Segment Information

9 Months Ended

Sep. 30, 2022

Segment Information [Abstract]

Segment Information

Note 12 – Segment Information 

The Company has twelve operating segments and two reportable segments. The Regulated Water segment is comprised of eight operating segments representing its water and wastewater regulated utility companies, which are organized by the states where the Company provides water and wastewater services. The eight water and wastewater utility operating segments are aggregated into one reportable segment, because each of these operating segments has the following similarities: economic characteristics, nature of services, production processes, customers, water distribution or wastewater collection methods, and the nature of the regulatory environment. The Regulated Natural Gas segment is comprised of one operating segment representing natural gas utility companies, acquired in the Peoples Gas Acquisition, for which the Company provides natural gas distribution services.

In addition to the Company’s two reportable segments, we include three of our operating segments within the Other category below. These segments are not quantitatively significant and are comprised of our non-regulated natural gas operations, Aqua Infrastructure, and Aqua Resources. Our non-regulated natural gas operations consist of utility service line protection solutions and repair services to households and the operation of gas marketing and production entities. Prior to the October 30, 2020 sale of our investment in joint venture, Aqua Infrastructure provided non-utility raw water supply services for firms in the natural gas drilling industry. Aqua Resources offers, through a third party, water and sewer service line protection solutions and repair services to households. In addition to these segments, Other is comprised of business activities not included in the reportable segments, corporate costs that have not been allocated to the Regulated Water and Regulated Natural Gas segments, and intersegment eliminations. Corporate costs include general and administrative expenses, and interest expense. The Company reports these corporate costs within Other as they relate to corporate-focused responsibilities and decisions and are not included in internal measures of segment operating performance used by the Company to measure the underlying performance of the operating segments. The Regulated Water and Regulated Natural Gas segments report interest expense that includes long-term debt that was pushed-down to the regulated operating subsidiaries from Essential Utilities, Inc.

The following table presents information about the Company’s reportable segments:

	Three Months Ended								Three Months Ended
	September 30, 2022								September 30, 2021
	Regulated Water		Regulated Natural Gas		Other		Consolidated		Regulated Water		Regulated Natural Gas		Other		Consolidated
Operating revenues	$	301,335	$	118,985	$	14,298	$	434,618	$	259,859	$	94,752	$	7,249	$	361,860
Operations and maintenance expense		94,854		51,850		4,657		151,361		86,923		53,954		(1,522)		139,355
Purchased gas		-		41,124		10,917		52,041		-		20,386		5,102		25,488
Depreciation and amortization		51,522		30,295		913		82,730		45,506		28,194		807		74,507
Taxes other than income taxes		16,809		5,073		743		22,625		16,291		4,271		496		21,058
Operating income (loss)		138,150		(9,357)		(2,932)		125,861		111,139		(12,053)		2,366		101,452
Interest expense, net (a)		27,762		20,323		10,893		58,978		27,389		18,406		5,772		51,567
Allowance for funds used during construction		(5,161)		(651)		-		(5,812)		(5,407)		(675)		-		(6,082)
Other		(2,219)		838		641		(740)		(1,896)		5,329		266		3,699
Income before income taxes		117,768		(29,867)		(14,466)		73,435		91,053		(35,113)		(3,672)		52,268
Provision for income taxes (benefit)		19,182		(12,734)		(1,651)		4,797		9,230		(6,821)		(644)		1,765
Net income (loss)	$	98,586	$	(17,133)	$	(12,815)	$	68,638	$	81,823	$	(28,292)	$	(3,028)	$	50,503
	Nine Months Ended								Nine Months Ended
	September 30, 2022								September 30, 2021
	Regulated Water		Regulated Natural Gas		Other		Consolidated		Regulated Water		Regulated Natural Gas		Other		Consolidated
Operating revenues	$	809,888	$	731,897	$	40,864	$	1,582,649	$	736,389	$	579,429	$	26,639	$	1,342,457
Operations and maintenance expense		273,757		156,209		(1,043)		428,923		243,071		157,614		(8,740)		391,945
Purchased gas		-		321,822		33,074		354,896		-		183,062		19,476		202,538
Depreciation and amortization		150,498		89,130		624		240,252		136,189		83,905		1,529		221,623
Taxes other than income taxes		48,262		16,878		2,212		67,352		47,756		13,356		2,107		63,219
Operating income		337,371		147,858		5,997		491,226		309,373		141,492		12,267		463,132
Interest expense, net		82,920		60,146		23,336		166,402		80,971		56,125		16,551		153,647
Allowance for funds used during construction		(15,657)		(2,145)		-		(17,802)		(13,091)		(831)		-		(13,922)
Other		(5,891)		404		2,144		(3,343)		(5,265)		4,462		(1,213)		(2,016)
Income before income taxes		275,999		89,453		(19,483)		345,969		246,758		81,736		(3,071)		325,423
Provision for income taxes (benefit)		40,528		(44,378)		(486)		(4,336)		22,056		(11,128)		(611)		10,317
Net income (loss)	$	235,471	$	133,831	$	(18,997)	$	350,305	$	224,702	$	92,864	$	(2,460)	$	315,106
Capital expenditures	$	382,853	$	335,738	$	1,097	$	719,688	$	404,894	$	269,958	$	993	$	675,845

^(a) The regulated water and regulated natural gas segments report interest expense that includes long-term debt that was pushed-down to the regulated operating subsidiaries from Essential Utilities, Inc.

	September 30,		December 31,
	2022		2021
Total assets:
Regulated water	$	8,666,230	$	8,403,586
Regulated natural gas		6,163,931		5,960,602
Other		449,631		294,090
Consolidated	$	15,279,792	$	14,658,278