10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

  þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2012

or

  ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                         to                                         

Commission File Number 1-6196

Piedmont Natural Gas Company, Inc.

(Exact name of registrant as specified in its charter)

North Carolina	56-0556998
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
4720 Piedmont Row Drive, Charlotte, North Carolina	28210
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (704) 364-3120

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at June 1, 2012
Common Stock, no par value	71,903,935

Piedmont Natural Gas Company, Inc.

Form 10-Q

for

April 30, 2012

TABLE OF CONTENTS

		Page
Part I.	Financial Information
Item 1.	Financial Statements		1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		47
Item 4.	Controls and Procedures		48
Part II.	Other Information
Item 1.	Legal Proceedings		48
Item 1A.	Risk Factors		48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		48
Item 6.	Exhibits		49
	Signatures		51

Part I. Financial Information

Item 1. Financial Statements

Piedmont Natural Gas Company, Inc. and Subsidiaries

Consolidated Balance Sheets (Unaudited)

(In thousands)

	April 30, 2012		October 31, 2011
ASSETS
Utility Plant:
Utility plant in service	$	3,432,691	$	3,377,310
Less accumulated depreciation		1,007,298		974,631
Utility plant in service, net		2,425,393		2,402,679
Construction work in progress		381,455		217,832
Plant held for future use		6,751		6,751
Total utility plant, net		2,813,599		2,627,262
Other Physical Property, at cost (net of accumulated depreciation of $825 in 2012 and $806 in 2011)		433		452
Current Assets:
Cash and cash equivalents		10,369		6,777
Trade accounts receivable (less allowance for doubtful accounts of $3,794 in 2012 and $1,347 in 2011)		77,444		57,035
Income taxes receivable		22,903		15,966
Other receivables		1,623		2,547
Unbilled utility revenues		18,229		28,715
Inventories:
Gas in storage		72,690		91,124
Materials, supplies and merchandise		1,117		1,368
Gas purchase derivative assets, at fair value		2,606		2,772
Amounts due from customers		49,685		38,649
Prepayments		18,572		39,128
Deferred income taxes		—		1,793
Other current assets		284		147
Total current assets		275,522		286,021
Noncurrent Assets:
Equity method investments in non-utility activities		88,687		85,121
Goodwill		48,852		48,852
Marketable securities, at fair value		2,212		1,439
Overfunded postretirement asset		22,879		22,879
Regulatory asset for postretirement benefits		79,024		81,073
Unamortized debt expense		13,060		11,315
Regulatory cost of removal asset		20,221		19,336
Other noncurrent assets		59,710		58,791
Total noncurrent assets		334,645		328,806
Total	$	3,424,199	$	3,242,541

See notes to consolidated financial statements.

1

Piedmont Natural Gas Company, Inc. and Subsidiaries

Consolidated Balance Sheets (Unaudited)

(In thousands)

	April 30, 2012			October 31, 2011
CAPITALIZATION AND LIABILITIES
Capitalization:
Stockholders’ equity:
Cumulative preferred stock — no par value — 175 shares authorized	$	—		$	—
Common stock — no par value — shares authorized: 200,000; shares outstanding: 71,879 in 2012 and 72,318 in 2011		431,140			446,791
Retained earnings		634,563			550,584
Accumulated other comprehensive loss		(892	)		(452	)
Total stockholders’ equity		1,064,811			996,923
Long-term debt		975,000			675,000
Total capitalization		2,039,811			1,671,923
Current Liabilities:
Short-term debt		80,000			331,000
Trade accounts payable		75,942			85,721
Other accounts payable		27,434			43,959
Accrued interest		20,043			20,038
Customers’ deposits		24,689			25,462
Deferred income taxes		31,269			—
General taxes accrued		10,487			21,262
Amounts due to customers		4,722			2,617
Other current liabilities		4,836			4,073
Total current liabilities		279,422			534,132
Noncurrent Liabilities:
Deferred income taxes		565,701			512,961
Unamortized federal investment tax credits		1,829			2,004
Accumulated provision for postretirement benefits		14,743			14,671
Cost of removal obligations		479,927			466,000
Other noncurrent liabilities		42,766			40,850
Total noncurrent liabilities		1,104,966			1,036,486
Commitments and Contingencies (Note 9)
Total	$	3,424,199		$	3,242,541

See notes to consolidated financial statements.

2

Piedmont Natural Gas Company, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands except per share amounts)

	Three Months Ended April 30						Six Months Ended April 30
	2012			2011			2012			2011
Operating Revenues	$	308,432		$	392,567		$	780,272		$	1,044,623
Cost of Gas		136,481			219,636			388,085			641,686
Margin		171,951			172,931			392,187			402,937
Operating Expenses:
Operations and maintenance		60,511			58,936			118,908			109,994
Depreciation		25,269			25,425			51,447			50,472
General taxes		9,299			9,464			17,920			20,561
Utility income taxes		28,090			26,179			75,311			78,114
Total operating expenses		123,169			120,004			263,586			259,141
Operating Income		48,782			52,927			128,601			143,796
Other Income (Expense):
Income from equity method investments		11,652			12,384			17,944			20,140
Non-operating income		581			470			641			638
Non-operating expense		(626	)		(794	)		(1,047	)		(1,179	)
Income taxes		(4,534	)		(4,716	)		(6,852	)		(7,667	)
Total other income (expense)		7,073			7,344			10,686			11,932
Utility Interest Charges:
Interest on long-term debt		10,005			12,071			20,028			24,171
Allowance for borrowed funds used during construction		(6,053	)		(1,341	)		(10,476	)		(3,675	)
Other		1,711			2,133			3,316			3,384
Total utility interest charges		5,663			12,863			12,868			23,880
Net Income		50,192			47,408			126,419			131,848
Other Comprehensive Income (Loss), net of tax:
Unrealized gain (loss) from hedging activities of equity method investments, net of tax of ($267) and ($66) for the three months ended April 30, 2012 and 2011, respectively, and ($545) and $55 for the six months ended April 30, 2012 and 2011, respectively		(419	)		(104	)		(855	)		81
Reclassification adjustment of realized gain (loss) from hedging activities of equity method investments included in net income, net of tax of ($7) and $56 for the three months ended April 30, 2012 and 2011, respectively, and $265 and $308 for the six months ended April 30, 2012 and 2011, respectively		(11	)		87			415			480
Total other comprehensive income (loss)		(430	)		(17	)		(440	)		561
Comprehensive Income	$	49,762		$	47,391		$	125,979		$	132,409
Average Shares of Common Stock:
Basic		71,731			71,824			71,931			72,012
Diluted		72,026			72,061			72,226			72,279
Earnings Per Share of Common Stock:
Basic	$	0.70		$	0.66		$	1.76		$	1.83
Diluted	$	0.70		$	0.66		$	1.75		$	1.82
Cash Dividends Per Share of Common Stock	$	0.30		$	0.29		$	0.59		$	0.57

See notes to consolidated financial statements.

3

Piedmont Natural Gas Company, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Six Months Ended April 30
	2012			2011
Cash Flows from Operating Activities:
Net income	$	126,419		$	131,848
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		53,727			52,481
Amortization of investment tax credits		(175	)		(185	)
Allowance for doubtful accounts		2,447			3,767
Income from equity method investments		(17,944	)		(20,140	)
Distributions of earnings from equity method investments		12,164			13,177
Deferred income taxes, net		86,082			42,873
Changes in assets and liabilities:
Gas purchase derivatives, at fair value		166			(2,780	)
Receivables		(11,488	)		(54,276	)
Inventories		18,685			23,859
Amounts due from/to customers		(8,931	)		79,235
Settlement of legal asset retirement obligations		(637	)		(1,113	)
Overfunded postretirement asset		—			(22,450	)
Regulatory asset for postretirement benefits		2,049			814
Other assets		13,101			43,825
Accounts payable		(22,632	)		(14,374	)
Provision for postretirement benefits		72			385
Other liabilities		(8,632	)		7,903
Net cash provided by operating activities		244,473			284,849
Cash Flows from Investing Activities:
Utility construction expenditures		(220,256	)		(89,428	)
Allowance for funds used during construction		(10,476	)		(3,675	)
Contributions to equity method investments		(3,356	)		(3,892	)
Distributions of capital from equity method investments		4,850			8,968
Proceeds from sale of property		409			765
Investments in marketable securities		(701	)		(450	)
Other		350			992
Net cash used in investing activities		(229,180	)		(86,720	)

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Piedmont Natural Gas Company, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Six Months Ended April 30
	2012			2011
Cash Flows from Financing Activities:
Borrowings under credit facility	$	345,000		$	944,000
Repayments under credit facility		(676,000	)		(1,082,500	)
Net borrowings - commercial paper		380,000			—
Retirement of long-term debt		—			(79	)
Expenses related to issuance of debt		(2,448	)		(2,155	)
Issuance of common stock through dividend reinvestment and employee stock plans		10,802			10,426
Repurchases of common stock		(26,528	)		(23,004	)
Dividends paid		(42,494	)		(41,104	)
Other		(33	)		(6	)
Net cash used in financing activities		(11,701	)		(194,422	)
Net Increase in Cash and Cash Equivalents		3,592			3,707
Cash and Cash Equivalents at Beginning of Period		6,777			5,619
Cash and Cash Equivalents at End of Period	$	10,369		$	9,326
Cash Paid During the Year for:
Interest	$	22,878		$	25,758
Income Taxes:
Income taxes paid	$	3,344		$	4,270
Income taxes refunded		—			1,865
Income taxes, net	$	3,344		$	2,405
Noncash Investing and Financing Activities:
Accrued construction expenditures	$	3,776		$	5,045

See notes to consolidated financial statements.

5

Piedmont Natural Gas Company, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Unaudited)

(In thousands except per share amounts)

	Common Stock						Retained			Accumulated Other Comprehensive
	Shares			Amount			Earnings			Income (Loss)			Total
Balance, October 31, 2010		72,282		$	445,640		$	519,831		$	(530	)	$	964,941
Comprehensive Income:
Net income								131,848						131,848
Other comprehensive income											561			561
Total comprehensive income														132,409
Common Stock Issued		479			13,657									13,657
Common Stock Repurchased		(800	)		(23,004	)								(23,004	)
Costs of Rescission Offer								(6	)					(6	)
Tax Benefit from Dividends Paid on ESOP Shares								51						51
Dividends Declared ($.57 per share)								(41,104	)					(41,104	)
Balance, April 30, 2011		71,961		$	436,293		$	610,620		$	31		$	1,046,944
Balance, October 31, 2011		72,318		$	446,791		$	550,584		$	(452	)	$	996,923
Comprehensive Income:
Net income								126,419						126,419
Other comprehensive loss											(440	)		(440	)
Total comprehensive income														125,979
Common Stock Issued		361			10,877									10,877
Common Stock Repurchased		(800	)		(26,528	)								(26,528	)
Tax Benefit from Dividends Paid on ESOP Shares								54						54
Dividends Declared ($.59 per share)								(42,494	)					(42,494	)
Balance, April 30, 2012		71,879		$	431,140		$	634,563		$	(892	)	$	1,064,811

See notes to consolidated financial statements.

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Piedmont Natural Gas Company, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

1. Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The consolidated financial statements have not been audited. We have prepared the unaudited consolidated financial statements under the rules of the Securities and Exchange Commission (SEC). Therefore, certain financial information and note disclosures normally included in annual financial statements prepared in conformity with generally accepted accounting principles (GAAP) in the United States of America are omitted in this interim report under these SEC rules and regulations. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes included in our Form 10-K for the year ended October 31, 2011.

Seasonality and Use of Estimates

The unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair statement of financial position at April 30, 2012 and October 31, 2011, the results of operations for the three months and six months ended April 30, 2012 and 2011, cash flows for the six months ended April 30, 2012 and 2011 and stockholders’ equity for the six months ended April 30, 2012 and 2011. Our business is seasonal in nature. The results of operations for the three months and six months ended April 30, 2012 do not necessarily reflect the results to be expected for the full year.

We make estimates and assumptions when preparing the consolidated financial statements. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates.

Significant Accounting Policies

Our accounting policies are described in Note 1 to the consolidated financial statements in our Form 10-K for the year ended October 31, 2011. There were no significant changes to those accounting policies during the six months ended April 30, 2012.

Rate-Regulated Basis of Accounting

Our utility operations are subject to regulation with respect to rates, service area, accounting and various other matters by the regulatory commissions in the states in which we operate. The accounting regulations provide that rate-regulated public utilities account for and report assets and liabilities consistent with the economic effect of the manner in which independent third-party regulators establish rates. In applying these regulations, we capitalize certain costs and benefits as regulatory assets and liabilities, respectively, in order to provide for recovery from or refund to utility customers in future periods.

Our regulatory assets are recoverable through either base rates or rate riders specifically authorized by a state regulatory commission. Base rates are designed to provide both a recovery of cost and a return on investment during the period the rates are in effect. As such, all of our regulatory assets are subject to review by the respective state regulatory commissions during any future rate proceedings. In the event that accounting for the effects of regulation were no longer applicable, we would recognize a write-off of the regulatory assets and regulatory liabilities that would result in an adjustment to net income. Our utility operations continue to recover their costs through cost-based rates established by the state regulatory commissions. As a result, we believe that the accounting prescribed under rate-based regulation remains appropriate. It is our opinion that all regulatory assets are recoverable in current rates or future rate proceedings.

7

Regulatory assets and liabilities in the consolidated balance sheets as of April 30, 2012 and October 31, 2011 are as follows.

In thousands	April 30,     2012		October 31,     2011
Regulatory assets	$	212,413	$	200,135
Regulatory liabilities		482,005		466,953

Inter-company transactions have been eliminated in consolidation where appropriate; however, we have not eliminated inter-company profit on sales to affiliates and costs from affiliates in accordance with accounting regulations prescribed under rate-based regulation. For information on related party transactions, see Note 12 to the consolidated financial statements in this Form 10-Q.

Fair Value Measurements

The carrying values of cash and cash equivalents, receivables, short-term debt, accounts payable, accrued interest and other current liabilities approximate fair value as all amounts reported are to be collected or paid within one year. Our financial assets and liabilities are recorded at fair value. They consist primarily of derivatives that are recorded in the consolidated balance sheets in accordance with derivative accounting standards and marketable securities that are classified as trading securities and are held in rabbi trusts established for our deferred compensation plans.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or exit date. We utilize market data or assumptions that market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the market approach for fair value measurements and endeavor to utilize the best available information. Accordingly, we use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value of our financial assets and liabilities are subject to potentially significant volatility based on changes in market prices, the portfolio valuation of our contracts, as well as the maturity and settlement of those contracts, and subsequent newly originated transactions, each of which directly affects the estimated fair value of our financial instruments. We are able to classify fair value balances based on the observance of those inputs in the fair value hierarchy levels as set forth in the fair value guidance.

For the fair value measurements of our derivatives and marketable securities, see Note 8 to the consolidated financial statements in this Form 10-Q. For the fair value measurements of our benefit plan assets, see Note 9 to our Form 10-K for the year ended October 31, 2011. For further information on our fair value methodologies, see “Fair Value Measurements” in Note 1 to the consolidated financial statements in our Form 10-K for the year ended October 31, 2011. There were no significant changes to these fair value methodologies during the three months ended April 30, 2012.

Recently Issued Accounting Guidance

In May 2011, the Financial Accounting Standards Board (FASB) issued accounting guidance to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in

8

accordance with U.S. GAAP and International Financial Reporting Standards (IFRS). The amendments are not intended to change the application of the current fair value requirements, but to clarify the application of existing requirements. The guidance does change particular principles or requirements for measuring fair value or disclosing information about fair value measurements. To improve consistency, language has been changed to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way. This guidance, which we adopted this quarter, is effective for interim and annual periods beginning after December 15, 2011. The adoption of this disclosure guidance had no material impact on our financial position, results of operations or cash flows.

In December 2011, the FASB issued accounting guidance to improve disclosures and make information more comparable to IFRS regarding the nature of an entity’s rights of offset and related arrangements associated with its financial instruments and derivative instruments. The guidance requires an entity to disclose information about offsetting and related arrangements in tabular format to enable users of financial statements to understand the effect of those arrangements on the entity’s financial position. The new disclosure requirements are effective for annual periods beginning after January 1, 2013 and interim periods therein and require retrospective application in all periods presented. We will adopt this offsetting disclosure guidance for the first quarter of our fiscal year ending October 31, 2014. The adoption of this guidance will have no impact on our financial position, results of operations or cash flows.

2. Regulatory Matters

On August 30, 2011, we filed an annual report with the Tennessee Regulatory Authority (TRA) reflecting the shared gas cost savings from gains and losses derived from gas purchase benchmarking and secondary market transactions for the twelve months ended June 30, 2011 under the Tennessee Incentive Plan (TIP). On March 13, 2012, the TRA Audit Staff filed their audit report, concluding that we had correctly calculated the June 30, 2011 incentive plan account balance. On March 26, 2012, the TRA approved the adoption of the audit report of the TRA Audit Staff.

On September 30, 2011, we filed an annual report for the twelve months ended June 30, 2011 with the TRA that reflected the transactions in the deferred gas cost account for the Actual Cost Adjustment (ACA) mechanism. On March 12, 2012, the TRA Audit Staff filed their report, concluding that we had correctly implemented the purchased gas adjustment (PGA) calculated in the ACA mechanism. On March 26, 2012, the TRA approved the adoption of the audit report of the TRA Audit Staff.

On February 26, 2010, we filed a petition with the TRA to adjust the applicable rate for the collection of the Nashville franchise fee from certain customers. The proposed rate adjustment was calculated to recover the net $2.9 million of under-collected Nashville franchise fee payments as of May 31, 2009. In April 2010, the TRA passed a motion approving a new Nashville franchise fee rate designed to recover only the net under-collections that have accrued since June 1, 2005, which would deny recovery of $1.5 million for us. In October 2011, the TRA issued an order denying us the recovery of $1.5 million of franchise fees consistent with its April 2010 motion, and we recorded $1.5 million in operations and maintenance expenses. In November 2011, we filed for reconsideration, which was granted on November 21, 2011. On February 13, 2012, a hearing on this matter was held before the TRA. On May 7, 2012, the TRA approved the recovery of an additional $.5 million in under-collected Nashville franchise fees covering years 2002 through May 2005, which we will record as a reduction in operations and maintenance expenses in our third quarter.

3. Earnings per Share

We compute basic earnings per share (EPS) using the weighted average number of shares of common stock outstanding during each period. Shares of common stock to be issued under approved incentive compensation plans are contingently issuable shares, as determined by applying the treasury stock method, and are included in our calculation of diluted EPS.

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A reconciliation of basic and diluted EPS for the three months and six months ended April 30, 2012 and 2011 is presented below.

	Three Months				Six Months
In thousands except per share amounts	2012		2011		2012		2011
Net Income	$	50,192	$	47,408	$	126,419	$	131,848
Average shares of common stock outstanding for basic earnings per share		71,731		71,824		71,931		72,012
Contingently issuable shares under incentive compensation plans		295		237		295		267
Average shares of dilutive stock		72,026		72,061		72,226		72,279
Earnings Per Share of Common Stock:
Basic	$	0.70	$	0.66	$	1.76	$	1.83
Diluted	$	0.70	$	0.66	$	1.75	$	1.82

4. Long-Term Debt Instruments

On March 27, 2012, we entered into an agreement to issue $300 million of fifteen-year senior unsecured notes in a private placement with a blended interest rate of 3.54%. On or around July 16, 2012, we will issue $100 million with an interest rate of 3.47%. On or around October 15, 2012, we will issue the remaining $200 million with an interest rate of 3.57%. Both issuances will mature on July 16, 2027. These proceeds will be used for general corporate purposes, including the repayment of short-term debt incurred in part for the funding of capital expenditures.

5. Short-Term Debt Instruments

We have a $650 million three-year revolving syndicated credit facility that expires on January 25, 2014. The credit facility has an option to expand up to $850 million. We pay an annual fee of $30,000 plus fifteen basis points for any unused amount up to $650 million. The facility provides a line of credit for letters of credit of $10 million, of which $2.9 million and $3.5 million were issued and outstanding at April 30, 2012 and October 31, 2011, respectively. These letters of credit are used to guarantee claims from self-insurance under our general and automobile liability policies. The credit facility bears interest based on the 30-day LIBOR rate plus from 65 to 150 basis points, based on our credit ratings. Amounts borrowed are continuously renewable until the expiration of the facility in 2014 provided that we are in compliance with all terms of the agreement. Due to the seasonal nature of our business, amounts borrowed can vary significantly during the period. The entire balance that was outstanding under the revolving syndicated credit facility was paid off March 19, 2012.

On March 1, 2012, we established a $650 million unsecured commercial paper (CP) program that is backstopped by the revolving syndicated credit facility. The notes issued under the CP program may have maturities not to exceed 397 days from the date of issuance. The amounts outstanding under the revolving syndicated credit facility and the CP program, either individually or in the aggregate, cannot exceed $650 million. Any borrowings under the CP program rank equally with our other unsubordinated and unsecured debt. The notes under the CP program are not registered and are being offered and issued pursuant to an exemption from registration.

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As of April 30, 2012, we have $380 million of notes outstanding under the CP program with original maturities ranging from 8 to 28 days from their dates of issuance. We will use the proceeds received from the notes we will issue in July and October 2012 to repay our short-term debt, as discussed in Note 4 to the consolidated financial statements in this Form 10-Q. As the notes under the CP program are expected to be refinanced with long-term debt, we have reclassified these notes, limited to the $300 million to be refinanced with private placement long-term debt, to “Long-term debt” in the consolidated balance sheets as of April 30, 2012, with the remaining balance of $80 million under the CP program included in “Short-term debt.”

Our outstanding short-term bank borrowings, as included in “Short-term debt” in the consolidated balance sheets, were $331 million, as of October 31, 2011, under our revolving syndicated credit facility in LIBOR cost-plus loans.

A summary of the short-term debt activity for the three and six months ended April 30, 2012 is as follows.

	Commercial Paper						Credit Facility						Total Borrowings
In millions	Three Months			Six Months			Three Months			Six Months			Three Months			Six Months
Minimum amount outstanding during period (1)	$	—		$	—		$	—		$	—		$	365		$	328.5
Maximum amount outstanding during period (1)		410			410			458.5			475.5			460			475.5
Minimum interest rate during period (2)		0.22	%		0.22	%		1.15	%		1.15	%		0.22	%		0.22	%
Maximum interest rate during period		0.41	%		0.41	%		1.17	%		1.20	%		1.17	%		1.20	%
Weighted average interest rate during period		0.35	%		0.35	%		1.15	%		1.17	%		0.71	%		0.94	%

⁽¹⁾  During March, we were borrowing under both the credit facility and CP program for a portion of the month.

⁽²⁾  This is the minimum rate when we were borrowing under the credit facility and/or CP program.

Our revolving syndicated credit facility’s financial covenants require us to maintain a ratio of total debt to total capitalization of no greater than 70%, and our actual ratio was 50% at April 30, 2012.

6. Capital Stock and Accelerated Share Repurchase

On January 4, 2012, we entered into an accelerated share repurchase (ASR) agreement where we purchased 800,000 shares of our common stock from an investment bank at the closing price that day of $33.77 per share. The settlement and retirement of those shares occurred on January 5, 2012. Total consideration paid to purchase the shares of $27 million was recorded in “Stockholders’ equity” as a reduction in “Common stock” in the consolidated balance sheets.

As part of the ASR, we simultaneously entered into a forward sale contract with the investment bank that was expected to mature in 52 trading days, or March 21, 2012. Under the terms of the forward sale contract, the investment bank was required to purchase, in the open market, 800,000 shares of our common stock during the term of the contract to fulfill its obligation related to the shares it borrowed from third parties and sold to us. At settlement, we, at our option, were required to either pay cash or issue shares of our common stock to the investment bank if the investment bank’s weighted average purchase price, less a $.09 per share discount, was higher than the January 4, 2012 closing price. The investment bank was required to pay us either cash or shares of our common stock, at our option, if the investment bank’s weighted average price, less a $.09 per share discount, for the shares purchased was lower than the initial purchase closing price. At settlement on February 28, 2012, we received $.5 million from the investment bank and recorded this amount in “Stockholders’ equity”

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as an addition to “Common Stock” in the consolidated balance sheets. The $.5 million was the difference between the investment bank’s weighted average purchase price of $33.25 per share less a discount of $.09 per share for a settlement price of $33.16 per share and the initial purchase closing price of $33.77 per share multiplied by 800,000 shares.

7. Marketable Securities

We have marketable securities that are invested in money market and mutual funds that are liquid and actively traded on the exchanges. These securities are assets that are held in rabbi trusts established for our deferred compensation. For further information on the deferred compensation plans, see Note 10 to the consolidated financial statements in this Form 10-Q.

We have classified these marketable securities as trading securities since their inception as the assets are held in rabbi trusts. Trading securities are recorded at fair value on the consolidated balance sheets with any gains or losses recognized currently in earnings. We do not intend to engage in active trading of the securities, and participants in the deferred compensation plans may redirect their investments at any time. Any participant’s account that exceeds $25,000 upon retirement will be paid over five years. An amount less than $25,000 in a participant’s account upon retirement will be paid in a lump sum. We have matched the current portion of the deferred compensation liability with the current asset and noncurrent deferred compensation liability with the noncurrent asset; the current portion is included in “Other current assets” in the consolidated balance sheets.

The money market investments in the trust approximate fair value due to the short period of time to maturity. The fair values of the equity securities are based on the quoted market prices as traded on the exchanges. The composition of these securities as of April 30, 2012 and October 31, 2011 is as follows.

	April 30, 2012				October 31, 2011
In thousands	Cost		Fair Value		Cost		Fair Value
Current trading securities:
Money markets	$	—	$	—	$	—	$	—
Mutual funds		134		155		47		52
Total current trading securities		134		155		47		52
Noncurrent trading securities:
Money markets		217		217		217		217
Mutual funds		1,775		1,995		1,107		1,222
Total noncurrent trading securities		1,992		2,212		1,324		1,439
Total trading securities	$	2,126	$	2,367	$	1,371	$	1,491

8. Financial Instruments and Related Fair Value

Derivative Assets and Liabilities under Master Netting Arrangements

We maintain brokerage accounts to facilitate transactions that support our gas cost hedging plans. The accounting guidance related to derivatives and hedging requires that we use a gross presentation, based on our election, for the fair value amounts of our derivative instruments and the fair value of the right to reclaim cash collateral. We use long position gas purchase options to provide some level of protection for our customers in the event of significant commodity price increases. As of April 30, 2012 and October 31, 2011, we had long

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gas purchase options providing total coverage of 44.6 million dekatherms and 38.1 million dekatherms, respectively. The long gas purchase options held at April 30, 2012 are for the period from June 2012 through May 2013.

Fair Value Measurements

We use financial instruments to mitigate commodity price risk for our customers. We also have marketable securities that are held in rabbi trusts established for certain of our deferred compensation plans. In developing our fair value measurements of these financial instruments, we utilize market data or assumptions about risk and the risks inherent in the inputs to the valuation technique. Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. We classify fair value balances based on the observance of those inputs into the fair value hierarchy levels as set forth in the fair value accounting guidance and fully described in “Fair Value Measurements” in Note 1 to the consolidated financial statements in our Form 10-K for the year ended October 31, 2011.

The following table sets forth, by level of the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of April 30, 2012 and October 31, 2011. Financial assets and liabilities are classified in their entirety based on the lowest level of 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 consideration within the fair value hierarchy levels. We have had no transfers between any level during the three months ended April 30, 2012 and 2011.

Fair Value Measurements as of April 30, 2012

In thousands	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Carrying Value
Recurring Fair Value Measurements:
Assets:
Derivatives held for distribution operations	$	2,606	$	—	$	—	$	2,606
Debt and equity securities held as trading securities:
Money markets		217		—		—		217
Mutual funds		2,150		—		—		2,150
Total recurring fair value assets	$	4,973	$	—	$	—	$	4,973

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Fair Value Measurements as of October 31, 2011

In thousands	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Carrying Value
Recurring Fair Value Measurements:
Assets:
Derivatives held for distribution operations	$	2,772	$	—	$	—	$	2,772
Debt and equity securities held as trading securities:
Money markets		217		—		—		217
Mutual funds		1,274		—		—		1,274
Total recurring fair value assets	$	4,263	$	—	$	—	$	4,263

Our utility segment derivative instruments are used in accordance with programs filed with or approved by the North Carolina Utility Commission (NCUC), the Public Service Commission of South Carolina (PSCSC) and the TRA to hedge the impact of market fluctuations in natural gas prices. These derivative instruments are accounted for at fair value each reporting period. In accordance with regulatory requirements, the net costs and the gains and losses related to these derivatives are reflected in purchased gas costs and ultimately passed through to customers through our PGA procedures. In accordance with accounting provisions for rate-regulated activities, the unrecovered amounts related to these instruments are reflected as a regulatory asset or liability, as appropriate, in “Amounts due to customers” or “Amounts due from customers” in the consolidated balance sheets. These derivative instruments include exchange-traded derivative contracts. Exchange-traded contracts are generally based on unadjusted quoted prices in active markets and are classified within Level 1.

Trading securities include assets in rabbi trusts established for our deferred compensation plans and are included in “Marketable securities, at fair value” in the consolidated balance sheets. Securities classified within Level 1 include funds held in money market and mutual funds which are highly liquid and are actively traded on the exchanges.

In developing the fair value of our long-term debt, we use a discounted cash flow technique, consistently applied, that incorporates a developed discount rate using long-term debt similarly rated by credit rating agencies combined with the U.S. Treasury bench mark with consideration given to maturities, redemption terms and credit ratings similar to our debt issuances. The carrying amount and fair value of our long-term debt, including the current portion, which is classified within Level 2, are shown below.

In thousands	Carrying Amount		Fair Value
As of April 30, 2012 (1)	$	675,000	$	844,566
As of October 31, 2011		675,000		831,323

⁽¹⁾  This amount excludes $300,000 of debt under the CP program reclassified to “Long-term debt” in the consolidated balance sheets for presentation purposes, which approximates fair value. See Note 5 – Short-Term Debt Instruments for additional information.

Quantitative and Qualitative Disclosures

The costs of our financial price hedging options for natural gas and all other costs related to hedging activities of our regulated gas costs are recorded in accordance with our regulatory tariffs approved by our state

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regulatory commissions, and thus are not accounted for as hedging instruments under derivative accounting standards. As required by the accounting guidance, the fair value amounts are presented on a gross basis and do not reflect any netting of asset and liability amounts or cash collateral amounts under master netting arrangements.

The following table presents the fair value and balance sheet classification of our financial options for natural gas as of April 30, 2012 and October 31, 2011.

Fair Value of Derivative Instruments

In thousands	Fair Value April 30, 2012		Fair Value October 31, 2011
Derivatives Not Designated as Hedging Instruments under Derivative Accounting Standards:
Asset Financial Instruments:
Current Assets — Gas purchase derivative assets (June 2012-May 2013)	$	2,606
Current Assets — Gas purchase derivative assets (December 2011-October 2012)			$	2,772

We purchase natural gas for our regulated operations for resale under tariffs approved by state regulatory commissions. We recover the cost of gas purchased for regulated operations through PGA procedures. Our risk management policies allow us to use financial instruments to hedge commodity price risks, but not for speculative trading. The strategy and objective of our hedging programs is to use these financial instruments to provide some level of protection against significant price increases. Accordingly, the operation of the hedging programs on the regulated utility segment as a result of the use of these financial derivatives is initially recorded as a component of deferred gas costs and recognized in the consolidated statements of comprehensive income as a component of cost of gas when the related costs are recovered through our rates.

The following table presents the impact that financial instruments not designated as hedging instruments under derivative accounting standards would have had on our consolidated statements of comprehensive income for the three months and six months ended April 30, 2012 and 2011, absent the regulatory treatment under our approved PGA procedures.

In thousands	Amount of Loss Recognized on Derivatives and Deferred Under  PGA Procedures								Location of Loss Recognized through PGA Procedures
	Three Months Ended          April 30				Six Months Ended          April 30
	2012		2011		2012		2011
Gas purchase options	$	2,365	$	1,903	$	5,288	$	6,125		Cost of Gas

In Tennessee, the cost of gas purchase options and all other costs related to hedging activities up to 1% of total annual gas costs are approved for recovery under the terms and conditions of our TIP approved by the TRA. In South Carolina, the costs of gas purchase options are subject to the terms and conditions of our gas hedging plan approved by the PSCSC. In North Carolina, the costs associated with our hedging program are treated as gas costs subject to an annual cost review proceeding by the NCUC.

Risk Management

Our financial derivative instruments do not contain material credit-risk-related or other contingent features that could require us to make accelerated payments.

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We seek to identify, assess, monitor and manage risk in accordance with defined policies and procedures under an Enterprise Risk Management program. In addition, we have an Energy Price Risk Management Committee that monitors compliance with our hedging programs, policies and procedures.

9. Commitments and Contingent Liabilities

Long-term contracts

We routinely enter into long-term gas supply commodity and capacity commitments and other agreements that commit future cash flows to acquire services we need in our business. These commitments include pipeline and storage capacity contracts and gas supply contracts to provide service to our customers and telecommunication and information technology contracts and other purchase obligations. Costs arising from the gas supply commodity and capacity commitments, while significant, are pass-through costs to our customers and are generally fully recoverable through our PGA procedures. The time periods for pipeline and storage capacity contracts range from one to twenty years. The time periods for gas supply contracts are up to 18 months. The time periods for the telecommunications and technology outsourcing contracts, maintenance fees for hardware and software applications, usage fees, local and long-distance costs and wireless service range from one to three years. Other purchase obligations consist primarily of commitments for pipeline products, vehicles, equipment and contractors.

Certain storage and pipeline capacity contracts require the payment of demand charges that are based on rates approved by the Federal Energy Regulatory Commission (FERC) in order to maintain our right to access the natural gas storage or the pipeline capacity on a firm basis during the contract term. The demand charges that are incurred in each period are recognized in the consolidated statements of comprehensive income as part of gas purchases and included in cost of gas.

Leases

We lease certain buildings, land and equipment for use in our operations under noncancelable operating leases. We account for these leases by recognizing the future minimum lease payments as expense on a straight-line basis over the respective minimum lease terms under current accounting practice.

Legal

We have only routine litigation in the normal course of business. We do not expect any of these routine litigation matters to have a material effect on our financial position, results of operations or cash flows.

Letters of Credit

We use letters of credit to guarantee claims from self-insurance under our general and automobile liability policies. We had $2.9 million in letters of credit that were issued and outstanding at April 30, 2012. Additional information concerning letters of credit is included in Note 5 to the consolidated financial statements in this Form 10-Q.

Environmental Matters

Our three regulatory commissions have authorized us to utilize deferral accounting in connection with environmental costs. Accordingly, we have established regulatory assets for actual environmental costs incurred and for estimated environmental liabilities recorded.

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We are responsible for any third-party claims for personal injury, death, property damage and diminution of property value or natural resources regarding nine manufactured gas plant (MGP) sites that were a part of a 1997 settlement with a third party and several MGP sites retained by Progress Energy, Inc. in connection with our 2003 North Carolina Natural Gas Corporation acquisition. We know of no such pending or threatened claims.

There are four MGP sites located in Hickory and Reidsville, North Carolina, Nashville, Tennessee and Anderson, South Carolina that we have owned, leased or operated and for which we have an investigation and remediation liability. In fiscal year 2012, we have performed soil remediation work at our Reidsville site, and we will be performing a groundwater remediation assessment under our North Carolina Department of Environment and Natural Resources (NCDENR) approved plan. Remediation at this site is scheduled to be completed in our fiscal year 2012, and we have incurred $.6 million of remediation costs through April 30, 2012.

As part of a voluntary agreement with the NCDENR, we conducted and completed soil remediation for the Hickory, North Carolina MGP site. The soil remediation report was filed with the NCDENR in October 2010. We continue to conduct periodic groundwater monitoring at this site in accordance with our site remediation plan. We have incurred $1.4 million of remediation costs on this site through April 30, 2012.

In November 2008, we submitted our final report of the remediation of the Nashville MGP holding tank site to the Tennessee Department of Environment and Conservation (TDEC). Remediation has been completed, and a consent order imposing usage restrictions on the property was approved and signed by the TDEC in June 2010. The public comment period has ended, and we continue to conduct semi-annual groundwater monitoring at the site per the final consent order. We have incurred $1.5 million of remediation costs through April 30, 2012.

During 2008, we became aware of and began investigating soil and groundwater molecular sieve contamination concerns at our Huntersville liquefied natural gas (LNG) facility. The molecular sieve and the related contaminated soil were removed and properly disposed, and in June 2010, we received a determination letter from the NCDENR that no further soil remediation would be required at the site for this issue. In September 2011, we received a letter from the NCDENR indicating their desire to enter into an Administrative Consent Order (ACO) addressing the remaining groundwater issues at the site. On April 11, 2012, we entered into a no admit/no deny ACO that imposed a fine of $40,000, unpaid annual fees totaling $18,000 and $1,860 for investigative and administrative costs. As part of the ACO, we will be required to develop a site assessment plan to determine the extent of the groundwater contamination related to the sieve burial, a groundwater remediation strategy and a groundwater and surface water site wide monitoring program. Upon acceptance by the NCDENR of the groundwater remediation strategy, we will then be required to develop a program for implementation of the strategy within thirty days.

The Huntersville LNG facility also was originally coated with lead-based paint. As a precautionary measure to ensure that no lead contamination occurs, removal of lead-based paint from the site was initiated in spring 2010. We have incurred $3.2 million through April 30, 2012 to remediate the Huntersville LNG site. The LNG tank is scheduled for lead-based paint removal in our fiscal year 2012. Additional facilities at our Huntersville LNG plant site are being evaluated for lead-based paint removal with work scheduled for our fiscal year 2012.

Our Nashville LNG facility was also originally coated with lead-based paint. We have incurred $.5 million of remediation costs through April 30, 2012. This work is scheduled to be completed in our fiscal year 2012.

We are transitioning away from owning and maintaining our own petroleum underground storage tanks (USTs). Our Charlotte, North Carolina resource center continues to operate USTs. During 2011, our Greenville, South Carolina and Greensboro and Salisbury, North Carolina resource centers had their tanks removed, and we do not anticipate significant environmental remediation with respect to the removal process. The South Carolina

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Department of Health and Environmental Control requested that we conduct an initial groundwater assessment at our Greenville, South Carolina site to determine its current groundwater quality condition. This assessment is scheduled to be completed in our fiscal year 2012. As of April 30, 2012, our estimated undiscounted environmental liability for USTs for which we retain remediation responsibility is $.3 million.

As of April 30, 2012, our estimated undiscounted environmental liability totaled $2.4 million consisting of $1.1 million for the MGP sites for which we retain remediation responsibility, $1 million for the LNG facilities and $.3 million for the USTs not yet remediated. The costs we reasonably expect to incur are estimated using assumptions based on actual costs incurred, the timing of future payments and inflation factors, among others.

Further evaluation of the MGP, LNG and UST sites and removal of lead-based paint could significantly affect recorded amounts; however, we believe that the ultimate resolution of these matters will not have a material effect on our financial position, results of operations or cash flows.

Additional information concerning commitments and contingencies is set forth in Note 8 to the consolidated financial statements of our Form 10-K for the year ended October 31, 2011.

10. Employee Benefit Plans

Components of the net periodic benefit cost for our defined benefit pension plans and our other postretirement employee benefits (OPEB) plan for the three months ended April 30, 2012 and 2011 are presented below.

	Qualified Pension						Nonqualified Pension				Other Benefits
In thousands	2012			2011			2012		2011		2012			2011
Service cost	$	2,475		$	2,225		$	10	$	11	$	347		$	350
Interest cost		2,650			2,700			51		52		337			374
Expected return on plan assets		(5,125	)		(5,150	)		—		—		(388	)		(384	)
Amortization of transition obligation		—			—			—		—		167			167
Amortization of prior service (credit) cost		(550	)		(550	)		20		5		—			—
Amortization of actuarial loss		1,375			775			12		11		—			—
Total	$	825		$	—		$	93	$	79	$	463		$	507

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Components of the net periodic benefit cost for our defined benefit pension plans and our OPEB plan for the six months ended April 30, 2012 and 2011 are presented below.

	Qualified Pension						Nonqualified Pension				Other Benefits
In thousands	2012			2011			2012		2011		2012			2011
Service cost	$	4,950		$	4,450		$	20	$	23	$	693		$	699
Interest cost		5,300			5,400			102		104		674			747
Expected return on plan assets		(10,250	)		(10,300	)		—		—		(776	)		(767	)
Amortization of transition obligation		—			—			—		—		334			334
Amortization of prior service (credit) cost		(1,100	)		(1,100	)		40		10		—			—
Amortization of actuarial loss		2,750			1,550			24		21		—			—
Total	$	1,650		$	—		$	186	$	158	$	925		$	1,013

In January 2012, we contributed $.5 million to the money purchase pension plan. We anticipate that we will contribute the following amounts to our other plans in 2012.

In thousands
Nonqualified pension plan	$	517
Qualified pension plan		—
OPEB plan		1,600

We have a defined contribution restoration (DCR) plan that we fund annually and that covers all officers at the vice president level and above. For the six months ended April 30, 2012, we contributed $.4 million to this plan. Participants may not contribute to the DCR plan. We have a voluntary deferral plan for the benefit of all director-level employees and officers; company contributions are not made to this plan. Both deferred compensation plans are funded through rabbi trusts with a bank as the trustee. As of April 30, 2012, we have a liability of $2.5 million for these plans.

See Note 7 and Note 8 to the consolidated financial statements in this Form 10-Q for information on the investments in marketable securities that are held in the trust.

11. Employee Share-Based Plans

Under our shareholder approved Incentive Compensation Plan (ICP), eligible officers and other participants are awarded units that pay out depending upon the level of performance achieved by Piedmont during three-year incentive plan performance periods. Distribution of those awards may be made in the form of shares of common stock and withholdings for payment of applicable taxes on the compensation. These plans require that a minimum threshold performance level be achieved in order for any award to be distributed. For the three months and six months ended April 30, 2012 and 2011, we recorded compensation expense, and as of April 30, 2012 and October 31, 2011, we have accrued a liability for these awards based on the fair market value of our stock at the end of each quarter. The liability is re-measured to market value at the settlement date.

In December 2010, a long-term retention stock unit award under the ICP (where a stock unit equals one share of our common stock upon vesting) was approved for eligible officers and other participants to support our succession planning and retention strategies. This retention stock unit award will vest for participants who have met the retention requirements at the end of a three-year period ending in December 2013 in the form of shares of common stock and withholdings for payment of applicable taxes on the compensation. The Compensation Committee of our Board of Directors has the discretion to accelerate the vesting of a participant’s units. For the

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three months and six months ended April 30, 2012 and 2011, we recorded compensation expense, and as of April 30, 2012 and October 31, 2011, we have accrued a liability for these awards based on the fair market value of our stock at the end of the quarter. The liability is re-measured to market value at the settlement date.

Also under our approved incentive plan, 64,700 unvested retention stock units were granted to our President and Chief Executive Officer in December 2011. During the five-year vesting period, any dividend equivalents will accrue on these stock units and be converted into additional units at the same rate and based on the closing price on the same payment date as dividends on our common stock. The stock units will vest, payable in the form of shares of common stock and withholdings for payment of applicable taxes on the compensation, over a five-year period only if he is an employee on each vesting date. In accordance with the vesting schedule, 20% of the units vest on December 15, 2014, 30% of the units vest on December 15, 2015 and 50% of the units vest on December 15, 2016. For the three months and six months ended April 30, 2012, we recorded compensation expense, and as of April 30, 2012, we have accrued a liability for this award based on the fair market value of our stock at the end of the quarter. The liability is re-measured to market value at the settlement date.

At the time of distribution of awards under the ICP, the number of shares issuable is reduced by the withholdings for payment of applicable income taxes for each participant. The participant may elect income tax withholdings at or above the minimum statutory withholding requirements. The maximum withholdings allowed is 50%. To date, shares withheld for payment of applicable income taxes have been immaterial. We present these net shares issued in our consolidated statements of stockholders’ equity.

The compensation expense related to the incentive compensation plans for the three months and six months ended April 30, 2012 and 2011, and the amounts recorded as liabilities as of April 30, 2012 and October 31, 2011 are presented below.

	Three Months				Six Months
In thousands	2012		2011		2012		2011
Compensation expense	$	501	$	1,244	$	2,075	$	2,166
	April 30,		October 31,
	2012		2011
Liability	$	6,976	$	5,015

On a quarterly basis, we issue shares of common stock under the employee stock purchase plan and have accounted for the issuance as an equity transaction. The exercise price is calculated as 95% of the fair market value on the purchase date of each quarter where fair market value is determined by calculating the mean average of the high and low trading prices on the purchase date.

12. Equity Method Investments

The consolidated financial statements include the accounts of wholly owned subsidiaries whose investments in joint venture, energy-related businesses are accounted for under the equity method. Our ownership interest in each entity is included in “Equity method investments in non-utility activities” in the consolidated balance sheets. Earnings or losses from equity method investments are included in “Income from equity method investments” in the consolidated statements of comprehensive income.

We own 21.49% of the membership interests in Cardinal Pipeline Company, L.L.C. (Cardinal), a North Carolina limited liability company. Cardinal owns and operates an intrastate natural gas pipeline in North Carolina and is regulated by the NCUC.

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In October 2009, we reached an agreement with Progress Energy Carolinas, Inc. to provide natural gas delivery service to a power generation facility to be built at their Wayne County, North Carolina site. To provide the additional delivery service, we have executed an agreement with Cardinal, which was approved by the NCUC in May 2010, to expand our firm capacity requirement by 149,000 dekatherms per day to serve Progress Energy Carolinas. This will require Cardinal to spend an estimated $48 million for a new compressor station and expanded meter stations in order to increase the capacity of its system by up to 199,000 dekatherms per day of firm capacity for us and another customer. As an equity venture partner of Cardinal, we will invest an estimated $10.3 million in Cardinal’s system expansion. Capital contributions related to this system expansion began in January 2011 and will continue on a periodic basis through September 2012. As of April 30, 2012, our current fiscal year contributions related to this expansion were $3.4 million, and our total contributions related to this expansion were $9.6 million. Cardinal’s expansion service for the project was placed into service on June 1, 2012.

Our natural gas delivery service for the Wayne County generation project was placed into service on June 1, 2012, and our service subscription to Cardinal’s capacity following the system expansion increased from approximately 37% to approximately 53%. As the project has been placed into service, the members’ capital will be replaced with up to $45 million in permanent financing, on or around June 22, 2012, at which time a portion of our capital contributions will be returned to us.

We have related party transactions as a transportation customer of Cardinal, and we record in cost of gas the transportation costs charged by Cardinal. For each period of the three months and six months ended April 30, 2012 and 2011, these transportation costs and the amounts we owed Cardinal as of April 30, 2012 and October 31, 2011 are as follows.

	Three Months				Six Months
In thousands	2012		2011		2012		2011
Transportation costs	$	1,012	$	1,001	$	2,047	$	2,035
	April 30, 2012		October 31, 2011
Trade accounts payable	$	337	$	349

We own 40% of the membership interests in Pine Needle LNG Company, L.L.C. (Pine Needle), a North Carolina limited liability company. Pine Needle owns an interstate LNG storage facility in North Carolina and is regulated by the FERC.

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We have related party transactions as a customer of Pine Needle, and we record in cost of gas the storage costs charged by Pine Needle. For each period of the three months and six months ended April 30, 2012 and 2011, these gas storage costs and the amounts we owed Pine Needle as of April 30, 2012 and October 31, 2011 are as follows.

	Three Months				Six Months
In thousands	2012		2011		2012		2011
Gas storage costs	$	2,464	$	2,714	$	4,983	$	5,641
	April 30, 2012		October 31, 2011
Trade accounts payable	$	821	$	849

We own 15% of the membership interests in SouthStar Energy Services LLC (SouthStar), a Delaware limited liability company. The other member is Georgia Natural Gas Company (GNGC), a wholly-owned subsidiary of AGL Resources, Inc. SouthStar primarily sells natural gas to residential, commercial and industrial customers in the southeastern United States and Ohio with most of its business being conducted in the unregulated retail gas market in Georgia. We account for our investment in SouthStar using the equity method, as we have board representation with voting rights equal to GNGC on significant governance matters and policy decisions, and thus, exercise significant influence over the operations of SouthStar.

We have related party transactions as we sell wholesale gas supplies to SouthStar, and we record in operating revenues the amounts billed to SouthStar. For each period of the three months and six months ended April 30, 2012 and 2011, our operating revenues from these sales and the amounts SouthStar owed us as of April 30, 2012 and October 31, 2011 are as follows.

	Three Months					Six Months
In thousands	2012			2011		2012			2011
Operating revenues	$	(26	)	$	666	$	(139	)	$	635
	April 30,			October 31,
	2012			2011
Trade accounts receivable	$	369		$	736

Piedmont Hardy Storage Company, LLC, a wholly owned subsidiary of Piedmont, owns 50% of the membership interests in Hardy Storage Company, LLC (Hardy Storage), a West Virginia limited liability company. Hardy Storage owns and operates an underground interstate natural gas storage facility located in Hardy and Hampshire Counties, West Virginia, that is regulated by the FERC.

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We have related party transactions as a customer of Hardy Storage and record in cost of gas the storage costs charged by Hardy Storage. For each period of the three months and six months ended April 30, 2012 and 2011, these gas storage costs and the amounts we owed Hardy Storage as of April 30, 2012 and October 31, 2011 are as follows.

	Three Months				Six Months
In thousands	2012		2011		2012		2011
Gas storage costs	$	2,425	$	2,425	$	4,851	$	4,851
	April 30, 2012		October 31, 2011
Trade accounts payable	$	808	$	808

13. Variable Interest Entities

Under accounting guidance, a variable interest entity (VIE) is a legal entity that conducts a business or holds property whose equity, by design, has any of the following characteristics: an insufficient amount of equity at risk to finance its activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or where equity owners do not receive expected losses or returns. An entity may have an interest in a VIE through ownership or other contractual rights or obligations and that interest changes as the entity’s net assets change. The consolidating investor is the entity that has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

As of April 30, 2012, we have determined that we are not the primary beneficiary, as defined by the authoritative guidance related to consolidations, in any of our equity method investments, as discussed in Note 12 to the consolidated financial statements in this Form 10-Q. Based on our involvement in these investments, we do not have the power to direct the activities of these investments that most significantly impact the VIE’s economic performance. As we are not the consolidating investor, we will continue to apply equity method accounting to these investments. Our maximum loss exposure related to these equity method investments is limited to our equity investment in each entity. As of April 30, 2012 and October 31, 2011, our investment balances are as follows.

	April 30,		October 31,
In thousands	2012		2011
Cardinal	$	22,101	$	18,323
Pine Needle		18,680		18,690
SouthStar		16,017		17,536
Hardy Storage		31,889		30,572
Total equity method investments in non-utility activities	$	88,687	$	85,121

We have also reviewed various lease arrangements, contracts to purchase, sell or deliver natural gas and other agreements in which we hold a variable interest. In these cases, we have determined that we are not the primary beneficiary of the related VIE because we do not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, or the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

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14. Business Segments

We have two reportable business segments, regulated utility and non-utility activities. Our segments are identified based on products and services, regulatory environments and our current corporate organization and business decision-making activities. The regulated utility segment is the gas distribution business, including the operations of merchandising and its related service work and home warranty programs, with activities conducted by the parent company. Operations of our non-utility activities segment are comprised of our equity method investments in joint ventures that are held by our wholly owned subsidiaries.

Operations of the regulated utility segment are reflected in “Operating Income” in the consolidated statements of comprehensive income. Operations of the non-utility activities segment are included in the consolidated statements of comprehensive income in “Income from equity method investments” and “Non-operating income.”

We evaluate the performance of the regulated utility segment based on margin, operations and maintenance expenses and operating income. We evaluate the performance of the non-utility activities segment based on earnings from the ventures. The basis of segmentation and the basis of the measurement of segment profit or loss are the same as reported in the consolidated financial statements in our Form 10-K for the year ended October 31, 2011.

Operations by segment for the three months and six months ended April 30, 2012 and 2011 are presented below.

In thousands	Regulated Utility				Non-utility Activities						Total
	2012		2011		2012			2011			2012		2011
Three Months
Revenues from external customers	$	308,432	$	392,567	$	—		$	—		$	308,432	$	392,567
Margin		171,951		172,931		—			—			171,951		172,931
Operations and maintenance expenses		60,511		58,936		21			17			60,532		58,953
Income from equity method investments		—		—		11,652			12,384			11,652		12,384
Operating income (loss) before income taxes		76,872		79,106		(26	)		(24	)		76,846		79,082
Income before income taxes		71,189		65,932		11,627			12,371			82,816		78,303
Six Months
Revenues from external customers	$	780,272	$	1,044,623	$	—		$	—		$	780,272	$	1,044,623
Margin		392,187		402,937		—			—			392,187		402,937
Operations and maintenance expenses		118,908		109,994		44			47			118,952		110,041
Income from equity method investments		—		—		17,944			20,140			17,944		20,140
Operating income (loss) before income taxes		203,912		221,910		(132	)		(143	)		203,780		221,767
Income before income taxes		190,770		197,621		17,812			20,008			208,582		217,629

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Reconciliations to the consolidated statements of comprehensive income for the three months and six months ended April 30, 2012 and 2011 are presented below.

In thousands	Three Months						Six Months
	2012			2011			2012			2011
Operating Income:
Segment operating income before income taxes	$	76,846		$	79,082		$	203,780		$	221,767
Utility income taxes		(28,090	)		(26,179	)		(75,311	)		(78,114	)
Non-utility activities before income taxes		26			24			132			143
Operating income	$	48,782		$	52,927		$	128,601		$	143,796
Net Income:
Income before income taxes for reportable segments	$	82,816		$	78,303		$	208,582		$	217,629
Income taxes		(32,624	)		(30,895	)		(82,163	)		(85,781	)
Net income	$	50,192		$	47,408		$	126,419		$	131,848

15. Subsequent Events

We monitor significant events occurring after the balance sheet date and prior to the issuance of the financial statements to determine the impacts, if any, of events on the financial statements to be issued. All subsequent events of which we are aware were evaluated. For information on subsequent event disclosure related to regulatory matters and equity method investments, see Note 2 and Note 12, respectively, to the consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report, as well as other documents we file with the Securities and Exchange Commission (SEC), may contain forward-looking statements. In addition, our senior management and other authorized spokespersons may make forward-looking statements in print or orally to analysts, investors, the media and others. These statements are based on management’s current expectations from information currently available and are believed to be reasonable and made in good faith. However, the forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the statements. Factors that may make the actual results differ from anticipated results include, but are not limited to the following, as well as those discussed in Part II, Item 1A. Risk Factors of this Form 10-Q:

• Regulatory issues. Deregulation, regulatory restructuring and other regulatory issues may affect us and those from whom we purchase natural gas transportation and storage service, including issues that affect allowed rates of return, terms and conditions of service, rate structures and financings. We monitor our ability to earn appropriate rates of return and initiate general rate proceedings as needed.

• Customer growth and consumption. Residential, commercial, industrial and power generation growth and energy consumption in our service areas may change. The ability to retain and grow our customer base, the pace of that growth and the levels of energy consumption are impacted by general business and economic conditions, such as interest rates, inflation, fluctuations in the capital markets and the overall strength of the economy in our service areas and the country, and by fluctuations in the wholesale prices of natural gas and competitive energy sources. Large-volume industrial customers may switch to alternate fuels or bypass our systems or shift to special competitive contracts or to tariff rates that are at lower-per unit margins than that customer’s existing rate.

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• Competition in the energy industry. We face competition in the energy industry, such as from electric companies, energy marketing and trading companies, fuel oil and propane dealers, renewable energy companies and coal companies, and we expect this competitive environment to continue.

• The capital-intensive nature of our business. In order to maintain growth, we must invest in our natural gas transmission and distribution systems each year. The cost of and the ability to complete these capital projects may be affected by the ability to obtain and the cost of obtaining governmental approvals, compliance with federal and state pipeline safety and integrity regulations, cost and timing of project development-related contracts and approvals, project development delays, federal and state tax policies, and the cost and availability of labor and materials. Weather, general economic conditions and the cost of funds to finance our capital projects can materially alter the cost and timing of a project.

• Access to capital markets. Our internally generated cash flows are not adequate to finance the full cost of capital expenditures. As a result, we rely on access to both short-term and long-term capital markets as a significant source of liquidity for capital requirements not satisfied by cash flows from operations. Changes in the capital markets, our financial condition or the financial condition of our lenders or investors could affect access to and cost of capital.

• Changes in the availability and cost of natural gas. To meet firm customer requirements, we must acquire sufficient gas supplies and pipeline capacity to ensure delivery to our distribution system while also ensuring that our supply and capacity contracts allow us to remain competitive. Natural gas is an unregulated commodity market subject to supply and demand and price volatility. Producers, marketers and pipelines are subject to operating, regulatory and financial risks associated with exploring, drilling, producing, gathering, marketing and transporting natural gas and have risks that increase our exposure to supply and price fluctuations. Since such risks may affect the availability and cost of natural gas, they also may affect the competitive position of natural gas relative to other energy sources.

• Changes in weather conditions. Weather conditions and other natural phenomena can have a material impact on our earnings. Severe weather conditions, including destructive weather patterns such as hurricanes, tornadoes and floods, can impact our customers, our suppliers and the pipelines that deliver gas to our distribution system and our distribution and transmission assets. Weather conditions directly influence the supply, demand, distribution and cost of natural gas.

• Changes in and cost of compliance with laws and regulations. We are subject to extensive federal, state and local laws and regulations. Environmental, safety, system integrity, tax and other laws and regulations, including those related to carbon regulation, may change. Compliance with such laws and regulations could increase capital or operating costs, affect our reported earnings or cash flows, increase our liabilities or change the way our business is conducted.

• Ability to retain and attract professional and technical employees. To provide quality service to our customers and meet regulatory requirements, we are dependent on our ability to recruit, train, motivate and retain qualified employees.

• Changes in accounting regulations and practices. We are subject to accounting regulations and practices issued periodically by accounting standard-setting bodies. New accounting standards may be issued that could change the way we record revenues, expenses, assets and liabilities, and could affect our reported earnings or increase our liabilities.

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• Earnings from our equity method investments. We invest in companies that have risks that are inherent in their businesses, and these risks may negatively affect our earnings from those companies.

• Changes in outstanding shares. The number of outstanding shares may fluctuate due to new issuances or repurchases under our Common Stock Open Market Purchase Program.

Other factors may be described elsewhere in this report. All of these factors are difficult to predict, and many of them are beyond our control. For these reasons, you should not place undue reliance on these forward-looking statements when making investment decisions. When used in our documents or oral presentations, the words “expect,” “believe,” “project,” “anticipate,” “intend,” “should,” “could,” “assume,” “estimate,” “forecast,” “future,” “indicate,” “outlook,” “plan,” “predict,” “seek,” “target,” “would” and variations of such words and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are based on information available to us as of the date they are made, and we do not undertake any obligation to update publicly any forward-looking statement either as a result of new information, future events or otherwise except as required by applicable laws and regulations. Our reports on Form 10-K, Form 10-Q and Form 8-K and amendments to these reports are available at no cost on our website at www.piedmontng.com as soon as reasonably practicable after the report is filed with or furnished to the SEC.

Overview

Piedmont Natural Gas Company, Inc., which began operations in 1951, is an energy services company whose principal business is the distribution of natural gas to over one million residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee, including 52,700 customers served by municipalities who are our wholesale customers. We are invested in joint venture, energy-related businesses, including unregulated retail natural gas marketing, and regulated interstate natural gas storage and intrastate natural gas transportation.

In the Carolinas, our service area is comprised of numerous cities, towns and communities. We provide service to Anderson, Gaffney, Greenville and Spartanburg in South Carolina and Charlotte, Salisbury, Greensboro, Winston-Salem, High Point, Burlington, Hickory, Indian Trail, Spruce Pine, Reidsville, Fayetteville, New Bern, Wilmington, Tarboro, Elizabeth City, Rockingham and Goldsboro in North Carolina. In North Carolina, we also provide wholesale natural gas service to the cities of Greenville, Rocky Mount and Wilson. In Tennessee, our service area is the metropolitan area of Nashville, including wholesale natural gas service to the cities of Gallatin and Smyrna.

We have two reportable business segments, regulated utility and non-utility activities, with the regulated utility segment being the largest. Factors critical to the success of the regulated utility include operating a safe, reliable natural gas distribution system and the ability to recover the costs and expenses of the business in the rates charged to customers. The non-utility activities segment consists of our equity method investments in joint venture, energy-related businesses that are involved in unregulated retail natural gas marketing, and regulated interstate natural gas storage and intrastate natural gas transportation. The percentages of assets as of April 30, 2012 and earnings before taxes by segment for the six months ended April 30, 2012 are presented below.

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				Earnings
	Assets			Before Taxes
Regulated Utility		97	%		91	%
Non-utility Activities:
Regulated non-utility activities					2	%
Unregulated non-utility activities					7	%
Total		3	%		9	%

For further information on equity method investments and business segments, see Note 12 and Note 14, respectively, to the consolidated financial statements in this Form 10-Q.

Our utility operations are regulated by the North Carolina Utilities Commission (NCUC), the Public Service Commission of South Carolina and the Tennessee Regulatory Authority (TRA) as to rates, service area, adequacy of service, safety standards, extensions and abandonment of facilities, accounting and depreciation. The NCUC also regulates us as to the issuance of long-term debt and equity securities. We are also subject to or affected by various federal regulations. These federal regulations include regulations that are particular to the natural gas industry, such as regulations of the Federal Energy Regulatory Commission that affect the purchase and sale of and the prices paid for the interstate transportation and storage of natural gas, regulations of the U.S. Department of Transportation (DOT) that affect the design, construction, operation, maintenance, integrity, safety and security of natural gas distribution and transmission systems, and regulations of the Environmental Protection Agency relating to the environment. In addition, we are subject to numerous other regulations, such as those relating to employment and benefit practices, which are generally applicable to companies doing business in the United States of America.

Our regulatory commissions approve rates and tariffs that are designed to give us the opportunity to generate revenues to recover the cost of natural gas delivered to our customers and our operating expenses and to earn a fair rate of return on invested capital for our shareholders. Our ability to earn our authorized rates of return is based in part on our ability to reduce or eliminate regulatory lag and also by improved rate designs that decouple the recovery of our approved margins from customer usage patterns impacted by seasonal weather patterns and customer conservation.

We continually assess alternative rate structures and cost recovery mechanisms that are more appropriate to the changing energy economy. The traditional utility rate design provides for the collection of margin revenue based on volumetric throughput which can be affected by customer consumption patterns, weather, conservation, price levels for natural gas or general economic conditions. Alternative rate structures and cost recovery mechanisms are rate designs and mechanisms that allow utilities to encourage energy efficiency and conservation by separating or decoupling the link between energy consumption and margin revenues, thereby aligning the interests of shareholders and customers.

In North Carolina, a margin decoupling mechanism provides for the recovery of our approved margin from residential and commercial customers on an annual basis independent of consumption patterns. The margin decoupling mechanism provides for semi-annual rate adjustments to refund any over-collection of margin or recover any under-collection of margin. In South Carolina, we operate under a rate stabilization mechanism that achieves the objectives of margin decoupling for residential and commercial customers with a one year lag. We have a weather normalization adjustment (WNA) mechanism in South Carolina that partially offsets the impact of colder- or warmer-than-normal winter weather on bills rendered during the months of November through March for residential and commercial customers. We also have a WNA mechanism in Tennessee that, effective

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March 1, 2012 with our rate case settlement, expanded the period to include the months of October through April for bills rendered to residential and commercial customers. The WNA formula calculates the actual weather variance from normal, using 30 years of history, which increases revenues when weather is warmer than normal and decreases revenues when weather is colder than normal. The WNA formula does not ensure full recovery of approved margin during periods when customer consumption patterns significantly vary from consumption patterns used to establish the WNA factors. The gas cost portion of our costs is recoverable through purchased gas adjustment (PGA) procedures and is not affected by the margin decoupling mechanism or the WNA. Also, as a result of our 2012 rate case settlement in Tennessee, our margin recovery will shift from 29% to 37% of fixed charges with a resulting decrease from 71% to 63% of volumetric charges. For the six months ended April 30, 2012, these and other rate designs stabilized our gas utility margin by providing fixed recovery of 70% of our utility margins, including margin decoupling in North Carolina, facilities charges to our customers and fixed-rate contracts; semi-fixed recovery of 20% of our utility margins, including the rate stabilization mechanism in South Carolina and WNA in South Carolina and Tennessee; and volumetric or periodic renegotiation of 10% of our utility margins. For the six months ended April 30, 2012, the margin decoupling mechanism in North Carolina increased margin by $38.7 million, and the WNA in South Carolina and Tennessee increased margin by $13.7 million, which includes the additional month of April 2012 in Tennessee.

Our strategic directives are customer-centered and reflect what we believe is the inherent benefit of natural gas compared to other types of energy. They are as follows:

• Promote the benefits of natural gas

• Expand our core natural gas and complementary energy-related businesses to enhance shareholder value

• Be the energy and service provider of choice

• Achieve excellence in customer service every time

• Preserve financial strength and flexibility

• Execute sustainable business practices

• Enhance our healthy, high performance culture

We believe natural gas is a safe and reliable energy source that is clean, efficient and abundant. We incorporate this belief into our pursuit of growth in our core residential, commercial and industrial markets as well as complementary energy-related investments. We want our customers to choose us because of the value of natural gas and the quality of our service to them. With the environmental and cost benefits of using natural gas compared to coal in the generation of electricity, we have encouraged the development of gas-fired power generation facilities in our market area. In providing services to our customers, we want every customer to feel that the service provided was excellent and that we value their business. In our business practices, we promote a sustainable enterprise by reducing our impact on the environment, developing strong communities in which we operate and fostering increased awareness and use of natural gas. We support our employees with improved processes and technology to better serve our customers and to add value for our shareholders while continuing to build on our healthy, high performance culture in order to recruit, retain and motivate our workforce.

Our business model supports new clean energy technologies and energy efficiencies in the end use of natural gas. We are seeking opportunities for regulatory innovation and strategic alliances to advance our customers’ interests in energy conservation, efficiency and environmental stewardship. We are promoting the direct use of natural gas in more homes, businesses, industries and vehicles as we strongly believe that the expanded use of clean, efficient, abundant and domestic natural gas with its relatively low emissions can help revitalize our economy, reduce both overall energy consumption and greenhouse gas emissions and enhance our national energy security.

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The safety of our system, the public and our employees is a critical component to our ongoing success as a company. We are subject to DOT and state regulation of our pipeline and related facilities and have ongoing programs to inspect our system for corrosion and leaks. We anticipate federal legislative and regulatory enactments that will increase in scope and add further requirements to our pipeline safety and integrity programs. We will continue our efforts to educate the public about our pipeline system in an effort to decrease third party excavation damage, which is the greatest cause of any pipeline damage on our system. We encourage focused efforts to improve the safety of our industry as a whole.

The safeguarding of our information technology infrastructure is important to our business as an operational investment to integrate, standardize, centralize and streamline our operations. We rely on these technological tools for enterprise resource planning, customer service solutions for integration of planning, scheduling and dispatching of field resources, automated meter reading and customer information for billing, to name a few. We are subject to cybersecurity risks related to breaches in technologies that are used in our natural gas distribution operations and other business processes when there is unauthorized access of digital data with the intent to misappropriate information, corrupt data or cause operational disruptions. A breakdown or breach in our systems could occur and could result in the unauthorized release of individually identifiable customer or other sensitive data and have an adverse effect on our reputation, financial position, results of operations and/or cash flows. To protect confidential customer, vendor, financial and employee information, we believe we have appropriate levels of security measures in place to secure our information systems from cybersecurity attacks or breaches, in addition to having a comprehensive identity theft protection program to protect customer information together with a cybersecurity insurance policy.

Our financial strength and flexibility is critical to our success as a company. We will continue our stewardship to maintain our financial strength which includes a strong balance sheet, investment-grade credit ratings and continued access to capital markets. We continue to evaluate the strength of financial institutions with which we have working relationships to ensure access to funds for operations and capital investments. Our capital plan includes maintaining a long-term debt-to-capitalization ratio within a range of 45% to 50%. We will continue to control our operating costs, implement new technologies and work with our state regulators to maintain fair rates of return and balance the interests of our customers and shareholders.

We invest in joint ventures to complement or supplement income from our regulated utility operations if an opportunity aligns with our overall business strategies and allows us to leverage our core competencies. We analyze and evaluate potential projects with a major factor being projected rates of return commensurate with the risk of such projects. We participate in the governance of our ventures by having management representatives on the governing boards. We monitor actual performance against expectations, and any decision to exit an existing joint venture would be based on many factors, including performance results and continued alignment with our business strategies.

Executive Summary

Natural gas production in North America continues to provide supply stability and price moderation for natural gas as a commodity. The lower price of natural gas has allowed us to significantly lower the cost of gas to our customers in North Carolina, South Carolina and Tennessee. Currently, natural gas has a price advantage over many other fuels, and it is anticipated that the cost of natural gas will remain low and competitive. Natural gas also has an environmental advantage over other fossil fuels. For example, the outlook for growth in natural gas consumption will be driven greatly by growth in gas use for power generation.

With our continued focus on residential, commercial and industrial customer conversions to natural gas and power generation gas delivery service opportunities, we continue to educate energy consumers about the benefits of natural gas as the fuel of choice because of its comfort, affordability, efficiency and environmental

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benefits, as well as the reliability and safety of our service and system. In this fiscal year to date, customer additions compared to the same period in 2011 increased 22% in our residential market and 15% in our commercial market. Residential gains were driven primarily by growth in our residential new construction and conversion markets where building permits increased modestly and lower wholesale natural gas costs continued to favorably position natural gas relative to other energy sources. Increased commercial growth reflected improvements in both commercial new construction activity and commercial conversion opportunities. We continue to forecast gross customer addition growth for fiscal 2012 of approximately 1%.

We completed pipeline expansion projects in December 2011 and June 2012 to provide long-term gas transportation service to two power generation customers in our market area. We have one pipeline expansion project under construction to provide natural gas delivery service to a power generation facility currently under construction in North Carolina with a targeted in service date by June 2013. See the following discussion of our forecasted capital investment related to the construction of the natural gas pipelines and compressor stations to serve these new power generation facilities in “Cash Flows from Investing Activities” in Item 2 of this Form 10-Q in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

We see an opportunity in the clean energy technology of compressed natural gas (CNG) vehicles. We are executing a plan to build more CNG fueling stations in our service area for use by our own vehicle fleet as well as by third party customers. Currently, approximately 13% of our vehicle fleet uses CNG. We have five company CNG fueling stations in use, and we plan to construct up to five more in fiscal year 2012 to serve our operational facilities. Within two years, we anticipate that up to 33% of our fleet may be capable of using CNG. We are also actively pursuing other commercial fleets to utilize company CNG stations and have had discussions with commercial customers for fueling stations at customer sites where there is sufficient demand.

We continue our regulatory strategy to align our rate structures between shareholder and customer interests. On January 23, 2012, the TRA approved in a general rate proceeding an annual increase of $11.9 million in rates and charges to all customers, based on an approved rate of return of equity of 10.2%, effective March 1, 2012. This represents an increase of 6.3% above the prior annual revenue. As part of the settlement, we have shifted more of our cost recovery to the fixed portion of the customers’ bills to somewhat mitigate fluctuations in volumetric usage. Also approved was an expansion of the WNA period to October through April with updated WNA factors and the recovery of various deferred regulatory assets.

To support our strategic objectives focusing on excellence in customer service, as discussed above in the “Overview,” during this fiscal year, we have reorganized our field customer services, sales and marketing, field operations and maintenance and construction departments into functional organizations to provide a more focused and better managed approach to customer service with an end goal of increasing customer loyalty and satisfaction while improving operational efficiencies. We have also implemented centralized service scheduling work processes and system enhancements to better serve our customers in a more timely and efficient fashion.

In order to fund our capital expansion projects as well as our ongoing capital needs, we have continued to focus on securing funds at the lowest cost to us to provide for operations and capital investments. In March 2012, we initiated a commercial paper (CP) program that is backstopped by our syndicated revolving credit facility for a combined borrowing capacity of $650 million. We anticipate interest expense savings of $2.5 million annually due to the lower interest rates associated with the sale of CP compared to drawing on our syndicated revolving credit facility. Also in March 2012, we entered into an agreement to issue $300 million of senior unsecured long-term debt in a private placement with a blended interest rate of 3.54%. We will issue $100 million in July 2012 and the remaining $200 million in October 2012 with the proceeds being used to repay short-term debt incurred in part for funding of capital expenditures. We also have an open shelf registration filed in June 2011 with the SEC that is available for future issuances of debt or equity.

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The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, enacted in December 2010, extended the 50% “bonus depreciation” that expired December 31, 2009 and temporarily increased “bonus depreciation” for federal income tax purposes to 100% for certain qualified investments. These provisions are effective for our fiscal year tax returns for 2010-2014. The Internal Revenue Service has issued regulations that are intended to provide guidance in interpreting the law. Based on current capital projections and timelines, we are anticipating a benefit through 2014 of $130 - 170 million. We anticipate that the bonus depreciation allowance will have a material favorable impact on our cash flows in the near term by reducing cash needed to pay federal income taxes.

The results for the three months and six months ended April 30, 2012 continue to reflect the warmer-than-normal 2011-2012 winter heating season with weather for three months and six months ended April 30, 2012 being 28% and 21% warmer than normal, respectively. Weather was 19% and 27% warmer than the prior year three-month and six-month periods, respectively.

During the three months ended April 30, 2012, net income increased $2.8 million as compared with the prior year period primarily due to a decrease of $7.2 million in utility interest charges due to an increase in capitalized interest, or the borrowed allowance for funds used during construction, and lower interest expense on long-term debt, partially offset by the following:

• Operations and maintenance expenses increased $1.6 million primarily due to increases in medical coverage premiums and defined benefit pension costs.

• Margin decreased $1 million primarily due to decreased volumes sold to industrial customers and decreased secondary market activity from warmer weather and less wholesale natural gas price volatility.

During the six months ended April 30, 2012, net income decreased $5.4 million as compared with the prior year period primarily due to the following:

• Margin decreased $10.8 million from several factors, primarily influenced by weather. Margin from secondary market activity decreased $5.7 million due to warmer weather and less wholesale natural gas price volatility. Residential and commercial retail margin decreased $3.9 million primarily from decreased sales of 21.3 million dekatherms due to warmer weather. The majority of the margin decrease is attributable to our residential and commercial customer classes in South Carolina and Tennessee where our rates are not fully decoupled and WNA does not perfectly adjust for variances in warmer- or colder-than-normal weather. Margin from the sales to and transport of gas for our industrial and resale customers decreased $1.8 million primarily because of warmer weather, partially offset by an increase in margin of $.9 million from power generation customers.

• Income from equity method investments decreased $2.2 million primarily due to a decrease in earnings from SouthStar Energy Services LLC (SouthStar) as a result of warmer weather.

• Operations and maintenance expenses increased $8.9 million primarily due to increases in medical coverage premiums and pension expense, including the absence of a regulatory pension deferral in 2012.

These decreases were partially offset by a decrease of $11 million in utility interest charges primarily due to an increase in capitalized interest, or the borrowed allowance for funds used during construction, and lower interest expense on long-term debt.

Even though operations and maintenance expenses are higher in the current periods as compared with the prior periods, we are actively working to control costs where possible through payroll, corporate charges and various discretionary spending items. We have benefited from cost containment measures taken during the current fiscal year, and we will continue to review areas where we could benefit further.

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Additional information on operating results for the three-month and six-month periods follows.

Results of Operations

We reported net income of $50.2 million for the three months ended April 30, 2012 as compared to $47.4 million for the same period in 2011. The following table provides a comparison of the components of our consolidated statements of comprehensive income for the three months ended April 30, 2012 as compared with the three months ended April 30, 2011.

Comprehensive Income Statement Components

	Three Months Ended April 30
In thousands, except per share amounts	2012		2011		Variance			Percent Change
Operating Revenues	$	308,432	$	392,567	$	(84,135	)		(21.4	)%
Cost of Gas		136,481		219,636		(83,155	)		(37.9	)%
Margin		171,951		172,931		(980	)		(0.6	)%
Operations and Maintenance		60,511		58,936		1,575			2.7	%
Depreciation		25,269		25,425		(156	)		(0.6	)%
General Taxes		9,299		9,464		(165	)		(1.7	)%
Utility Income Taxes		28,090		26,179		1,911			7.3	%
Total Operating Expenses		123,169		120,004		3,165			2.6	%
Operating Income		48,782		52,927		(4,145	)		(7.8	)%
Other Income (Expense), net of tax		7,073		7,344		(271	)		(3.7	)%
Utility Interest Charges		5,663		12,863		(7,200	)		(56.0	)%
Net Income	$	50,192	$	47,408	$	2,784			5.9	%
Average Shares of Common Stock:
Basic		71,731		71,824		(93	)		(0.1	)%
Diluted		72,026		72,061		(35	)		—	%
Earnings Per Share of Common Stock:
Basic	$	0.70	$	0.66	$	0.04			6.1	%
Diluted	$	0.70	$	0.66	$	0.04			6.1	%

We reported net income of $126.4 million for the six months ended April 30, 2012 as compared to $131.8 million for the same period in 2011. The following table provides a comparison of the components of our consolidated statements of comprehensive income for the six months ended April 30, 2012 as compared with the six months ended April 30, 2011.

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Comprehensive Income Statement Components
	Six Months Ended April 30
In thousands, except per share amounts	2012		2011		Variance			Percent Change
Operating Revenues	$	780,272	$	1,044,623	$	(264,351	)		(25.3	)%
Cost of Gas		388,085		641,686		(253,601	)		(39.5	)%
Margin		392,187		402,937		(10,750	)		(2.7	)%
Operations and Maintenance		118,908		109,994		8,914			8.1	%
Depreciation		51,447		50,472		975			1.9	%
General Taxes		17,920		20,561		(2,641	)		(12.8	)%
Utility Income Taxes		75,311		78,114		(2,803	)		(3.6	)%
Total Operating Expenses		263,586		259,141		4,445			1.7	%
Operating Income		128,601		143,796		(15,195	)		(10.6	)%
Other Income (Expense), net of tax		10,686		11,932		(1,246	)		(10.4	)%
Utility Interest Charges		12,868		23,880		(11,012	)		(46.1	)%
Net Income	$	126,419	$	131,848	$	(5,429	)		(4.1	)%
Average Shares of Common Stock:
Basic		71,931		72,012		(81	)		(0.1	)%
Diluted		72,226		72,279		(53	)		(0.1	)%
Earnings Per Share of Common Stock:
Basic	$	1.76	$	1.83	$	(0.07	)		(3.8	)%
Diluted	$	1.75	$	1.82	$	(0.07	)		(3.8	)%

Key statistics are shown in the table below for the three months ended April 30, 2012 and 2011.

Gas Deliveries, Customers, Weather Statistics and Number of Employees

	Three Months Ended          April 30
	2012			2011			Variance			Percent Change
Deliveries in Dekatherms (in thousands):
Sales Volumes		24,024			28,763			(4,739	)	(16.5)%
Transportation Volumes		56,176			36,814			19,362		52.6%
Throughput		80,200			65,577			14,623		22.3%
Secondary Market Volumes		13,038			10,976			2,062		18.8%
Customers Billed (at period end)		984,125			978,469			5,656		0.6%
Gross Customer Additions		2,620			2,141			479		22.4%
Degree Days
Actual		865			1,074			(209	)	(19.5)%
Normal		1,194			1,200			(6	)	(0.5)%
Percent warmer than normal		(27.6	)%		(10.5	)%		n/a		n/a
Number of Employees (at period end)		1,775			1,787			(12	)	(0.7)%

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Key statistics are shown in the table below for the six months ended April 30, 2012 and 2011.

Gas Deliveries, Customers, Weather Statistics and Number of Employees

	Six Months Ended         April 30
	2012			2011		Variance			Percent Change
Deliveries in Dekatherms (in thousands):
Sales Volumes		62,621			84,939		(22,318	)		(26.3)%
Transportation Volumes		107,808			78,481		29,327			37.4%
Throughput		170,429			163,420		7,009			4.3%
Secondary Market Volumes		24,485			25,262		(777	)		(3.1)%
Customers Billed (at period end)		984,125			978,469		5,656			0.6%
Gross Customer Additions		6,058			4,998		1,060			21.2%
Degree Days
Actual		2,433			3,352		(919	)		(27.4)%
Normal		3,063			3,065		(2	)		(0.1)%
Percent (warmer) colder than normal		(20.6	)%		9.4%		n/a			n/a
Number of Employees (at period end)		1,775			1,787		(12	)		(0.7)%

Operating Revenues

Changes in operating revenues for the three months and six months ended April 30, 2012 compared with the same periods in 2011 are presented below.

Changes in Revenues - Increase (Decrease)

In millions	Three Months			Six Months
Gas costs passed through to sales customers	$	(82.8	)	$	(269.5	)
Secondary market revenues		(16.3	)		(70.5	)
Margin decoupling mechanism		10.2			54.9
WNA		4.8			18.3
Transportation revenues		1.5			3.4
Other		(1.5	)		(1.0	)
Total	$	(84.1	)	$	(264.4	)

Gas costs passed through to sales customers – the decreases for the three months and six months are primarily due to lower volumes delivered and lower gas costs passed through to sales customers.

Secondary market revenues – the decreases for the three months and six months are due to decreased activity and margins.

Margin decoupling mechanism – the increases for the three months and six months are primarily due to warmer-than-normal weather in North Carolina.

WNA – the increases for the three months and six months are due to warmer-than-normal weather in South Carolina and Tennessee.

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Transportation revenues – the increases for the three months and six months are primarily due to increased volumes delivered to power generation customers.

Cost of Gas

Changes in cost of gas for the three months and six months ended April 30, 2012 compared with the same periods in 2011 are presented below.

Changes in Cost of Gas – Increase (Decrease)

In millions	Three Months			Six Months
Commodity gas costs passed through to sales customers	$	(68.9	)	$	(209.5	)
Commodity gas costs – secondary market transactions		(16.1	)		(64.8	)
Pipeline demand charges		(1.4	)		(5.5	)
Regulatory approved gas cost mechanisms		1.6			24.9
Other		1.6			1.3
Total	$	(83.2	)	$	(253.6	)

Commodity gas costs passed through to sales customers – the decreases for the three months and six months are due to lower volumes sold and lower gas costs passed through to sales customers.

Commodity gas costs – secondary market transactions – the decreases for the three months and six months are due to lower average gas costs.

Pipeline demand charges – the decreases for the three months and six months are primarily due to changing asset manager payments.

In all three states, we are authorized to recover from customers all prudently incurred gas costs. Charges to cost of gas are based on the amount recoverable under approved rate schedules. The net of any over- or under-recoveries of gas costs are reflected in a regulatory deferred account and are added to or deducted from cost of gas and are included in “Amounts due from customers” or “Amounts due to customers” in the consolidated balance sheets.

Margin

Changes in margin for the three months and six months ended April 30, 2012 compared with the same periods in 2011 are presented below.

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Changes in Margin – Increase (Decrease)

In millions	Three Months			Six Months
Secondary market activity	$	(.2	)	$	(5.7	)
Sales to residential and commercial customer classes		.4			(3.9	)
Industrial customer activity		(.6	)		(.9	)
Net gas cost adjustments		(.6	)		(.3	)
Total	$	(1.0	)	$	(10.8	)

Secondary market activity – the decreases for the three months and six months are due to decreased activity resulting from warmer weather and less wholesale natural gas price volatility.

Sales to residential and commercial customer classes – the increase for the three months is primarily due to customer growth. The decrease for the six months is primarily due to warmer weather in jurisdictions where our rates are not fully decoupled and WNA does not perfectly adjust for variances from normal weather, slightly offset by customer growth.

Industrial customer activity (including power generation) – the decreases for the three months and six months are due to decreased volumes in the industrial market.

Our utility margin is defined as natural gas revenues less natural gas commodity purchases and fixed gas costs for transportation and storage capacity. Margin, rather than revenues, is used by management to evaluate utility operations due to the passthrough of changes in wholesale commodity gas costs, which accounted for 36% of revenues for the six months ended April 30, 2012, and transportation and storage costs, which accounted for 8%.

In general rate proceedings, state regulatory commissions authorize us to recover a margin, which is the applicable billing rate less cost of gas, on each unit of gas delivered. The commissions also authorize us to recover margin losses resulting from negotiating lower rates to industrial customers when necessary to remain competitive. The ability to recover such negotiated margin reductions is subject to continuing regulatory approvals.

Our utility margin is also impacted by certain regulatory mechanisms as defined elsewhere in this document and in our Form 10-K for the year ended October 31, 2011. These include WNA in Tennessee and South Carolina, the Natural Gas Rate Stabilization Act in South Carolina, secondary market activity in North Carolina and South Carolina, Tennessee Incentive Plan in Tennessee, the margin decoupling mechanism in North Carolina and negotiated loss treatment and the recovery of uncollectible gas costs in all three jurisdictions. We retain 25% of secondary market margins generated through off-system sales and capacity release activity in all jurisdictions, with 75% credited to customers through the incentive plans.

Operations and Maintenance Expenses

Changes in operations and maintenance expenses for the three months and six months ended April 30, 2012 compared with the same periods in 2011 are presented below.

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Changes in Operations and Maintenance Expenses – Increase/(Decrease)

In millions	Three Months			Six Months
Employee benefits expense	$	1.5		$	5.6
Corporate dues and fees expense		.5			1.0
Other		(.4	)		2.3
Total	$	1.6		$	8.9

Employee benefit expense – the increases for the three months and six months are due primarily to increases in medical coverage premiums and defined benefit pension costs, and for the six months, the absence of a regulatory pension deferral in 2012.

Corporate dues and fees expense – the increases for the three months and six months are due primarily to the timing of the annual DOT pipeline safety fee.

Depreciation

Depreciation expense increased $1 million for the six months ended April 30, 2012 compared with the same period in 2011 primarily due to increases in plant in service, partially offset by lower depreciation rates applied to South Carolina property, effective November 1, 2011, and Tennessee property, effective March 1, 2012. The quarter change was insignificant.

General Taxes

General taxes decreased $2.6 million for the six months ended April 30, 2012 compared with the same period in 2011 primarily due to the accrual of a liability in 2011 for sales tax on certain customer accounts that were not exempt from sales tax in the prior period. The quarter change was insignificant.

Other Income (Expense)

Other Income (Expense) is comprised of income from equity method investments, non-operating income, non-operating expense and income taxes related to these items. Non-operating income includes non-regulated merchandising and service work, home service warranty programs, subsidiary operations, interest income and other miscellaneous income. Non-operating expense is comprised of charitable contributions and other miscellaneous expenses.

The primary change to Other Income (Expense) for the six months ended April 30, 2012 compared with the same period in 2011 was in income from equity method investments. All other changes for the three months ended April 30, 2012 compared with the same period in 2011 were insignificant.

Income from equity method investments decreased $2.2 million for the six months ended April 30, 2012 compared with the same period in 2011 due to a $2.7 million decrease in earnings from SouthStar primarily due to lower customer usage related to warmer-than-normal weather, net of weather derivatives, and the recording of a lower of cost or market storage inventory adjustment in the current year period as compared with the prior year period, partially offset by higher retail spreads and lower transportation and gas costs.

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Utility Interest Charges

Changes in utility interest charges for the three months and six months ended April 30, 2012 compared with the same periods in 2011 are presented below.

Changes in Utility Interest Charges – Increase (Decrease)

In millions	Three Months			Six Months
Borrowed allowance for funds used during construction	$	(4.7	)	$	(6.8	)
Interest expense on long-term debt		(2.1	)		(4.1	)
Interest expense on short-term debt		.3			1.0
Other		(.7	)		(1.1	)
Total	$	(7.2	)	$	(11.0	)

Borrowed allowance for funds used during construction – the decreases to interest expense for the three months and six months are due to an increase in capitalized interest primarily as a result of increased construction expenditures in the current periods.

Interest expense on long-term debt – the decreases for the three months and six months are primarily due to lower amounts of debt outstanding in the current periods at lower interest rates.

Interest expense on short-term debt – the increases for the three months and six months are primarily due to higher balances outstanding during the current periods offset in part by average interest rates being approximately 45 basis points lower for the current three month period and 16 basis points lower in the current six month period.

Financial Condition and Liquidity

To meet our capital and liquidity requirements, we rely on certain resources, including cash flows from operating activities, access to capital markets, cash generated from our investments in joint ventures and short-term debt. Our capital market strategy has continued to focus on maintaining a strong balance sheet, ensuring sufficient cash resources and daily liquidity, accessing capital markets at favorable times when needed, managing critical business risks, and maintaining a balanced capital structure through the issuance of equity or long-term debt securities or the repurchase of our equity securities.

Short-term debt is vital in order to meet working capital needs, such as our seasonal requirements for gas supply, general corporate liquidity, capital expenditures and approved investments. We rely on short-term debt together with long-term capital markets to provide a significant source of liquidity to meet operating requirements that are not satisfied by internally generated cash flows. Currently, cash flows from operations are not adequate to finance the full cost of planned capital expenditures, which are fundamental to support our system infrastructure and the growth in our customer base.

The level of short-term debt can vary significantly due to changes in the wholesale cost of natural gas and the level of purchases of natural gas supplies for storage to serve customer demand. We pay our suppliers for natural gas purchases before we collect our costs from customers through their monthly bills. If wholesale gas prices increase, we may incur more short-term debt for natural gas inventory and other operating costs since collections from customers could be slower and some customers may not be able to pay their gas bills on a timely basis.

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We believe the capacity of short-term credit available to us under our revolving syndicated credit facility and our CP program and the issuance of debt and equity securities, together with cash provided by operating activities, will continue to allow us to meet our needs for working capital, construction expenditures, investments in joint ventures, anticipated debt redemptions, dividend payments, employee benefit plan contributions, common share repurchases and other cash needs.

Short-Term Debt. We have a $650 million three-year revolving syndicated credit facility that expires on January 25, 2014. The credit facility has an option to expand up to $850 million. We pay an annual fee of $30,000 plus fifteen basis points for any unused amount up to $650 million.

On March 1, 2012, we established a $650 million unsecured CP program that is backstopped by the revolving syndicated credit facility. The notes issued under the CP program may have maturities not to exceed 397 days from the date of issuance. The amounts outstanding under the revolving syndicated credit facility and the CP program, either individually or in the aggregate, cannot exceed $650 million. Any borrowings under the CP program rank equally with our other unsubordinated and unsecured debt.

During the three months ended April 30, 2012, short-term debt ranged from $365 million to $460 million, and interest rates ranged from .22% to 1.17%. During the six months ended April 30, 2012, short-term debt ranged from $328.5 million to $475.5 million, and interest rates ranged from .22% to 1.20%. For further information on short-term debt activity, see Note 5 to the consolidated financial statements in this Form 10-Q.

Our short-term debt as of April 30, 2012 consists of $380 million of notes outstanding under our CP program. The notes under the CP program are expected to be refinanced in part with long-term debt that we will issue in July and October 2012. We have reclassified these notes, limited to the $300 million to be issued as private placement long-term debt, to “Long-term debt” in the consolidating balance sheets. For further information, see Note 4 to the consolidated financial statements in this Form 10-Q. The remaining balance of $80 million of CP notes outstanding is included in “Short-term debt” in the consolidated balance sheets.

Highlights for our short-term debt as of April 30, 2012 and for the quarter ended April 30, 2012 are presented below.

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Short-Term Debt

As of April 30, 2012

In thousands	Commercial Paper			Credit Facility			Total Borrowings
End of period (April 30, 2012):
Amount outstanding	$	380,000		$	—		$	380,000
Weighted average interest rate		0.39	%		—	%		.39	%
During the period (February 1, 2012—April 30, 2012):
Average amount outstanding	$	331,900		$	186,300		$	413,700
Weighted average interest rate		0.35	%		1.15	%		.71	%
Maximum amount outstanding:
February	$	—		$	458,500		$	458,500
March (1)		410,000			421,500			460,000
April		405,000			—			405,000

⁽¹⁾ During March, we were borrowing under both the credit facility and CP program for a portion of the month.

As of April 30, 2012, we had $10 million available for letters of credit under our revolving syndicated credit facility, of which $2.9 million were issued and outstanding. The letters of credit are used to guarantee claims from self-insurance under our general and automobile liability policies. As of April 30, 2012, unused lines of credit available under our revolving syndicated credit facility, including the issuance of the letters of credit, totaled $267.1 million.

Cash Flows from Operating Activities. The natural gas business is seasonal in nature. Operating cash flows may fluctuate significantly during the year and from year to year due to working capital changes within our utility and non-utility operations. The major factors that affect our working capital are weather, natural gas purchases and prices, natural gas storage activity, collections from customers and deferred gas cost recoveries. We rely on operating cash flows and short-term debt to meet seasonal working capital needs. During our first and second quarters, we generally experience overall positive cash flows from the sale of flowing gas and gas withdrawal from storage and the collection of amounts billed to customers during the November through March winter heating season. Cash requirements generally increase during the third and fourth quarters due to increases in natural gas purchases injected into storage, construction activity and decreases in receipts from customers.

During the winter heating season, our trade accounts payable increase to reflect amounts due to our natural gas suppliers for commodity and pipeline capacity. The cost of the natural gas can vary significantly from period to period due to changes in the price of natural gas, which is a function of market fluctuations in the commodity cost of natural gas, along with our changing requirements for storage volumes. Differences between natural gas costs that we have paid to suppliers and amounts that we have collected from customers are included in regulatory deferred accounts in amounts due to or from customers. These natural gas costs can cause cash flows to vary significantly from period to period along with variations in the timing of collections from customers under our gas cost recovery mechanisms.

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Cash flows from operations are impacted by weather, which affects gas purchases and sales. Warmer weather can lead to lower revenues from fewer volumes of natural gas sold or transported. Colder weather can increase volumes sold to weather-sensitive customers, but may lead to conservation by customers in order to reduce their heating bills. Warmer-than-normal weather can lead to reduced operating cash flows, thereby increasing the need for short-term bank borrowings to meet current cash requirements.

Because of the weak economy, including continued high unemployment, we may incur additional bad debt expense as well as experience increased customer conservation. We may incur more short-term debt to pay for gas supplies and other operating costs since collections from customers could be slower and some customers may not be able to pay their bills. Regulatory margin stabilizing and cost recovery mechanisms, such as those that allow us to recover the gas cost portion of bad debt expense, are expected to mitigate the impact these factors may have on our results of operations. With the unusually warmer-than-normal winter of 2011-2012 together with lower natural gas prices this fiscal year, we have experienced lower levels of bad debt expense.

Net cash provided by operating activities was $244.5 million and $284.8 million for the six months ended April 30, 2012 and 2011, respectively. Net cash provided by operating activities reflects a decrease of $5.4 million in net income for 2012 compared with 2011 primarily due to lower margin earned in 2012 as well as higher operating costs. The effect of changes in working capital on net cash provided by operating activities is described below:

• Trade accounts receivable and unbilled utility revenues increased $12.4 million from October 31, 2011 primarily due to the winter consumption of gas and decreased $39.3 million compared with April 30, 2011 primarily due to 27.4% warmer weather during the current period than the same prior period. Volumes sold to weather-sensitive residential and commercial customers decreased 21.3 million dekatherms as compared with the same prior period. Total throughput increased 7 million dekatherms as compared with the same prior period, largely from increased volumes of 31.4 million dekatherms, or 112.5%, sold to and transported for power generation customers, partially offset by decreased sales to residential, commercial and industrial customers.

• Net amounts due from customers increased $8.9 million from October 31, 2011 primarily due to the timing of collection of deferred gas costs through rates.

• Gas in storage decreased $18.4 million in the current period primarily due to a decrease in the weighted average cost of gas, partially offset by increased volumes of gas in storage from lower customer sales in 2012 primarily due to warmer weather as discussed above.

• Prepaid gas costs decreased $21.6 million in the current period primarily due to gas being made available for sale during the period. Under some gas supply contracts, prepaid gas costs incurred during the summer months represent purchases of gas that are not available for sale, and therefore not recorded in inventory, until the start of the winter heating season.

• Trade accounts payable decreased $6 million in the current period primarily due to decreases in the commodity cost of gas.

Our three state regulatory commissions approve rates that are designed to give us the opportunity to generate revenues to cover our gas costs, fixed and variable non-gas costs and earn a fair return for our shareholders. We have a WNA mechanism in South Carolina and Tennessee that partially offsets the impact of colder- or warmer-than-normal weather on bills rendered in November through March for residential and commercial customers. The WNA mechanism in Tennessee, effective March 1, 2012 as a result of our rate case settlement, applies to the months of October through April for residential and commercial billings. The WNA in South Carolina and Tennessee, which includes the additional month of April 2012 in Tennessee, generated charges to customers of $13.7 million and credits of $4.7 million in the six months ended April 30, 2012 and 2011, respectively. In Tennessee, adjustments are made directly to individual customer bills. In South Carolina, the adjustments are calculated at the individual customer level but are recorded in “Amounts due from customers”

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or “Amounts due to customers” in the consolidated balance sheets for subsequent collection from or refund to all customers in the class. The margin decoupling mechanism in North Carolina provides for the collection of our approved margin from residential and commercial customers independent of consumption patterns. The margin decoupling mechanism increased margin by $38.7 million and decreased margin by $16.2 million in the six months ended April 30, 2012 and 2011, respectively. Our gas costs are recoverable through PGA procedures and are not affected by the WNA or the margin decoupling mechanism.

The financial condition of the natural gas marketers and pipelines that supply and deliver natural gas to our distribution system can increase our exposure to supply and price fluctuations. We believe our risk exposure to the financial condition of the marketers and pipelines is not significant based on our receipt of the products and services prior to payment and the availability of other marketers of natural gas to meet our firm supply needs if necessary. We have regulatory commission approval in North Carolina, South Carolina and Tennessee that places tighter credit requirements on the retail natural gas marketers that schedule gas for transportation service on our system.

The regulated utility competes with other energy products, such as electricity and propane, in the residential and commercial customer markets. The most significant product competition is with electricity for space heating, water heating and cooking. Numerous factors can influence customer demand for natural gas, including price, value, availability, environmental attributes, reliability and energy efficiency. Increases in the price of natural gas can negatively impact our competitive position by decreasing the price benefits of natural gas to the consumer. This can impact our cash needs if customer growth slows, resulting in reduced capital expenditures, or if customers conserve, resulting in reduced gas purchases and customer billings.

In the industrial market, many of our customers are capable of burning a fuel other than natural gas, with fuel oil being the most significant competing energy alternative. Our ability to maintain industrial market share is largely dependent on price. The relationship between supply and demand has the greatest impact on the price of natural gas. The price of oil depends upon a number of factors beyond our control, including the relationship between worldwide supply and demand and the policies of foreign and domestic governments and organizations, as well as the value of the US dollar versus other currencies. Our liquidity could be impacted, either positively or negatively, as a result of alternate fuel decisions made by industrial customers.

In an effort to keep customer rates competitive and to maximize earnings, we continue to implement business process improvement and operations and maintenance cost management programs to capture operational efficiencies while improving customer service and maintaining a safe and reliable system.

Cash Flows from Investing Activities. Net cash used in investing activities was $229.2 million and $86.7 million for the six months ended April 30, 2012 and 2011, respectively. Net cash used in investing activities was primarily for utility construction expenditures. Gross utility construction expenditures for the six months ended April 30, 2012 were $220.3 million as compared to $89.4 million in the same prior period primarily due to expending $127 million for the construction of power generation service delivery projects in 2012 as compared with $23 million expended for these projects in the same prior period.

We have a substantial capital expansion program for the construction of transmission and distribution facilities, purchase of equipment and other general improvements. This program primarily supports our system infrastructure and the growth in our customer base. Significant utility construction expenditures are expected to meet long-term growth, including the power generation market, and are part of our long-range forecasts that are prepared at least annually and typically cover a forecast period of five years. We are contractually obligated to expend capital as the work is completed.

We anticipate making capital expenditures, including allowance for funds used during construction, of $250 - 270 million and $105 –115 million in our fiscal years 2012 and 2013, respectively, to provide natural gas

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service for two new power generation facilities in North Carolina. These expenditures are significantly higher than we have traditionally expended for service expansions. We intend to fund expenditures related to these projects in a manner that maintains our targeted capitalization ratio of 45-50% in long-term debt and 50-55% in common equity. Additional detail for the anticipated capital expenditures follows.

In millions	2012		2013		2014
Utility capital expenditures	$	290 - 330	$	310 - 340	$	175 - 225
Power generation related capital expenditures		250 - 270		105 - 115		—
Total forecasted capital expenditures	$	540 - 600	$	415 - 455	$	175 - 225

In October 2009, we reached an agreement with Progress Energy Carolinas to provide natural gas delivery service to a power generation facility to be built at their Wayne County, North Carolina site. The agreement, approved by the NCUC in May 2010, called for us to construct approximately 38 miles of 20-inch transmission pipeline along with compression facilities to provide natural gas delivery service to the plant. Our natural gas delivery service for the project was placed in service on June 1, 2012, and our investment in the pipeline and compression facilities is supported by a long-term service agreement. To provide the additional delivery service, we have executed an agreement with Cardinal Pipeline Company, L.L.C. (Cardinal) to expand our firm capacity requirement by 149,000 dekatherms per day to serve this facility. This will require Cardinal to spend an estimated $48 million to expand its system in order to increase its firm capacity by up to 199,000 dekatherms per day for us and another customer. As a 21.49% equity venture partner of Cardinal, we will invest an estimated $10.3 million in Cardinal’s system expansion. Capital contributions related to this system expansion began in January 2011 and will continue on a periodic basis through September 2012. As of April 30, 2012, our contributions to date related to this system expansion were $9.6 million. Cardinal’s expansion service for the project was also placed into service on June 1, 2012. For further information regarding this agreement, see Note 12 to the consolidated financial statements in this Form 10-Q.

In April 2010, we reached another agreement with Progress Energy Carolinas to provide natural gas delivery service to a power generation facility to be built at their existing Sutton site near Wilmington, North Carolina. The agreement, also approved by the NCUC in May 2010, calls for us to construct approximately 130 miles of transmission pipeline along with compression facilities to provide natural gas delivery service to the plant by June 2013, and our investment in the pipeline and compression facilities is supported by a long-term service agreement.

The Sutton facilities will create cost effective expansion capacity that we will use to help serve the growing natural gas requirements of our customers in the eastern part of North Carolina. We anticipate that a portion of the cost of this project will be included in our North Carolina utility rate base because the facilities will enhance our ability to serve our other North Carolina customers. At the present time with the timing and design scope of the Sutton facilities, there is no current need to proceed with our previously announced Robeson liquefied natural gas storage project. The timing and design scope of the expansion of our facilities in Robeson County will be determined as our system infrastructure and market supply growth requirements in North Carolina dictate.

In December 2011 under an agreement with Duke Energy Carolinas, we placed into service the natural gas pipeline facilities that we constructed to provide natural gas delivery service to their Rockingham County, North Carolina power generation facility.

Cash Flows from Financing Activities. Net cash used in financing activities was $11.7 million and $194.4 million for the six months ended April 30, 2012 and 2011, respectively. Funds are primarily provided from short-term borrowings and the issuance of common stock through our dividend reinvestment and stock purchase

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plan (DRIP) and our employee stock purchase plan (ESPP). We may sell common stock and long-term debt when market and other conditions favor such long-term financing. Funds are primarily used to retire long-term debt, pay down outstanding short-term debt, repurchase common stock under the common stock repurchase program and pay quarterly dividends on our common stock.

On March 1, 2012, we established a $650 million unsecured CP program. With the lower interest rates associated with the sale of CP compared to drawing on our syndicated revolving credit facility, we anticipate interest expense savings of $2.5 million annually. For further information on our CP program, see the previous discussion of “Short-Term Debt” in “Financial Condition and Liquidity.”

Outstanding debt under our syndicated revolving credit facility and CP program increased to $380 million as of April 30, 2012 from $331 million as of October 31, 2011 primarily due to higher capital expenditures. For further information on short-term debt, see Note 5 to the consolidated financial statements in this Form 10-Q and the previous discussion of “Short-Term Debt” in “Financial Condition and Liquidity.”

We have an open combined debt and equity shelf registration filed in July 2011 that is available for future use. Unless otherwise specified at the time such securities are offered for sale, the net proceeds from the sale of the securities will be used for general corporate purposes, including capital expenditures, additions to working capital and advances for our investments in our subsidiaries, and for repurchases of shares of our common stock. Pending such use, we may temporarily invest any net proceeds that are not applied to the purposes mentioned above in investment grade securities.

We continually monitor customer growth trends, opportunities in our markets, the economic recovery of our service area and the timing of any infrastructure investments that would require the need for additional long-term debt. On March 27, 2012, we entered into an agreement to issue $300 million of notes in a private placement with a blended interest rate of 3.54%. On or around July 16, 2012, we will issue $100 million with an interest rate of 3.47%. On or around October 15, 2012, we will issue the remaining $200 million with an interest rate of 3.57%. Both issuances will mature on July 16, 2027. These proceeds will be used for general corporate purposes, including the repayment of short-term debt incurred in part for funding of capital expenditures.

During the six months ended April 30, 2012 and 2011, we issued $10.8 million and $10.4 million, respectively, of common stock through DRIP and ESPP. From time to time, we have repurchased shares of common stock under our Common Stock Open Market Purchase Program as described in Part II, Item 2 in this Form 10-Q. During the six months ended April 30, 2012, we repurchased and retired .8 million shares for $27 million, leaving a balance of 2,910,074 shares available for repurchase under the program. On February 28, 2012, upon final settlement of this transaction, we received $.5 million from the investment bank. During the six months ended April 30, 2011, we repurchased and retired .8 million shares for $22.2 million under the program that settled in our second quarter in 2011. On March 21, 2011, final settlement of the transaction occurred, and we paid $.8 million to the investment bank.

We have paid quarterly dividends on our common stock since 1956. Provisions contained in certain note agreements under which long-term debt was issued restrict the amount of cash dividends that may be paid. As of April 30, 2012, our retained earnings were not restricted. On June 7, 2012, the Board of Directors declared a quarterly dividend on common stock of $.30 per share, payable July 13, 2012 to shareholders of record at the close of business on June 22, 2012.

Our long-term targeted capitalization ratio is 45-50% in long-term debt and 50-55% in common equity. As of April 30, 2012, our capitalization as presented in our financial statements in this Form 10-Q, including current maturities of long-term debt, if any, consisted of 48% in long-term debt and 52% in common equity. Our contractual long-term debt excludes the $300 million reclassification of CP that is expected to be refinanced

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with long-term debt. Without this $300 million reclassification, as of April 30, 2012, our capitalization, including current maturities of contractual long-term debt, if any, consisted of 39% in contractual long-term debt and 61% in common equity.

The components of our total debt outstanding (short-term debt and long-term debt) to our total capitalization as of April 30, 2012 and 2011, and October 31, 2011, are summarized in the table below.

	April 30					October 31					April 30
In thousands	2012		Percentage			2011		Percentage			2011		Percentage
Short-term debt	$	80,000		4	%	$	331,000		16	%	$	103,500		5	%
Current portion of long-term debt		—		—	%		—		—	%		256,843		14	%
Long-term debt		975,000		46	%		675,000		34	%		475,000		25	%
Total debt		1,055,000		50	%		1,006,000		50	%		835,343		44	%
Common stockholders’ equity		1,064,811		50	%		996,923		50	%		1,046,944		56	%
Total capitalization (including short-term debt)	$	2,119,811		100	%	$	2,002,923		100	%	$	1,882,287		100	%

Credit ratings impact our ability to obtain short-term and long-term financing and the cost of such financings. We believe our credit ratings will allow us to continue to have access to the capital markets, as and when needed, at a reasonable cost of funds. In determining our credit ratings, the rating agencies consider a number of quantitative and qualitative factors. For a listing of the more significant quantitative and qualitative factors considered by the rating agencies, see “Cash Flows from Financing Activities” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the year ended October 31, 2011.

As of April 30, 2012, all of our long-term debt was unsecured. Our long-term debt is rated “A” by Standard & Poor’s Ratings Services (S&P) and “A3” by Moody’s Investors Service (Moody’s). Currently, with respect to our long-term debt, the credit agencies maintain their stable outlook. S&P and Moody’s have issued credit ratings on the CP program at A1 and P2, respectively. Credit ratings and outlooks are opinions of the rating agency and are subject to their ongoing review. A significant decline in our operating performance, capital structure or a significant reduction in our liquidity could trigger a negative change in our ratings outlook or even a reduction in our credit ratings by our rating agencies. This would mean more limited access to the private and public credit markets and an increase in the costs of such borrowings. There is no guarantee that a rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn by a rating agency if, in its judgment, circumstances warrant a change.

We are subject to default provisions related to our long-term debt and short-term borrowings. Failure to satisfy any of the default provisions may result in total outstanding issues of debt becoming due. There are cross-default provisions in all of our debt agreements. As of April 30, 2012, there has been no event of default giving rise to acceleration of our debt.

Estimated Future Contractual Obligations

During the three months ended April 30, 2012, there were no material changes to our estimated future contractual obligations in Management’s Discussion and Analysis in this Form 10-Q compared to what we disclosed in our Form 10-K for the year ended October 31, 2011.

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements other than letters of credit and operating leases. The letters of credit are discussed in Note 5 to the consolidated financial statements in this Form 10-Q. The operating leases were discussed in Note 8 to the consolidated financial statements in our Form 10-K for the year ended October 31, 2011.

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Critical Accounting Policies and Estimates

We prepare the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. We make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods reported. Actual results may differ significantly from these estimates and assumptions. We base our estimates on historical experience, where applicable, and other relevant factors that we believe are reasonable under the circumstances. On an ongoing basis, we evaluate estimates and assumptions and make adjustments in subsequent periods to reflect more current information if we determine that modifications in assumptions and estimates are warranted.

Management considers an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made, and changes in the estimate or a different estimate that could have been used would have had a material impact on our financial condition or results of operations. We consider regulatory accounting, revenue recognition, and pension and postretirement benefits to be our critical accounting estimates. Management is responsible for the selection of these critical accounting estimates presented in our Form 10-K for the year ended October 31, 2011 in Management’s Discussion and Analysis of Financial Condition and Results of Operations. Management has discussed these critical accounting estimates with the Audit Committee of the Board of Directors. There have been no changes in our critical accounting policies and estimates since October 31, 2011.

Accounting Guidance

For information regarding recently issued accounting guidance, see Note 1 to the consolidated financial statements in this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various forms of market risk, including the credit risk of our suppliers and our customers, interest rate risk, commodity price risk and weather risk. We seek to identify, assess, monitor and manage all of these risks in accordance with defined policies and procedures under an Enterprise Risk Management program and with the direction of the Energy Price Risk Management Committee. Risk management is guided by senior management with Board of Directors’ oversight, and senior management takes an active role in the development of policies and procedures.

During the six months ended April 30, 2012, there were no material changes in the way that we monitor and manage market risk and credit risk in accordance with our policies and procedures. Our exposure to and management of interest rate risk, commodity price risk and weather risk has remained the same during the six months ended April 30, 2012. Our annual discussion of market risk was included in Item 7A of our Form 10-K as of October 31, 2011.

Additional information concerning market risk is included in “Financial Condition and Liquidity” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 in this Form 10-Q.

As of April 30, 2012, we had $380 million of debt outstanding under our CP program at an interest rate of .39%, which at April 30, 2012 was the rate for the CP program as we were not borrowing under the revolving syndicated credit facility. The carrying amount of this debt approximates fair value. A change of 100 basis points in the underlying average interest rate for our short-term debt would have caused a change in interest expense of approximately $2 million during the six months ended April 30, 2012.

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Item 4. Controls and Procedures

Our management, including the President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Form 10-Q. Such disclosure controls and procedures are designed to provide reasonable assurance that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the United States Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, the President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures were effective at the reasonable assurance level.

We routinely review our internal control over financial reporting and from time to time make changes intended to enhance the effectiveness of our internal control over financial reporting. There were no changes to our internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during the second quarter of fiscal 2012 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

We have only routine immaterial litigation in the normal course of business.

Item 1A. Risk Factors

During the six months ended April 30, 2012, there were no material changes to our risk factors that were disclosed in our Form 10-K for the year ended October 31, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a) Sale of Unregistered Equity Securities.

None.

c) Issuer Purchases of Equity Securities.

The following table provides information with respect to repurchases of our common stock under the Common Stock Open Market Purchase Program during the three months ended April 30, 2012.

Period	Total Number of Shares Purchased			Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced  Program		Maximum Number of Shares that May Yet be Purchased     Under the Program (1)
Beginning of the period									2,910,074
2/1/12 - 2/29/12		—		$	—		—		2,910,074
3/1/12 - 3/31/12		1,238	(2)	$	31.89		—		2,910,074
4/1/12 - 4/30/12		—		$	—		—		2,910,074
Total		1,238		$	31.89		—

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(1) The Common Stock Open Market Purchase Program was approved by the Board of Directors and announced on June 4, 2004 to purchase up to three million shares of common stock for reissuance under our dividend reinvestment and stock purchase, employee stock purchase and incentive compensation plans. On December 16, 2005, the Board of Directors approved an increase in the number of shares in this program from three million to six million to reflect the two-for-one stock split in 2004. The Board also approved on that date an amendment of the Common Stock Open Market Purchase Program to provide for the purchase of up to four million additional shares of common stock to maintain our debt-to-equity capitalization ratios at target levels. The additional four million shares were referred to as our accelerated share repurchase (ASR) program. On March 6, 2009, the Board of Directors authorized the repurchase of up to an additional four million shares under the Common Stock Open Market Purchase Program and the ASR program, which were consolidated.

(2) The total number of shares purchased is shares withheld by us to satisfy tax withholding obligations related to the vesting of shares awarded under a retention award under an incentive compensation plan that is outside of the Common Stock Open Market Purchase Program.

The amount of cash dividends that may be paid on common stock is restricted by provisions contained in certain note agreements under which long-term debt was issued, with those for the senior notes being the most restrictive. We cannot pay or declare any dividends or make any other distribution on any class of stock or make any investments in subsidiaries or permit any subsidiary to do any of the above (all of the foregoing being “restricted payments”), except out of net earnings available for restricted payments. As of April 30, 2012, net earnings available for restricted payments were greater than retained earnings; therefore, our retained earnings were not restricted.

Item 6. Exhibits

4.1	Corporate Commercial Paper Master Note dated March 1, 2012 between U.S. Bank National Association as Paying Agent and Piedmont Natural Gas Company, Inc. as Issuer
4.2	Form of 3.47% Series A Senior Notes due July 16, 2027 (Exhibit 4.1, Form 8-K filed March 29, 2012)
4.3	Form of 3.57% Series B Senior Notes due July 16, 2027 (Exhibit 4.2, Form 8-K filed March 29, 2012)
Compensatory Contracts:
10.1	Employment Agreement, dated February 1, 2012, between Piedmont Natural Gas Company, Inc. and Victor M. Gaglio
10.2	Severance Agreement, dated February 1, 2012, between Piedmont Natural Gas Company, Inc. and Victor M. Gaglio

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Other Contracts:
10.3	Form of Commercial Paper Dealer Agreement, dated March 1, 2012, between Piedmont Natural Gas Company, Inc. and Dealers party thereto
10.4	Note Purchase Agreement, dated as of March 27, 2012, between Piedmont Natural Gas Company, Inc. and the Purchasers party thereto (Exhibit 10.1, Form 8-K filed March 29, 2012)
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer
101.INS	XBRL Instance Document (1)
101.SCH	XBRL Taxonomy Extension Schema (1)
101.CAL	XBRL Taxonomy Calculation Linkbase (1)
101.DEF	XBRL Taxonomy Definition Linkbase (1)
101.LAB	XBRL Taxonomy Extension Label Linkbase (1)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase (1)

(1) Furnished, not filed.

Attached as Exhibit 101 to this Quarterly Report are the following documents formatted in extensible business reporting language (XBRL): (1) Document and Entity Information; (2) Consolidated Balance Sheets at April 30, 2012 and October 31, 2011; (3) Consolidated Statements of Comprehensive Income for the three months and six months ended April 30, 2012 and 2011; (4) Consolidated Statements of Cash Flows for the six months ended April 30, 2012 and 2011; (5) Consolidated Statements of Stockholders’ Equity for the six months ended April 30, 2012 and 2011; and (6) Notes to Consolidated Financial Statements.

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed furnished, not filed as part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. We also make available on our web site the Interactive Data Files submitted as Exhibit 101 to this Quarterly Report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Piedmont Natural Gas Company, Inc.
	(Registrant)
Date June 7, 2012	/s/ Karl W. Newlin
	Karl W. Newlin
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)
Date June 7, 2012	/s/ Jose M. Simon
	Jose M. Simon
	Vice President and Controller
	(Principal Accounting Officer)

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Piedmont Natural Gas Company, Inc.

Form 10-Q

For the Quarter Ended April 30, 2012

Exhibits

  4.1 Corporate Commercial Paper Master Note dated March 1, 2012 between U.S. Bank National Association as Paying Agent and Piedmont Natural Gas Company, Inc. as Issuer

Compensatory Contracts:

10.1	Employment Agreement, dated February 1, 2012, between Piedmont Natural Gas Company, Inc. and Victor M. Gaglio
10.2	SeveranceAgreement, dated February 1, 2012, between Piedmont Natural Gas Company, Inc. and Victor M. Gaglio

Other Contract:

10.3	Form of Commercial Paper Dealer Agreement, dated March 1, 2012, between Piedmont Natural Gas Company, Inc. and Dealers party thereto
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer

EX-4.1

Exhibit 4.1

The Depository Trust Company

A subsidiary of The Depository Trust & Clearing Corporation

CORPORATE COMMERCIAL PAPER – MASTER NOTE

March 1, 2012

(Date of Issuance)

Piedmont Natural Gas Company, Inc. (“Issuer”), for value received, hereby promises to pay to Cede & Co., as nominee of The Depository Trust Company, or to registered assigns: (i) the principal amount, together with unpaid accrued interest thereon, if any, on the maturity date of each obligation identified on the records of Issuer (the “Underlying Records”) as being evidenced by this Master Note, which Underlying Records are maintained by U.S. Bank National Association (“Paying Agent”); (ii) interest on the principal amount of each such obligation that is payable in installments, if any, on the due date of each installment, as specified on the Underlying Records; and (iii) the principal amount of each such obligation that is payable in installments, if any, on the due date of each installment, as specified on the Underlying Records. Interest shall be calculated at the rate and according to the calculation convention specified on the Underlying Records. Payments shall me made by wire transfer to the registered owner from Paying Agent without the necessity of presentation and surrender of this Master Note.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS MASTER NOTE SET FORTH ON THE REVERSE HEREOF.

This Master Note is a valid and binding obligation of Issuer.

Not Valid Unless Countersigned for Authentication by Paying Agent.

	U.S. Bank National Association		Piedmont Natural Gas Company, Inc.
	(Paying Agent)		(Issuer)
By:	/s/ Millie Rolla	By:	/s/ Robert O. Pritchard
	(Authorized Countersignature)		(Authorized Signature)
			(Guarantor)
		By:
			(Authorized Signature)

At the request of the registered owner, Issuer shall promptly issue and deliver one or more separate note certificates evidencing each obligation evidenced by this Master Note. As of the date any such note certificate or certificates are issued, the obligations which are evidenced thereby shall not longer be evidenced by this Master Note.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto

(Name, Address, and Taxpayer Identification Number of Assignee)

the Master Note and all rights thereunder, hereby irrevocably constituting and appointing                                  attorney to transfer said Master Note on the books of Issuer with full power of substitution in the premises.

Dated:
Signature(s) Guaranteed:	(Signature)
	Notice: The signature on this assignment must correspond with the name as written upon the face of this Master Note, in every particular, without alteration or enlargement or any change whatsoever.

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to Issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC ( and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT dated as of February 1, 2012, by and between PIEDMONT NATURAL GAS COMPANY, INC., a North Carolina corporation (the “Corporation”), and, VICTOR M. GAGLIO, (the “Officer”).

WITNESSETH:

WHEREAS, the Board of Directors of the Corporation has determined that the continued retention of the services of the Officer on a long-term basis as described herein is in the best interest of the Corporation in that (a) it promotes the stability of senior management of the Corporation; (b) it enables the Corporation to obtain and retain the services of a well-qualified executive officer with extensive contacts in the natural gas industry; and (c) it secures the continued services of the Officer notwithstanding any change in control of the Corporation; and

WHEREAS, the services of the Officer, his experience and knowledge of the Corporation’s industry, and his reputation and contacts in the Corporation’s industry are valuable to the Corporation; and

WHEREAS, the Corporation considers the establishment and maintenance of a sound and vital management to be part of its overall corporate strategy and to be essential to protecting and enhancing the best interests of the Corporation and its stockholders; and

WHEREAS, the parties desire to enter into this Agreement in order to clearly set forth the terms and conditions of the Officer’s employment relationship with the Corporation; and

WHEREAS, contemporaneous with this Agreement, the parties have entered into a Severance Agreement (the “Severance Agreement”), which sets forth certain rights and obligations of the Officer and certain rights and obligations of the Corporation in the event of a “Potential Change of Control” (as defined in the Severance Agreement) or following a “Change in Control” (as defined in the Severance Agreement). Use of the phrases “Potential Change of Control” and “Change in Control” herein shall have the meanings ascribed to those phrases in the Severance Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereby agree as follows:

1. Employment. The Corporation hereby employs the Officer and the Officer hereby accepts such employment, upon the terms and conditions stated herein, as Senior Vice President – Chief Utility Operations Officer of the Corporation. The Officer shall render such administrative and management services to the Corporation as are customarily performed by persons situated in a similar executive capacity. The Officer shall promote the business of the Corporation and perform such other duties as shall from time to time be reasonably prescribed by the Directors or the Chief Executive Officer of the Corporation. It is understood that the Officer’s continued election as an

officer of the Corporation is dependent upon action by the Board of Directors of the Corporation from time to time and that, subject to the provisions of Section 7 of this Agreement, the Officer’s title and/or duties may change from time to time; provided that following a Change in Control and during the term of the Severance Agreement any action affecting a change in title and/or duties shall be subject to the Severance Agreement.

2. Base Salary. The Corporation shall pay the Officer during the term of this Agreement as compensation for all services rendered by him to the Corporation a base salary in such amounts and at such intervals as shall be commensurate with his duties and responsibilities hereunder. Initially such base salary shall be at the rate of $310,000 per year. The Officer’s base salary may be increased from time to time to reflect the duties required of the Officer. In reviewing the Officer’s base salary, the Board of Directors of the Corporation shall consider the overall performance of the Corporation, the overall performance of the Officer and the service of the Officer rendered to the Corporation and its subsidiaries and changes in the cost of living. The Board of Directors may also provide for performance or merit increases. Participation by Officer in any incentive, deferred compensation, stock option, stock purchase, bonus, pension, life insurance or other employee benefit plans which may be offered by the Corporation from time to time and participation in any fringe benefits provided by the Corporation shall not cause a reduction of the base salary payable to the Officer. The Officer will be entitled to such customary fringe benefits, vacation and sick leave as are consistent with the normal practices and established policies of the Corporation.

3. Participation in Incentive, Retirement and Employee Benefit Plans; Fringe Benefits. The Officer shall be entitled to participate in any plan relating to incentive compensation, stock options, stock purchase, pension, thrift, profit sharing, group life insurance, medical coverage, disability coverage, education, or other retirement or employee benefits that the Corporation has adopted, or may from time to time adopt, for the benefit of its executive employees and for employees generally, subject to the eligibility rules of such plans.

The Officer shall also be entitled to participate in any other fringe benefits which are now or may be or become applicable to the Corporation’s executive employees, including the payment of reasonable expenses for attending annual and periodic meetings of trade associations, and any other benefits which are commensurate with the duties and responsibilities to be performed by the Officer under this Agreement. Additionally, the Officer shall be entitled to such vacation and sick leave as shall be established under uniform employee policies promulgated by the Board of Directors. The Corporation shall reimburse the Officer for all out-of-pocket reasonable and necessary business expenses which the Officer may incur in connection with his service on behalf of the Corporation.

4. Term. The initial term of employment under this Agreement shall be for a one-year period commencing February 1, 2012; provided that this Agreement shall automatically be extended to a full one-year period on each successive day during the term of this Agreement. The effect hereof shall be that the Agreement shall at all times remain subject to a term of one year, unless (i) written notice has been given that the Agreement shall not be extended as provided in this Section 4, or (ii) the Agreement is terminated pursuant to Section 7. If written notice from the Corporation or the Officer is delivered to the other party advising the other party that this Agreement is not to be further extended, then upon such notice, the Agreement shall terminate on the anniversary of the

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date of notice. Provided, further, no extension shall cause this Agreement to extend beyond the date on which the Officer reaches 65 years of age. Upon any extension, the base salary of the extended agreement shall be the base salary in effect on the effective date of such extension.

5. Loyalty; Noncompetition

(a) The Officer shall devote his best efforts to the performance of his duties and responsibilities under this Agreement.

(b) During the term of this Agreement, or any renewals hereof, the Officer agrees he will not own, manage, operate, join, control or participate in the management, operation or control of, or be employed by or connected in any manner with any business which competes with the Corporation or any of its subsidiary corporations without the prior written consent of the Corporation. Notwithstanding the foregoing, the Officer shall be free, without such consent, to purchase or hold as an investment or otherwise, up to five percent of the outstanding stock or other securities of any corporation which has its securities publicly traded on any recognized securities exchange or in any established over-the-counter market.

The Officer shall hold in confidence all knowledge or information of a confidential nature with respect to the business of the Corporation or any subsidiary of the Corporation received by him during the term of this Agreement and will not disclose or make use of such information without the prior written consent of the Corporation.

The Officer acknowledges that it would not be possible to ascertain the amount of monetary damages in the event of a breach by the Officer under the provisions of this Section 5 and agrees that, in the event of a breach of this Section, injunctive relief enforcing the terms of this Section is an appropriate remedy.

6. Standards. The Officer shall perform his duties and responsibilities under this Agreement in accordance with such reasonable standards expected of employees with comparable positions in comparable organizations and as may be established from time to time by the Board of Directors. The Corporation will provide the Officer with the working facilities and staff customary for similar executives and necessary for him to perform his duties.

7. Termination and Termination Pay.

(a) Change of Control. Following a Change in Control and during the term of the Severance Agreement, this Agreement shall become null and void except with respect to any rights or obligations accruing prior to the Change in Control and the rights and obligations of the Officer and the Company, including any termination of the Officer, shall be subject to the provisions of the Severance Agreement.

(b) By Death. The Officer’s employment under this Agreement shall be terminated upon the death of the Officer during the term of this Agreement, in which event the Officer’s estate shall be entitled to receive all compensation due the Officer through the last day of the calendar month in which his death shall have occurred.

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(c) By Total Disability. Except for that period of time following a Change in Control and during the term of the Severance Agreement, the Officer’s employment under this Agreement shall be terminated upon the total permanent disability of the Officer during the term of this Agreement, in which event the Officer shall receive all compensation, including bonuses, through the date of determination of such disability and for a period of 90 days thereafter. For purposes of this Section, the Officer shall be deemed to have suffered permanent disability upon the determination of such status by the United States Social Security Administration or a certification to such effect by the Officer’s regular physician.

(d) By Officer. Except as provided in Section 4 of the Severance Agreement, the Officer’s employment under this Agreement may be terminated at any time by the Officer upon 60 days’ written notice to the Board of Directors. Upon such termination, the Officer shall be entitled to receive all compensation, including bonuses, through the effective date of such termination.

(e) By Corporation. Except for that period of time following a Change of Control and during the term of the Severance Agreement, the Board of Directors may terminate the Officer’s employment at any time, but any such termination by the Board of Directors, other than termination for cause, shall not prejudice the Officer’s right to continue to receive payment of all compensation and the continuance of benefits for a period of 12 months from the effective date of termination or until such time as the Officer reaches 65 years of age (whichever is less). The Officer shall have no right to receive compensation or other benefits (other than vested benefits) for any period after “termination for cause.” Termination for cause shall mean termination because of the Officer’s personal dishonesty, incompetence, willful material misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful material violation of a law, rule or regulation (other than traffic or traffic-related violations or similar offenses) or final cease-and-desist order, or material breach of any provisions of this Agreement.

(f) Costs and Expenses. In the event any dispute shall arise between the Officer and the Corporation as to the terms or interpretation of this Agreement, including this Section 7, whether instituted by formal legal proceedings or otherwise, including any action taken by Officer to enforce the terms of this Section 7 or in defending against any action taken by the Corporation, the Corporation shall reimburse the Officer for all costs and expenses, proceedings or actions in the event the Officer prevails in any such action.

8. Successors and Assigns.

(a) This Employment Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Corporation that shall acquire, directly or indirectly, by conversion, merger, consolidation, purchase or otherwise, all or substantially all of the assets of the Corporation.

(b) Since the Corporation is contracting for the unique and personal skills of the Officer, the Officer shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Corporation.

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9. Code Section 409A.

(a) Delay of Certain Payments. Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that the Company determines would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Internal Revenue Code of 1986 (the “Code”) would otherwise be payable or distributable under this Agreement by reason of the Officer’s termination of employment, then to the extent necessary to comply with Code Section 409A:

(i) if the payment or distribution is payable in a lump sum, the Officer’s right to receive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier of the Officer’s death or the seventh month following the Officer’s termination of employment; and

(ii) if the payment or distribution is payable over time, the amount of such non-exempt deferred compensation that would otherwise be payable during the six (6) month period immediately following the Officer’s termination of employment will be accumulated and the Officer’s right to receive payment or distribution of such accumulated amount will be delayed until the earlier of the Officer’s death or the seventh month following the Officer’s termination of employment and paid on the earlier of such dates, without interest, and the normal payment or distribution schedule for any remaining payments or distributions will commence.

(b) Expense Reimbursements. To the extent any expense reimbursement or in-kind benefit to which the Officer is or may be entitled to receive under this Agreement constitutes non-exempt “deferred compensation” for purposes of Section 409A of the Code, then (i) such reimbursement shall be paid to the Officer as soon as administratively practicable after the Officer submits a valid claim for reimbursement, but in no event later than the last day of the Officer’s taxable year following the taxable year in which the expense was incurred, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any taxable year of the Officer shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year of the Officer, and (iii) the Officer’s right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

10. Modification; Waiver; Amendments. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, signed by the Officer and on behalf of the Corporation by such officer as may be specifically designated by the Board of Directors. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties, except as herein otherwise provided. Any modification, waiver or amendment shall be made consistent with the terms and conditions of the Severance Agreement.

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11. Applicable Law. This Agreement shall be governed in all respects whether as to validity, construction, capacity, performance or otherwise, by the laws of North Carolina.

12. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first hereinabove written.

	CORPORATION:
ATTEST:	Piedmont Natural Gas Company, Inc.
/s/ Judy Z. Mayo
Assistant Secretary
	By:	/s/ Thomas E. Skains
		Thomas E. Skains
		President and Chief Executive Officer
	OFFICER:
	By:	/s/ Victor M. Gaglio
		Victor M. Gaglio

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EX-10.2

Exhibit 10.2

SEVERANCE AGREEMENT

THIS SEVERANCE AGREEMENT, dated February 1, 2012, is made by and between PIEDMONT NATURAL GAS COMPANY, INC., a North Carolina corporation (the “Company”), and VICTOR M. GAGLIO (the “Executive”).

WHEREAS, the Company considers it essential to the best interests of its shareholders to foster the continued employment of key management personnel; and

WHEREAS, the Board of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders; and

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.

2. Term of Agreement. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2012; provided, however, that commencing on January 1, 2013 and each January 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than fifteen (15) months prior to the applicable January 1, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire at the end of the thirty-sixth (36th) calendar month after the calendar month in which such Change in Control occurred (regardless of whether either party had given notice before the Change in Control to the other party not to extend the Term as provided above). For example, if a Change in Control were to occur on July 1, 2012, the Term of this Agreement would expire on July 31, 2015.

3. Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 10.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been (or, under the terms of the second sentence of Section 6.1 hereof, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control and during the Term. This Agreement shall not be construed as creating an

express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

4. The Executive’s Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is twelve (12) months from the date of such Potential Change of Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason. Should the Executive fail to comply with the provisions of this Section 4, the Company’s sole remedy shall be to deny the payment of any Severance Payments to the Executive.

5. Compensation Other Than Severance Payments.

5.1. Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive’s full salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation, benefit or incentive plan, program or arrangement maintained by the Company during such period, until the Executive’s employment is terminated by the Company for Disability.

5.2 If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay the Executive’s full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s executive compensation, benefit and incentive plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

5.3 If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due, including in a lump sum in cash that portion of the Executive’s vacation pay vested and accrued but not paid. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s long-term incentive stock plan, pension, supplemental retirement, insurance and other executive compensation, benefit or incentive plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason.

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6. Severance Payments.

6.1 Subject to Section 6.2 hereof, upon the Executive’s Date of Termination following a Change in Control and during the Term, other than (i) by the Company for Cause, (ii)by reason of the Executive’s death or Disability, or (iii)by the Executive without Good Reason (including Retirement by the Executive), then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (x) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (y) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (z) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes by clear and convincing evidence that such position is not correct.

(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to 3.00 times the sum of (i) the Executive’s annual base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason and (ii) the Executive’s target annual bonus (MVP and STI) immediately prior to the Date of Termination or, if higher, the Executive’s target annual bonus immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

(B) For the 36-month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 6.2 hereof), such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the 36-month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits

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to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. If the Severance Payments shall be reduced pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the lesser of (a) the amount of the reduction made in the Severance Payments pursuant to Section 6.2 hereof, or (b) the amount of the subsequent reduction in the Section 6.1(B) benefits made pursuant to the immediately preceding sentence.

6.2(A) Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter called “Total Payments”) would not be deductible (in whole or part), by the Company, an affiliate or Person making such payment or providing such benefit as a result of section 280G of the Code, then the Total Payments shall be reduced if, and only if, such reduction results in the Executive’s receipt, on an after-tax basis, of a greater amount of the Total Payments after taking into account all applicable federal, state and local employment taxes, income taxes and the Excise Tax (all computed at the highest applicable marginal rate). Any reduction in the Total Payments required by this Section 6.2(A) shall first reduce the cash Severance Payments (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero); provided, however, that the Executive may elect to have the noncash Severance Payments reduced (or eliminated) prior to any reduction of the cash Severance Payments.

(B) For purposes of this Section 6.2, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”), does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of the Code, and (iii) the value of any noncash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

6.3 The payments provided in Section 6.1(A) hereof shall be made not later than the fifth day following the Date of Termination; provided, however, that if the amounts of such payments, and any reduction in such payments required by Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the

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Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code). At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

7. Termination Procedures and Compensation During Dispute.

7.1 Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 11 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board that was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail.

7.2 Date of Termination. “Date of Termination” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (i) if the Executive separates from service for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive separates from service for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).

7.3 Dispute Concerning Termination. If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has

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been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

7.4 Compensation During Dispute. If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.2 hereof) and shall not be offset against or reduce any other amounts due under this Agreement.

8. Compliance with Code Section 409A. Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that the Company determines would constitute non-exempt “deferred compensation” for purposes of section 409A of the Code would otherwise be payable or distributable under this Agreement by reason of the Executive’s separation from service during a period in which the Executive is a Specified Employee, then to the extent necessary to comply with Code Section 409A: (i) if the payment or distribution is payable in a lump sum, the Executive’s right to receive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier of the Executive’s death or the first day of the seventh month following the Executive’s separation from service, and (ii) if the payment, distribution or benefit is payable or provided over time, the amount of such non-exempt deferred compensation or benefit that would otherwise be payable or provided during the six-month period immediately following the Executive’s separation from service will be accumulated, and the Executive’s right to receive payment or distribution of such accumulated amount or benefit will be delayed until the earlier of the Executive’s death or the first day of the seventh month following the Executive’s separation from service and paid or provided on the earlier of such dates, without interest, and the normal payment or distribution schedule for any remaining payments, distributions or benefits will commence.

9. No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than Section 6.1(B) hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

10. Successors; Binding Agreement.

10.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the

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same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive’s employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.

10.2 This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

11. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address inserted below the Executive’s signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:

Piedmont Natural Gas Company, Inc.

P.O. Box 33068

Charlotte, North Carolina 28233

Attention: Senior Vice President — General Counsel, Corporate Secretary &

Chief Compliance and Community Affairs Officer

12. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change in Control (i) by the Company other than for Cause or (ii) by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of

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the State of North Carolina. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration.

13. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

15. Settlement of Disputes; Arbitration.

15.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.

15.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Charlotte, North Carolina in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

16. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

(B) “Auditor” shall have the meaning set forth in Section 6.2 hereof.

(C) Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

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(D) “Board” shall mean the Board of Directors of the Company.

(E) “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) which failure shall continue unabated for thirty (30) days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes by clear and convincing evidence that Cause exists.

(F) A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (III) below; or

(II) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

(III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 50% of the combined voting power of the securities of the Company or such surviving entity or any

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parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially owned by such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing 20% or more of the combined voting power of the Company’s then outstanding securities; or

(IV) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

(G) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(H) “Company” shall mean Piedmont Natural Gas Company, Inc. and, except in determining under Section 16(F) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(I) “Date of Termination” shall have the meaning set forth in Section 7.2 hereof.

(J) “Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.

(K) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(L) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code.

(M) “Executive” shall mean the individual named in the first paragraph of this Agreement.

(N) “Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses

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(ii) and (iii) of the second sentence of Section 6.1 hereof (treating all references in paragraphs (I) through (VII) below to a “Change in Control” as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (I), (V), (VI) or (VII) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

(I) the assignment to the Executive of any duties inconsistent with the Executive’s status as a senior executive officer of the Company, a change in the Executive’s reporting responsibilities, titles or offices, or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to the Change in Control other than any such alteration primarily attributable to the fact that the Company may no longer be a public company;

(II) a reduction by the Company in the Executive’s annual base salary as in effect on the date hereof or as the same may be increased from time to time except for across-the-board salary reductions (not to exceed 10%) similarly affecting all senior executives of the Company and all senior executives of any Person in control of the Company including the Chief Executive Officer;

(III) the relocation of the principal executive offices to a location more than 35 miles from the Company’s principal executive offices immediately prior to the Change in Control or the Company’s requiring the Executive to be based anywhere other than the location of the Company’s executive offices except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(IV) the failure by the Company to pay to the Executive any portion of the Executive’s current compensation or benefits except pursuant to an across-the-board compensation or benefit deferral (not to exceed 10%) similarly affecting all senior executives of the Company and all senior executives of any Person in control of the Company including the Chief Executive Officer, or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

(V) the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive’s total compensation, including but not limited to the Company’s long-term incentive plans or any substitute plans adopted prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other participants, as existed immediately prior to the Change in Control;

(VI) the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, supplement retirement, savings, life insurance, supplemental life insurance, medical,

11

health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control (except for across-the-board changes similarly affecting all senior executives of the Company and all senior executives of any Person in control of the Company, including the Chief Executive Officer, not to exceed 10%), the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled either by prior written agreements or on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control; or

(VII) any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1 hereof; for purposes of this Agreement, no such purported termination shall be effective.

The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

For purposes of any determination regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes by clear and convincing evidence that Good Reason does not exist.

(O) “Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.

(P) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(Q) “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(II) the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(III) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or

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(IV) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(R) “Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated voluntarily by the Executive in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

(S) “Severance Payments” shall have the meaning set forth in Section 6.1 hereof.

(T) “Specified Employee” shall have the meaning given such term in Code Section 409A and the final regulations thereunder.

(U) “Tax Counsel” shall have the meaning set forth in Section 6.2 hereof.

(V) “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

(W) “Total Payments” shall mean those payments so described in Section 6.2 hereof.

PIEDMONT NATURAL GAS COMPANY, INC.
By:	/s/ Thomas E Skains
	Thomas E. Skains
	President and Chief Executive Officer
	/s/ Victor M. Gaglio
	Victor M. Gaglio

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EX-10.3

Exhibit 10.3

Commercial Paper Dealer Agreement

4(2) Program

Between:

[                    ], as Issuer, and

[                    ], as Dealer

Concerning Notes to be issued pursuant to an Issuing and Paying Agent Agreement dated as of [                    ], 20[    ] between the Issuer and [            ], as Issuing and Paying Agent

Dated as of

[                    ], 20[    ]

Commercial Paper Dealer

Agreement

4(2) Program

This agreement (as amended, modified, supplemented, restated and/or replaced from time to time, the “Agreement”) sets forth the understandings between the Issuer and the Dealer, each named on the cover page hereof, in connection with the issuance and sale by the Issuer of its short-term unsecured promissory notes (as amended, modified, supplemented, restated and/or replaced from time to time, the “Notes”) through the Dealer.

Certain terms used in this Agreement are defined in Section 6 hereof.

The Addendum to this Agreement, and any Annexes or Exhibits described in this Agreement or such Addendum, are hereby incorporated into this Agreement and made fully a part hereof.

1. Offers, Sales and Resales of Notes.

1.1 While (i) the Issuer has and shall have no obligation to sell the Notes to the Dealer or to permit the Dealer to arrange any sale of the Notes for the account of the Issuer, and (ii) the Dealer has and shall have no obligation to purchase the Notes from the Issuer or to arrange any sale of the Notes for the account of the Issuer, the parties hereto agree that in any case where the Dealer purchases Notes from the Issuer, or arranges for the sale of Notes by the Issuer, such Notes will be purchased or sold by the Dealer in reliance on the representations, warranties, covenants and agreements of the Issuer contained herein or made pursuant hereto and on the terms and conditions and in the manner provided herein.

1.2 So long as this Agreement shall remain in effect, and in addition to the limitations contained in Section 1.7 hereof, the Issuer shall not, without the consent of the Dealer, offer, solicit or accept offers to purchase, or sell, any Notes except (a) in transactions with one or more dealers which may from time to time after the date hereof become dealers with respect to the Notes by executing with the Issuer one or more agreements which contain provisions substantially identical to those contained in Section 1 of this Agreement, of which the Issuer hereby undertakes to provide the Dealer prompt notice or (b) in transactions with the other dealers listed on the Addendum hereto, which are executing agreements with the Issuer which contain provisions substantially identical to Section 1 of this Agreement contemporaneously herewith. In no event shall the Issuer offer, solicit or accept offers to purchase, or sell, any Notes directly on its own behalf in transactions with persons other than broker-dealers as specifically permitted in this Section 1.2.

1.3 The Notes shall be in a minimum denomination of $250,000 or integral multiples of $1,000 in excess thereof, will bear such interest rates, if interest bearing, or will be sold at such discount from their face amounts, as shall be agreed upon by the Dealer and the Issuer, shall have a maturity not exceeding 397 days from the date of issuance and may have such terms as are specified in Exhibit C hereto or the Private Placement Memorandum. The Notes shall not contain any provision for extension, renewal or automatic “rollover.”

1.4 The authentication and issuance of, and payment for, the Notes shall be effected in accordance with the Issuing and Paying Agent Agreement, and the Notes shall be either

individual physical certificates or book-entry notes evidenced by one or more master notes (each, as amended, modified, supplemented, restated and/or replaced from time to time, a “Master Note”) registered in the name of The Depository Trust Company (“DTC”) or its nominee, in the form or forms delivered to the Dealer pursuant to Section 3.6.

1.5 If the Issuer and the Dealer shall agree on the terms of the purchase of any Note by the Dealer or the sale of any Note arranged by the Dealer (including, but not limited to, agreement with respect to the date of issue, purchase price, principal amount, maturity and interest rate or interest rate index and margin (in the case of interest-bearing Notes) or discount thereof (in the case of Notes issued on a discount basis), and appropriate compensation for the Dealer’s services hereunder) pursuant to this Agreement, the Issuer shall cause such Note to be issued and delivered in accordance with the terms of the Issuing and Paying Agent Agreement and payment for such Note shall be made by the purchaser thereof, either directly or through the Dealer, to the Issuing and Paying Agent, for the account of the Issuer. Except as otherwise agreed, in the event that the Dealer is acting as an agent and a purchaser shall either fail to accept delivery of or make payment for a Note on the date fixed for settlement, the Dealer shall promptly notify the Issuer, and if the Dealer has theretofore paid the Issuer for the Note, the Issuer will promptly return such funds to the Dealer against its return of the Note to the Issuer, in the case of a certificated Note, and upon notice of such failure in the case of a book-entry Note. If such failure occurred for any reason other than default by the Dealer, the Issuer shall reimburse the Dealer on an equitable basis for the Dealer’s loss of the use of such funds for the period such funds were credited to the Issuer’s account.

1.6 The Dealer and the Issuer hereby establish and agree to observe the following procedures in connection with offers, sales and subsequent resales or other transfers of the Notes:

(a) Offers and sales of the Notes by or through the Dealer shall be made only to: (i) investors reasonably believed by the Dealer to be Qualified Institutional Buyers, Institutional Accredited Investors or Sophisticated Individual Accredited Investors and (ii) non-bank fiduciaries or agents that will be purchasing Notes for one or more accounts, each of which is reasonably believed by the Dealer to be an Institutional Accredited Investor or a Sophisticated Individual Accredited Investor.

(b) Resales and other transfers of the Notes by the holders thereof shall be made only in accordance with the restrictions in the legend described in clause (e) below.

(c) No general solicitation or general advertising shall be used in connection with the offering of the Notes. Without limiting the generality of the foregoing, without the prior written approval of the Dealer, the Issuer shall not issue any press release, make any other statement to any member of the press making reference to the Notes, the offer or sale of the Notes or this Agreement or place or publish any “tombstone” or other advertisement relating to the Notes or the offer or sale thereof. To the extent permitted by applicable securities laws, the Issuer shall (i) omit the name of the Dealer from any publicly available filing by the Issuer that makes reference to the Notes, the offer or sale of the Notes or this Agreement and (ii) redact the name of the Dealer and any contact or other information that could identify the Dealer from any agreement or other information filed as an exhibit to such filing.

(d) No sale of Notes to any one purchaser shall be for less than $250,000 principal or face amount, and no Note shall be issued in a smaller principal or face amount. If the

purchaser is a non-bank fiduciary acting on behalf of others, each person for whom such purchaser is acting must purchase at least $250,000 principal or face amount of Notes.

(e) Offers and sales of the Notes by the Issuer through the Dealer acting as agent for the Issuer shall be made in accordance with Rule 506 under the Securities Act, and shall be subject to the restrictions described in the legend appearing on Exhibit A hereto. A legend substantially to the effect of such Exhibit A shall appear as part of the Private Placement Memorandum used in connection with offers and sales of Notes hereunder, as well as on each individual certificate representing a Note and each Master Note representing book-entry Notes offered and sold pursuant to this Agreement.

(f) The Dealer shall furnish or shall have furnished to each purchaser of Notes for which it has acted as the Dealer a copy of the then-current Private Placement Memorandum unless such purchaser has previously received a copy of the Private Placement Memorandum as then in effect. The Private Placement Memorandum shall expressly state that any person to whom Notes are offered shall have an opportunity to ask questions of, and receive information from, the Issuer and the Dealer and shall provide the names, addresses and telephone numbers of the persons from whom information regarding the Issuer may be obtained.

(g) The Issuer agrees, for the benefit of the Dealer and each of the holders and prospective purchasers from time to time of the Notes that, if at any time the Issuer shall not be subject to Section 13 or 15(d) of the Exchange Act, the Issuer will furnish, upon request and at its expense, to the Dealer and to holders and prospective purchasers of Notes information required by Rule 144A(d)(4)(i) in compliance with Rule 144A(d).

(h) In the event that any Note offered or to be offered by the Dealer would be ineligible for resale under Rule 144A, the Issuer shall immediately notify the Dealer (by telephone, confirmed in writing) of such fact and shall promptly prepare and deliver to the Dealer an amendment or supplement to the Private Placement Memorandum describing the Notes that are ineligible, the reason for such ineligibility and any other relevant information relating thereto.

(i) The Issuer represents that it is not currently issuing commercial paper in the United States market in reliance upon the exemption provided by Section 3(a)(3) of the Securities Act. The Issuer agrees that, if it shall issue commercial paper after the date hereof in reliance upon such exemption (a) the proceeds from the sale of the Notes will be segregated from the proceeds of the sale of any such commercial paper by being placed in a separate account; (b) the Issuer will institute appropriate corporate procedures to ensure that the offers and sales of notes issued by the Issuer pursuant to the Section 3(a)(3) exemption are not integrated with offerings and sales of Notes hereunder; and (c) the Issuer will comply with each of the requirements of Section 3(a)(3) of the Securities Act in selling commercial paper or other short-term debt securities other than the Notes in the United States.

1.7 The Issuer hereby represents and warrants to the Dealer, in connection with offers, sales and resales of Notes, as follows:

(a) The Issuer hereby confirms to the Dealer that (except as permitted by Section 1.6(i)) within the preceding six months neither the Issuer nor any person other than the Dealer

or the other dealers referred to in Section 1.2 hereof acting on behalf of the Issuer has offered or sold any Notes, or any substantially similar security of the Issuer (including, without limitation, medium-term notes issued by the Issuer), to, or solicited offers to buy any such security from, any person other than the Dealer or the other dealers referred to in Section 1.2 hereof. The Issuer also agrees that (except as permitted by Section 1.6(i)), as long as the Notes are being offered for sale by the Dealer and the other dealers referred to in Section 1.2 hereof as contemplated hereby and until at least six months after the offer of Notes hereunder has been terminated, neither the Issuer nor any person other than the Dealer or the other dealers referred to in Section 1.2 hereof (except as contemplated by Section 1.2 hereof) will offer the Notes or any substantially similar security of the Issuer for sale to, or solicit offers to buy any such security from, any person other than the Dealer or the other dealers referred to in Section 1.2 hereof, it being understood that such agreement is made with a view to bringing the offer and sale of the Notes within the exemption provided by Section 4(2) of the Securities Act and Rule 506 thereunder and shall survive any termination of this Agreement. The Issuer hereby represents and warrants that it has not taken or omitted to take, and will not take or omit to take, any action that would cause the offering and sale of Notes hereunder to be integrated with any other offering of securities, whether such offering is made by the Issuer or some other party or parties.

(b) The Issuer represents and agrees that the proceeds of the sale of the Notes are not currently contemplated to be used for the purpose of buying, carrying or trading securities within the meaning of Regulation T and the interpretations thereunder by the Board of Governors of the Federal Reserve System. In the event that the Issuer determines to use such proceeds for the purpose of buying, carrying or trading securities, whether in connection with an acquisition of another company or otherwise, the Issuer shall give the Dealer at least five business days’ prior written notice to that effect. The Issuer shall also give the Dealer prompt notice of the actual date that it commences to purchase securities with the proceeds of the Notes. Thereafter, in the event that the Dealer purchases Notes as principal and does not resell such Notes on the day of such purchase, to the extent necessary to comply with Regulation T and the interpretations thereunder, the Dealer will sell such Notes either (i) only to offerees it reasonably believes to be Qualified Institutional Buyers or to Qualified Institutional Buyers it reasonably believes are acting for other Qualified Institutional Buyers, in each case in accordance with Rule 144A or (ii) in a manner which would not cause a violation of Regulation T and the interpretations thereunder.

2. Representations and Warranties of Issuer.

The Issuer represents and warrants that:

2.1 The Issuer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all the requisite power and authority to execute, deliver and perform its obligations under the Notes, this Agreement and the Issuing and Paying Agent Agreement.

2.2 This Agreement and the Issuing and Paying Agent Agreement have been duly authorized, executed and delivered by the Issuer and constitute legal, valid and binding obligations of the Issuer enforceable against the Issuer in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

2.3 The Notes have been duly authorized, and when issued as provided in the Issuing and Paying Agent Agreement, will be duly and validly issued and will constitute legal, valid and binding obligations of the Issuer enforceable against the Issuer in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

2.4 The offer and sale of the Notes in the manner contemplated hereby do not require registration of the Notes under the Securities Act, pursuant to the exemption from registration contained in Section 4(2) thereof, and no indenture in respect of the Notes is required to be qualified under the Trust Indenture Act of 1939, as amended.

2.5 The Notes will rank at least pari passu with all other unsecured and unsubordinated indebtedness of the Issuer.

2.6 No consent or action of, or filing or registration with, any governmental or public regulatory body or authority, including the SEC, is required to authorize, or is otherwise required in connection with the execution, delivery or performance of, this Agreement, the Notes or the Issuing and Paying Agent Agreement, except as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Notes.

2.7 Neither the execution and delivery of this Agreement and the Issuing and Paying Agent Agreement, nor the issuance of the Notes in accordance with the Issuing and Paying Agent Agreement, nor the fulfillment of or compliance with the terms and provisions hereof or thereof by the Issuer, will (i) result in the creation or imposition of any mortgage, lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Issuer, or (ii) violate or result in a breach or a default under any of the terms of the Issuer’s charter documents or by-laws, any contract or instrument to which the Issuer is a party or by which it or its property is bound, or any law or regulation, or any order, writ, injunction or decree of any court or government instrumentality, to which the Issuer is subject or by which it or its property is bound, which breach or default might have a material adverse effect on the condition (financial or otherwise), operations or business of the Issuer and its subsidiaries taken as a whole or the ability of the Issuer to perform its obligations under this Agreement, the Notes or the Issuing and Paying Agent Agreement.

2.8 There is no litigation or governmental proceeding pending, or to the knowledge of the Issuer threatened, against or affecting the Issuer or any of its subsidiaries which might result in a material adverse effect on the condition (financial or otherwise), operations or business of the Issuer and its subsidiaries taken as a whole or the ability of the Issuer to perform its obligations under this Agreement, the Notes or the Issuing and Paying Agent Agreement.

2.9 The Issuer is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

2.10 Neither the Private Placement Memorandum nor the Company Information contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

2.11 Each (a) issuance of Notes by the Issuer hereunder and (b) amendment or supplement of the Private Placement Memorandum shall be deemed a representation and warranty by the Issuer to the Dealer, as of the date thereof, that, both before and after giving effect to such issuance and after giving effect to such amendment or supplement, (i) the representations and warranties given by the Issuer set forth in this Section 2 remain true and correct on and as of such date as if made on and as of such date, (ii) in the case of an issuance of Notes, the Notes being issued on such date have been duly and validly issued and constitute legal, valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and (iii) in the case of an issuance of Notes, since the date of the most recent Private Placement Memorandum, there has been no material adverse effect on the condition (financial or otherwise), operations or business of the Issuer and its subsidiaries taken as a whole which has not been disclosed to the Dealer in writing.

3. Covenants and Agreements of Issuer.

The Issuer covenants and agrees that:

3.1 The Issuer will give the Dealer prompt notice (but in any event prior to any subsequent issuance of Notes hereunder) of any amendment to, modification of or waiver with respect to, the Notes or the Issuing and Paying Agent Agreement, including a complete copy of any such amendment, modification or waiver.

3.2 The Issuer shall, whenever there shall occur any change in the condition (financial or otherwise), operations or business of the Issuer and its subsidiaries taken as a whole or any development or occurrence in relation to the Issuer that would be material to holders of the Notes or potential holders of the Notes (including any downgrading or receipt of any notice of intended or potential downgrading or any review for potential change in the rating accorded any of the Issuer’s securities by any nationally recognized statistical rating organization which has published a rating of the Notes), promptly, and in any event prior to any subsequent issuance of Notes hereunder, notify the Dealer (by telephone, confirmed in writing) of such change, development or occurrence.

3.3 The Issuer shall from time to time furnish to the Dealer such information as the Dealer may reasonably request, including, without limitation, any press releases or material provided by the Issuer to any national securities exchange or rating agency, regarding (i) the Issuer’s operations and financial condition, (ii) the due authorization and execution of the Notes and (iii) the Issuer’s ability to pay the Notes as they mature.

3.4 The Issuer will take all such action as the Dealer may reasonably request to ensure that each offer and each sale of the Notes will comply with any applicable state Blue Sky laws; provided, however, that the Issuer shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified or subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

3.5 The Issuer will not be in default of any of its obligations hereunder, under the Notes or under the Issuing and Paying Agent Agreement, at any time that any of the Notes are outstanding.

3.6 The Issuer shall not issue Notes hereunder until the Dealer shall have received (a) an opinion of counsel to the Issuer, addressed to the Dealer, satisfactory in form and substance to the Dealer, (b) a copy of the executed Issuing and Paying Agent Agreement as then in effect, (c) a copy of resolutions adopted by the Board of Directors of the Issuer, satisfactory in form and substance to the Dealer and certified by the Secretary or similar officer of the Issuer, authorizing execution and delivery by the Issuer of this Agreement, the Issuing and Paying Agent Agreement and the Notes and consummation by the Issuer of the transactions contemplated hereby and thereby, (d) prior to the issuance of any book-entry Notes represented by a master note registered in the name of DTC or its nominee, a copy of the executed Letter of Representations among the Issuer, the Issuing and Paying Agent and DTC and of the executed master note, (e) prior to the issuance of any Notes in physical form, a copy of such form (unless attached to this Agreement or the Issuing and Paying Agent Agreement) and (f) such other certificates, opinions, letters and documents as the Dealer shall have reasonably requested.

3.7 The Issuer shall reimburse the Dealer for all of the Dealer’s reasonable and documented out-of-pocket expenses related to this Agreement, including expenses incurred in connection with its preparation and negotiation, and the transactions contemplated hereby (including, but not limited to, the printing and distribution of the Private Placement Memorandum), and, if applicable, for the reasonable and documented fees and out-of-pocket expenses of the Dealer’s counsel.

3.8 Without limiting any obligation of the Issuer pursuant to this Agreement to provide the Dealer with credit and financial information, the Issuer hereby acknowledges and agrees that the Dealer may share the Company Information and any other information or matters relating to the Issuer or the transactions contemplated hereby with affiliates of the Dealer, including, but not limited to, [            ] and that such affiliates may likewise share information relating to the Issuer or such transactions with the Dealer.

4. Disclosure.

4.1 The Private Placement Memorandum and its contents (other than the Dealer Information) shall be the sole responsibility of the Issuer. The Private Placement Memorandum shall contain a statement expressly offering an opportunity for each prospective purchaser to ask questions of, and receive answers from, the Issuer concerning the offering of Notes and to obtain relevant additional information which the Issuer possesses or can acquire without unreasonable effort or expense.

4.2 The Issuer agrees to promptly furnish the Dealer the Company Information as it becomes available.

4.3 (a) The Issuer further agrees to notify the Dealer promptly upon the occurrence of any event relating to or affecting the Issuer that would cause the Company Information then in existence to include an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they are made, not misleading.

(b) In the event that the Issuer gives the Dealer notice pursuant to Section 4.3(a) and the Dealer notifies the Issuer that it then has Notes it is holding in inventory, the Issuer agrees promptly to supplement or amend the Private Placement Memorandum so that the Private Placement Memorandum, as amended or supplemented, shall not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Issuer shall make such supplement or amendment available to the Dealer.

(c) In the event that (i) the Issuer gives the Dealer notice pursuant to Section 4.3(a), (ii) the Dealer does not notify the Issuer that it is then holding Notes in inventory and (iii) the Issuer chooses not to promptly amend or supplement the Private Placement Memorandum in the manner described in clause (b) above, then all solicitations and sales of Notes shall be suspended until such time as the Issuer has so amended or supplemented the Private Placement Memorandum, and made such amendment or supplement available to the Dealer.

5. Indemnification and Contribution.

5.1 The Issuer will indemnify and hold harmless the Dealer, each individual, corporation, partnership, trust, association or other entity controlling the Dealer, any affiliate of the Dealer or any such controlling entity and their respective directors, officers, employees, partners, incorporators, shareholders, servants, trustees and agents (hereinafter the “Indemnitees”) against any and all liabilities, penalties, suits, causes of action, losses, damages, claims, costs and expenses (including, without limitation, reasonable and documented fees and disbursements of counsel) or judgments of whatever kind or nature (each a “Claim”), imposed upon, incurred by or asserted against the Indemnitees arising out of or based upon (i) any allegation that the Private Placement Memorandum, the Company Information or any information provided by the Issuer to the Dealer included (as of any relevant time) or includes an untrue statement of a material fact or omitted (as of any relevant time) or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (ii) arising out of or based upon the breach by the Issuer of any agreement, covenant or representation made in or pursuant to this Agreement. This indemnification shall not apply to the extent that the Claim arises out of or is based upon Dealer Information.

5.2 Provisions relating to claims made for indemnification under this Section 5 are set forth on Exhibit B to this Agreement.

5.3 In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in this Section 5 is held to be unavailable or insufficient to hold harmless the Indemnitees, although applicable in accordance with the terms of this Section 5, the Issuer shall contribute to the aggregate costs incurred by the Dealer in connection with any Claim in the proportion of the respective economic interests of the Issuer and the Dealer; provided, however, that such contribution by the Issuer shall be in an amount such that the aggregate costs incurred by the Dealer do not exceed the aggregate of the commissions and fees earned by the Dealer hereunder with respect to the issue or issues of Notes to which such Claim relates. The respective economic interests shall be calculated by reference to the aggregate proceeds to the Issuer of the Notes issued hereunder and the aggregate commissions and fees earned by the Dealer hereunder.

6. Definitions.

6.1 “Claim” shall have the meaning set forth in Section 5.1.

6.2 “Company Information” at any given time shall mean the Private Placement Memorandum together with, to the extent applicable, (i) the Issuer’s most recent report on Form 10-K filed with the SEC and each report on Form 10-Q or 8-K filed by the Issuer with the SEC since the most recent Form 10-K, (ii) the Issuer’s most recent annual audited financial statements and each interim financial statement or report prepared subsequent thereto, if not included in item (i) above, (iii) the Issuer’s and its affiliates’ other publicly available recent reports, including, but not limited to, any publicly available filings or reports provided to their respective shareholders, (iv) any other information or disclosure prepared pursuant to Section 4.3 hereof and (v) any information prepared or approved by the Issuer for dissemination to investors or potential investors in the Notes.

6.3 “Dealer Information” shall mean material concerning the Dealer provided by the Dealer in writing expressly for inclusion in the Private Placement Memorandum.

6.4 “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended.

6.5 “Indemnitee” shall have the meaning set forth in Section 5.1.

6.6 “Institutional Accredited Investor” shall mean an institutional investor that is an accredited investor within the meaning of Rule 501 under the Securities Act and that has such knowledge and experience in financial and business matters that it is capable of evaluating and bearing the economic risk of an investment in the Notes, including, but not limited to, a bank, as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution, as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity.

6.7 “Issuing and Paying Agent Agreement” shall mean the issuing and paying agent agreement described on the cover page of this Agreement, as such agreement may be amended, modified, supplemented, restated and/or replaced from time to time.

6.8 “Issuing and Paying Agent” shall mean the party designated as such on the cover page of this Agreement, as issuing and paying agent under the Issuing and Paying Agent Agreement, or any successor thereto in accordance with the Issuing and Paying Agent Agreement.

6.9 “Non-bank fiduciary or agent” shall mean a fiduciary or agent other than (a) a bank, as defined in Section 3(a)(2) of the Securities Act, or (b) a savings and loan association, as defined in Section 3(a)(5)(A) of the Securities Act.

6.10 “Private Placement Memorandum” shall mean offering materials prepared in accordance with Section 4 (including materials referred to therein or incorporated by reference therein, if any) provided to purchasers and prospective purchasers of the Notes, and shall include amendments, modifications, supplements, restatements and/or replacements thereto which may be prepared from time to time in accordance with this Agreement (other than any amendment, modification, supplement, restatement and/or replacement that has been completely superseded by a later amendment. modification, supplement, restatement and/or replacement).

6.11 “Qualified Institutional Buyer” shall have the meaning assigned to that term in Rule 144A under the Securities Act.

6.12 “Rule 144A” shall mean Rule 144A under the Securities Act.

6.13 “SEC” shall mean the U.S. Securities and Exchange Commission.

6.14 “Securities Act” shall mean the U.S. Securities Act of 1933, as amended.

6.15 “Sophisticated Individual Accredited Investor” shall mean an individual who (a) is an accredited investor within the meaning of Regulation D under the Securities Act and (b) based on his or her pre-existing relationship with the Dealer, is reasonably believed by the Dealer to be a sophisticated investor (i) possessing such knowledge and experience (or represented by a fiduciary or agent possessing such knowledge and experience) in financial and business matters that he or she is capable of evaluating and bearing the economic risk of an investment in the Notes and (ii) having not less than $5 million in investments (as defined, for purposes of this section, in Rule 2a51-1 under the Investment Company Act of 1940, as amended).

7. General

7.1 Unless otherwise expressly provided herein, all notices under this Agreement to parties hereto shall be in writing (including, without limitation, via email) and shall be effective when received at the address of the respective party set forth in the Addendum to this Agreement.

7.2 This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws provisions.

7.3 The Issuer agrees that any suit, action or proceeding brought by the Issuer against the Dealer in connection with or arising out of this Agreement or the Notes or the offer and sale of the Notes shall be brought solely in the United States federal courts located in the Borough of Manhattan or the courts of the State of New York located in the Borough of Manhattan. EACH OF THE DEALER AND THE ISSUER WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

7.4 This Agreement may be terminated, at any time, by the Issuer, upon one (1) business day’s prior notice to such effect to the Dealer, or by the Dealer upon one (1) business day’s prior notice to such effect to the Issuer. Any such termination, however, shall not affect the obligations of the Issuer under Sections 3.7, 5 and 7.3 hereof or the respective representations, warranties, agreements, covenants, rights or responsibilities of the parties made or arising prior to the termination of this Agreement.

7.5 This Agreement is not assignable by either party hereto without the prior written consent of the other party; provided, however, that the Dealer may assign its rights and obligations under this Agreement to any affiliate of the Dealer.

7.6 This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

7.7 This Agreement is for the exclusive benefit of the parties hereto, and their respective permitted successors and assigns hereunder, and shall not be deemed to give any legal or equitable right, remedy or claim to any other person whatsoever.

7.8 The Issuer acknowledges and agrees that the Dealer is acting solely in the capacity of an arm’s length contractual counterparty to the Issuer with respect to the offering of the Notes contemplated hereby (including in connection with determining the price and terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of (except to the extent explicitly set forth herein), the Issuer or any other person. The Dealer has not assumed an advisory or fiduciary responsibility in favor of the Issuer with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether the Dealer has advised or is currently advising the Issuer on other matters) or any other obligation to the Issuer except the obligations expressly set forth in this Agreement. Additionally, the Dealer is not advising the Issuer or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Issuer shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Dealer shall have no responsibility or liability to the Issuer with respect thereto. Any review by the Dealer of the Issuer, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Dealer and shall not be on behalf of the Issuer.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year first above written.

[                    ], as Issuer	[                    ], as Dealer
By:	By:

Name: Name:

Title: Title:

Addendum

The following additional clauses shall apply to the Agreement and be deemed a part thereof.

1. The other dealers referred to in clause (b) of Section 1.2 of the Agreement are [                    ].

2. The addresses of the respective parties for purposes of notices under Section 7.1 are as follows:

For the Issuer:

Address: [                        ]

Attention: [                        ]

Telephone number: [                    ]

Fax number: [                    ]

Email: [                                        ]

For the Dealer:

Address: [                    ]

Attention: [                    ]

Telephone number: [                    ]

Fax number: [                    ]

Email: [                                        ]

Exhibit A

Form of Legend for Private Placement Memorandum and Notes

THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER APPLICABLE SECURITIES LAW, AND OFFERS AND SALES THEREOF MAY BE MADE ONLY IN COMPLIANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER WILL BE DEEMED TO REPRESENT THAT (I) IT HAS BEEN AFFORDED AN OPPORTUNITY TO INVESTIGATE MATTERS RELATING TO THE ISSUER AND THE NOTES, (II) IT IS NOT ACQUIRING SUCH NOTE WITH A VIEW TO ANY DISTRIBUTION THEREOF AND (III) IT IS EITHER (A)(1) AN INSTITUTIONAL INVESTOR OR SOPHISTICATED INDIVIDUAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a) UNDER THE ACT AND WHICH, IN THE CASE OF AN INDIVIDUAL, (i) POSSESSES SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT HE OR SHE IS CAPABLE OF EVALUATING AND BEARING THE ECONOMIC RISK OF AN INVESTMENT IN THE NOTES AND (ii) HAS NOT LESS THAN $5 MILLION IN INVESTMENTS (AN “INSTITUTIONAL ACCREDITED INVESTOR” OR “SOPHISTICATED INDIVIDUAL ACCREDITED INVESTOR”, RESPECTIVELY) AND (2)(i) PURCHASING NOTES FOR ITS OWN ACCOUNT, (ii) A BANK (AS DEFINED IN SECTION 3(a)(2) OF THE ACT) OR A SAVINGS AND LOAN ASSOCIATION OR OTHER INSTITUTION (AS DEFINED IN SECTION 3(a)(5)(A) OF THE ACT) ACTING IN ITS INDIVIDUAL OR FIDUCIARY CAPACITY OR (iii) A FIDUCIARY OR AGENT (OTHER THAN A U.S. BANK OR SAVINGS AND LOAN ASSOCIATION) PURCHASING NOTES FOR ONE OR MORE ACCOUNTS EACH OF WHICH ACCOUNTS IS SUCH AN INSTITUTIONAL ACCREDITED INVESTOR OR SOPHISTICATED INDIVIDUAL ACCREDITED INVESTOR; OR (B) A QUALIFIED INSTITUTIONAL BUYER (“QIB”) WITHIN THE MEANING OF RULE 144A UNDER THE ACT THAT IS ACQUIRING NOTES FOR ITS OWN ACCOUNT OR FOR ONE OR MORE ACCOUNTS, EACH OF WHICH ACCOUNTS IS A QIB; AND THE PURCHASER ACKNOWLEDGES THAT IT IS AWARE THAT THE SELLER MAY RELY UPON THE EXEMPTION FROM THE REGISTRATION PROVISIONS OF SECTION 5 OF THE ACT PROVIDED BY RULE 144A. BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER THEREOF SHALL ALSO BE DEEMED TO AGREE THAT ANY RESALE OR OTHER TRANSFER THEREOF WILL BE MADE ONLY (A) IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE ACT, EITHER (1) TO THE ISSUER OR TO A PLACEMENT AGENT DESIGNATED BY THE ISSUER AS A PLACEMENT AGENT FOR THE NOTES (COLLECTIVELY, THE “PLACEMENT AGENTS”), NONE OF WHICH SHALL HAVE ANY OBLIGATION TO ACQUIRE SUCH NOTE, (2) THROUGH A PLACEMENT AGENT TO AN INSTITUTIONAL ACCREDITED INVESTOR, SOPHISTICATED INDIVIDUAL ACCREDITED INVESTOR OR A QIB, OR (3) TO A QIB IN A TRANSACTION THAT MEETS THE REQUIREMENTS OF RULE 144A AND (B) IN MINIMUM AMOUNTS OF $250,000.

Exhibit B

Further Provisions Relating to Indemnification

(a) The Issuer agrees to reimburse each Indemnitee for all reasonable and documented expenses (including reasonable and documented fees and disbursements of external counsel) as they are incurred by it in connection with investigating or defending any loss, claim, damage, liability or action in respect of which indemnification may be sought under Section 5 of the Agreement (whether or not it is a party to any such proceedings).

(b) Promptly after receipt by an Indemnitee of notice of the existence of a Claim, such Indemnitee will, if a claim in respect thereof is to be made against the Issuer, notify the Issuer in writing of the existence thereof; provided that (i) the omission so to notify the Issuer will not relieve the Issuer from any liability which it may have hereunder unless and except to the extent it did not otherwise learn of such Claim and such failure results in the forfeiture by the Issuer of substantial rights and defenses, and (ii) the omission so to notify the Issuer will not relieve it from liability which it may have to an Indemnitee otherwise than on account of this indemnity agreement. In case any such Claim is made against any Indemnitee and it notifies the Issuer of the existence thereof, the Issuer will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the Indemnitee, to assume the defense thereof, with counsel reasonably satisfactory to such Indemnitee; provided that if the defendants in any such Claim include both the Indemnitee and the Issuer, and the Indemnitee shall have concluded that there may be legal defenses available to it which are different from or additional to those available to the Issuer, the Issuer shall not have the right to direct the defense of such Claim on behalf of such Indemnitee, and the Indemnitee shall have the right to select separate counsel to assert such legal defenses on behalf of such Indemnitee. Upon receipt of notice from the Issuer to such Indemnitee of the Issuer’s election so to assume the defense of such Claim and approval by the Indemnitee of counsel, the Issuer will not be liable to such Indemnitee for expenses incurred thereafter by the Indemnitee in connection with the defense thereof (other than reasonable costs of investigation) unless (i) the Indemnitee shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the Issuer shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel in the jurisdiction in which any Claim is brought), approved by the Dealer, representing the Indemnitee who is party to such Claim), (ii) the Issuer shall not have employed counsel reasonably satisfactory to the Indemnitee to represent the Indemnitee within a reasonable time after notice of existence of the Claim or (iii) the Issuer has authorized in writing the employment of counsel for the Indemnitee. The indemnity, reimbursement and contribution obligations of the Issuer hereunder shall be in addition to any other liability the Issuer may otherwise have to an Indemnitee and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Issuer and any Indemnitee. The Issuer agrees that without the Dealer’s prior written consent, it will not settle, compromise or consent to the entry of any judgment in any Claim in respect of which indemnification may be sought under the indemnification provision of the Agreement (whether or not the Dealer or any other Indemnitee is an actual or potential party to such Claim), unless such settlement, compromise or consent (i) includes an unconditional release of each Indemnitee from all liability arising out of such Claim and (ii) does not include a statement as to or an admission of fault, culpability or failure to act, by or on behalf of any Indemnitee.

Exhibit C

Statement of Terms for Interest – Bearing Commercial Paper Notes of [                    ]

THE PROVISIONS SET FORTH BELOW ARE QUALIFIED TO THE EXTENT APPLICABLE BY THE TRANSACTION SPECIFIC [PRICING] [PRIVATE PLACEMENT MEMORANDUM] SUPPLEMENT (THE “SUPPLEMENT”) (IF ANY) SENT TO EACH PURCHASER AT THE TIME OF THE TRANSACTION.

1. General. (a) The obligations of the Issuer to which these terms apply (each a “Note”) are represented by one or more Master Notes (each, a “Master Note”) issued in the name of (or of a nominee for) The Depository Trust Company (“DTC”), which Master Note includes the terms and provisions for the Issuer’s Interest-Bearing Commercial Paper Notes that are set forth in this Statement of Terms, since this Statement of Terms constitutes an integral part of the Underlying Records as defined and referred to in the Master Note.

(b) “Business Day” means any day other than a Saturday or Sunday that is neither a legal holiday nor a day on which banking institutions are authorized or required by law, executive order or regulation to be closed in New York City and, with respect to LIBOR Notes (as defined below) is also a London Business Day. “London Business Day” means, a day, other than a Saturday or Sunday, on which dealings in deposits in U.S. dollars are transacted in the London interbank market.

2. Interest. (a) Each Note will bear interest at a fixed rate (a “Fixed Rate Note”) or at a floating rate (a “Floating Rate Note”).

(b) The Supplement sent to each holder of such Note will describe the following terms: (i) whether such Note is a Fixed Rate Note or a Floating Rate Note and whether such Note is an Original Issue Discount Note (as defined below); (ii) the date on which such Note will be issued (the “Issue Date”); (iii) the Stated Maturity Date (as defined below); (iv) if such Note is a Fixed Rate Note, the rate per annum at which such Note will bear interest, if any, and the Interest Payment Dates; (v) if such Note is a Floating Rate Note, the Base Rate, the Index Maturity, the Interest Reset Dates, the Interest Payment Dates and the Spread and/or Spread Multiplier, if any (all as defined below), and any other terms relating to the particular method of calculating the interest rate for such Note; and (vi) any other terms applicable specifically to such Note. “Original Issue Discount Note” means a Note which has a stated redemption price at the Stated Maturity Date that exceeds its Issue Price by more than a specified de minimis amount and which the Supplement indicates will be an “Original Issue Discount Note”.

(c) Each Fixed Rate Note will bear interest from its Issue Date at the rate per annum specified in the Supplement until the principal amount thereof is paid or made available for payment. Interest on each Fixed Rate Note will be payable on the dates specified in the Supplement (each an “Interest Payment Date” for a Fixed Rate Note) and on the Maturity Date (as defined below). Interest on Fixed Rate Notes will be computed on the basis of a 360-day year of twelve 30-day months.

If any Interest Payment Date or the Maturity Date of a Fixed Rate Note falls on a day that is not a Business Day, the required payment of principal, premium, if any, and/or interest will be payable on the next succeeding Business Day, and no additional interest will accrue in respect of the payment made on that next succeeding Business Day.

(d) The interest rate on each Floating Rate Note for each Interest Reset Period (as defined below) will be determined by reference to an interest rate basis (a “Base Rate”) plus or minus a number of basis points (one basis point equals one-hundredth of a percentage point) (the “Spread”), if any, and/or multiplied by a certain percentage (the “Spread Multiplier”), if any, until the principal thereof is paid or made available for payment. The Supplement will designate which of the following Base Rates is applicable to the related Floating Rate Note: (a) the CD Rate (a “CD Rate Note”), (b) the Commercial Paper Rate (a “Commercial Paper Rate Note”), (c) the Federal Funds Rate (a “Federal Funds Rate Note”), (d) LIBOR (a “LIBOR Note”), (e) the Prime Rate (a “Prime Rate Note”), (f) the Treasury Rate (a “Treasury Rate Note”) or (g) such other Base Rate as may be specified in such Supplement.

The rate of interest on each Floating Rate Note will be reset daily, weekly, monthly, quarterly or semi-annually (the “Interest Reset Period”). The date or dates on which interest will be reset (each an “Interest Reset Date”) will be, unless otherwise specified in the Supplement, in the case of Floating Rate Notes which reset daily, each Business Day, in the case of Floating Rate Notes (other than Treasury Rate Notes) that reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes that reset weekly, the Tuesday of each week; in the case of Floating Rate Notes that reset monthly, the third Wednesday of each month; in the case of Floating Rate Notes that reset quarterly, the third Wednesday of March, June, September and December; and in the case of Floating Rate Notes that reset semiannually, the third Wednesday of the two months specified in the Supplement. If any Interest Reset Date for any Floating Rate Note is not a Business Day, such Interest Reset Date will be postponed to the next day that is a Business Day, except that in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Interest on each Floating Rate Note will be payable monthly, quarterly or semiannually (the “Interest Payment Period”) and on the Maturity Date. Unless otherwise specified in the Supplement, and except as provided below, the date or dates on which interest will be payable (each an “Interest Payment Date” for a Floating Rate Note) will be, in the case of Floating Rate Notes with a monthly Interest Payment Period, on the third Wednesday of each month; in the case of Floating Rate Notes with a quarterly Interest Payment Period, on the third Wednesday of March, June, September and December; and in the case of Floating Rate Notes with a semiannual Interest Payment Period, on the third Wednesday of the two months specified in the Supplement. In addition, the Maturity Date will also be an Interest Payment Date.

If any Interest Payment Date for any Floating Rate Note (other than an Interest Payment Date occurring on the Maturity Date) would otherwise be a day that is not a Business Day, such Interest Payment Date shall be postponed to the next day that is a Business Day, except that

in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day. If the Maturity Date of a Floating Rate Note falls on a day that is not a Business Day, the payment of principal and interest will be made on the next succeeding Business Day, and no interest on such payment shall accrue for the period from and after such maturity.

Interest payments on each Interest Payment Date for Floating Rate Notes will include accrued interest from and including the Issue Date or from and including the last date in respect of which interest has been paid, as the case may be, to, but excluding, such Interest Payment Date. On the Maturity Date, the interest payable on a Floating Rate Note will include interest accrued to, but excluding, the Maturity Date. Accrued interest will be calculated by multiplying the principal amount of a Floating Rate Note by an accrued interest factor. This accrued interest factor will be computed by adding the interest factors calculated for each day in the period for which accrued interest is being calculated. The interest factor (expressed as a decimal) for each such day will be computed by dividing the interest rate applicable to such day by 360, in the cases where the Base Rate is the CD Rate, Commercial Paper Rate, Federal Funds Rate, LIBOR or Prime Rate, or by the actual number of days in the year, in the case where the Base Rate is the Treasury Rate. The interest rate in effect on each day will be (i) if such day is an Interest Reset Date, the interest rate with respect to the Interest Determination Date (as defined below) pertaining to such Interest Reset Date, or (ii) if such day is not an Interest Reset Date, the interest rate with respect to the Interest Determination Date pertaining to the next preceding Interest Reset Date, subject in either case to any adjustment by a Spread and/or a Spread Multiplier.

The “Interest Determination Date” where the Base Rate is the CD Rate or the Commercial Paper Rate will be the second Business Day next preceding an Interest Reset Date. The Interest Determination Date where the Base Rate is the Federal Funds Rate or the Prime Rate will be the Business Day next preceding an Interest Reset Date. The Interest Determination Date where the Base Rate is LIBOR will be the second London Business Day next preceding an Interest Reset Date. The Interest Determination Date where the Base Rate is the Treasury Rate will be the day of the week in which such Interest Reset Date falls when Treasury Bills are normally auctioned. Treasury Bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is held on the following Tuesday or the preceding Friday. If an auction is so held on the preceding Friday, such Friday will be the Interest Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week.

The “Index Maturity” is the period to maturity of the instrument or obligation from which the applicable Base Rate is calculated.

The “Calculation Date,” where applicable, shall be the earlier of (i) the tenth calendar day following the applicable Interest Determination Date or (ii) the Business Day preceding the applicable Interest Payment Date or Maturity Date.

All times referred to herein reflect New York City time, unless otherwise specified.

The Issuer shall specify in writing to the Issuing and Paying Agent which party will be the calculation agent (the “Calculation Agent”) with respect to the Floating Rate Notes. The Calculation Agent will provide the interest rate then in effect and, if determined, the interest rate which will become effective on the next Interest Reset Date with respect to such Floating Rate Note to the Issuing and Paying Agent as soon as the interest rate with respect to such Floating Rate Note has been determined and as soon as practicable after any change in such interest rate.

All percentages resulting from any calculation on Floating Rate Notes will be rounded to the nearest one hundred-thousandth of a percentage point, with five-one millionths of a percentage point rounded upwards. For example, 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655). All dollar amounts used in or resulting from any calculation on Floating Rate Notes will be rounded, in the case of U.S. dollars, to the nearest cent or, in the case of a foreign currency, to the nearest unit (with one-half cent or unit being rounded upwards).

CD Rate Notes

“CD Rate” means the rate on any Interest Determination Date for negotiable certificates of deposit having the Index Maturity as published by the Board of Governors of the Federal Reserve System (the “FRB”) in “Statistical Release H.15(519), Selected Interest Rates” or any successor publication of the FRB (“H.15(519)”) under the heading “CDs (Secondary Market)”.

If the above rate is not published in H.15(519) by 3:00 p.m. on the Calculation Date, the CD Rate will be the rate on such Interest Determination Date set forth in the daily update of H.15(519), available through the world wide website of the FRB at http://www.federalreserve.gov/releases/h15/Update, or any successor site or publication or other recognized electronic source used for the purpose of displaying the applicable rate (“H.15 Daily Update”) under the caption “CDs (Secondary Market)”.

If such rate is not published in either H.15(519) or H.15 Daily Update by 3:00 p.m. on the Calculation Date, the Calculation Agent will determine the CD Rate to be the arithmetic mean of the secondary market offered rates as of 10:00 a.m. on such Interest Determination Date of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in New York City selected by the Calculation Agent for negotiable U.S. dollar certificates of deposit of major United States money center banks of the highest credit standing in the market for negotiable certificates of deposit with a remaining maturity closest to the Index Maturity in the denomination of $5,000,000.

If the dealers selected by the Calculation Agent are not quoting as set forth above, the CD Rate will remain the CD Rate then in effect on such Interest Determination Date.

Commercial Paper Rate Notes

“Commercial Paper Rate” means the Money Market Yield (calculated as described below) of the rate on any Interest Determination Date for commercial paper having the Index Maturity, as published in H.15(519) under the heading “Commercial Paper-Nonfinancial”.

If the above rate is not published in H.15(519) by 3:00 p.m. on the Calculation Date, then the Commercial Paper Rate will be the Money Market Yield of the rate on such Interest Determination Date for commercial paper of the Index Maturity as published in H.15 Daily Update under the heading “Commercial Paper-Nonfinancial”.

If by 3:00 p.m. on such Calculation Date such rate is not published in either H.15(519) or H.15 Daily Update, then the Calculation Agent will determine the Commercial Paper Rate to be the Money Market Yield of the arithmetic mean of the offered rates as of 11:00 a.m. on such Interest Determination Date of three leading dealers of U.S. dollar commercial paper in New York City selected by the Calculation Agent for commercial paper of the Index Maturity placed for an industrial issuer whose bond rating is “AA,” or the equivalent, from a nationally recognized statistical rating organization.

If the dealers selected by the Calculation Agent are not quoting as mentioned above, the Commercial Paper Rate with respect to such Interest Determination Date will remain the Commercial Paper Rate then in effect on such Interest Determination Date.

“Money Market Yield” will be a yield calculated in accordance with the following formula:

Money Market Yield =	D x 360	x 100
	360 – (D x M)

where “D” refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal and “M” refers to the actual number of days in the interest period for which interest is being calculated.

Federal Funds Rate Notes

“Federal Funds Rate” means the rate on any Interest Determination Date for federal funds as published in H.15(519) under the heading “Federal Funds (Effective)” and displayed on Moneyline Telerate (or any successor service) on page 120 (or any other page as may replace the specified page on that service) (“Telerate Page 120”).

If the above rate does not appear on Telerate Page 120 or is not so published by 3:00 p.m. on the Calculation Date, the Federal Funds Rate will be the rate on such Interest Determination Date as published in H.15 Daily Update under the heading “Federal Funds/(Effective)”.

If such rate is not published as described above by 3:00 p.m. on the Calculation Date, the Calculation Agent will determine the Federal Funds Rate to be the arithmetic mean of the rates for the last transaction in overnight U.S. dollar federal funds arranged by each of three leading brokers of Federal Funds transactions in New York City selected by the Calculation Agent prior to 9:00 a.m. on such Interest Determination Date.

If the brokers selected by the Calculation Agent are not quoting as mentioned above, the Federal Funds Rate will remain the Federal Funds Rate then in effect on such Interest Determination Date.

LIBOR Notes

The London Interbank offered rate (“LIBOR”) means, with respect to any Interest Determination Date, the rate for deposits in U.S. dollars having the Index Maturity that appears on the Designated LIBOR Page as of 11:00 a.m., London time, on such Interest Determination Date.

If no rate appears, LIBOR will be determined on the basis of the rates at approximately 11:00 a.m., London time, on such Interest Determination Date at which deposits in U.S. dollars are offered to prime banks in the London interbank market by four major banks in such market selected by the Calculation Agent for a term equal to the Index Maturity and in principal amount equal to an amount that in the Calculation Agent’s judgment is representative for a single transaction in U.S. dollars in such market at such time (a “Representative Amount”). The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR for such interest period will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in New York City, on such Interest Determination Date by three major banks in New York City, selected by the Calculation Agent, for loans in U.S. dollars to leading European banks, for a term equal to the Index Maturity and in a Representative Amount; provided, however, that if fewer than three banks so selected by the Calculation Agent are providing such quotations, the then existing LIBOR rate will remain in effect for such Interest Payment Period.

“Designated LIBOR Page” means the display designated as page “3750” on Moneyline Telerate (or such other page as may replace the 3750 page on that service or such other service or services as may be nominated by the British Bankers’ Association for the purposes of displaying London interbank offered rates for U.S. dollar deposits).

Prime Rate Notes

“Prime Rate” means the rate on any Interest Determination Date as published in H.15(519) under the heading “Bank Prime Loan”.

If the above rate is not published in H.15(519) prior to 3:00 p.m. on the Calculation Date, then the Prime Rate will be the rate on such Interest Determination Date as published in H.15 Daily Update opposite the caption “Bank Prime Loan”.

If the rate is not published prior to 3:00 p.m. on the Calculation Date in either H.15(519) or H.15 Daily Update, then the Calculation Agent will determine the Prime Rate to be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen US PRIME1 Page (as defined below) as such bank’s prime rate or base lending rate as of 11:00 a.m., on that Interest Determination Date.

If fewer than four such rates referred to above are so published by 3:00 p.m. on the Calculation Date, the Calculation Agent will determine the Prime Rate to be the arithmetic mean of the prime rates or base lending rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Interest Determination Date by three major banks in New York City selected by the Calculation Agent.

If the banks selected are not quoting as mentioned above, the Prime Rate will remain the Prime Rate in effect on such Interest Determination Date.

“Reuters Screen US PRIME1 Page” means the display designated as page “US PRIME1” on the Reuters Monitor Money Rates Service (or such other page as may replace the US PRIME1 page on that service for the purpose of displaying prime rates or base lending rates of major United States banks).

Treasury Rate Notes

“Treasury Rate” means:

(1) the rate from the auction held on the Interest Determination Date (the “Auction”) of direct obligations of the United States (“Treasury Bills”) having the Index Maturity specified in the Supplement under the caption “INVESTMENT RATE” on the display on Moneyline Telerate (or any successor service) on page 56 (or any other page as may replace that page on that service) (“Telerate Page 56”) or page 57 (or any other page as may replace that page on that service) (“Telerate Page 57”), or

(2) if the rate referred to in clause (1) is not so published by 3:00 p.m. on the related Calculation Date, the Bond Equivalent Yield (as defined below) of the rate for the applicable Treasury Bills as published in H.15 Daily Update, under the caption “U.S. Government Securities/Treasury Bills/Auction High”, or

(3) if the rate referred to in clause (2) is not so published by 3:00 p.m. on the related Calculation Date, the Bond Equivalent Yield of the auction rate of the applicable Treasury Bills as announced by the United States Department of the Treasury, or

(4) if the rate referred to in clause (3) is not so announced by the United States Department of the Treasury, or if the Auction is not held, the Bond Equivalent Yield of the rate on the particular Interest Determination Date of the applicable Treasury Bills as published in H.15(519) under the caption “U.S. Government Securities/Treasury Bills/Secondary Market”, or

(5) if the rate referred to in clause (4) not so published by 3:00 p.m. on the related Calculation Date, the rate on the particular Interest Determination Date of the applicable Treasury Bills as published in H.15 Daily Update, under the caption “U.S. Government Securities/Treasury Bills/Secondary Market”, or

(6) if the rate referred to in clause (5) is not so published by 3:00 p.m. on the related Calculation Date, the rate on the particular Interest Determination Date calculated by the Calculation Agent as the Bond Equivalent Yield of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m. on that Interest Determination Date, of three primary United States government securities dealers selected by the Calculation Agent, for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity specified in the Supplement, or

(7) if the dealers so selected by the Calculation Agent are not quoting as mentioned in clause (6), the Treasury Rate in effect on the particular Interest Determination Date.

“Bond Equivalent Yield” means a yield (expressed as a percentage) calculated in accordance with the following formula:

Bond Equivalent Yield =	D x N	x 100
	360 – (D x M)

where “D” refers to the applicable per annum rate for Treasury Bills quoted on a bank discount basis and expressed as a decimal, “N” refers to 365 or 366, as the case may be, and “M” refers to the actual number of days in the applicable Interest Reset Period.

3. Final Maturity. The “Stated Maturity Date” for any Note will be the date so specified in the Supplement, which shall be no later than 397 days from the date of issuance. On its Stated Maturity Date, or any date prior to the Stated Maturity Date on which the particular Note becomes due and payable by the declaration of acceleration, each such date being referred to as a “Maturity Date”, the principal amount of each Note, together with accrued and unpaid interest thereon, will be immediately due and payable.

4. Events of Default. The occurrence of any of the following shall constitute an “Event of Default” with respect to a Note: (i) default in any payment of principal of or interest on such Note which continues unpaid for five (5) days past a scheduled payment date (including on a redemption thereof); (ii) the Issuer makes any compromise arrangement with its creditors generally including the entering into any form of moratorium with its creditors generally; (iii) a court having jurisdiction shall enter a decree or order for relief in respect of the Issuer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or there shall be appointed a receiver, administrator, liquidator, custodian, trustee or sequestrator (or similar officer) with respect to the whole or substantially the whole of the assets of the Issuer and any such decree, order or appointment is not removed, discharged or withdrawn within 60 days thereafter; or (iv) the Issuer shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment of or taking possession by a receiver, administrator, liquidator, assignee, custodian, trustee or sequestrator (or similar official), with respect to the whole or substantially the whole of the assets of the Issuer or make any general assignment for the benefit of creditors. Upon the occurrence of an Event of Default, the principal of each obligation evidenced by such Note (together with interest accrued and unpaid thereon) shall become, without any notice or demand, immediately due and payable.

5. Obligation Absolute. No provision of the Issuing and Paying Agent Agreement under which the Notes are issued shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on each Note at the times, place and rate, and in the coin or currency, herein prescribed.

6. Supplement. Any term contained in the Supplement shall supercede any conflicting term contained herein.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Thomas E. Skains, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Piedmont Natural Gas Company, Inc.;

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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 (or persons performing the equivalent functions):

(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.

Date:	June 7, 2012	/s/ Thomas E. Skains
		Thomas E. Skains
		Chairman of the Board, President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Karl W. Newlin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Piedmont Natural Gas Company, Inc.;

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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 (or persons performing the equivalent functions):

(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.

Date:	June 7, 2012	/s/ Karl W. Newlin
		Karl W. Newlin
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY

ACT OF 2002

In connection with the Quarterly Report of Piedmont Natural Gas Company, Inc. (the “Company”), on Form 10-Q for the period ended April 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas E. Skains, Chairman of the Board, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) 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 of the Company.

June 7, 2012

/s/ Thomas E. Skains

Thomas E. Skains

Chairman of the Board, President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY

ACT OF 2002

In connection with the Quarterly Report of Piedmont Natural Gas Company, Inc. (the “Company”), on Form 10-Q for the period ended April 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Karl W. Newlin, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) 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 of the Company.

June 7, 2012

/s/ Karl W. Newlin

Karl W. Newlin

Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Capital Stock and ASR (Details) (USD $)	0 Months Ended		3 Months Ended
	Feb. 28, 2012	Jan. 05, 2012	Mar. 21, 2012
Capital Stock And Accelerated Share Repurchase Details [Abstract]
Stock Repurchased And Retired During Period Shares		800,000
Accelerated Share Repurchases Initial Price Paid Per Share		$ 33.77
Stock Repurchased During Period Value At Initial Price ASR Plan		$ 27,000,000
Accelerated Share Repurchases Discount On Weighted Average Purchase Price Per Share	$ 0.09		$ 0.09
Stock Repurchased During Period Shares Accelerated Share Repurchase Plan			800,000
Accelerated Share Repurchases Settlement Payment Or Receipt	$ (500,000)
Accelerated Share Repurchases Weighted Average Purchase Price Per Share Prior To Discount	$ 33.25
Accelerated Share Repurchases Final Price Paid Per Share	$ 33.16

XML

Business Segments Reconciliations To Statements Of Operations (Details) (USD $)	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Net Income [Abstract]
Income Before Income Taxes for Reportable Segments	$ 82,816,000	$ 78,303,000	$ 208,582,000	$ 217,629,000
Income Taxes	(32,624,000)	(30,895,000)	(82,163,000)	(85,781,000)
Net Income	50,192,000	47,408,000	126,419,000	131,848,000
Segment Reconciliation Abstract
Operating Income (Loss) Before Income Taxes	76,846,000	79,082,000	203,780,000	221,767,000
Utility Income Taxes	(28,090,000)	(26,179,000)	(75,311,000)	(78,114,000)
Non-utility Activities Before Income Taxes	26,000	24,000	132,000	143,000
Operating Income	$ 48,782,000	$ 52,927,000	$ 128,601,000	$ 143,796,000

XML

Variable Interest Entities (Details) (USD $)	Apr. 30, 2012	Oct. 31, 2011
Variable Interest Entity [Line Items]
Variable Interest Entity Nonconsolidated Carrying Amount Assets	$ 88,687,000	$ 85,121,000
Cardinal Pipeline Company [Member]
Variable Interest Entity [Line Items]
Variable Interest Entity Nonconsolidated Carrying Amount Assets	22,101,000	18,323,000
Pine Needle Company [Member]
Variable Interest Entity [Line Items]
Variable Interest Entity Nonconsolidated Carrying Amount Assets	18,680,000	18,690,000
South Star Energy Services [Member]
Variable Interest Entity [Line Items]
Variable Interest Entity Nonconsolidated Carrying Amount Assets	16,017,000	17,536,000
Piedmont Hardy Storage [Member]
Variable Interest Entity [Line Items]
Variable Interest Entity Nonconsolidated Carrying Amount Assets	$ 31,889,000	$ 30,572,000

XML

Business Segments (Tables)

3 Months Ended

Apr. 30, 2012

Business Segments Tables [Abstract]

Operations By Segment

		Regulated				Non-utility
In thousands		Utility				Activities				Total
		2012		2011		2012		2011		2012		2011
Three Months
Revenues from external customers	$	308,432	$	392,567	$	-	$	-	$	308,432	$	392,567
Margin		171,951		172,931		-		-		171,951		172,931
Operations and maintenance expenses		60,511		58,936		21		17		60,532		58,953
Income from equity method investments		-		-		11,652		12,384		11,652		12,384
Operating income (loss) before income taxes		76,872		79,106		(26)		(24)		76,846		79,082
Income before income taxes		71,189		65,932		11,627		12,371		82,816		78,303
Six Months
Revenues from external customers	$	780,272	$	1,044,623	$	-	$	-	$	780,272	$	1,044,623
Margin		392,187		402,937		-		-		392,187		402,937
Operations and maintenance expenses		118,908		109,994		44		47		118,952		110,041
Income from equity method investments		-		-		17,944		20,140		17,944		20,140
Operating income (loss) before income taxes		203,912		221,910		(132)		(143)		203,780		221,767
Income before income taxes		190,770		197,621		17,812		20,008		208,582		217,629

Segment Information To Consolidated Financial Statements Reconciliation Text Block

In thousands		Three Months				Six Months
		2012		2011		2012		2011
Operating Income:
Segment operating income before
income taxes	$	76,846	$	79,082	$	203,780	$	221,767
Utility income taxes		(28,090)		(26,179)		(75,311)		(78,114)
Non-utility activities before income taxes		26		24		132		143
Operating income	$	48,782	$	52,927	$	128,601	$	143,796

Schedule Of Reconciliation Income Before Taxes To Net Income [Table Text Block]

Net Income:
Income before income taxes for
reportable segments	$	82,816	$	78,303	$	208,582	$	217,629
Income taxes		(32,624)		(30,895)		(82,163)		(85,781)
Net income	$	50,192	$	47,408	$	126,419	$	131,848

XML

Earnings Per Share (Tables)

3 Months Ended

Apr. 30, 2012

Earnings Per Share Tables [Abstract]

Earnings Per Share Reconciliation

A reconciliation of basic and diluted EPS for the three months and six months ended April 30, 2012 and 2011 is presented below.

		Three Months				Six Months
In thousands except per share amounts		2012		2011		2012		2011
Net Income	$	50,192	$	47,408	$	126,419	$	131,848
Average shares of common stock outstanding for
basic earnings per share		71,731		71,824		71,931		72,012
Contingently issuable shares under incentive
compensation plans		295		237		295		267
Average shares of dilutive stock		72,026		72,061		72,226		72,279
Earnings Per Share of Common Stock:
Basic	$	0.70	$	0.66	$	1.76	$	1.83
Diluted	$	0.70	$	0.66	$	1.75	$	1.82

XML

Commitment & Contingencies (Details) (USD $)	3 Months Ended		3 Months Ended										3 Months Ended
	Apr. 30, 2012	Oct. 31, 1997	Apr. 30, 2012 Pipeline And Storage Capacity Contacts [Member] Maximum [Member]	Apr. 30, 2012 Pipeline And Storage Capacity Contacts [Member] Minimum [Member]	Apr. 30, 2012 Gas Supply Contracts [Member]	Apr. 30, 2012 Telecommunications And Technology Outsourcing Contracts [Member] Maximum [Member]	Apr. 30, 2012 Telecommunications And Technology Outsourcing Contracts [Member] Minimum [Member]	Apr. 30, 2012 Hickory North Carolina Site [Member]	Apr. 30, 2012 Reidsville North Carolina Site [Member]	Apr. 30, 2012 Nashville MGP Site [Member]	Apr. 30, 2012 Huntersville LNG Facility [Member]	Apr. 11, 2012 Huntersville LNG Facility [Member]	Apr. 30, 2012 Nashville LNG Facility [Member]
Commitment & Contingencies Details [Abstract]
Letters of Credit Issued and Outstanding	$ 2,900,000
Number Of Regulatory Commissions	3
MGP Sites Under Settlement		9
Site Contingency Unasserted Claims	0
MGP Sites Not Under Settlement	4
Site Contingency [Line Items]
Site Contingency Environmental Remediation Costs Recognized								1,400,000	600,000	1,500,000	3,200,000		500,000
Administrative Consent Order Fine												40,000
Administrative Consent Order Unpaid Annual Fees												18,000
Administrative Consent Order Investigative And Administrative Cost												1,860
Accrual For Environmental Loss Contingencies	2,400,000
MGP Facility Enviromental Liability	1,100,000
LNG Facility Liability	1,000,000
Under Ground Storage Tank Liability	$ 300,000
Long Term Purchase Commitment [Line Items]
Long Term Purchase Commitment Time Period			20 years	1 years	1.5 years	3 years	1 years

XML

Short Term Debt (Details) (USD $)	3 Months Ended	6 Months Ended
	Apr. 30, 2012	Apr. 30, 2012	Oct. 31, 2011
Line Of Credit Facility [Line Items]
Short-term debt	$ 80,000,000	$ 80,000,000	$ 331,000,000
Commercial Paper Reclassed Long Term Debt	300,000,000	300,000,000
Letter Of Credit [Member]
Line Of Credit Facility [Line Items]
Credit Facility Current Borrowing Capacity	10,000,000	10,000,000	10,000,000
Credit Facility Amount Outstanding	2,900,000	2,900,000	3,500,000
Short Term Credit Facilities [Member]
Line Of Credit Facility [Line Items]
Line of Credit Facility Interest Rate During Period	0.71%	0.94%
Short Term Credit Facilities [Member] | Maximum [Member]
Line Of Credit Facility [Line Items]
Line of Credit Facility Interest Rate During Period	1.17%	1.20%
Credit Facility Maximum Amount Outstanding During Period	460,000,000	475,500,000
Short Term Credit Facilities [Member] | Minimum [Member]
Line Of Credit Facility [Line Items]
Line of Credit Facility Interest Rate During Period	0.22%	0.22%
Credit Facility Minimum Amount Outstanding During Period	365,000,000	328,500,000
Three Year Revolving Credit Facility [Member]
Line Of Credit Facility [Line Items]
Credit Facility Current Borrowing Capacity	650,000,000	650,000,000
Maximum Facility	850,000,000	850,000,000
Line Of Credit Commitment Annual Fee	$30,000 plus fifteen basis points
Line Of Credit Facility Frequency Of Commitment Fee Payment	Annual
Maximum Unused Amount On Which Fees Are Payable	650,000,000
Credit Facility Amount Outstanding			331,000,000
Credit Facility Interest Rate Description	30-day LIBOR rate plus from 65 to 150 basis points
Line of Credit Facility Interest Rate During Period	1.15%	1.17%
Credit Facility Covenant Terms	total debt to total capitalization of no greater than 70%
Credit Facility Covenant Compliance	actual ratio was 50%
Line of Credit Facility, Expiration Date	1/25/2014
Three Year Revolving Credit Facility [Member] | Maximum [Member]
Line Of Credit Facility [Line Items]
Line of Credit Facility Interest Rate During Period	1.17%	1.20%
Credit Facility Maximum Amount Outstanding During Period	458,500,000	475,500,000
Three Year Revolving Credit Facility [Member] | Minimum [Member]
Line Of Credit Facility [Line Items]
Line of Credit Facility Interest Rate During Period	1.15%	1.15%
Credit Facility Minimum Amount Outstanding During Period	0	0
Commercial Paper [Member]
Line Of Credit Facility [Line Items]
Line of Credit Facility Interest Rate During Period	0.35%	0.35%
Commercial Paper	380,000,000	380,000,000
Short Term Borrowings Term	$650 million unsecured commercial paper (CP) program that is backstopped by the revolving syndicated credit facility. The notes issued under the CP program may have maturities not to exceed 397 days from the date of issuance. The amounts outstanding under the revolving syndicated credit facility and the CP program, either individually or in the aggregate, cannot exceed $650 million. Any borrowings under the CP program rank equally with our other unsubordinated and unsecured debt.
Debt Instrument, Maturity Date Range, Start	8 days
Debt Instrument, Maturity Date Range, End	28 days
Commercial Paper [Member] | Maximum [Member]
Line Of Credit Facility [Line Items]
Line of Credit Facility Interest Rate During Period	0.41%	0.41%
Credit Facility Maximum Amount Outstanding During Period	410,000,000	410,000,000
Commercial Paper [Member] | Minimum [Member]
Line Of Credit Facility [Line Items]
Line of Credit Facility Interest Rate During Period	0.22%	0.22%
Credit Facility Minimum Amount Outstanding During Period	$ 0	$ 0

XML

Business Segments (Details) (USD $)	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Segment Reporting Information [Line Items]
Revenues From External Customers	$ 308,432,000	$ 392,567,000	$ 780,272,000	$ 1,044,623,000
Margin	171,951,000	172,931,000	392,187,000	402,937,000
Operations And Maintenance Expenses	60,532,000	58,953,000	118,952,000	110,041,000
Income From Equity Method Investments	11,652,000	12,384,000	17,944,000	20,140,000
Operating Income (Loss) Before Income Taxes	76,846,000	79,082,000	203,780,000	221,767,000
Income Before Income Taxes	82,816,000	78,303,000	208,582,000	217,629,000
Regulated Operation [Member]
Segment Reporting Information [Line Items]
Revenues From External Customers	308,432,000	392,567,000	780,272,000	1,044,623,000
Margin	171,951,000	172,931,000	392,187,000	402,937,000
Operations And Maintenance Expenses	60,511,000	58,936,000	118,908,000	109,994,000
Income From Equity Method Investments	0	0	0	0
Operating Income (Loss) Before Income Taxes	76,872,000	79,106,000	203,912,000	221,910,000
Income Before Income Taxes	71,189,000	65,932,000	190,770,000	197,621,000
Non Utility Activities [Member]
Segment Reporting Information [Line Items]
Revenues From External Customers	0	0	0	0
Margin	0	0	0	0
Operations And Maintenance Expenses	21,000	17,000	44,000	47,000
Income From Equity Method Investments	11,652,000	12,384,000	17,944,000	20,140,000
Operating Income (Loss) Before Income Taxes	(26,000)	(24,000)	(132,000)	(143,000)
Income Before Income Taxes	$ 11,627,000	$ 12,371,000	$ 17,812,000	$ 20,008,000

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Significant Accounting Policies (Disclosure)

3 Months Ended

Apr. 30, 2012

Summary Of Significant Accounting Policies Details [Abstract]

Significant Accounting Policies Text Block

1.       Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The consolidated financial statements have not been audited. We have prepared the unaudited consolidated financial statements under the rules of the Securities and Exchange Commission (SEC). Therefore, certain financial information and note disclosures normally included in annual financial statements prepared in conformity with generally accepted accounting principles (GAAP) in the United States of America are omitted in this interim report under these SEC rules and regulations. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes included in our Form 10-K for the year ended October 31, 2011.

Seasonality and Use of Estimates

The unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair statement of financial position at April 30, 2012 and October 31, 2011, the results of operations for the three months and six months ended April 30, 2012 and 2011, cash flows for the six months ended April 30, 2012 and 2011 and stockholders' equity for the six months ended April 30, 2012 and 2011. Our business is seasonal in nature. The results of operations for the three months and six months ended April 30, 2012 do not necessarily reflect the results to be expected for the full year.

We make estimates and assumptions when preparing the consolidated financial statements. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates.

Significant Accounting Policies

Our accounting policies are described in Note 1 to the consolidated financial statements in our Form 10-K for the year ended October 31, 2011. There were no significant changes to those accounting policies during the six months ended April 30, 2012.

Rate-Regulated Basis of Accounting

Our utility operations are subject to regulation with respect to rates, service area, accounting and various other matters by the regulatory commissions in the states in which we operate. The accounting regulations provide that rate-regulated public utilities account for and report assets and liabilities consistent with the economic effect of the manner in which independent third-party regulators establish rates. In applying these regulations, we capitalize certain costs and benefits as regulatory assets and liabilities, respectively, in order to provide for recovery from or refund to utility customers in future periods.

Our regulatory assets are recoverable through either base rates or rate riders specifically authorized by a state regulatory commission. Base rates are designed to provide both a recovery of cost and a return on investment during the period the rates are in effect. As such, all of our regulatory assets are subject to review by the respective state regulatory commissions during any future rate proceedings. In the event that accounting for the effects of regulation were no longer applicable, we would recognize a write-off of the regulatory assets and regulatory liabilities that would result in an adjustment to net income. Our utility operations continue to recover their costs through cost-based rates established by the state regulatory commissions. As a result, we believe that the accounting prescribed under rate-based regulation remains appropriate. It is our opinion that all regulatory assets are recoverable in current rates or future rate proceedings.

Regulatory assets and liabilities in the consolidated balance sheets as of April 30, 2012 and October 31, 2011 are as follows.

		April 30,		October 31,
In thousands		2012		2011
Regulatory assets	$	212,413	$	200,135
Regulatory liabilities		482,005		466,953

Inter-company transactions have been eliminated in consolidation where appropriate; however, we have not eliminated inter-company profit on sales to affiliates and costs from affiliates in accordance with accounting regulations prescribed under rate-based regulation. For information on related party transactions, see Note 12 to the consolidated financial statements in this Form 10-Q.

Fair Value Measurements

The carrying values of cash and cash equivalents, receivables, short-term debt, accounts payable, accrued interest and other current liabilities approximate fair value as all amounts reported are to be collected or paid within one year. Our financial assets and liabilities are recorded at fair value. Theyconsist primarilyofderivatives that are recorded in the consolidated balance sheets in accordance with derivativeaccounting standards and marketable securities that are classified as trading securities and are held in rabbi trusts established for our deferred compensation plans.

Fair value is the price that would be received to sell an asset or paid to transfer a liability inan orderly transaction between market participants at the measurement date, or exit date. We utilize market data or assumptions that market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to thevaluation technique. These inputs can be readily observable, market corroborated or generallyunobservable. We primarily apply the market approach for fair value measurements andendeavor to utilize the best available information. Accordingly, we use valuation techniques thatmaximize the use of observable inputs and minimize the use of unobservable inputs.The fairvalue of our financial assets and liabilities are subject to potentially significant volatility based onchanges in market prices, the portfolio valuation of our contracts, as well as the maturity andsettlement of those contracts, and subsequent newly originated transactions, each of which directlyaffects the estimated fair value of our financial instruments. We are able to classify fair valuebalances based on the observance of those inputs in the fair value hierarchy levels asset forth in the fair value guidance.

For the fair value measurements of our derivatives and marketable securities, see Note 8 tothe consolidated financial statements in this Form 10-Q.For the fair value measurements of our benefit plan assets, see Note 9 to our Form 10-K for the year ended October 31, 2011. For further information on our fair value methodologies, see “Fair Value Measurements” in Note 1 to the consolidated financial statements in our Form 10-K for the year ended October 31, 2011. There were no significant changes to these fair value methodologies during the three months ended April 30, 2012.

Recently Issued Accounting Guidance

In May 2011, the Financial Accounting Standards Board (FASB) issued accounting guidance to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and International Financial Reporting Standards (IFRS). The amendments are not intended to change the application of the current fair value requirements, but to clarify the application of existing requirements. The guidance does change particular principles or requirements for measuring fair value or disclosing information about fair value measurements. To improve consistency, language has been changed to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way. This guidance, which we adopted this quarter, is effective for interim and annual periods beginning after December 15, 2011. The adoption of this disclosure guidance hadno material impact on our financial position, results of operations or cash flows.

In December 2011, the FASB issued accounting guidance to improve disclosures and make information more comparable to IFRS regarding the nature of an entity's rights of offset and related arrangements associated with its financial instruments and derivative instruments. The guidance requires an entity to disclose information about offsetting and related arrangements in tabular format to enable users of financial statements to understand the effect of those arrangements on the entity's financial position. The new disclosure requirements are effective for annual periods beginning after January 1, 2013 and interim periods therein and require retrospective application in all periods presented. We will adopt this offsetting disclosure guidance for the first quarter of our fiscal year ending October 31, 2014. The adoption of this guidance will have no impact on our financial position, results of operations or cash flows.

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Employee Benefit Plans (Details) (USD $)	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Qualified Pension [Member]
Defined Benefit Plan Net Periodic Benefit Cost [Abstract]
Service Cost	$ 2,475,000	$ 2,225,000	$ 4,950,000	$ 4,450,000
Interest Cost	2,650,000	2,700,000	5,300,000	5,400,000
Expected Return On Plan Assets	(5,125,000)	(5,150,000)	(10,250,000)	(10,300,000)
Amortization Of Transition Obligation	0	0	0	0
Amortization Of Prior Service (Credit) Cost	(550,000)	(550,000)	(1,100,000)	(1,100,000)
Amortization Of Actuarial Loss	1,375,000	775,000	2,750,000	1,550,000
Net Periodic Benefit Cost	825,000	0	1,650,000	0
Future Employee Benefit Plan Employer Contribution	0
Non Qualified Pension [Member]
Defined Benefit Plan Net Periodic Benefit Cost [Abstract]
Service Cost	10,000	11,000	20,000	23,000
Interest Cost	51,000	52,000	102,000	104,000
Expected Return On Plan Assets	0	0	0	0
Amortization Of Transition Obligation	0	0	0	0
Amortization Of Prior Service (Credit) Cost	20,000	5,000	40,000	10,000
Amortization Of Actuarial Loss	12,000	11,000	24,000	21,000
Net Periodic Benefit Cost	93,000	79,000	186,000	158,000
Future Employee Benefit Plan Employer Contribution	517,000
Other Benefits [Member]
Defined Benefit Plan Net Periodic Benefit Cost [Abstract]
Service Cost	347,000	350,000	693,000	699,000
Interest Cost	337,000	374,000	674,000	747,000
Expected Return On Plan Assets	(388,000)	(384,000)	(776,000)	(767,000)
Amortization Of Transition Obligation	167,000	167,000	334,000	334,000
Amortization Of Prior Service (Credit) Cost	0	0	0	0
Amortization Of Actuarial Loss	0	0	0	0
Net Periodic Benefit Cost	463,000	507,000	925,000	1,013,000
Future Employee Benefit Plan Employer Contribution	1,600,000
MPP Plan [Member]
Defined Contribution Plan Disclosure [Abstract]
Employee Benefit Plan Employer Contribution			500,000
DCR Plan [Member]
Defined Contribution Plan Disclosure [Abstract]
Defined Contribution Restoration and Voluntary Deferral Plan Recorded Liability	2,500,000
Employee Benefit Plan Employer Contribution			$ 400,000

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Employee Benefit Plans (Tables)

3 Months Ended

Apr. 30, 2012

Employee Benefit Plans Tables [Abstract]

Components Of Net Periodic Benefit Cost

Components of the net periodic benefit cost for our defined benefit pension plans and our other postretirement employee benefits (OPEB) plan for the three months ended April 30, 2012 and 2011 are presented below.

	Qualified Pension				Nonqualified Pension				Other Benefits
In thousands		2012		2011		2012		2011		2012		2011
Service cost	$	2,475	$	2,225	$	10	$	11	$	347	$	350
Interest cost		2,650		2,700		51		52		337		374
Expected return
on plan assets		(5,125)		(5,150)		-		-		(388)		(384)
Amortization of
transition obligation		-		-		-		-		167		167
Amortization of prior
service (credit) cost		(550)		(550)		20		5		-		-
Amortization of actuarial
loss		1,375		775		12		11		-		-
Total	$	825	$	-	$	93	$	79	$	463	$	507

Components of the net periodic benefit cost for our defined benefit pension plans and our OPEB plan for the six months ended April 30, 2012 and 2011 are presented below.

	Qualified Pension				Nonqualified Pension				Other Benefits
In thousands		2012		2011		2012		2011		2012		2011
Service cost	$	4,950	$	4,450	$	20	$	23	$	693	$	699
Interest cost		5,300		5,400		102		104		674		747
Expected return
on plan assets		(10,250)		(10,300)		-		-		(776)		(767)
Amortization of
transition obligation		-		-		-		-		334		334
Amortization of prior
service (credit) cost		(1,100)		(1,100)		40		10		-		-
Amortization of actuarial
loss		2,750		1,550		24		21		-		-
Total	$	1,650	$	-	$	186	$	158	$	925	$	1,013

Anticipated Employer Contribution To Benefit Plans

We anticipate that we will contribute the following amounts to our other plans in 2012.

In thousands
Nonqualified pension plan	$	517
Qualified pension plan		-
OPEB plan		1,600

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Financial Instruments & Related Fair Value (Tables)

3 Months Ended

Apr. 30, 2012

Financial Instruments And Related Fair Value Tables [Abstract]

Assets And Liabilities Measured And Recorded At Fair Value On Recurring Basis

The following table sets forth, by level of the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of April 30, 2012 and October 31, 2011.

Fair Value Measurements as of April 30, 2012
				Significant
		Quoted Prices		Other		Significant
		in Active		Observable		Unobservable		Total
		Markets		Inputs		Inputs		Carrying
In thousands		(Level 1)		(Level 2)		(Level 3)		Value
Recurring Fair Value Measurements:
Assets:
Derivatives held for distribution operations	$	2,606	$	-	$	-	$	2,606
Debt and equity securities held as trading securities:
Money markets		217		-		-		217
Mutual funds		2,150		-		-		2,150
Total recurring fair value assets	$	4,973	$	-	$	-	$	4,973

Fair Value Measurements as of October 31, 2011
			Significant
	Quoted Prices		Other		Significant
	in Active		Observable		Unobservable		Total
	Markets		Inputs		Inputs		Carrying
In thousands	(Level 1)		(Level 2)		(Level 3)		Value
Recurring Fair Value Measurements:
Assets:
Derivatives held for distribution operations	$	2,772	$	-	$	-	$	2,772
Debt and equity securities held as trading securities:
Money markets		217		-		-		217
Mutual funds		1,274		-		-		1,274
Total recurring fair value assets	$	4,263	$	-	$	-	$	4,263

Schedule Of Long Term Debt Fair Value Carrying Amount [Table Text Block]

The carrying amount and fair value of our long-term debt,including the current portion, which is classified within Level 2, are shown below.

			Carrying
In thousands			Amount		Fair Value
As of April 30, 2012	(1)	$	675,000	$	844,566
As of October 31, 2011			675,000		831,323
(1) This amount excludes $300,000 of debt under the CP program reclassified to "Long-term debt" in the consolidated balance sheets for presentation purposes, which approximates fair value. See Note 5 - Short-Term Debt Instruments for additional information.

Fair Value By Balance Sheet Grouping

The following table presents the fair value and balance sheet classification of our financial options for natural gas as of April 30, 2012 and October 31, 2011.

Fair Value of Derivative Instruments
		Fair Value		Fair Value
In thousands		April 30, 2012		October 31, 2011
Derivatives Not Designated as Hedging Instruments under Derivative Accounting Standards:
Asset Financial Instruments:
Current Assets - Gas purchase derivative assets (June 2012-May 2013)	$	2,606
Current Assets - Gas purchase derivative assets (December 2011-October 2012)			$	2,772

Impact Of Financial Instruments Would Have Had On Statement Of Operations

The following table presents the impact that financial instruments not designated as hedging instruments under derivative accounting standards would have had on our consolidated statements of comprehensive income for the three months and six months ended April 30, 2012 and 2011, absent the regulatory treatment under our approved PGA procedures.

									Location of Loss
									Recognized through
In thousands		Amount of Loss Recognized on Derivatives and Deferred Under PGA Procedures							PGA Procedures
		Three Months Ended				Six Months Ended
		April 30				April 30
		2012		2011		2012		2011
Gas purchase options	$	2,365	$	1,903	$	5,288	$	6,125	Cost of Gas

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Employee Share Based Plans (Details) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended		36 Months Ended		60 Months Ended
	Dec. 31, 2011	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011	Oct. 31, 2014	Dec. 15, 2013	Dec. 15, 2016	Dec. 15, 2015	Dec. 15, 2014	Oct. 31, 2011
Employee Share Based Plans Details [Abstract]
Unvested Shares Issued To CEO	64,700
Incentive Compensation Plan Common Stock Vested As Percentage Of Total Granted								50.00%	30.00%	20.00%
Compensation Expense		$ 501,000	$ 1,244,000	$ 2,075,000	$ 2,166,000
Liability		$ 6,976,000		$ 6,976,000							$ 5,015,000
Employee Stock Purchase Plan Exercise Price As A Percentage Of Fair Market Value		95.00%
Vesting Period For Common Stock Granted Years								5
Number Of Performance Periods Under ICP Plans Performance Awards						3
Number Of Performance Periods Under ICP Plans Retention Award							3
Maximum Statutory Withholdings Allowed		50.00%		50.00%

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Employee Share Based Plans (Tables)

3 Months Ended

Apr. 30, 2012

Employee Share Based Plans Tables [Abstract]

Compensation Expense And Liabilities

The compensation expense related to the incentive compensation plans for the three months and six months ended April 30, 2012 and 2011, and the amounts recorded as liabilities as of April 30, 2012 and October 31, 2011 are presented below.

		Three Months				Six Months
In thousands		2012		2011		2012		2011
Compensation expense	$	501	$	1,244	$	2,075	$	2,166
		April 30,		October 31,
		2012		2011
Liability	$	6,976	$	5,015

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Equity Method Investments (Tables)

3 Months Ended

Apr. 30, 2012

Equity Method Investments Tables [Abstract]

Related Party Transactions With Equity Method Investee Cardinal

For each period of thethree months and six months ended April 30, 2012 and 2011, these transportation costs and the amounts we owed Cardinal as of April 30, 2012 and October 31, 2011 are as follows.

		Three Months				Six Months
In thousands		2012		2011		2012		2011
Transportation costs	$	1,012	$	1,001	$	2,047	$	2,035
		April 30,		October 31,
		2012		2011
Trade accounts payable	$	337	$	349

Related Party Transactions With Equity Method Investee Pine Needle

For each period of the three monthsand six months ended April 30, 2012 and 2011, these gas storage costs and the amounts we owed Pine Needle as of April 30, 2012 and October 31, 2011 are as follows.

		Three Months				Six Months
In thousands		2012		2011		2012		2011
Gas storage costs	$	2,464	$	2,714	$	4,983	$	5,641
		April 30,		October 31,
		2012		2011
Trade accounts payable	$	821	$	849

Related Party Transactions With Equity Method Investee SouthStar

For each period of the three monthsand six months ended April 30, 2012 and 2011, our operating revenues from these sales and the amounts SouthStar owedus as of April 30, 2012 and October 31, 2011 are as follows.

		Three Months				Six Months
In thousands		2012		2011		2012		2011
Operating revenues	$	(26)	$	666	$	(139)	$	635
		April 30,		October 31,
		2012		2011
Trade accounts receivable	$	369	$	736

Related Party Transactions With Equity Method Investee Hardy

For each period of the three months and six months ended April 30, 2012 and 2011, these gas storage costs and the amounts we owed Hardy Storage as of April 30, 2012 and October 31, 2011 are as follows.

		Three Months				Six Months
In thousands		2012		2011		2012		2011
Gas storage costs	$	2,425	$	2,425	$	4,851	$	4,851
		April 30,		October 31,
		2012		2011
Trade accounts payable	$	808	$	808

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Consolidated Statements of Stockholders' Equity (Parentheticals) (USD $)	6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011
Consolidated Statements of Stockholders' Equity (Unaudited) [Abstract]
Dividends declared per share	$ 0.59	$ 0.57

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Variable Interest Entities (Tables)

3 Months Ended

Apr. 30, 2012

Variable Interest Entities Loss Exposure [Abstract]

Schedule Of Variable Interest Entities Investment Balances [Table Text Block]

As of April 30, 2012 and October 31, 2011,our investment balances are as follows.

		April 30,		October 31,
In thousands		2012		2011
Cardinal	$	22,101	$	18,323
Pine Needle		18,680		18,690
SouthStar		16,017		17,536
Hardy Storage		31,889		30,572
Total equity method investments in non-utility activities	$	88,687	$	85,121

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Marketable Securities (Details) (USD $)	Apr. 30, 2012	Oct. 31, 2011
Investment Measurement [Line Items]
Current trading securities (fair value)	$ 155,000	$ 52,000
Noncurrent trading securities (fair value)	2,212,000	1,439,000
Current trading securities(cost)	134,000	47,000
Noncurrent trading securities(cost)	1,992,000	1,324,000
Total trading (fair value)	2,367,000	1,491,000
Total trading securities(cost)	2,126,000	1,371,000
Balance Threshold For Payout Over Specified Time Period	25,000
Time Period Of Payout If Balance Exceeds Certain Threshold	5
Money markets
Investment Measurement [Line Items]
Current trading securities (fair value)	0	0
Noncurrent trading securities (fair value)	217,000	217,000
Current trading securities(cost)	0	0
Noncurrent trading securities(cost)	217,000	217,000
Total trading (fair value)	217,000	217,000
Mutual funds
Investment Measurement [Line Items]
Current trading securities (fair value)	155,000	52,000
Noncurrent trading securities (fair value)	1,995,000	1,222,000
Current trading securities(cost)	134,000	47,000
Noncurrent trading securities(cost)	1,775,000	1,107,000
Total trading (fair value)	$ 2,150,000	$ 1,274,000

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Consolidated Balance Sheets (USD $)	Apr. 30, 2012	Oct. 31, 2011
Utility Plant
Utility plant in service	$ 3,432,691,000	$ 3,377,310,000
Less accumulated depreciation	1,007,298,000	974,631,000
Utility plant in service, net	2,425,393,000	2,402,679,000
Construction work in progress	381,455,000	217,832,000
Plant held for future use	6,751,000	6,751,000
Total utility plant, net	2,813,599,000	2,627,262,000
Other Physical Property at cost, net	433,000	452,000
Current Assets
Cash and cash equivalents	10,369,000	6,777,000
Trade accounts receivable, net	77,444,000	57,035,000
Income taxes receivable	22,903,000	15,966,000
Other receivables	1,623,000	2,547,000
Unbilled utility revenues	18,229,000	28,715,000
Gas in storage	72,690,000	91,124,000
Materials, supplies and merchandise	1,117,000	1,368,000
Gas purchase derivative assets, at fair value	2,606,000	2,772,000
Amounts due from customers	49,685,000	38,649,000
Prepayments	18,572,000	39,128,000
Deferred income taxes	0	1,793,000
Other current assets	284,000	147,000
Total current assets	275,522,000	286,021,000
Noncurrent Assets
Equity method investments in non-utility activities	88,687,000	85,121,000
Goodwill	48,852,000	48,852,000
Marketable securities, at fair value	2,212,000	1,439,000
Overfunded postretirement asset	22,879,000	22,879,000
Regulatory asset for postretirement benefits	79,024,000	81,073,000
Unamortized debt expense	13,060,000	11,315,000
Regulatory cost of removal asset	20,221,000	19,336,000
Other noncurrent assets	59,710,000	58,791,000
Total noncurrent assets	334,645,000	328,806,000
Total Assets	3,424,199,000	3,242,541,000
Stockholders' equity
Cumulative preferred stock - no par value, 175 shares authorized	0	0
Common stock - no par value, shares authorized: 200,000; shares outstanding: 71,879 in 2012 and 72,318 in 2011	431,140,000	446,791,000
Retained earnings	634,563,000	550,584,000
Accumulated other comprehensive loss	(892,000)	(452,000)
Total stockholders' equity	1,064,811,000	996,923,000
Long-term debt	975,000,000	675,000,000
Total capitalization	2,039,811,000	1,671,923,000
Current Liabilities
Short-term debt	80,000,000	331,000,000
Trade accounts payable	75,942,000	85,721,000
Other accounts payable	27,434,000	43,959,000
Accrued interest	20,043,000	20,038,000
Customers' deposits	24,689,000	25,462,000
Deferred income taxes	31,269,000	0
General taxes accrued	10,487,000	21,262,000
Amounts due to customers	4,722,000	2,617,000
Other current liabilities	4,836,000	4,073,000
Total current liabilities	279,422,000	534,132,000
Noncurrent Liabilities
Deferred income taxes	565,701,000	512,961,000
Unamortized federal investment tax credits	1,829,000	2,004,000
Accumulated provision for postretirement benefits	14,743,000	14,671,000
Cost of removal obligations	479,927,000	466,000,000
Other noncurrent liabilities	42,766,000	40,850,000
Total noncurrent liabilities	1,104,966,000	1,036,486,000
Commitments and Contingencies (Note 9)	0	0
Total Capitalization and Liabilities	$ 3,424,199,000	$ 3,242,541,000

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Equity Method Investments (Details) (USD $)	0 Months Ended	3 Months Ended		6 Months Ended		16 Months Ended
	Jun. 01, 2012	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Jun. 22, 2012	Oct. 31, 2011
Cardinal Pipeline Company [Member]
Schedule Of Equity Method Investments [Line Items]
Equity Method Investment Ownership Percentage		21.49%		21.49%		21.49%
Pipeline Transportation Capacity Subscribed	53.00%	37.00%
Cardinal Firm Capacity Requirement Expansion Units	149,000
Cardinal Firm Capacity Requirement Expansion Value		$ 48,000,000
Cardinal System Capacity Increase	199,000
Equity Venture Contribution System Expansion		10,300,000
Cardinal Permanent Financing							45,000,000
Related Party Transaction Expenses From Transactions With Related Party		1,012,000	1,001,000	2,047,000	2,035,000
Due To Related Parties Current		337,000		337,000		337,000		349,000
Equity Contributions				3,400,000
Total Equity Contributions						9,600,000
Pine Needle Company [Member]
Schedule Of Equity Method Investments [Line Items]
Equity Method Investment Ownership Percentage		40.00%		40.00%		40.00%
Related Party Transaction Expenses From Transactions With Related Party		2,464,000	2,714,000	4,983,000	5,641,000
Due To Related Parties Current		821,000		821,000		821,000		849,000
South Star Energy Services [Member]
Schedule Of Equity Method Investments [Line Items]
Equity Method Investment Ownership Percentage		15.00%		15.00%		15.00%
Due From Related Parties Current		369,000		369,000		369,000		736,000
Related Party Transaction Revenues From Transactions With Related Party		(26,000)	666,000	(139,000)	635,000
Piedmont Hardy Storage [Member]
Schedule Of Equity Method Investments [Line Items]
Equity Method Investment Ownership Percentage		50.00%		50.00%		50.00%
Related Party Transaction Expenses From Transactions With Related Party		2,425,000	2,425,000	4,851,000	4,851,000
Due To Related Parties Current		$ 808,000		$ 808,000		$ 808,000		$ 808,000

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Consolidated Statements Of Cash Flows (USD $)	6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011
Cash Flows from Operating Activities
Net income	$ 126,419,000	$ 131,848,000
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	53,727,000	52,481,000
Amortization of investment tax credits	(175,000)	(185,000)
Allowance for doubtful accounts (provision)	2,447,000	3,767,000
Income from equity method investments	(17,944,000)	(20,140,000)
Distributions of earnings from equity method investments	12,164,000	13,177,000
Deferred income taxes, net	86,082,000	42,873,000
Changes in assets and liabilities
Gas purchase derivatives, at fair value	166,000	(2,780,000)
Receivables	(11,488,000)	(54,276,000)
Inventories	18,685,000	23,859,000
Amounts due from/to customers	(8,931,000)	79,235,000
Settlement of legal asset retirement obligations	(637,000)	(1,113,000)
Overfunded postretirement asset	0	(22,450,000)
Regulatory asset for postretirement benefits	2,049,000	814,000
Other assets	13,101,000	43,825,000
Accounts payable	(22,632,000)	(14,374,000)
Provision for postretirement benefits	72,000	385,000
Other liabilities	(8,632,000)	7,903,000
Net cash provided by operating activities	244,473,000	284,849,000
Cash Flows from Investing Activities
Utility construction expenditures	(220,256,000)	(89,428,000)
Allowance for funds used during construction	(10,476,000)	(3,675,000)
Contributions to equity method investments	(3,356,000)	(3,892,000)
Distributions of capital from equity method investments	4,850,000	8,968,000
Proceeds from sale of property	409,000	765,000
Investments in marketable securities	(701,000)	(450,000)
Other	350,000	992,000
Net cash used in investing activities	(229,180,000)	(86,720,000)
Cash Flows from Financing Activities
Borrowings under credit facility	345,000,000	944,000,000
Repayments under credit facility	(676,000,000)	(1,082,500,000)
Net borrowings - commercial paper	380,000,000	0
Retirement of long-term debt	0	(79,000)
Expenses related to issuance of debt	(2,448,000)	(2,155,000)
Issuance of common stock through dividend reinvestment and employee stock plans	10,802,000	10,426,000
Repurchases of common stock	(26,528,000)	(23,004,000)
Dividends paid	(42,494,000)	(41,104,000)
Other	(33,000)	(6,000)
Net cash used in financing activities	(11,701,000)	(194,422,000)
Net Increase in Cash and Cash Equivalents	3,592,000	3,707,000
Cash and Cash Equivalents at Beginning of Period	6,777,000	5,619,000
Cash and Cash Equivalents at End of Period	10,369,000	9,326,000
Accrued construction expenditures	3,776,000	5,045,000
Interest	22,878,000	25,758,000
Income Taxes
Income taxes paid	3,344,000	4,270,000
Income taxes refunded	0	1,865,000
Income taxes, net	$ 3,344,000	$ 2,405,000

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Regulatory Matters (Details) (Tennessee Regulatory Authority [Member], USD $)	3 Months Ended
	Jul. 31, 2012	May 07, 2012	Oct. 31, 2011	Feb. 26, 2010
Tennessee Regulatory Authority [Member]
Schedule Of Regulatory Matters [Line Items]
Proposed Rate Adjustment For Uncollected Franchise Fees				$ 2,900,000
Denial Of Proposed Rate Adjustment For Uncollected Franchise Fees			1,500,000
Denied Franchise Fees Recorded In Operations And Maintenance			1,500,000
Additional Recovery Franchise Fees		500,000
Allowed Franchise Fees Recorded In Operations And Maintenance	$ 500,000

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Business Segments (Disclosure)

3 Months Ended

Apr. 30, 2012

Business Segments Disclosure [Abstract]

Segment Reporting Disclosure Text Block

14.       Business Segments

We have two reportable business segments, regulated utility and non-utility activities. Our segments are identified based on products and services, regulatory environments and our current corporate organization and business decision-making activities. The regulated utility segment is the gas distribution business, including the operations of merchandising and its related service work and home warranty programs, with activities conducted by the parent company. Operations of our non-utility activities segment are comprised of our equity method investments in joint ventures that are held by our wholly owned subsidiaries.

Operations of the regulated utility segment are reflected in “Operating Income” in the consolidated statements ofcomprehensive income. Operations of the non-utility activities segment are included in the consolidated statements ofcomprehensive incomein “Income from equity method investments” and “Non-operating income.”

We evaluate the performance of the regulated utility segment based on margin, operations and maintenance expenses and operating income. We evaluate the performance of the non-utility activities segment based on earnings from the ventures. The basis of segmentation and the basis of the measurement of segment profit or loss are the same as reported in the consolidated financial statements in our Form 10-K for the year ended October 31, 2011.

Operations by segment for the three months and six months ended April 30, 2012 and 2011 are presented below.

		Regulated				Non-utility
In thousands		Utility				Activities				Total
		2012		2011		2012		2011		2012		2011
Three Months
Revenues from external customers	$	308,432	$	392,567	$	-	$	-	$	308,432	$	392,567
Margin		171,951		172,931		-		-		171,951		172,931
Operations and maintenance expenses		60,511		58,936		21		17		60,532		58,953
Income from equity method investments		-		-		11,652		12,384		11,652		12,384
Operating income (loss) before income taxes		76,872		79,106		(26)		(24)		76,846		79,082
Income before income taxes		71,189		65,932		11,627		12,371		82,816		78,303
Six Months
Revenues from external customers	$	780,272	$	1,044,623	$	-	$	-	$	780,272	$	1,044,623
Margin		392,187		402,937		-		-		392,187		402,937
Operations and maintenance expenses		118,908		109,994		44		47		118,952		110,041
Income from equity method investments		-		-		17,944		20,140		17,944		20,140
Operating income (loss) before income taxes		203,912		221,910		(132)		(143)		203,780		221,767
Income before income taxes		190,770		197,621		17,812		20,008		208,582		217,629

Reconciliations to the consolidated statements of comprehensive income for the three months and six months ended April 30, 2012 and 2011 are presented below.

In thousands		Three Months				Six Months
		2012		2011		2012		2011
Operating Income:
Segment operating income before
income taxes	$	76,846	$	79,082	$	203,780	$	221,767
Utility income taxes		(28,090)		(26,179)		(75,311)		(78,114)
Non-utility activities before income taxes		26		24		132		143
Operating income	$	48,782	$	52,927	$	128,601	$	143,796

Net Income:
Income before income taxes for
reportable segments	$	82,816	$	78,303	$	208,582	$	217,629
Income taxes		(32,624)		(30,895)		(82,163)		(85,781)
Net income	$	50,192	$	47,408	$	126,419	$	131,848

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Earnings Per Share (Details) (USD $)	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Earnings Per Share Reconciliation Of Basic And Diluted
Net Income	$ 50,192,000	$ 47,408,000	$ 126,419,000	$ 131,848,000
Average Shares Of Common Stock Outstanding For Basic Earnings Per Share	71,731,000	71,824,000	71,931,000	72,012,000
Contingently Issuable Shares Under Incentive Compensation Plans	295,000	237,000	295,000	267,000
Average Shares Of Dilutive Stock	72,026,000	72,061,000	72,226,000	72,279,000
Earnings Per Share Basic	$ 0.70	$ 0.66	$ 1.76	$ 1.83
Earnings Per Share Diluted	$ 0.70	$ 0.66	$ 1.75	$ 1.82

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Summary Of Significant Accounting Policies (Policies)

3 Months Ended

Apr. 30, 2012

Summary Of Significant Accounting Policies [Abstract]

Unaudited Interim Financial Information

Unaudited Interim Financial Information

The consolidated financial statements have not been audited. We have prepared the unaudited consolidated financial statements under the rules of the Securities and Exchange Commission (SEC). Therefore, certain financial information and note disclosures normally included in annual financial statements prepared in conformity with generally accepted accounting principles (GAAP) in the United States of America are omitted in this interim report under these SEC rules and regulations. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes included in our Form 10-K for the year ended October 31, 2011.

Seasonality

The unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair statement of financial position at April 30, 2012 and October 31, 2011, the results of operations for the three months and six months ended April 30, 2012 and 2011, cash flows for the six months ended April 30, 2012 and 2011 and stockholders' equity for the six months ended April 30, 2012 and 2011. Our business is seasonal in nature. The results of operations for the three months and six months ended April 30, 2012 do not necessarily reflect the results to be expected for the full year.

Use of Estimates

We make estimates and assumptions when preparing the consolidated financial statements. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates.

Rate Regulated Basis Of Accounting

Our utility operations are subject to regulation with respect to rates, service area, accounting and various other matters by the regulatory commissions in the states in which we operate. The accounting regulations provide that rate-regulated public utilities account for and report assets and liabilities consistent with the economic effect of the manner in which independent third-party regulators establish rates. In applying these regulations, we capitalize certain costs and benefits as regulatory assets and liabilities, respectively, in order to provide for recovery from or refund to utility customers in future periods.

Inter-company transactions have been eliminated in consolidation where appropriate; however, we have not eliminated inter-company profit on sales to affiliates and costs from affiliates in accordance with accounting regulations prescribed under rate-based regulation.

Fair Value Measurements

Our financial assets and liabilities are recorded at fair value. Theyconsist primarilyofderivatives that are recorded in the consolidated balance sheets in accordance with derivativeaccounting standards and marketable securities that are classified as trading securities and are held in rabbi trusts established for our deferred compensation plans.

Fair value is the price that would be received to sell an asset or paid to transfer a liability inan orderly transaction between market participants at the measurement date, or exit date. We utilize market data or assumptions that market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to thevaluation technique. These inputs can be readily observable, market corroborated or generallyunobservable. We primarily apply the market approach for fair value measurements andendeavor to utilize the best available information. Accordingly, we use valuation techniques thatmaximize the use of observable inputs and minimize the use of unobservable inputs.

Marketable Securities

The fair values of the equity securities are based on the quoted market prices as traded on the exchanges.

Earnings Per Share

We compute basic earnings per share (EPS) using the weighted average number of shares of common stock outstanding during each period. Shares of common stock to be issued under approved incentive compensation plans are contingently issuable shares, as determined by applying the treasury stock method, and are included in our calculation of diluted EPS.

Subsequent Events Policy Text Block

We monitor significant events occurring after the balance sheet date and prior to the issuance of the financial statements to determine the impacts, if any, of events on the financial statements to be issued.

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Consolidated Statements of Stockholders' Equity (USD $)	Total	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Stockholders' Equity, beginning balance at Oct. 31, 2010	$ 964,941,000	$ 445,640,000	$ 519,831,000	$ (530,000)
Common Stock, Shares, Outstanding, Beginning Balance at Oct. 31, 2010		72,282,000
Comprehensive Income
Net Income	131,848,000		131,848,000
Other comprehensive income (loss)	561,000			561,000
Total comprehensive income	132,409,000
Common Stock Issued	13,657,000	13,657,000
Common Stock Repurchased	(23,004,000)	(23,004,000)
Costs of Recission Offer	(6,000)		(6,000)
Tax Benefit from Dividends Paid On ESOP Shares	51,000		51,000
Dividends Declared	(41,104,000)		(41,104,000)
Common Stock Issued (Shares)		479,000
Common Stock Repurchased (Shares)		(800,000)
Stockholders' Equity, ending balance at Apr. 30, 2011	1,046,944,000	436,293,000	610,620,000	31,000
Common Stock, Shares, Outstanding, Ending Balance at Apr. 30, 2011		71,961,000
Stockholders' Equity, beginning balance at Oct. 31, 2011	996,923,000	446,791,000	550,584,000	(452,000)
Common Stock, Shares, Outstanding, Beginning Balance at Oct. 31, 2011	72,318,000	72,318,000
Comprehensive Income
Net Income	126,419,000		126,419,000
Other comprehensive income (loss)	(440,000)			(440,000)
Total comprehensive income	125,979,000
Common Stock Issued	10,877,000	10,877,000
Common Stock Repurchased	(26,528,000)	(26,528,000)
Tax Benefit from Dividends Paid On ESOP Shares	54,000		54,000
Dividends Declared	(42,494,000)		(42,494,000)
Common Stock Issued (Shares)		361,000
Common Stock Repurchased (Shares)		(800,000)
Stockholders' Equity, ending balance at Apr. 30, 2012	$ 1,064,811,000	$ 431,140,000	$ 634,563,000	$ (892,000)
Common Stock, Shares, Outstanding, Ending Balance at Apr. 30, 2012	71,879,000	71,879,000

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Consolidated Balance Sheets (Parentheticals) (USD $)	Apr. 30, 2012	Oct. 31, 2011
Consolidated Balance Sheets (Unaudited) [Abstract]
Other Physical Property accumulated depreciation	$ 825,000	$ 806,000
Allowance for doubtful accounts	$ 3,794,000	$ 1,347,000
Cumulative preferred stock no par value	$ 0	$ 0
Cumulative preferred stock shares authorized	175,000	175,000
Common stock no par value	$ 0	$ 0
Common stock shares authorized	200,000,000	200,000,000
Common stock shares outstanding	71,879,000	72,318,000

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Commitment & Contingencies (Disclosure)

3 Months Ended

Apr. 30, 2012

Commitments And Contingencies Disclosure [Abstract]

Commitments And Contingencies Disclosure Text Block

9.       Commitments and Contingent Liabilities

Long-term contracts

We routinely enter into long-term gas supply commodity and capacity commitments and other agreements that commit future cash flows to acquire services we need in our business. These commitments include pipeline and storage capacity contracts and gas supply contracts to provide service to our customers and telecommunication and information technology contracts and other purchase obligations. Costs arising from the gas supply commodity and capacity commitments, while significant, are pass-through costs to our customers and are generally fully recoverable through our PGA procedures. The time periods for pipeline and storage capacity contracts range from one totwentyyears. The time periods for gas supply contracts are up to 18 months.The time periods for the telecommunications and technology outsourcing contracts, maintenance fees for hardware and software applications, usage fees, local and long-distance costs and wireless service range fromonetothreeyears. Other purchase obligations consist primarily of commitments for pipeline products, vehicles, equipment and contractors.

Certain storage and pipeline capacity contracts require the payment of demand charges that are based on rates approved by the Federal Energy Regulatory Commission (FERC) in order to maintain our right to access the natural gas storage or the pipeline capacity on a firm basis during the contract term. The demand charges that are incurred in each period are recognized in the consolidated statements of comprehensive income as part of gas purchases and included in cost of gas.

Leases

We lease certain buildings, land and equipment for use in our operations under noncancelable operating leases. We account for these leases by recognizing the future minimum lease payments as expense on a straight-line basis over the respective minimum lease terms under current accounting practice.

Legal

We have only routine litigation in the normal course of business. We do not expect any of these routine litigation matters to have a material effect on our financial position, results of operations or cash flows.

Letters of Credit

We use letters of credit to guarantee claims from self-insurance under our generaland automobile liability policies. We had $2.9million in letters of credit that were issued and outstanding at April 30, 2012. Additional information concerning letters of credit is included in Note 5 to the consolidated financial statements in this Form 10-Q.

Environmental Matters

Our three regulatory commissions have authorized us to utilize deferral accounting in connection with environmental costs. Accordingly, we have established regulatory assets for actual environmental costs incurred and for estimated environmental liabilities recorded.

We are responsible for any third-party claims for personal injury, death, property damage and diminution of property value or natural resources regarding nine manufactured gas plant (MGP) sites that were a part of a 1997 settlement with a third party and several MGP sites retained by Progress Energy, Inc. in connection with our 2003 North Carolina Natural Gas Corporation acquisition. We know of no such pending or threatened claims.

There are four MGP sites located in Hickory and Reidsville, North Carolina, Nashville, Tennessee and Anderson, South Carolina that we have owned, leased or operated and for which we have an investigation and remediation liability. In fiscal year 2012, we have performed soil remediation work at our Reidsville site, and we will be performing a groundwater remediation assessment under our North Carolina Department of Environment and Natural Resources (NCDENR) approved plan. Remediation at this site is scheduled to be completed in our fiscal year 2012, and we have incurred $.6 million of remediation costs through April 30, 2012.

As part of a voluntary agreement with the NCDENR, we conducted and completed soil remediationfor the Hickory, North Carolina MGP site. The soil remediation report was filed with the NCDENR in October 2010. We continue to conduct periodic groundwater monitoring at this site in accordance with our site remediation plan.We have incurred $1.4 million of remediation costson this site through April 30, 2012.

In November 2008, we submitted our final report of the remediation of the Nashville MGP holding tank site to the Tennessee Department of Environment and Conservation (TDEC). Remediation has been completed, and a consent order imposing usage restrictions on the property was approved and signed by the TDECin June 2010. The public comment period has ended,and we continue to conductsemi-annual groundwater monitoring at the site per the final consent order.We have incurred $1.5 millionof remediation costs through April 30, 2012.

During 2008, we became aware of and began investigating soil and groundwater molecular sieve contamination concerns at our Huntersville liquefied natural gas (LNG) facility. The molecular sieve and the related contaminated soil were removed and properly disposed, and in June 2010, we received a determination letter from the NCDENR that no further soil remediation would be required at the site for this issue. In September 2011, we received a letter from the NCDENR indicating their desire to enter into an Administrative Consent Order (ACO) addressing the remaining groundwater issues at the site. On April 11, 2012, we entered into a no admit/no deny ACO that imposed a fine of $40,000, unpaid annual fees totaling $18,000and $1,860 for investigative and administrative costs. As part of the ACO, we will be required to develop a site assessment plan to determine the extent of the groundwater contamination related to the sieve burial, a groundwater remediation strategy and a groundwater and surface water site wide monitoring program. Upon acceptance by the NCDENR of the groundwater remediation strategy, we will then be required to develop a program for implementation of the strategywithin thirty days.

The Huntersville LNG facility also was originally coated with lead-based paint. As a precautionary measure to ensure that no lead contamination occurs, removal of lead-based paint from the site was initiated in spring 2010. We have incurred $3.2 millionthrough April 30, 2012 to remediate the Huntersville LNG site. The LNG tank is scheduled for lead-based paint removal in our fiscal year 2012. Additional facilities at our Huntersville LNG plant site are being evaluated for lead-based paint removal with work scheduled for our fiscal year 2012.

Our Nashville LNG facility was also originally coated with lead-based paint. We have incurred $.5 million of remediation costs through April 30, 2012. This work is scheduled to be completed in our fiscal year 2012.

We are transitioning away from owning and maintaining our own petroleum underground storage tanks (USTs). Our Charlotte, North Carolina resource center continues to operate USTs. During 2011, our Greenville, South Carolina and Greensboro and Salisbury, North Carolina resource centers hadtheir tanks removed, and we do not anticipate significant environmental remediation with respect to the removal process.The South Carolina Department of Health and Environmental Control requested that we conduct an initial groundwater assessment at our Greenville, South Carolina site to determine its current groundwater quality condition.This assessment is scheduled to be completed in our fiscal year 2012.As of April 30, 2012, our estimated undiscounted environmental liability for USTs for which we retain remediation responsibility is $.3 million.

As of April 30, 2012, our estimated undiscounted environmental liability totaled $2.4 million consisting of $1.1 million for the MGP sites for which we retain remediation responsibility, $1 million for the LNG facilities and $.3 million for the USTs not yet remediated. The costs we reasonably expect to incur are estimated using assumptions based on actual costs incurred, the timing of future payments and inflation factors, among others.

Further evaluation of the MGP, LNG and UST sites and removal of lead-based paint could significantly affect recorded amounts; however, we believe that the ultimate resolution of these matters will not have a material effect on our financial position, results of operations or cash flows.

Additional information concerning commitments and contingencies is set forth in Note 8to the consolidated financial statements of our Form 10-K for the year ended October 31, 2011.

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Document And Entity Information	3 Months Ended
	Apr. 30, 2012	Jun. 01, 2012
Document And Entity Information [Abstract]
Entity Registrant Name	PIEDMONT NATURAL GAS CO INC
Entity Central Index Key	0000078460
Document Type	10-Q
Document Period End Date	Apr. 30, 2012
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2012
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock Shares Outstanding		71,903,935

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Employee Benefit Plans (Disclosure)

3 Months Ended

Apr. 30, 2012

Employee Benefit Plans Disclosure [Abstract]

Pension And Other Postretirement Benefits Disclosure Text Block

10.       Employee Benefit Plans

Components of the net periodic benefit cost for our defined benefit pension plans and our other postretirement employee benefits (OPEB) plan for the three months ended April 30, 2012 and 2011 are presented below.

	Qualified Pension				Nonqualified Pension				Other Benefits
In thousands		2012		2011		2012		2011		2012		2011
Service cost	$	2,475	$	2,225	$	10	$	11	$	347	$	350
Interest cost		2,650		2,700		51		52		337		374
Expected return
on plan assets		(5,125)		(5,150)		-		-		(388)		(384)
Amortization of
transition obligation		-		-		-		-		167		167
Amortization of prior
service (credit) cost		(550)		(550)		20		5		-		-
Amortization of actuarial
loss		1,375		775		12		11		-		-
Total	$	825	$	-	$	93	$	79	$	463	$	507

Components of the net periodic benefit cost for our defined benefit pension plans and our OPEB plan for the six months ended April 30, 2012 and 2011 are presented below.

	Qualified Pension				Nonqualified Pension				Other Benefits
In thousands		2012		2011		2012		2011		2012		2011
Service cost	$	4,950	$	4,450	$	20	$	23	$	693	$	699
Interest cost		5,300		5,400		102		104		674		747
Expected return
on plan assets		(10,250)		(10,300)		-		-		(776)		(767)
Amortization of
transition obligation		-		-		-		-		334		334
Amortization of prior
service (credit) cost		(1,100)		(1,100)		40		10		-		-
Amortization of actuarial
loss		2,750		1,550		24		21		-		-
Total	$	1,650	$	-	$	186	$	158	$	925	$	1,013

In January 2012, we contributed $.5 million to the money purchase pension plan.We anticipate that we will contribute the following amounts to our other plans in 2012.

In thousands
Nonqualified pension plan	$	517
Qualified pension plan		-
OPEB plan		1,600

We have a defined contribution restoration(DCR) plan thatwe fund annually and that covers all officers at the vice president level and above. For the sixmonths ended April 30, 2012,we contributed $.4million to this plan.Participants may not contribute to the DCR plan. We have a voluntary deferral plan for the benefit of alldirector-levelemployees and officers; company contributions are not made to this plan. Both deferred compensation plans are funded through rabbi trusts with a bank as the trustee. As ofApril 30, 2012, we have a liability of $2.5 million for these plans.

See Note 7 and Note 8 to the consolidated financial statements in this Form 10-Q for information on the investments in marketable securities that are held in the trust.

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Consolidated Statements of Comprehensive Income (USD $)	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Consolidated Statements Of Comprehensive Income (Unaudited) [Abstract]
Operating Revenues	$ 308,432,000	$ 392,567,000	$ 780,272,000	$ 1,044,623,000
Cost of Gas	136,481,000	219,636,000	388,085,000	641,686,000
Margin	171,951,000	172,931,000	392,187,000	402,937,000
Operating Expenses
Operations and maintenance	60,511,000	58,936,000	118,908,000	109,994,000
Depreciation	25,269,000	25,425,000	51,447,000	50,472,000
General taxes	9,299,000	9,464,000	17,920,000	20,561,000
Utility income taxes	28,090,000	26,179,000	75,311,000	78,114,000
Total operating expenses	123,169,000	120,004,000	263,586,000	259,141,000
Operating Income	48,782,000	52,927,000	128,601,000	143,796,000
Other Income (Expense)
Income from equity method investments	11,652,000	12,384,000	17,944,000	20,140,000
Non-operating income	581,000	470,000	641,000	638,000
Non-operating expense	(626,000)	(794,000)	(1,047,000)	(1,179,000)
Income taxes	(4,534,000)	(4,716,000)	(6,852,000)	(7,667,000)
Total other income (expense)	7,073,000	7,344,000	10,686,000	11,932,000
Utility Interest Charges
Interest on long-term debt	10,005,000	12,071,000	20,028,000	24,171,000
Allowance for borrowed funds used during construction	(6,053,000)	(1,341,000)	(10,476,000)	(3,675,000)
Other	1,711,000	2,133,000	3,316,000	3,384,000
Total utility interest charges	5,663,000	12,863,000	12,868,000	23,880,000
Net Income	50,192,000	47,408,000	126,419,000	131,848,000
Other Comprehensive Income (Loss), net of tax
Unrealized gain (loss) from hedging activities of equity method investments, net of tax	(419,000)	(104,000)	(855,000)	81,000
Reclassification adjustment of realized gain (loss) from hedging activities of equity method investments included in net income, net of tax	(11,000)	87,000	415,000	480,000
Total other comprehensive income (loss)	(430,000)	(17,000)	(440,000)	561,000
Comprehensive Income	$ 49,762,000	$ 47,391,000	$ 125,979,000	$ 132,409,000
Average Shares of Common Stock
Basic	71,731,000	71,824,000	71,931,000	72,012,000
Diluted	72,026,000	72,061,000	72,226,000	72,279,000
Earnings Per Share of Common Stock
Basic	$ 0.70	$ 0.66	$ 1.76	$ 1.83
Diluted	$ 0.70	$ 0.66	$ 1.75	$ 1.82
Cash Dividends Per Share of Common Stock	$ 0.30	$ 0.29	$ 0.59	$ 0.57

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Short Term Debt (Disclosure)

3 Months Ended

Apr. 30, 2012

Short Term Debt Disclosure [Abstract]

Short Term Debt Text Block

5. Short-Term Debt Instruments

We have a $650 million three-year revolving syndicated credit facility that expires on January 25, 2014. The credit facility has an option to expand up to $850 million. We pay an annual fee of $30,000 plus fifteen basis points for any unused amount up to $650 million. The facility provides a line of credit for letters of credit of $10 million, of which $2.9 million and $3.5 million were issued and outstanding at April 30, 2012 and October 31, 2011, respectively. These letters of credit are used to guarantee claims from self-insurance under our general and automobile liability policies. The credit facility bears interest based on the 30-day LIBOR rate plus from 65 to 150 basis points, based on our credit ratings. Amounts borrowed are continuously renewable until the expiration of the facility in 2014 provided that we are in compliance with all terms of the agreement. Due to the seasonal nature of our business, amounts borrowed can vary significantly during the period. The entire balance that was outstanding under the revolving syndicated credit facility was paid off March 19, 2012.

On March 1, 2012, we established a $650 million unsecured commercial paper (CP) programthat is backstopped by therevolving syndicated credit facility. The notes issued under the CP program may have maturities not to exceed 397 days from the date of issuance. The amounts outstanding under the revolving syndicated credit facility and the CP program, either individually or in the aggregate, cannot exceed $650 million. Any borrowings under the CP program rank equally with our other unsubordinated and unsecured debt. The notes under the CP program are not registered andare being offered andissued pursuant to an exemption from registration.

As of April 30, 2012, we have $380 million of notes outstanding under the CP program with original maturities ranging from8 to 28 days from their dates of issuance. We will use the proceeds received from the notes we will issue in July and October 2012 to repay our short-term debt, as discussed in Note 4 to the consolidated financial statements in this Form 10-Q. As the notes under the CP program are expected to be refinanced with long-term debt, we have reclassified these notes, limited to the $300 million to be refinanced with private placement long-term debt, to “Long-term debt” in the consolidated balance sheets as of April 30, 2012, with the remaining balance of $80 million under the CP program included in “Short-term debt.”

Our outstanding short-term bank borrowings, as included in “Short-term debt” in the consolidated balance sheets, were $331 million, as of October 31, 2011, under our revolving syndicated credit facility in LIBOR cost-plus loans.

A summary of the short-term debt activity for the three and six months ended April 30, 2012 is as follows.

	Commercial Paper						Credit Facility						Total Borrowings
	Three			Six			Three			Six			Three			Six
In millions	Months			Months			Months			Months			Months			Months
Minimum amount outstanding during period (1)	$	-		$	-		$	-		$	-		$	365		$	328.5
Maximum amount outstanding during period (1)		410			410			458.5			475.5			460			475.5
Minimum interest rate during period (2)		0.22	%		0.22	%		1.15	%		1.15	%		0.22	%		0.22	%
Maximum interest rate during period		0.41	%		0.41	%		1.17	%		1.20	%		1.17	%		1.20	%
Weighted average interest rate during period		0.35	%		0.35	%		1.15	%		1.17	%		0.71	%		0.94	%
(1) During March, we were borrowing under both the credit facility and CP program for a portion of the month.
(2) This is the minimum rate when we were borrowing under the credit facility and/or CP program.

Our revolving syndicated credit facility's financial covenants require us to maintain a ratio of total debt to total capitalization of no greater than 70%, and our actual ratio was 50% at April 30, 2012.

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Earnings Per Share (Disclosure)

3 Months Ended

Apr. 30, 2012

Earnings Per Share of Common Stock

Earnings Per Share

3.       Earnings per Share

We compute basic earnings per share (EPS) using the weighted average number of shares of common stock outstanding during each period. Shares of common stock to be issued under approved incentive compensation plans are contingently issuable shares, as determined by applying the treasury stock method, and are included in our calculation of diluted EPS.

A reconciliation of basic and diluted EPS for the three months and six months ended April 30, 2012 and 2011 is presented below.

		Three Months				Six Months
In thousands except per share amounts		2012		2011		2012		2011
Net Income	$	50,192	$	47,408	$	126,419	$	131,848
Average shares of common stock outstanding for
basic earnings per share		71,731		71,824		71,931		72,012
Contingently issuable shares under incentive
compensation plans		295		237		295		267
Average shares of dilutive stock		72,026		72,061		72,226		72,279
Earnings Per Share of Common Stock:
Basic	$	0.70	$	0.66	$	1.76	$	1.83
Diluted	$	0.70	$	0.66	$	1.75	$	1.82

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Subsequent Events (Disclosure)

3 Months Ended

Apr. 30, 2012

Subsequent Events Disclosure [Abstract]

Schedule Of Subsequent Events Text Block

15. Subsequent Events

We monitor significant events occurring after the balance sheet date and prior to the issuance of the financial statements to determine the impacts, if any, of events on the financial statements to be issued. All subsequent events of which we are aware were evaluated. For information on subsequent event disclosure related to regulatory matters and equity method investments, see Note 2 and Note 12, respectively, to the consolidated financial statements.

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Employee Share Based Plans (Disclosure)

3 Months Ended

Apr. 30, 2012

Employee Share Based Plans Disclosure [Abstract]

Disclosure Of Compensation Related Costs Share Based Payments Text Block

11.       Employee Share-Based Plans

Underour shareholder approved Incentive Compensation Plan (ICP), eligible officers and other participants are awarded units that pay out depending upon the level of performance achieved by Piedmont during three-yearincentive plan performance periods. Distribution of those awards may be made in the form of shares of common stock and withholdings for payment of applicable taxes on the compensation. These plans require that a minimum threshold performance level be achieved in order for any award to be distributed. For the three months and six months ended April 30, 2012 and 2011, we recorded compensation expense, and as of April 30, 2012 and October 31, 2011, we have accrued a liability for these awards based on the fair market value of our stock at the end of each quarter. The liability is re-measured to market value at the settlement date.

In December 2010, a long-term retention stock unit award under theICP (where a stock unit equals one share of our common stock upon vesting) was approved for eligible officers and other participants to support our succession planning and retention strategies. This retention stock unit award will vest for participants who have met the retention requirements at the end of a three-year period ending in December 2013 in the form of shares of common stock and withholdings for payment of applicable taxes on the compensation. The Compensation Committee of our Board of Directors has the discretion to accelerate the vesting of a participant's units. For the three monthsand six months ended April 30, 2012 and 2011, we recorded compensation expense, and as of April 30, 2012 and October 31, 2011, we have accrued a liability for these awards based on the fair market value of our stock at the end of the quarter. The liability is re-measured to market value at the settlement date.

Also under our approved incentive plan, 64,700 unvested retention stock units were granted toour President and Chief Executive Officer in December 2011. During the five-year vesting period, any dividend equivalentswill accrue on these stock units and be converted into additional units at the same rate and based on the closing price on the same payment date as dividends on our common stock. The stock units willvest, payable in the form of shares of common stock and withholdings for payment of applicable taxes on the compensation,over a five-year period only if he is an employee on each vesting date.In accordance with the vesting schedule, 20% of the units vest on December 15, 2014, 30%of the units vest on December 15, 2015 and 50% of the unitsvest on December 15, 2016.For the three months and six months ended April 30, 2012, we recorded compensation expense, and as of April 30, 2012, we have accrued a liability for this award based on the fair market value of our stock at the end of the quarter. The liability is re-measured to market value at the settlement date.

At the time of distribution of awards under the ICP, the number of shares issuable is reduced by the withholdings for payment of applicable income taxes for each participant. The participant may elect income tax withholdings at or above the minimum statutory withholding requirements. The maximum withholdings allowed is 50%. To date, shares withheld for payment of applicable income taxes have been immaterial. We present these net shares issued in our consolidated statements of stockholders' equity.

The compensation expense related to the incentive compensation plans for the three months and six months ended April 30, 2012 and 2011, and the amounts recorded as liabilities as of April 30, 2012 and October 31, 2011 are presented below.

		Three Months				Six Months
In thousands		2012		2011		2012		2011
Compensation expense	$	501	$	1,244	$	2,075	$	2,166
		April 30,		October 31,
		2012		2011
Liability	$	6,976	$	5,015

On a quarterly basis, we issue shares of common stock under the employee stock purchase planand have accounted for the issuance as an equity transaction. The exercise price is calculated as 95% of the fair market value on the purchase date of each quarter where fair market value is determined by calculating the mean average of the high and low trading prices on the purchase date.

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Marketable Securities (Disclosure)

3 Months Ended

Apr. 30, 2012

Marketable Securities [Abstract]

Marketable Securities Disclosure

7.       Marketable Securities

We have marketable securities that are invested in money market and mutual funds that are liquid and actively traded on the exchanges. These securities are assets that are held in rabbi trusts established for our deferred compensation. For further information on the deferred compensation plans, see Note 10 to the consolidated financial statements in this Form 10-Q.

We have classified these marketable securities as trading securities since their inception as the assets are held in rabbi trusts. Trading securities are recorded at fair value on the consolidated balance sheets with any gains or losses recognized currently in earnings. We do not intend to engage in active trading of the securities, and participants in the deferred compensation plans may redirect their investments at any time. Any participant's account that exceeds $25,000 upon retirement will be paid over five years. An amount less than $25,000in a participant's account upon retirement will be paid in a lump sum. We have matched the current portion of the deferred compensation liability with the current asset and noncurrent deferred compensation liability with the noncurrent asset; the current portion is included in “Other current assets” in the consolidated balance sheets.

The money market investments in the trust approximate fair value due to the short period of time to maturity. The fair values of the equity securities are based on the quoted market prices as traded on the exchanges.The composition of these securities as of April 30, 2012and October 31, 2011is as follows.

	April 30, 2012				October 31, 2011
			Fair				Fair
In thousands	Cost		Value		Cost		Value
Current trading securities:
Money markets	$	-	$	-	$	-	$	-
Mutual funds		134		155		47		52
Total current trading securities		134		155		47		52
Noncurrent trading securities:
Money markets		217		217		217		217
Mutual funds		1,775		1,995		1,107		1,222
Total noncurrent trading securities		1,992		2,212		1,324		1,439
Total trading securities	$	2,126	$	2,367	$	1,371	$	1,491

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Long Term Debt (Disclosure)

3 Months Ended

Apr. 30, 2012

Long Term Debt Disclosure [Abstract]

Long Term Debt Text Block

4. Long-Term Debt Instruments

On March 27, 2012, we entered into an agreement to issue $300 millionof fifteen-year senior unsecured notes in a private placement with a blended interest rate of 3.54%. On or around July 16, 2012, we willissue $100 million with an interest rate of 3.47%. On or around October 15, 2012, we will issuethe remaining $200 million with an interest rate of 3.57%. Both issuances will mature on July 16, 2027. These proceeds will be used for general corporate purposes, including the repayment of short-term debt incurred in part for the funding of capital expenditures.

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Capital Stock (Disclosure)

3 Months Ended

Apr. 30, 2012

Capital Stock and Accelerated Share Repurchase [Abstract]

Capital Stock and Accelerated Share Repurchase [Text Block]

6.Capital Stock and Accelerated Share Repurchase

On January 4, 2012, we entered into an accelerated share repurchase (ASR) agreement where we purchased 800,000 shares of our common stock from an investment bank at the closing price that day of $33.77 per share. The settlement and retirement of those shares occurred on January 5, 2012. Total consideration paid to purchase the shares of $27 millionwas recorded in “Stockholders' equity” as a reduction in “Common stock” in the consolidated balance sheets.

As part of the ASR, we simultaneously entered into a forward sale contract with the investment bank that was expected to mature in52trading days, or March 21, 2012. Under the terms of the forward sale contract, the investment bank was required to purchase, in the open market, 800,000 shares of our common stock during the term of the contract to fulfill its obligation related to the shares it borrowed from third parties and sold to us. At settlement, we, at our option, were required to either pay cash or issue shares of our common stock to the investment bank if the investment bank's weighted average purchase price, less a $.09per share discount,was higher than the January 4, 2012 closing price. The investment bank was required to pay us either cash or shares of our common stock, at our option, if the investment bank's weighted average price, less a $.09per share discount, for the shares purchased was lower than the initial purchaseclosing price.At settlement on February 28, 2012, we received $.5 million from the investment bank and recorded this amount in “Stockholders' equity” as an addition to “Common Stock” in the consolidated balance sheets. The $.5 million was the difference between the investment bank's weighted average purchase price of $33.25 per share less a discount of $.09 per share for a settlement price of $33.16 per share and the initial purchase closing price of $33.77 per share multiplied by 800,000 shares.

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Financial Instruments & Related Fair Value (Disclosure)

3 Months Ended

Apr. 30, 2012

Financial Instruments And Risk Management Disclosure [Abstract]

Financial Instruments And Risk Management [Text Block]

8.       Financial Instruments and Related Fair Value

       Derivative Assets and Liabilities under Master Netting Arrangements

We maintain brokerage accounts to facilitate transactions that support our gas cost hedging plans. The accounting guidance related to derivatives and hedging requires that we use a gross presentation, based on our election, for the fair value amounts of our derivative instruments and the fair value of the right to reclaim cash collateral.We use long position gas purchase options to provide some level of protection for our customers in the event of significant commodity price increases. As of April 30, 2012 and October 31, 2011, we had long gas purchase options providing total coverage of 44.6 million dekatherms and 38.1 million dekatherms, respectively.  The long gas purchase options held at April 30, 2012 are for the period from June 2012 through May 2013.

       Fair Value Measurements

We use financial instruments to mitigate commodity price risk for our customers. We also have marketable securities that are held in rabbi trusts established for certain of our deferred compensation plans.In developing our fair value measurements of these financial instruments, we utilize market data or assumptions about risk and the risks inherent in the inputs to the valuation technique. Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. We classify fair value balances based on the observance of those inputs into the fair value hierarchy levels as set forth in the fair value accounting guidance and fully described in “Fair Value Measurements” in Note 1 to the consolidated financial statements in our Form 10-K for the year ended October 31, 2011.

The following table sets forth, by level of the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of April 30, 2012 and October 31, 2011.Financial assets and liabilities are classified in their entirety based on the lowest level of 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 consideration within the fair value hierarchy levels. We have had no transfers between any level during the three months ended April 30, 2012 and 2011.

Fair Value Measurements as of April 30, 2012
				Significant
		Quoted Prices		Other		Significant
		in Active		Observable		Unobservable		Total
		Markets		Inputs		Inputs		Carrying
In thousands		(Level 1)		(Level 2)		(Level 3)		Value
Recurring Fair Value Measurements:
Assets:
Derivatives held for distribution operations	$	2,606	$	-	$	-	$	2,606
Debt and equity securities held as trading securities:
Money markets		217		-		-		217
Mutual funds		2,150		-		-		2,150
Total recurring fair value assets	$	4,973	$	-	$	-	$	4,973

Fair Value Measurements as of October 31, 2011
			Significant
	Quoted Prices		Other		Significant
	in Active		Observable		Unobservable		Total
	Markets		Inputs		Inputs		Carrying
In thousands	(Level 1)		(Level 2)		(Level 3)		Value
Recurring Fair Value Measurements:
Assets:
Derivatives held for distribution operations	$	2,772	$	-	$	-	$	2,772
Debt and equity securities held as trading securities:
Money markets		217		-		-		217
Mutual funds		1,274		-		-		1,274
Total recurring fair value assets	$	4,263	$	-	$	-	$	4,263

Our utility segment derivative instruments are used in accordance with programs filed with or approved by the North Carolina Utility Commission (NCUC), the Public Service Commission of South Carolina (PSCSC)and the TRA to hedge the impact of market fluctuations in natural gasprices. These derivative instruments are accounted for at fair value each reporting period. In accordance with regulatory requirements, the net costs and the gains and losses related to these derivatives are reflected in purchased gas costs and ultimately passed through to customers through ourPGA procedures. In accordance with accounting provisions for rate-regulated activities, the unrecovered amounts related to these instruments are reflected as a regulatory asset or liability, as appropriate, in “Amounts due to customers” or “Amounts due from customers” in the consolidated balance sheets. These derivative instrumentsinclude exchange-traded derivative contracts. Exchange-traded contracts are generally based on unadjusted quoted prices in active markets and are classified within Level 1.

Trading securities include assets in rabbi trusts established for our deferred compensation plans and are included in “Marketable securities, at fair value” in the consolidated balance sheets. Securities classified within Level 1 include funds held in money market and mutual fundswhich are highly liquid and are actively traded on the exchanges.

In developing the fair value of our long-term debt, we use a discounted cash flow technique, consistently applied, that incorporates a developed discount rate using long-term debt similarly rated by credit rating agencies combined with the U.S. Treasury bench mark with consideration given to maturities, redemption terms and credit ratings similar to our debt issuances.The carrying amount and fair value of our long-term debt,including the current portion, which is classified within Level 2, are shown below.

			Carrying
In thousands			Amount		Fair Value
As of April 30, 2012	(1)	$	675,000	$	844,566
As of October 31, 2011			675,000		831,323
(1) This amount excludes $300,000 of debt under the CP program reclassified to "Long-term debt" in the consolidated balance sheets for presentation purposes, which approximates fair value. See Note 5 - Short-Term Debt Instruments for additional information.

Quantitative and Qualitative Disclosures

The costs of our financial price hedging options for natural gas and all other costs related to hedging activities of our regulated gas costs are recorded in accordance with our regulatory tariffs approved by our state regulatory commissions, and thus are not accounted for as hedging instruments under derivative accounting standards. As required by the accounting guidance, the fair value amounts are presented on a gross basis and do not reflect any netting of asset and liability amounts or cash collateral amounts under master netting arrangements.

The following table presents the fair value and balance sheet classification of our financial options for natural gas as of April 30, 2012 and October 31, 2011.

Fair Value of Derivative Instruments
		Fair Value		Fair Value
In thousands		April 30, 2012		October 31, 2011
Derivatives Not Designated as Hedging Instruments under Derivative Accounting Standards:
Asset Financial Instruments:
Current Assets - Gas purchase derivative assets (June 2012-May 2013)	$	2,606
Current Assets - Gas purchase derivative assets (December 2011-October 2012)			$	2,772

We purchase natural gas for our regulated operations for resale under tariffs approved by state regulatory commissions. We recover the cost of gas purchased for regulated operations through PGA procedures. Our risk management policies allow us to use financial instruments to hedge commodity price risks, but not for speculative trading. The strategy and objective of our hedging programs is to use these financial instruments to provide some level of protection against significant price increases. Accordingly, the operation of the hedging programs on the regulated utility segment as a result of the use of these financial derivatives is initially recorded as a component of deferred gas costs and recognized in the consolidated statements of comprehensive income as a component of cost of gas when the related costs are recovered through our rates.

The following table presents the impact that financial instruments not designated as hedging instruments under derivative accounting standards would have had on our consolidated statements of comprehensive income for the three months and six months ended April 30, 2012 and 2011, absent the regulatory treatment under our approved PGA procedures.

									Location of Loss
									Recognized through
In thousands		Amount of Loss Recognized on Derivatives and Deferred Under PGA Procedures							PGA Procedures
		Three Months Ended				Six Months Ended
		April 30				April 30
		2012		2011		2012		2011
Gas purchase options	$	2,365	$	1,903	$	5,288	$	6,125	Cost of Gas

In Tennessee, the cost of gas purchase options and all other costs related to hedging activities up to 1% of total annual gas costs are approved for recovery under the terms and conditions of our TIP approved by the TRA. In South Carolina, the costs of gas purchase options are subject to the terms and conditions of our gas hedging plan approved by the PSCSC. In North Carolina, the costs associated with our hedging program are treated as gas costs subject to an annual cost review proceeding by the NCUC.

Risk Management

Our financial derivative instruments do not contain material credit-risk-related or other contingent features that could require us to make accelerated payments.

We seek to identify, assess, monitor and manage risk in accordance with defined policies and procedures under an Enterprise Risk Management program. In addition, we have anEnergy Price Risk Management Committee that monitors compliance with our hedging programs, policies and procedures.

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Summary Of Significant Accounting Policies (Details) (USD $)	Apr. 30, 2012	Oct. 31, 2011
Summary Of Significant Accounting Policies Details [Abstract]
Regulatory Assets	$ 212,413,000	$ 200,135,000
Regulatory Liabilities	$ 482,005,000	$ 466,953,000

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Variable Interest Entities (Disclosure)

3 Months Ended

Apr. 30, 2012

Variable Interest Entities [Abstract]

Aggregation Of Variable Interest Entities Disclosures [Text Block]

13. Variable Interest Entities

Under accounting guidance, a variable interest entity (VIE) is a legal entity that conducts a business or holds property whose equity, by design, has any of the following characteristics: an insufficient amount of equity at risk to finance its activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or where equity owners do not receive expected losses or returns. An entity may have an interest in a VIE through ownership or other contractual rights or obligations and that interest changes as the entity's net assets change. The consolidating investor is the entity that has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

As of April 30, 2012, we have determined that we are not the primary beneficiary, as defined by the authoritative guidance related to consolidations, in any of our equity method investments, as discussed in Note 12 to the consolidated financial statements in this Form 10-Q. Based on our involvement in these investments, we do not have the power to direct the activities of these investments that most significantly impact the VIE's economic performance. As we are not the consolidating investor, we will continue to apply equity method accounting to these investments. Our maximum loss exposure related to these equity method investments is limited to our equity investment in each entity. As of April 30, 2012 and October 31, 2011,our investment balances are as follows.

		April 30,		October 31,
In thousands		2012		2011
Cardinal	$	22,101	$	18,323
Pine Needle		18,680		18,690
SouthStar		16,017		17,536
Hardy Storage		31,889		30,572
Total equity method investments in non-utility activities	$	88,687	$	85,121

We have also reviewed various lease arrangements, contracts to purchase, sell or deliver natural gas and other agreements in which we hold a variable interest. In these cases, we have determined that we are not the primary beneficiary of the related VIE because we do not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, or the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

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Short Term Debt (Tables)

3 Months Ended

Apr. 30, 2012

Short Term Debt Tables [Abstract]

Schedule of Line of Credit Facilities [Table Text Block]

A summary of the short-term debt activity for the three and six months ended April 30, 2012 is as follows.

	Commercial Paper						Credit Facility						Total Borrowings
	Three			Six			Three			Six			Three			Six
In millions	Months			Months			Months			Months			Months			Months
Minimum amount outstanding during period (1)	$	-		$	-		$	-		$	-		$	365		$	328.5
Maximum amount outstanding during period (1)		410			410			458.5			475.5			460			475.5
Minimum interest rate during period (2)		0.22	%		0.22	%		1.15	%		1.15	%		0.22	%		0.22	%
Maximum interest rate during period		0.41	%		0.41	%		1.17	%		1.20	%		1.17	%		1.20	%
Weighted average interest rate during period		0.35	%		0.35	%		1.15	%		1.17	%		0.71	%		0.94	%
(1) During March, we were borrowing under both the credit facility and CP program for a portion of the month.
(2) This is the minimum rate when we were borrowing under the credit facility and/or CP program.

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Financial Instruments & Related Fair Value (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2012 mmbtu	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011	Oct. 31, 2011 mmbtu
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Derivatives Held For Distribution Operations	$ 2,606,000		$ 2,606,000		$ 2,772,000
Total trading (fair value)	2,367,000		2,367,000		1,491,000
Total Fair Value Assets	4,973,000		4,973,000		4,263,000
Long Term Debt Fair Value	844,566,000		844,566,000		831,323,000
Long Term Debt Carrying Value	675,000,000		675,000,000		675,000,000
Commercial Paper Reclassed Long Term Debt	300,000,000		300,000,000
Gas Options Total Coverage	44,600,000				38,100,000
Amount Of Loss Recognized On Derivatives	2,365,000	1,903,000	5,288,000	6,125,000
Amount Of Loss Deferred Under PGA Procedures	2,365,000	1,903,000	5,288,000	6,125,000
Percentage Of Annual Gas Costs Approved For Recovery Under TIP	1.00%
Fair Value Measurement Transfers Between Levels Activity	0	0
Derivative [Line Items]
Gas Purchase Options Current Assets	2,606,000		2,606,000		2,772,000
Money markets
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Total trading (fair value)	217,000		217,000		217,000
Mutual funds
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Total trading (fair value)	2,150,000		2,150,000		1,274,000
Quoted Prices In Active Markets [Member]
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Derivatives Held For Distribution Operations	2,606,000		2,606,000		2,772,000
Total Fair Value Assets	4,973,000		4,973,000		4,263,000
Quoted Prices In Active Markets [Member] | Money markets
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Total trading (fair value)	217,000		217,000		217,000
Quoted Prices In Active Markets [Member] | Mutual funds
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Total trading (fair value)	2,150,000		2,150,000		1,274,000
Significant Other Observable Inputs [Member]
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Derivatives Held For Distribution Operations	0		0		0
Total Fair Value Assets	0		0		0
Significant Other Observable Inputs [Member] | Money markets
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Total trading (fair value)	0		0		0
Significant Other Observable Inputs [Member] | Mutual funds
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Total trading (fair value)	0		0		0
Significant Unobservable Inputs [Member]
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Derivatives Held For Distribution Operations	0		0		0
Total Fair Value Assets	0		0		0
Significant Unobservable Inputs [Member] | Money markets
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Total trading (fair value)	0		0		0
Significant Unobservable Inputs [Member] | Mutual funds
Fair Value Assets Measured On Recurring Basis Financial Statement Captions [Line Items]
Total trading (fair value)	$ 0		$ 0		$ 0

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Consolidated Statements of Comprehensive Income (Parentheticals) (USD $)	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Consolidated Statements Of Comprehensive Income (Unaudited) [Abstract]
Unrealized Gain (Loss) On Derivatives From Equity Method Investments Arising During Period Tax	$ (267,000)	$ (66,000)	$ (545,000)	$ 55,000
Reclassification Adjustment Of Realized Gain (Loss) From Hedging Activities Of Equity Method Investments Included In Net Income Tax	$ (7,000)	$ 56,000	$ 265,000	$ 308,000

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Regulatory Matters (Disclosure)

3 Months Ended

Apr. 30, 2012

Regulatory Matters Disclosure [Abstract]

Public Utilities Disclosure Text Block

2.       Regulatory Matters

On August30, 2011, we filed an annual report with the Tennessee Regulatory Authority (TRA) reflecting the shared gas costsavings from gains and losses derived from gas purchase benchmarking and secondary markettransactions for the twelve months ended June 30, 2011 under the Tennessee Incentive Plan (TIP). On March 13, 2012, the TRA Audit Staff filed their audit report, concluding that we had correctly calculated the June 30, 2011 incentive plan account balance. On March 26, 2012, the TRA approved the adoption of the audit report of the TRA Audit Staff.

On September30, 2011, we filed an annual report for the twelve months ended June 30, 2011with the TRA that reflected the transactions in the deferred gas cost account for the Actual Cost Adjustment (ACA)mechanism.On March 12, 2012, the TRA Audit Staff filed their report, concluding that we had correctly implemented the purchased gas adjustment (PGA) calculated in the ACA mechanism. On March 26, 2012, the TRA approved the adoption of the audit report of the TRA Audit Staff.

On February 26, 2010, we filed a petition with the TRA to adjust the applicable rate for thecollection of the Nashville franchise fee from certain customers. The proposed rate adjustmentwas calculated to recover the net $2.9 million of under-collected Nashville franchise fee paymentsas of May 31, 2009.In April 2010, the TRA passed a motion approving a new Nashville franchisefee rate designed to recover only the net under-collections that have accrued since June 1, 2005, which would deny recovery of $1.5 million for us. In October 2011, the TRA issued an orderdenying us the recovery of $1.5 million of franchise fees consistent with its April 2010 motion,and we recorded $1.5 million in operations and maintenance expenses.In November 2011, wefiled for reconsideration, which was granted on November 21, 2011. On February 13, 2012, a hearing on this matter was held before the TRA. On May 7, 2012, the TRA approved the recovery of an additional $.5 million in under-collected Nashville franchise fees covering years 2002 through May 2005, which we will record as a reduction in operations and maintenance expenses in our third quarter.

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Marketable Securities (Tables)

3 Months Ended

Apr. 30, 2012

Marketable Securities Tables [Abstract]

Marketable Securities Table

The composition of these securities as of April 30, 2012and October 31, 2011is as follows.

	April 30, 2012				October 31, 2011
			Fair				Fair
In thousands	Cost		Value		Cost		Value
Current trading securities:
Money markets	$	-	$	-	$	-	$	-
Mutual funds		134		155		47		52
Total current trading securities		134		155		47		52
Noncurrent trading securities:
Money markets		217		217		217		217
Mutual funds		1,775		1,995		1,107		1,222
Total noncurrent trading securities		1,992		2,212		1,324		1,439
Total trading securities	$	2,126	$	2,367	$	1,371	$	1,491

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Long Term Debt (Details)	0 Months Ended
	Mar. 27, 2012
Long Term Debt Activity [Line Items]
Long-term Debt, Description	agreement to issue $300 million of fifteen-year senior unsecured notes in a private placement with a blended interest rate of 3.54%. On or around July 16, 2012, we will issue $100 million with an interest rate of 3.47%. On or around October 15, 2012, we will issue the remaining $200 million with an interest rate of 3.57%. Both issuances will mature on July 16, 2027.

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Equity Method Investments (Disclosure)

3 Months Ended

Apr. 30, 2012

Equity Method Investments Disclosure [Abstract]

Equity Method Investments Disclosure Text Block

12.       Equity Method Investments

The consolidated financial statements include the accounts of wholly owned subsidiaries whose investments in joint venture, energy-related businesses are accounted for under the equity method. Our ownership interest in each entity is included in “Equity method investments in non-utility activities” in the consolidated balance sheets. Earnings or losses from equity method investments are included in “Income from equity method investments” in the consolidated statements ofcomprehensive income.

We own 21.49% of the membership interests in Cardinal Pipeline Company, L.L.C. (Cardinal), a North Carolina limited liability company. Cardinal owns and operates an intrastate natural gas pipeline in North Carolina and is regulated by the NCUC.

In October 2009, we reached an agreement with Progress Energy Carolinas, Inc. to provide natural gas delivery service to a power generation facility to be built at their Wayne County, North Carolina site. To provide the additional delivery service, we have executed an agreement with Cardinal, which was approved by the NCUC in May 2010, to expand our firm capacity requirement by 149,000 dekatherms per day to serve Progress Energy Carolinas. This will require Cardinal to spend an estimated $48 million for a new compressor station and expanded meter stations in order to increase the capacity of its system by up to 199,000 dekatherms per day of firm capacity for us and another customer. As an equity venture partner of Cardinal, we will invest an estimated $10.3 million in Cardinal's system expansion. Capital contributions related to this system expansion began in January 2011 and will continue on a periodic basis through September 2012. As of April 30, 2012, our current fiscal year contributionsrelated to this expansion were $3.4 million, and our total contributions related to this expansion were $9.6 million. Cardinal's expansion service for the project was placed into service on June 1, 2012.

Our natural gas delivery service for the Wayne County generation project was placed into service on June 1, 2012, and our service subscription to Cardinal's capacity following the system expansion increased from approximately 37% to approximately 53%. As the project has been placed into service, the members' capital will be replaced with up to $45 million in permanent financing, on or around June 22, 2012, at which time a portion of our capital contributions will be returned to us.

We have related party transactions as a transportation customer of Cardinal, and we record in cost of gas the transportation costs charged by Cardinal.For each period of thethree months and six months ended April 30, 2012 and 2011, these transportation costs and the amounts we owed Cardinal as of April 30, 2012 and October 31, 2011 are as follows.

		Three Months				Six Months
In thousands		2012		2011		2012		2011
Transportation costs	$	1,012	$	1,001	$	2,047	$	2,035
		April 30,		October 31,
		2012		2011
Trade accounts payable	$	337	$	349

We own 40% of the membership interests in Pine Needle LNG Company, L.L.C. (Pine Needle), aNorth Carolina limited liability company. Pine Needle owns aninterstateLNG storage facility in North Carolina and is regulated by the FERC.

We have related party transactions as a customer of Pine Needle, and we record in cost of gas the storage costs charged by Pine Needle. For each period of the three monthsand six months ended April 30, 2012 and 2011, these gas storage costs and the amounts we owed Pine Needle as of April 30, 2012 and October 31, 2011 are as follows.

		Three Months				Six Months
In thousands		2012		2011		2012		2011
Gas storage costs	$	2,464	$	2,714	$	4,983	$	5,641
		April 30,		October 31,
		2012		2011
Trade accounts payable	$	821	$	849

We own 15% of the membership interestsin SouthStar Energy Services LLC (SouthStar), a Delaware limited liability company. The other member is Georgia Natural Gas Company (GNGC), a wholly-owned subsidiary of AGL Resources, Inc.SouthStar primarily sells natural gas to residential, commercial and industrial customers in the southeastern United States and Ohio with most of its business being conducted in the unregulated retail gas market in Georgia. We account for our investment in SouthStar using the equity method, as we haveboard representation with voting rights equal to GNGC on significant governance matters and policy decisions, and thus, exercise significant influence over the operations of SouthStar.

We have related party transactions as we sell wholesale gas supplies to SouthStar, and we record in operating revenues the amounts billed to SouthStar. For each period of the three monthsand six months ended April 30, 2012 and 2011, our operating revenues from these sales and the amounts SouthStar owedus as of April 30, 2012 and October 31, 2011 are as follows.

		Three Months				Six Months
In thousands		2012		2011		2012		2011
Operating revenues	$	(26)	$	666	$	(139)	$	635
		April 30,		October 31,
		2012		2011
Trade accounts receivable	$	369	$	736

Piedmont Hardy Storage Company, LLC, a wholly owned subsidiary of Piedmont, owns 50% of the membership interests in Hardy Storage Company, LLC (Hardy Storage), a West Virginia limited liability company. Hardy Storage owns and operates an underground interstate natural gas storage facility located in Hardy and Hampshire Counties, West Virginia, that is regulated by the FERC.

We have related party transactions as a customer of Hardy Storage and record in cost of gas the storage costs charged by Hardy Storage.For each period of the three months and six months ended April 30, 2012 and 2011, these gas storage costs and the amounts we owed Hardy Storage as of April 30, 2012 and October 31, 2011 are as follows.

		Three Months				Six Months
In thousands		2012		2011		2012		2011
Gas storage costs	$	2,425	$	2,425	$	4,851	$	4,851
		April 30,		October 31,
		2012		2011
Trade accounts payable	$	808	$	808