Note 5 - Regulatory Matters

3 Months Ended

Dec. 31, 2023

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 December 31, 2023, September 30, 2023, and December 31, 2022.

	December 31,		September 30,		December 31,
Spire	2023		2023		2022
Regulatory Assets:
Current:
Unamortized purchased gas adjustments	$	207.0	$	293.2	$	238.9
Other		49.4		55.1		30.2
Total Current Regulatory Assets		256.4		348.3		269.1
Noncurrent:
Pension and postretirement benefit costs		255.3		261.0		277.3
Cost of removal		640.8		633.2		506.1
Future income taxes due from customers		145.6		144.5		138.6
Energy efficiency		57.5		56.3		59.1
Unamortized purchased gas adjustments		20.3		23.0		107.9
Other		147.4		131.2		131.7
Total Noncurrent Regulatory Assets		1,266.9		1,249.2		1,220.7
Total Regulatory Assets	$	1,523.3	$	1,597.5	$	1,489.8
Regulatory Liabilities:
Current:
Other	$	7.1	$	7.3	$	3.7
Total Current Regulatory Liabilities		7.1		7.3		3.7
Noncurrent:
Deferred taxes due to customers		124.5		128.0		140.9
Pension and postretirement benefit costs		188.2		185.2		156.6
Accrued cost of removal		130.3		126.6		33.7
Unamortized purchased gas adjustments		23.7		11.2		—
Other		20.5		21.4		13.7
Total Noncurrent Regulatory Liabilities		487.2		472.4		344.9
Total Regulatory Liabilities	$	494.3	$	479.7	$	348.6

	December 31,		September 30,		December 31,
Spire Missouri	2023		2023		2022
Regulatory Assets:
Current:
Unamortized purchased gas adjustments	$	194.1	$	269.4	$	181.2
Other		18.8		23.7		10.0
Total Current Regulatory Assets		212.9		293.1		191.2
Noncurrent:
Future income taxes due from customers		137.3		136.2		130.1
Pension and postretirement benefit costs		185.5		189.1		197.4
Energy efficiency		57.5		56.3		59.1
Unamortized purchased gas adjustments		20.3		23.0		107.9
Cost of removal		97.0		97.0		23.9
Other		133.2		116.0		116.3
Total Noncurrent Regulatory Assets		630.8		617.6		634.7
Total Regulatory Assets	$	843.7	$	910.7	$	825.9
Regulatory Liabilities:
Noncurrent:
Deferred taxes due to customers	$	111.6	$	114.8	$	124.6
Pension and postretirement benefit costs		160.2		156.5		127.4
Accrued cost of removal		93.4		90.4		—
Unamortized purchased gas adjustments		23.7		11.2		—
Other		15.6		16.5		7.0
Total Noncurrent Regulatory Liabilities		404.5		389.4		259.0
Total Regulatory Liabilities	$	404.5	$	389.4	$	259.0

	December 31,		September 30,		December 31,
Spire Alabama	2023		2023		2022
Regulatory Assets:
Current:
Unamortized purchased gas adjustments	$	12.2	$	21.7	$	54.5
Other		18.8		19.9		12.8
Total Current Regulatory Assets		31.0		41.6		67.3
Noncurrent:
Future income taxes due from customers		1.9		2.0		2.1
Pension and postretirement benefit costs		66.0		67.8		75.1
Cost of removal		543.7		536.2		482.2
Other		1.0		0.9		1.0
Total Noncurrent Regulatory Assets		612.6		606.9		560.4
Total Regulatory Assets	$	643.6	$	648.5	$	627.7
Regulatory Liabilities:
Noncurrent:
Pension and postretirement benefit costs	$	17.3	$	17.9	$	18.7
Other		3.4		3.3		3.5
Total Noncurrent Regulatory Liabilities		20.7		21.2		22.2
Total Regulatory Liabilities	$	20.7	$	21.2	$	22.2

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

	December 31,		September 30,		December 31,
	2023		2023		2022
Spire
Pension and postretirement benefit costs	$	134.0	$	133.4	$	127.0
Future income taxes due from customers		143.6		142.5		136.4
Unamortized purchased gas adjustments		214.4		292.4		289.1
Other		117.0		104.2		122.9
Total Regulatory Assets Not Earning a Return	$	609.0	$	672.5	$	675.4
Spire Missouri
Pension and postretirement benefit costs	$	134.0	$	133.4	$	127.0
Future income taxes due from customers		137.3		136.2		130.1
Unamortized purchased gas adjustments		214.4		292.4		289.1
Other		117.0		104.2		122.9
Total Regulatory Assets Not Earning a Return	$	602.7	$	666.2	$	669.1

Like all the Company’s regulatory assets, these regulatory assets as of December 31, 2023 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. On December 15, 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. On January 19, 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. On July 12, 2023, the MoPSC entered a scheduling order in this matter which includes several rounds of pre-filed testimony prior to an evidentiary hearing to be held in early May 2024. On November 2, 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. The proposed disallowance relating to an off-system sale remains pending in the case. Management believes the likelihood of an unfavorable outcome is remote.

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. On April 20, 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. On October 4, 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. The related rate increase, totaling up to $17.3 in annualized revenue, remains under review by the MoPSC but is tentatively expected to be effective in July 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 tariff effective in November 2023. 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 are expected to be substantially recovered by the end of the current heating season and fully recovered during fiscal 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 and January 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.