and the Alabama Attorney General’s Office (AGO) resulting in an amended RSE filing made on December 21, 2022 reflecting an increase in annual revenues of $2.5 effective January 1, 2023. Spire Gulf’s April 30, 2023 RSE point of test filing reflected that its projected return on average common equity (RCE) exceeded the allowed RCE, resulting in an annualized refund of $1.8 that became effective July 1, 2023. Spire Gulf’s September 30, 2023 RSE point of test reflected that its actual RCE still exceeded the allowed RCE, resulting in an additional annualized refund of $2.0 that became effective December 13, 2023. On October 26, 2023, Spire Gulf made its annual RSE filing (based on its budget for fiscal 2024). Following review by the APSC and AGO, Spire Gulf made an amended RSE filing on December 12, 2023 reflecting a further increase in annual revenues of $2.7 which became effective December 13, 2023.

 

On September 14, 2022, Spire Mississippi filed its Rate Stabilization Adjustment Rider (RSA) with the Mississippi Public Service Commission (MSPSC) for the rate year ended June 30, 2022, and the MSPSC, by its order dated December 6, 2022, approved a stipulation agreement between the Mississippi Public Utility Staff and Spire Mississippi that provides for a $0.8 increase in annual revenues through rates that became effective on January 1, 2023. Similarly, on September 1, 2023, Spire Mississippi filed its RSA with the MSPSC for the rate year ended June 30, 2023, and the MSPSC, by its order dated December 14, 2023, approved a stipulation agreement between the Mississippi Public Utility Staff and Spire Mississippi that provides for another $0.8 increase in annual revenues through rates that became effective on January 1, 2024.