Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 22, 2019 | |
Document Information [Line Items] | ||
Entity Registrant Name | ONE Gas, Inc. | |
Entity Central Index Key | 0001587732 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 52,686,634 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 |
STATEMENTS OF INCOME
STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Regulated Operating Revenue | $ 661,000 | $ 638,464 |
Cost of natural gas | 365,076 | 350,419 |
Operating expenses | ||
Operations and maintenance | 108,275 | 102,665 |
Depreciation and amortization | 43,846 | 38,890 |
General taxes | 16,184 | 16,200 |
Total operating expenses | 168,305 | 157,755 |
Operating income | 127,619 | 130,290 |
Other expense, net | 429 | (2,164) |
Interest expense, net | (15,786) | (12,352) |
Income before income taxes | 112,262 | 115,774 |
Income taxes | (18,602) | (24,939) |
Net income | $ 93,660 | $ 90,835 |
Earnings per share | ||
Basic | $ 1.77 | $ 1.73 |
Diluted | $ 1.76 | $ 1.72 |
Weighted Average Number of Shares Outstanding, Basic [Abstract] | ||
Basic | 52,825 | 52,604 |
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||
Diluted | 53,206 | 52,897 |
Dividends declared per share of stock | $ 0.50 | $ 0.46 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF COMPREHENSIVE INCOME Parenthetical - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
STATEMENTS OF COMPREHENSIVE INCOME Parenthetical [Abstract] | ||
Pension and other postemployment benefit plans, tax | $ (53) | $ (351) |
STATEMENTS OF COMPREHENSIVE I_2
STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net income | $ 93,660 | $ 90,835 |
Other comprehensive income (loss), net of tax | ||
Change in pension and postemployment benefit plan liability, net of tax of $(53) and (351), respectively | 160 | (80) |
Other comprehensive income, net of tax | 160 | (80) |
Comprehensive income | $ 93,820 | $ 90,755 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Document Fiscal Year Focus | 2019 | |
Property, plant and equipment | ||
Property, plant and equipment | $ 6,148,394 | $ 6,073,143 |
Accumulated depreciation and amortization | 1,816,480 | 1,789,431 |
Net property, plant and equipment | 4,331,914 | 4,283,712 |
Current assets | ||
Cash and cash equivalents | 19,628 | 21,323 |
Accounts receivable, net | 338,082 | 295,421 |
Materials and supplies | 46,895 | 44,333 |
Natural gas in storage | 51,475 | 107,295 |
Regulatory assets | 38,760 | 54,420 |
Other current assets | 21,430 | 20,495 |
Total current assets | 516,270 | 543,287 |
Goodwill and other assets | ||
Regulatory assets | 429,518 | 437,479 |
Goodwill | 157,953 | 157,953 |
Other assets | 88,637 | 46,211 |
Total goodwill and other assets | 676,108 | 641,643 |
Total assets | 5,524,292 | 5,468,642 |
Equity and long-term debt | ||
Common stock, $0.01 par value: authorized 250,000,000 shares; issued and outstanding 52,686,634 shares at March 31, 2019; issued 52,598,005 and outstanding 52,564,902 shares at December 31, 2018 | 527 | 526 |
Paid-in Capital | 1,720,220 | 1,727,492 |
Retained earnings | 389,177 | 320,869 |
Accumulated other comprehensive income (loss) | (5,144) | (4,086) |
Treasury stock, at cost: 33,103 shares at December 31, 2018 | 0 | (2,145) |
Total equity | 2,104,780 | 2,042,656 |
Long-term debt, excluding current maturities and net issuance costs of $11,368 and $11,457, respectively | 1,285,587 | 1,285,483 |
Total equity and long-term debt | 3,390,367 | 3,328,139 |
Current liabilities | ||
Notes payable | 295,500 | 299,500 |
Accounts payable | 119,629 | 174,510 |
Accrued taxes other than income | 51,903 | 47,640 |
Regulatory Liability, Current | 54,791 | 48,394 |
Customer deposits | 62,401 | 61,183 |
Other current liabilities | 73,967 | 67,664 |
Total current liabilities | 658,191 | 698,891 |
Deferred credits and other liabilities [Abstract] | ||
Deferred income taxes | 666,438 | 652,426 |
Regulatory Liability, Noncurrent | 511,743 | 520,866 |
Employee benefit obligations | 173,296 | 178,720 |
Other deferred credits | 124,257 | 89,600 |
Total deferred credits and other liabilities | 1,475,734 | 1,441,612 |
Commitments and contingencies | ||
Total liabilities and equity | 5,524,292 | 5,468,642 |
Over-recovered purchased-gas costs [Member] | ||
Current liabilities | ||
Regulatory Liability, Current | 14,197 | 13,668 |
Deferred credits and other liabilities [Abstract] | ||
Regulatory Liability, Noncurrent | $ 0 | $ 0 |
BALANCE SHEETS BALANCE SHEETS P
BALANCE SHEETS BALANCE SHEETS Parenthetical - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 52,686,634 | 52,598,005 |
Common stock, shares outstanding | 52,686,634 | 52,564,902 |
Treasury stock, shares | 0 | 33,103 |
Debt issuance costs | $ 11,368 | $ 11,457 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating activities | ||
Net income | $ 93,660 | $ 90,835 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 43,846 | 38,890 |
Deferred income taxes | 4,828 | 24,077 |
Share-based compensation expense | 1,954 | 1,945 |
Provision for doubtful accounts | 2,263 | 2,722 |
Changes in assets and liabilities: | ||
Accounts receivable | (44,924) | (7,447) |
Materials and supplies | (2,562) | 4,610 |
Natural gas in storage | 55,820 | 79,598 |
Asset removal costs | (11,169) | (7,436) |
Accounts payable | (53,172) | (56,409) |
Accrued taxes other than income | 4,263 | 6,147 |
Customer deposits | 1,218 | 1,050 |
Regulatory assets and liabilities | 29,090 | 83,724 |
Other assets and liabilities | (2,824) | (39,022) |
Cash provided by operating activities | 122,291 | 223,284 |
Investing activities | ||
Capital expenditures | (83,303) | (86,599) |
Other | (3,040) | 0 |
Cash used in investing activities | (86,343) | (86,599) |
Financing activities | ||
Repayments of notes payable, net | (4,000) | (74,608) |
Dividends paid | (26,343) | (24,137) |
Tax withholdings related to net share settlements of stock compensation | (7,300) | (7,817) |
Cash used in financing activities | (37,643) | (106,562) |
Change in cash and cash equivalents | (1,695) | 30,123 |
Cash and cash equivalents at beginning of period | 21,323 | 14,413 |
Cash and cash equivalents at end of period | 19,628 | 44,536 |
Common Stock [Member] | ||
Operating activities | ||
Net income | $ 0 | $ 0 |
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Common Stock [Member] | Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Shares issued, beginning balance at Dec. 31, 2017 | 52,598,005 | |||||
Equity, beginning balance at Dec. 31, 2017 | $ 1,960,209 | $ 526 | $ 1,737,551 | $ 246,121 | $ (18,496) | $ (5,493) |
Net income | 90,835 | 0 | 90,835 | 0 | 0 | |
Other comprehensive income | (80) | $ 0 | 0 | (80) | ||
Common stock issued, shares | 0 | |||||
Common stock issued, value | (5,879) | $ 0 | (16,074) | 0 | 10,195 | 0 |
Common stock dividends - $0.50 and $0.46 per share as of March 31, 2019 and 2018, respectively | (24,137) | $ 0 | 224 | (24,361) | 0 | 0 |
Shares issued, ending balance at Mar. 31, 2018 | 52,598,005 | |||||
Equity, ending balance at Mar. 31, 2018 | $ 2,020,948 | $ 526 | 1,721,701 | 312,595 | (8,301) | (5,573) |
Shares issued, beginning balance at Dec. 31, 2018 | 52,598,005 | 52,598,005 | ||||
Equity, beginning balance at Dec. 31, 2018 | $ 2,042,656 | $ 526 | 1,727,492 | 320,869 | (2,145) | (4,086) |
Net income | 93,660 | 0 | 0 | 93,660 | 0 | 0 |
Other comprehensive income | 160 | 0 | 0 | 0 | 0 | 160 |
Income Tax Effects Allocated Directly to Equity, Cumulative Effect of Change in Accounting Principle | 0 | $ 0 | 0 | 1,218 | 0 | (1,218) |
Common stock issued, shares | 88,629 | |||||
Common stock issued, value | (5,353) | $ 1 | (7,499) | 0 | 2,145 | 0 |
Common stock dividends - $0.50 and $0.46 per share as of March 31, 2019 and 2018, respectively | $ (26,343) | $ 0 | 227 | (26,570) | 0 | 0 |
Shares issued, ending balance at Mar. 31, 2019 | 52,686,634 | 52,686,634 | ||||
Equity, ending balance at Mar. 31, 2019 | $ 2,104,780 | $ 527 | $ 1,720,220 | $ 389,177 | $ 0 | $ (5,144) |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Significant Accounting Policies [Line Items] | |
SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Our accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. These statements also have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The 2018 year-end consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes in our Annual Report. Our significant accounting policies are described in Note 1 of our Notes to the Consolidated Financial Statements in our Annual Report. Due to the seasonal nature of our business, the results of operations for the three months ended March 31, 2019 , are not necessarily indicative of the results that may be expected for a 12-month period. We provide natural gas distribution services to our 2.2 million customers through our divisions in Oklahoma, Kansas and Texas through Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, respectively. We serve residential, commercial, industrial and transportation customers in all three states. Use of Estimates - The preparation of our consolidated financial statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amount of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. These estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Items that may be estimated include, but are not limited to, the economic useful life of assets, fair value of assets and liabilities, provision for doubtful accounts, unbilled revenues for natural gas delivered but for which meters have not been read, natural gas purchased but for which no invoice has been received, provision for income taxes, including any deferred tax valuation allowances, the results of litigation and various other recorded or disclosed amounts. We evaluate these estimates on an ongoing basis using historical experience and other methods we consider reasonable based on the particular circumstances. Nevertheless, actual results may differ significantly from the estimates. Any effects on our financial position or results of operations from revisions to these estimates are recorded in the period when the facts that give rise to the revision become known to us. Segments - We operate in one reportable and operating business segment: regulated public utilities that deliver natural gas to residential, commercial, industrial and transportation customers. The accounting policies for our segment are the same as those described in Note 1 of our Notes to the Consolidated Financial Statements in our Annual Report. We evaluate our financial performance principally on operating income. For the three months ended March 31, 2019 , and 2018 , we had no single external customer from which we received 10 percent or more of our gross revenues. Reclassification of Prior Year Presentation - Certain prior year amounts have been reclassified for consistency with the current year presentation. Adjustments have been made to the consolidated balance sheets and consolidated statements of cash flows for the year ended December 31, 2018, to include accrued interest and accrued liabilities in other current liabilities. These reclassifications had no effect on the reported results of operations in the consolidated statements of income or previously reported cash flows from operating activities in the consolidated statements of cash flows. Recently Issued Accounting Standards Update - In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)”. Under this guidance, a company should defer implementation costs that it incurs if the company would capitalize those same costs under the internal-use software guidance for an arrangement that is a software license. This standard is effective for interim and annual periods in fiscal years beginning after December 15, 2019, and early adoption is permitted. We will adopt this standard January 1, 2020, and are currently assessing the potential impacts to our consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. We adopted this new guidance in the first quarter 2019 and our adoption did not result in a material impact to our consolidated financial statements. This change is reflected in our consolidated statements of equity. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments,’’ which introduces new guidance to the accounting for credit losses on instruments within its scope, including trade receivables. It is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted for fiscal years beginning after December 15, 2018. The new guidance will be initially applied through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. We are currently assessing the timing and impacts of adopting this standard, which must be adopted by the first quarter of 2020. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” as amended, “Topic 842” which prescribes recognizing lease assets and liabilities on the balance sheet and includes disclosure of key information about leasing arrangements. We adopted this new guidance effective January 1, 2019, and applied the modified retrospective approach to all existing leases. Upon adoption we recognized lease liabilities of approximately $32 million , with corresponding right-of-use assets of the same amount based on the present value of the remaining minimum rental payments for existing operating leases. Our adoption did not result in a material impact to our results of operations or cash flows. We utilized the practical expedients that allow us to: (1) not reassess expired or existing contracts to determine whether they are subject to lease accounting guidance, (2) not reconsider lease classification at transition, and (3) not evaluate previously capitalized initial direct costs under the revised requirements. We also utilized the practical expedients that allow us to: (1) not evaluate under Topic 842 existing or expired land easements that were not previously accounted for as leases under the current lease guidance in ASC Topic 840 (“Topic 840”) and (2) use an additional transition method in which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We adopted an accounting policy that exempts leases with terms of less than one year from the recognition requirements of Topic 842, and disclose such leases in our interim and annual disclosures upon adoption. Our adoption did not result in a cumulative adjustment to our opening retained earnings. See Note 6 for additional information regarding our leases. Property, Plant and Equipment - Accounts payable for construction work in process and asset removal costs decreased by approximately $1.7 million and $9.7 million for the three months ended March 31, 2019 and 2018, respectively. Such amounts are not included in capital expenditures in our consolidated statements of cash flows. |
REVENUE (Notes)
REVENUE (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue Recognition, Policy [Policy Text Block] | 2. REVENUE We recognize revenue from contracts with customers to depict the transfers of goods and services to customers at an amount that we expect to be entitled to receive in exchange for these goods and services. Our sources of revenue are disaggregated by natural gas sales, transportation revenues, and miscellaneous revenues, which are primarily one-time service fees, that meet the requirements of FASB’s ASU 2014-09, “Revenue from Contracts with Customers” (“ASC 606”). Certain revenues that do not meet the requirements of ASC 606 are classified as other revenues in our Notes to Consolidated Financial Statements in this Quarterly Report. Our natural gas sales to customers represent revenue from contracts with customers through implied contracts established by our tariff rates approved by the regulatory authorities. For natural gas sales, the customer receives the benefits of our performance when the commodity is received and simultaneously consumed by the customer. The performance obligation is satisfied over time as the customer consumes the natural gas. Our transportation revenues represent revenue from contracts with customers through implied contracts established by our tariff rates approved by the regulatory authorities and tariff-based negotiated contracts. The customer receives the benefits of our performance when the commodity is delivered to the customer and the performance obligation is satisfied over time as the customer receives the natural gas. For regulated deliveries of natural gas, we read meters and bill customers on a monthly cycle. We recognize revenues upon the delivery of natural gas commodity or services rendered to customers. The billing cycles for customers do not necessarily coincide with the accounting periods used for financial reporting purposes. We accrue unbilled revenues for natural gas that has been delivered but not yet billed at the end of an accounting period. We use the invoice method practical expedient, where we recognize revenue for volumes delivered for which we have a right to invoice. As a result, we estimate unbilled revenues at the end of each accounting period consistent with past practice. Accrued unbilled revenue is based on a percentage estimate of amounts unbilled each month, which is dependent upon a number of factors, some of which require management’s judgment. These factors include customer consumption patterns and the impact of weather on usage. The accrued unbilled natural gas sales revenue at March 31, 2019 and December 31, 2018 , were $88.7 million and $127.6 million , respectively, and are included in accounts receivable in our consolidated balance sheets. Our miscellaneous revenues from contracts with customers represent implied contracts established by our tariff rates approved by the regulatory authorities and includes miscellaneous utility services with the performance obligation satisfied at a point in time when services are rendered to the customer. Total other revenues consist of revenues associated with regulatory mechanisms that do not meet the requirements of ASC 606 as revenue from contracts with customers, but authorize us to accrue revenues earned based on tariffs approved by the regulatory authorities. Other revenues - natural gas sales related primarily reflect our weather normalization mechanism in Kansas. This mechanism adjusts our revenues earned for the variance between actual and normal HDDs. This mechanism can have either positive (warmer than normal) or negative (colder than normal) effects on revenues. We collect and remit other taxes on behalf of governmental authorities, and we record these amounts in accrued taxes other than income in our consolidated balance sheets on a net basis. The following table sets forth our revenues disaggregated by source for the periods indicated: Three Months Ended March 31, 2019 2018 (Thousands of dollars) Natural gas sales to customers $ 621,492 $ 594,926 Transportation revenues 35,028 33,543 Miscellaneous revenues 5,428 6,768 Total revenues from contracts with customers 661,948 635,237 Other revenues - natural gas sales related (2,944 ) 1,030 Other revenues 1,996 2,197 Total other revenues (948 ) 3,227 Total revenues $ 661,000 $ 638,464 |
REGULATORY ASSETS AND LIABILITI
REGULATORY ASSETS AND LIABILITIES (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | |
Schedule of Regulatory Assets and Liabilities | 3. REGULATORY ASSETS AND LIABILITIES The tables below present a summary of regulatory assets, net of amortization, and liabilities for the periods indicated: March 31, 2019 Current Noncurrent Total ( Thousands of dollars ) Pension and postemployment benefit costs $ 22,967 $ 414,253 $ 437,220 Reacquired debt costs 812 6,285 7,097 MGP remediation costs 98 7,611 7,709 Other 14,883 1,369 16,252 Total regulatory assets, net of amortization 38,760 429,518 468,278 Federal corporate income tax rate changes (a) (32,312 ) (511,743 ) (544,055 ) Over-recovered purchased-gas costs (14,197 ) — (14,197 ) Weather normalization (8,282 ) — (8,282 ) Total regulatory liabilities (54,791 ) (511,743 ) (566,534 ) Net regulatory liabilities $ (16,031 ) $ (82,225 ) $ (98,256 ) (a) See Note 11 for additional information regarding our federal corporate income tax rate changes to regulatory liabilities. December 31, 2018 Current Noncurrent Total ( Thousands of dollars ) Under-recovered purchased-gas costs $ 25,083 $ — $ 25,083 Pension and postemployment benefit costs 23,384 421,726 445,110 Reacquired debt costs 812 6,487 7,299 MGP remediation costs — 7,724 7,724 Other (a) 5,141 1,542 6,683 Total regulatory assets, net of amortization 54,420 437,479 491,899 Federal corporate income tax rate changes (b) (30,934 ) (520,866 ) (551,800 ) Over-recovered purchased-gas costs (13,668 ) — (13,668 ) Weather normalization (3,792 ) — (3,792 ) Total regulatory liabilities (48,394 ) (520,866 ) (569,260 ) Net regulatory assets (liabilities) $ 6,026 $ (83,387 ) $ (77,361 ) (a) Includes reclassification of ad-valorem tax for consistency with the current year presentation. (b) See Note 11 for additional information regarding our federal corporate income tax rate changes to regulatory liabilities. Regulatory assets in our consolidated balance sheets, as authorized by various regulatory authorities, are probable of recovery. Base rates and certain riders are designed to provide a recovery of costs during the period such rates are in effect, but do not generally provide for a return on investment for amounts we have deferred as regulatory assets. All of our regulatory assets are subject to review by the respective regulatory authorities during future regulatory proceedings. We are not aware of any evidence that these costs will not be recoverable through either riders or base rates, and we believe that we will be able to recover such costs, consistent with our historical recoveries. |
CREDIT FACILITIES (Notes)
CREDIT FACILITIES (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Short-term Debt [Line Items] | |
Short-term Debt [Text Block] | 4. CREDIT FACILITY AND SHORT-TERM NOTES PAYABLE In October 2018, we exercised a one-year extension on the ONE Gas Credit Agreement. The ONE Gas Credit Agreement remains a $700 million revolving unsecured credit facility and includes a $20 million letter of credit subfacility and a $60 million swingline subfacility. We are able to request an increase in commitments of up to an additional $500 million upon satisfaction of customary conditions, including receipt of commitments from either new lenders or increased commitments from existing lenders. The ONE Gas Credit Agreement expires in October 2023 , and is available to provide liquidity for working capital, capital expenditures, acquisitions and mergers, the issuance of letters of credit and for other general corporate purposes. The ONE Gas Credit Agreement contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining ONE Gas’ total debt-to-capital ratio of no more than 70 percent at the end of any calendar quarter. At March 31, 2019 , our total debt-to-capital ratio was 43 percent and we were in compliance with all covenants under the ONE Gas Credit Agreement. At March 31, 2019 , we had $1.2 million in letters of credit issued and no borrowings under the ONE Gas Credit Agreement, resulting in $698.8 million of remaining credit available under the ONE Gas Credit Agreement. We have a commercial paper program under which we may issue unsecured commercial paper up to a maximum amount of $700 million to fund short-term borrowing needs. The maturities of the commercial paper notes may vary but may not exceed 270 days from the date of issue. The commercial paper notes are generally sold at par less a discount representing an interest factor. At March 31, 2019, we had $295.5 million of commercial paper outstanding. The ONE Gas Credit Agreement is available to repay the commercial paper notes, if necessary. |
LONG-TERM DEBT (Notes)
LONG-TERM DEBT (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Long-term Debt, Unclassified [Abstract] | |
Long-term Debt [Text Block] | 5. LONG-TERM DEBT In November 2018, ONE Gas issued $400 million of 4.50 percent senior notes due 2048 . The proceeds from the issuance were used to retire the $300 million of 2.07 percent senior notes due 2019, to reduce the amount of outstanding commercial paper and for general corporate purposes. Our long-term debt includes $300 million of 3.61 percent senior notes due in 2024 , $600 million of 4.658 percent senior notes due 2044 , and $400 million of 4.50 percent senior notes due 2048 . The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those Senior Notes immediately due and payable in full. |
LEASES (Notes)
LEASES (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Lessee, Lease, Description [Line Items] | |
Leases of Lessee Disclosure [Text Block] | 6. LEASES A lease is a contract that conveys the right to control the use and obtain substantially all the economic benefits from the use of an identified asset for a period of time in exchange for consideration. We determine if an arrangement is a lease at inception and, if so, whether the arrangement is an operating lease or a finance lease. We identify a lease as a finance lease if the agreement includes any of the following criteria: transfer of ownership by the end of the lease term; an option to purchase the underlying asset that the lessee is reasonably certain to exercise; a lease term that represents 75 percent or more of the remaining economic life of the underlying asset; a present value of lease payments and any residual value guaranteed by the lessee that equals or exceeds 90 percent of the fair value of the underlying asset; or an underlying asset that is so specialized in nature that there is no expected alternative use to the lessor at the end of the lease term. A lease that does not meet any of these criteria is considered an operating lease. Lease right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the commencement date of a lease based on the present value of lease payments over the lease term. Our lease terms may include options to extend or terminate the lease. We include these extension or termination options in the determination of the lease term when it is reasonably certain that we will exercise that option. We have lease agreements with lease and non-lease components, which are accounted for separately. Additionally, for certain office equipment leases, we apply a portfolio approach to effectively account for the operating lease right-of-use assets and liabilities. We do not recognize leases having a term of less than one year in our consolidated balance sheets. For purposes of determining the present value of the lease payments, we use a lease’s implicit interest rate when readily determinable. As most of our leases do not provide an implicit interest rate, we use a discount rate commensurate with borrowing rates for defined terms that are reviewed annually on December 31st. Lease cost for operating leases is recognized on a straight-line basis over the lease term. We have operating leases for office facilities, gas storage facilities, information technology equipment and right-of-way contracts. Our leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within specified time frames. We have not entered into any finance leases. Our right-of-use asset is $38.5 million as of March 31, 2019, and is reported within other assets in our consolidated balance sheets. Current operating lease liabilities are reported within our other current liabilities and other liabilities in our consolidated balance sheets. Total operating lease cost including immaterial amounts attributable to short-term operating leases was $2.0 million for the three months ended March 31, 2019. Three Months Ended March 31, Other information related to operating leases 2019 (Millions of dollars) Weighted-average remaining lease term 7 years Weighted-average discount rate 3.66% Supplemental cash flows information Lease payments $ (2.2 ) Right-of-use assets obtained in exchange for lease obligations $ 8.7 March 31, Future minimum lease payments under non-cancellable operating leases 2019 (Millions of dollars) 2019 (excluding the three months ended March 31, 2019) $ 5.7 2020 7.4 2021 7.0 2022 6.7 2023 5.7 Thereafter 11.6 Total future minimum lease payments $ 44.1 Imputed interest (5.6 ) Total operating lease liability $ 38.5 Consolidated balance sheets as of March 31, 2019 Current operating lease liability $ 6.2 Long-term operating lease liability 32.3 Total operating lease liability $ 38.5 The following table sets forth the required disclosures under Topic 842 for the comparative period under Topic 840, as reported in Note 15 of our Notes to the Consolidated Financial Statements in our Annual Report: December 31, Future minimum lease payments under non-cancellable operating leases 2018 (Millions of dollars) 2019 $ 6.3 2020 5.1 2021 4.5 2022 4.3 2023 4.2 Thereafter 3.8 Total future minimum lease payments $ 28.2 |
EQUITY (Notes)
EQUITY (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Class of Stock [Line Items] | |
Stockholders' Equity Note Disclosure [Text Block] | EQUITY Dividends Declared - In April 2019, we declared a dividend of $0.50 per share ( $2.00 per share on an annualized basis) for shareholders of record as of May 15, 2019 , payable May 31, 2019 . |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Comprehensive Income (Loss) Note [Text Block] | ACCUMULATED OTHER COMPREHENSIVE LOSS The following table sets forth the effect of reclassifications from accumulated other comprehensive loss in our consolidated statements of income for the periods indicated: Three Months Ended Affected Line Item in the Details About Accumulated Other March 31, Consolidated Statements Comprehensive Loss Components 2019 2018 of Income ( Thousands of dollars ) Pension and other postemployment benefit plan obligations (a) Amortization of net loss $ 8,821 $ 10,950 Amortization of unrecognized prior service credit (168 ) (1,142 ) 8,653 9,808 Reclassification of stranded tax effects (b) (1,218 ) — Regulatory adjustments (c) (7,222 ) (9,537 ) 213 271 Income before income taxes (53 ) (351 ) Income tax expense Total reclassifications for the period $ 160 $ (80 ) Net income (a) These components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 10 for additional detail of our net periodic benefit cost . (b) Reflects the impact of the adoption of ASU 2018-02 in fiscal year 2019 related to stranded tax effects in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act of 2017. See Note 1 of the Notes to Consolidated Financial Statements for additional information regarding our adoption of this standard. (c) Regulatory adjustments represent pension and other postemployment benefit costs expected to be recovered through rates and are deferred as part of our regulatory assets. See Note 3 for additional disclosures of regulatory assets and liabilities. |
EARNINGS PER SHARE (Notes)
EARNINGS PER SHARE (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
EARNINGS PER SHARE [Line Items] | |
Earnings Per Share [Text Block] | EARNINGS PER SHARE Basic EPS is based on net income and is calculated based upon the daily weighted-average number of common shares outstanding during the periods presented. Also, this calculation includes fully vested stock awards that have not yet been issued as common stock. Diluted EPS includes basic EPS, plus unvested stock awards granted under our compensation plans, but only to the extent these instruments dilute earnings per share. The following tables set forth the computation of basic and diluted EPS from continuing operations for the periods indicated: Three Months Ended March 31, 2019 Income Shares Per Share Amount ( Thousands, except per share amounts ) Basic EPS Calculation Net income available for common stock $ 93,660 52,825 $ 1.77 Diluted EPS Calculation Effect of dilutive securities — 381 Net income available for common stock and common stock equivalents $ 93,660 53,206 $ 1.76 Three Months Ended March 31, 2018 Income Shares Per Share Amount ( Thousands, except per share amounts ) Basic EPS Calculation Net income available for common stock $ 90,835 52,604 $ 1.73 Diluted EPS Calculation Effect of dilutive securities — 293 Net income available for common stock and common stock equivalents $ 90,835 52,897 $ 1.72 |
EMPLOYEE BENEFIT PLANS (Notes)
EMPLOYEE BENEFIT PLANS (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Employee Benefit Plans [Line Items] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS The following tables set forth the components of net periodic benefit cost for our pension and other postemployment benefit plans for the periods indicated: Pension Benefits Three Months Ended March 31, 2019 2018 ( Thousands of dollars ) Components of net periodic benefit cost Service cost $ 3,008 $ 3,230 Interest cost (a) 10,168 9,200 Expected return on assets (a) (15,485 ) (15,145 ) Amortization of net loss (a) 8,260 9,978 Net periodic benefit cost $ 5,951 $ 7,263 (a) These amounts, net of any amounts capitalized as a regulatory asset since adoption of ASU 2017-07 on January 1, 2018, have been recognized as other income (expense), net in the consolidated statements of income. See Note 12 for additional detail of our other income (expense). Other Postemployment Benefits Three Months Ended March 31, 2019 2018 ( Thousands of dollars ) Components of net periodic benefit cost (credit) Service cost $ 434 $ 589 Interest cost (a) 2,329 2,279 Expected return on assets (a) (3,147 ) (3,571 ) Amortization of unrecognized prior service credit (a) (168 ) (1,142 ) Amortization of net loss (a) 561 972 Net periodic benefit cost (credit) $ 9 $ (873 ) (a) These amounts, net of any amounts capitalized as a regulatory asset since adoption of ASU 2017-07 on January 1, 2018, have been recognized as other income (expense), net in the consolidated statements of income. See Note 12 for additional detail of our other income (expense). We recover qualified pension benefit plan and other postemployment benefit plan costs through rates charged to our customers. Certain regulatory authorities require that the recovery of these costs be based on specific guidelines. The difference between these regulatory-based amounts and the periodic benefit cost calculated pursuant to GAAP is deferred as a regulatory asset or liability and amortized to expense over periods in which this difference will be recovered in rates, as authorized by the applicable regulatory authorities. Regulatory deferrals related to net periodic benefit cost were not material for the three months ended March 31, 2019 . Since adoption of ASU 2017-07 on January 1, 2018, we continue to capitalize all eligible service cost and non-service cost components under the accounting requirements of ASC Topic 980 (Regulated Operations) for rate-regulated entities. Our consolidated balance sheets reflect the capitalized non-service cost components as a regulatory asset. We have recognized a regulatory asset of $2.2 million and $1.5 million as of March 31, 2019 and December 31, 2018, respectively. See Note 3 of the Notes to the Consolidated Financial Statements in this Quarterly Report for additional information. |
INCOME TAXES (Notes)
INCOME TAXES (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure | INCOME TAXES We use an estimated annual effective tax rate for purposes of determining the income tax provision during interim reporting periods. In calculating our estimated annual effective tax rate, we consider forecasted annual pre-tax income and estimated permanent book versus tax differences, as well as tax credits. Adjustments to the effective tax rate and estimates will occur as information and assumptions change. Changes in tax laws or tax rates are recognized in the financial reporting period that includes the enactment date. As a result of the enactment of the Tax Cuts and Jobs Act of 2017, we remeasured our ADIT. As a regulated entity, the change in ADIT was recorded as a regulatory liability and is subject to refund to our customers. The Tax Cuts and Jobs Act of 2017 retains the tax normalization provisions of the Code that stipulate how these excess deferred income taxes for certain accelerated tax depreciation benefits are to be refunded to customers. Our customers will receive refunds as determined by our regulators beginning in 2019. In each state, we received accounting orders requiring us to refund the reduction in ADIT due to the remeasurement and to establish a separate regulatory liability for the difference in taxes included in our rates that have been calculated based on a 35 percent federal corporate income tax rate and the new 21 percent federal corporate income tax rate effective in January 2018. We have completed or made a reasonable estimate for the measurement and accounting of the effects of the Tax Cuts and Jobs Act of 2017, which were reflected in our December 31, 2018, consolidated financial statements. While we still expect additional guidance from the U.S. Department of the Treasury and the IRS, we have finalized our calculations using available guidance. Any additional issued guidance or future actions of our regulators could potentially affect the final determination of the accounting effects arising from the implementation of the Tax Cuts and Jobs Act of 2017. In January 2019, the OCC issued an order in response to Oklahoma Natural Gas’ March 2018 PBRC filing requiring Oklahoma Natural Gas to credit customers for the reduction in ADIT based upon an amortization period in compliance with the tax normalization rules for the portions of excess ADIT stipulated by the Code and ten years for all other components of excess ADIT. In February 2019, the KCC issued an order adjusting Kansas Gas Service’s base rates, which included an amortization credit associated with the refund of ADIT based on an amortization period in compliance with the tax normalization rules for the portion of excess ADIT stipulated by the Code and five years for all other components of excess ADIT. In Texas, we continue to work with our regulators to address the reduction in ADIT due to the remeasurement. As a result of the orders in Oklahoma and Kansas, the estimated excess ADIT is being returned to customers beginning in 2019. During the first quarter of fiscal 2019, we credited income tax expense $6.8 million for the amortization of the regulatory liability associated with excess ADIT that was returned to customers. The treatment of our excess ADIT in Texas and the degree to which it impacts us will be determined as we work with our regulators. In 2018, we accrued a separate regulatory liability associated with the change in the federal corporate income tax rates collected in our rates resulting in a reduction to our revenues of $36.6 million for the year ended December 31, 2018. In January 2019, the OCC issued an order that resulted in the establishment of a $15.8 million liability, including interest, at December 31, 2018 for the estimated impact on customer rates of earnings, including amounts attributable to tax savings, above the 9.5 percent approved ROE in the 2018 review period to be returned to customers within the 2019 PBRC filing. In a separate order issued in February 2019, the KCC required Kansas Gas Service to refund the regulatory liability for the portion of its revenue representing the difference between the 21 percent and 35 percent federal corporate income tax rate for the period between January 1, 2018, and through the date on which the KCC issued a final order in Kansas Gas Service’s June 2018 rate case. In the first quarter 2019, we accrued an additional $2.4 million reduction to revenues for the period until new rates were implemented in Kansas. The refund of $16.6 million will be issued through a bill credit in the second quarter 2019. In 2018, Texas Gas Service issued one-time refunds totaling $6.6 million for the reduction in the federal corporate income tax rate for the period between January 1, 2018, to the dates new rates were implemented in its service areas. |
OTHER INCOME AND OTHER EXPENSE
OTHER INCOME AND OTHER EXPENSE (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Other Income and Other Expense Disclosure [Text Block] | OTHER INCOME AND OTHER EXPENSE The following table sets forth the components of other income and other expense for the periods indicated: Three Months Ended March 31, 2019 2018 ( Thousands of dollars ) Net periodic benefit cost other than service cost $ (1,599 ) $ (1,734 ) Other, net 2,028 (430 ) Total other income (expense), net $ 429 $ (2,164 ) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies [Line Items] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Environmental Matters - We are subject to multiple historical, wildlife preservation and environmental laws and/or regulations, which affect many aspects of our present and future operations. Regulated activities include, but are not limited to, those involving air emissions, storm water and wastewater discharges, handling and disposal of solid and hazardous wastes, wetland preservation, hazardous materials transportation, and pipeline and facility construction. These laws and regulations require us to obtain and/or comply with a wide variety of environmental clearances, registrations, licenses, permits and other approvals. Failure to comply with these laws, regulations, licenses and permits or the discovery of presently unknown environmental conditions may expose us to fines, penalties and/or interruptions in our operations that could be material to our results of operations. In addition, emission controls and/or other regulatory or permitting mandates under the Clean Air Act and other similar federal and state laws could require unexpected capital expenditures. We cannot assure that existing environmental statutes and regulations will not be revised or that new regulations will not be adopted or become applicable to us. Revised or additional statutes or regulations that result in increased compliance costs or additional operating restrictions could have a material adverse effect on our business, financial condition and results of operations. Our expenditures for environmental investigation and remediation compliance to-date have not been significant in relation to our financial position, results of operations or cash flows, and our expenditures related to environmental matters had no material effects on earnings or cash flows during the three months ended March 31, 2019 and 2018 . We own or retain legal responsibility for certain environmental conditions at 12 former MGP sites in Kansas. These sites contain contaminants generally associated with MGP sites and are subject to control or remediation under various environmental laws and regulations. A consent agreement with the KDHE governs all environmental investigation and remediation work at these sites. The terms of the consent agreement require us to investigate these sites and set remediation activities based upon the results of the investigations and risk analysis. Remediation typically involves the management of contaminated soils and may involve removal of structures and monitoring and/or remediation of groundwater. Regulatory closure has been achieved at three of the 12 sites, but these sites remain subject to potential future requirements that may result in additional costs. We have completed or are addressing removal of the source of soil contamination at all 12 sites and continue to monitor groundwater at eight of the 12 sites according to plans approved by the KDHE. During the first quarter of 2019, we completed a project to remove a source of contamination and associated contaminated materials at the twelfth site where no active soil remediation had previously occurred. We are also finalizing a study of the feasibility of various options to address the remainder of the site. With regard to one of our former MGP sites in Kansas, periodic monitoring and a 2016 interim site investigation indicated elevated levels of contaminants generally associated with MGP sites. In 2016, we estimated the potential costs associated with additional investigation and remediation to be in the range of $4.0 million to $7.0 million . We have submitted a remediation plan to the KDHE for this site. The KDHE is currently reviewing our plan. In the second quarter of 2018, we revised our estimate of the potential costs associated with additional investigation and remediation to be in the range of $5.6 million to $7.0 million . A single reliable estimate of the remediation costs was not feasible due to the amount of uncertainty in the ultimate remediation approach that will be utilized. Accordingly, we recorded in the second quarter of 2018 an adjustment to the reserve of $1.6 million bringing the total to $5.6 million for this site, which also increased our regulatory asset pursuant to our AAO in Kansas. In April 2017, Kansas Gas Service filed an application with the KCC seeking approval of an AAO associated with the costs incurred at, and nearby, these 12 former MGP sites. In October 2017, Kansas Gas Service, the KCC staff and the Citizens’ Utility Ratepayer Board filed a unanimous settlement agreement with the KCC. The agreement allows Kansas Gas Service to defer and seek recovery of costs necessary for investigation and remediation at these sites that are incurred after January 1, 2017, up to a cap of $15.0 million , net of any related insurance recoveries. Costs approved in a future rate proceeding would then be amortized over a 15-year period. The unamortized amounts will not be included in rate base or accumulate carrying charges. At the time future investigation and remediation work, net of any related insurance recoveries, is expected to exceed $15.0 million , Kansas Gas Service will be required to file an application with the KCC for approval to increase the $15.0 million cap. The KCC issued an order approving the settlement agreement in November 2017. A regulatory asset of approximately $5.9 million was recorded for estimated costs that were accrued at January 1, 2017. We also own or retain legal responsibility for certain environmental conditions at a former MGP site in Texas. At the request of the Texas Commission on Environmental Quality, we began investigating the level and extent of contamination associated with the site under their Texas Risk Reduction Program. A preliminary site investigation revealed that this site contains contaminants generally associated with MGP sites and is subject to control or remediation under various environmental laws and regulations. Until the investigation is complete, we are unable to determine what, if any, active remediation will be required. A reliable estimate of potential remediation costs is not feasible at this point due to the amount of uncertainty as to the levels and extent of contamination. Our expenditures for environmental evaluation, mitigation, remediation and compliance to date have not been significant in relation to our financial position, results of operations or cash flows, and our expenditures related to environmental matters had no material effects on earnings or cash flows during the three months ended March 31, 2019 and 2018 . A number of environmental issues may exist with respect to MGP sites that are unknown to us. Accordingly, future costs are dependent on the final determination and regulatory approval of any remedial actions, the complexity of the site, level of remediation required, changing technology and governmental regulations, and to the extent not recovered by insurance or recoverable in rates from our customers, could be material to our financial condition, results of operations or cash flows. We are subject to environmental regulation by federal, state and local authorities. Due to the inherent uncertainties surrounding the development of federal and state environmental laws and regulations, we cannot determine with specificity the impact such laws and regulations may have on our existing and future facilities. With the trend toward stricter standards, greater regulation and more extensive permit requirements for the types of assets operated by us, our environmental expenditures could increase in the future, and such expenditures may not be fully recovered by insurance or recoverable in rates from our customers, and those costs may adversely affect our financial condition, results of operations and cash flows. However, we do not expect expenditures for these matters to have a material adverse effect on our financial condition, results of operations or cash flows. Pipeline Safety - We are subject to PHMSA regulations, including integrity-management regulations. PHMSA regulations require pipeline companies operating high-pressure transmission pipelines to perform integrity assessments on pipeline segments that pass through densely populated areas or near specifically designated high-consequence areas. In January 2012, the Pipeline Safety, Regulatory Certainty and Job Creation Act was signed into law. The law increased maximum penalties for violating federal pipeline safety regulations and directs the DOT and the Secretary of Transportation to conduct further review or studies on issues that may or may not be material to us. These issues include, but are not limited to, the following: • an evaluation of whether natural gas pipeline integrity-management requirements should be expanded beyond current high-consequence areas; • a verification of records for pipelines in class 3 and 4 locations and high-consequence areas to confirm maximum allowable operating pressures; and • a requirement to test previously untested pipelines operating above 30 percent yield strength in high-consequence areas. In April 2016, PHMSA published a NPRM, the Safety of Gas Transmission & Gathering Lines Rule, in the Federal Register to revise pipeline safety regulations applicable to the safety of onshore natural gas transmission and gathering pipelines. Proposals include changes to pipeline integrity-management requirements and other safety-related requirements. The NPRM comment period ended July 7, 2016, and comments are under review by PHMSA. As part of the comment review process, PHMSA is being advised by the Technical Pipeline Safety Standards Committee, informally known by PHMSA as the GPAC, a statutorily mandated advisory committee that advises PHMSA on proposed safety policies for natural gas pipelines. The GPAC reviews PHMSA's proposed regulatory initiatives to assure the technical feasibility, reasonableness, cost-effectiveness and practicality of each proposal. The GPAC has met five times since January 2017 to review public comments and make recommendations to PHMSA. The GPAC completed their review of the NPRM on March 28, 2018, except for gas gathering pipelines. The next GPAC meeting, scheduled in June 2019, will focus on gas gathering pipelines. In addition to reviewing public and committee comments, PHMSA announced they will split this NPRM into three separate final rulemakings: • the first final rule will address the legislative mandates from the Pipeline Safety, Regulatory Certainty and Jobs Creation Act and will be called the Safety of Gas Transmission Pipelines: Maximum Allowable Operating Pressure Reconfirmation, Expansion of Assessment Requirements, and Other Related Amendments; • the second final rule will be called the Safety of Gas Transmission Pipelines: Repair Criteria, Integrity Management Improvements, Cathodic Protection, Management of Change, and Other Related Amendments and will cover all remaining elements of the NPRM (except for gas gathering pipelines); and • the third final rule will be called the Safety of Gas Gathering Pipelines and will address gas gathering pipelines. A significant number of recommendations have been made to PHMSA to improve the NPRM. The industry trade associations filed joint comments to the “legislative mandates” rulemaking to amend the federal safety regulations applicable to gas transmission and gathering pipelines. The timing of each final rule being published is unknown, but they are expected to be published during 2019. The potential capital and operating expenditures associated with compliance with the proposed rules are currently being evaluated and could be significant depending on the final regulations. Legal Proceedings - We are a party to various litigation matters and claims that have arisen in the normal course of our operations. While the results of litigation and claims cannot be predicted with certainty, we believe the reasonably possible losses from such matters, individually and in the aggregate, are not material. Additionally, we believe the probable final outcome of such matters will not have a material adverse effect on our results of operations, financial position or cash flows. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |
Fair Value Disclosures | DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS Accounting Treatment - We record all derivative instruments at fair value, with the exception of normal purchases and normal sales that are expected to result in physical delivery. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it, or if regulatory rulings require a different accounting treatment. If certain conditions are met, we may elect to designate a derivative instrument as a hedge to mitigate the risk of exposure to changes in fair values or cash flows. The table below summarizes the various ways in which we account for our derivative instruments and the impact on our consolidated financial statements: Recognition and Measurement Accounting Treatment Balance Sheet Income Statement Normal purchases and normal sales - Recorded at historical cost - Change in fair value not recognized in earnings Mark-to-market - Recorded at fair value - Change in fair value deferred through the purchased-gas cost adjustment mechanisms We have not elected to designate any of our derivative instruments as hedges. Premiums paid and any cash settlements received associated with the commodity derivative instruments entered into by us are included in, and recoverable through, the purchased-gas cost adjustment mechanisms. Determining Fair Value - We define fair value as the price that would be received from the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date. We use the market and income approaches to determine the fair value of our assets and liabilities and consider the markets in which the transactions are executed. We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date. Fair Value Hierarchy - At each balance sheet date, we utilize a fair value hierarchy to classify fair value amounts recognized or disclosed in our consolidated financial statements based on the observability of inputs used to estimate such fair value. The levels of the hierarchy are described below: • Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities; • Level 2 - Significant observable pricing inputs other than quoted prices included within Level 1 that are, either directly or indirectly, observable as of the reporting date. Essentially, this represents inputs that are derived principally from or corroborated by observable market data; and • Level 3 - May include one or more unobservable inputs that are significant in establishing a fair value estimate. These unobservable inputs are developed based on the best information available and may include our own internal data. We recognize transfers into and out of the levels as of the end of each reporting period. Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. We categorize derivatives for which fair value is determined using multiple inputs within a single level, based on the lowest level input that is significant to the fair value measurement in its entirety. Derivative Instruments - At March 31, 2019 , we had no purchased natural gas call options. At December 31, 2018 , we held purchased natural gas call options for the heating season ended March 31, 2019, with total notional amounts of 14.3 Bcf, for which we paid premiums of $4.1 million , and had a fair value of $2.1 million . The premiums paid and any cash settlements received are recorded as part of our unrecovered purchased-gas costs in current regulatory assets as these contracts are included in, and recoverable through, the purchased-gas cost adjustment mechanisms. Additionally, changes in fair value associated with these contracts are deferred as part of our unrecovered purchased-gas costs in our consolidated balance sheets. Our natural gas call options are classified as Level 1, as fair value amounts are based on unadjusted quoted prices in active markets including NYMEX-settled prices. There were no transfers between levels for the three months ended March 31, 2019 and 2018 . Other Financial Instruments - The approximate fair value of cash and cash equivalents, accounts receivable and accounts payable is equal to book value, due to the short-term nature of these items. Our cash and cash equivalents are comprised of bank and money market accounts, and are classified as Level 1. Our other current assets include $1.5 million of corporate bonds and $1.4 million of United States treasury notes, for which the fair value approximates our cost and are also classified as Level 1. Short-term notes payable and commercial paper are due upon demand and, therefore, the carrying amounts approximate fair value and are classified as Level 1. The book value of our long-term debt, including current maturities, was $1.3 billion at both March 31, 2019 and December 31, 2018 . The estimated fair value of our long-term debt, including current maturities, was $1.4 billion at both March 31, 2019 and December 31, 2018 . The estimated fair value of our long-term debt at March 31, 2019 and December 31, 2018 , was determined using quoted market prices, and is classified as Level 2. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Significant Accounting Policies [Line Items] | |
Use of Estimates | Use of Estimates - The preparation of our consolidated financial statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amount of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. These estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Items that may be estimated include, but are not limited to, the economic useful life of assets, fair value of assets and liabilities, provision for doubtful accounts, unbilled revenues for natural gas delivered but for which meters have not been read, natural gas purchased but for which no invoice has been received, provision for income taxes, including any deferred tax valuation allowances, the results of litigation and various other recorded or disclosed amounts. We evaluate these estimates on an ongoing basis using historical experience and other methods we consider reasonable based on the particular circumstances. Nevertheless, actual results may differ significantly from the estimates. Any effects on our financial position or results of operations from revisions to these estimates are recorded in the period when the facts that give rise to the revision become known to us. |
Segments | Segments - We operate in one reportable and operating business segment: regulated public utilities that deliver natural gas to residential, commercial, industrial and transportation customers. The accounting policies for our segment are the same as those described in Note 1 of our Notes to the Consolidated Financial Statements in our Annual Report. We evaluate our financial performance principally on operating income. For the three months ended March 31, 2019 , and 2018 , we had no single external customer from which we received 10 percent or more of our gross revenues. |
Recently Issued Accounting Standards Update | Recently Issued Accounting Standards Update - In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)”. Under this guidance, a company should defer implementation costs that it incurs if the company would capitalize those same costs under the internal-use software guidance for an arrangement that is a software license. This standard is effective for interim and annual periods in fiscal years beginning after December 15, 2019, and early adoption is permitted. We will adopt this standard January 1, 2020, and are currently assessing the potential impacts to our consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. We adopted this new guidance in the first quarter 2019 and our adoption did not result in a material impact to our consolidated financial statements. This change is reflected in our consolidated statements of equity. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments,’’ which introduces new guidance to the accounting for credit losses on instruments within its scope, including trade receivables. It is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted for fiscal years beginning after December 15, 2018. The new guidance will be initially applied through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. We are currently assessing the timing and impacts of adopting this standard, which must be adopted by the first quarter of 2020. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” as amended, “Topic 842” which prescribes recognizing lease assets and liabilities on the balance sheet and includes disclosure of key information about leasing arrangements. We adopted this new guidance effective January 1, 2019, and applied the modified retrospective approach to all existing leases. Upon adoption we recognized lease liabilities of approximately $32 million , with corresponding right-of-use assets of the same amount based on the present value of the remaining minimum rental payments for existing operating leases. Our adoption did not result in a material impact to our results of operations or cash flows. We utilized the practical expedients that allow us to: (1) not reassess expired or existing contracts to determine whether they are subject to lease accounting guidance, (2) not reconsider lease classification at transition, and (3) not evaluate previously capitalized initial direct costs under the revised requirements. We also utilized the practical expedients that allow us to: (1) not evaluate under Topic 842 existing or expired land easements that were not previously accounted for as leases under the current lease guidance in ASC Topic 840 (“Topic 840”) and (2) use an additional transition method in which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We adopted an accounting policy that exempts leases with terms of less than one year from the recognition requirements of Topic 842, and disclose such leases in our interim and annual disclosures upon adoption. Our adoption did not result in a cumulative adjustment to our opening retained earnings. See Note 6 for additional information regarding our leases. Property, Plant and Equipment - Accounts payable for construction work in process and asset removal costs decreased by approximately $1.7 million and $9.7 million for the three months ended March 31, 2019 and 2018, respectively. Such amounts are not included in capital expenditures in our consolidated statements of cash flows. |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Derivatives | Accounting Treatment - We record all derivative instruments at fair value, with the exception of normal purchases and normal sales that are expected to result in physical delivery. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it, or if regulatory rulings require a different accounting treatment. If certain conditions are met, we may elect to designate a derivative instrument as a hedge to mitigate the risk of exposure to changes in fair values or cash flows. The table below summarizes the various ways in which we account for our derivative instruments and the impact on our consolidated financial statements: Recognition and Measurement Accounting Treatment Balance Sheet Income Statement Normal purchases and normal sales - Recorded at historical cost - Change in fair value not recognized in earnings Mark-to-market - Recorded at fair value - Change in fair value deferred through the purchased-gas cost adjustment mechanisms We have not elected to designate any of our derivative instruments as hedges. Premiums paid and any cash settlements received associated with the commodity derivative instruments entered into by us are included in, and recoverable through, the purchased-gas cost adjustment mechanisms. |
Fair Value Measurement | Determining Fair Value - We define fair value as the price that would be received from the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date. We use the market and income approaches to determine the fair value of our assets and liabilities and consider the markets in which the transactions are executed. We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date. Fair Value Hierarchy - At each balance sheet date, we utilize a fair value hierarchy to classify fair value amounts recognized or disclosed in our consolidated financial statements based on the observability of inputs used to estimate such fair value. The levels of the hierarchy are described below: • Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities; • Level 2 - Significant observable pricing inputs other than quoted prices included within Level 1 that are, either directly or indirectly, observable as of the reporting date. Essentially, this represents inputs that are derived principally from or corroborated by observable market data; and • Level 3 - May include one or more unobservable inputs that are significant in establishing a fair value estimate. These unobservable inputs are developed based on the best information available and may include our own internal data. We recognize transfers into and out of the levels as of the end of each reporting period. Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. We categorize derivatives for which fair value is determined using multiple inputs within a single level, based on the lowest level input that is significant to the fair value measurement in its entirety. |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenues Disaggregated by Source [Table] | The following table sets forth our revenues disaggregated by source for the periods indicated: Three Months Ended March 31, 2019 2018 (Thousands of dollars) Natural gas sales to customers $ 621,492 $ 594,926 Transportation revenues 35,028 33,543 Miscellaneous revenues 5,428 6,768 Total revenues from contracts with customers 661,948 635,237 Other revenues - natural gas sales related (2,944 ) 1,030 Other revenues 1,996 2,197 Total other revenues (948 ) 3,227 Total revenues $ 661,000 $ 638,464 |
REGULATORY ASSETS AND LIABILI_2
REGULATORY ASSETS AND LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES | The tables below present a summary of regulatory assets, net of amortization, and liabilities for the periods indicated: March 31, 2019 Current Noncurrent Total ( Thousands of dollars ) Pension and postemployment benefit costs $ 22,967 $ 414,253 $ 437,220 Reacquired debt costs 812 6,285 7,097 MGP remediation costs 98 7,611 7,709 Other 14,883 1,369 16,252 Total regulatory assets, net of amortization 38,760 429,518 468,278 Federal corporate income tax rate changes (a) (32,312 ) (511,743 ) (544,055 ) Over-recovered purchased-gas costs (14,197 ) — (14,197 ) Weather normalization (8,282 ) — (8,282 ) Total regulatory liabilities (54,791 ) (511,743 ) (566,534 ) Net regulatory liabilities $ (16,031 ) $ (82,225 ) $ (98,256 ) (a) See Note 11 for additional information regarding our federal corporate income tax rate changes to regulatory liabilities. December 31, 2018 Current Noncurrent Total ( Thousands of dollars ) Under-recovered purchased-gas costs $ 25,083 $ — $ 25,083 Pension and postemployment benefit costs 23,384 421,726 445,110 Reacquired debt costs 812 6,487 7,299 MGP remediation costs — 7,724 7,724 Other (a) 5,141 1,542 6,683 Total regulatory assets, net of amortization 54,420 437,479 491,899 Federal corporate income tax rate changes (b) (30,934 ) (520,866 ) (551,800 ) Over-recovered purchased-gas costs (13,668 ) — (13,668 ) Weather normalization (3,792 ) — (3,792 ) Total regulatory liabilities (48,394 ) (520,866 ) (569,260 ) Net regulatory assets (liabilities) $ 6,026 $ (83,387 ) $ (77,361 ) (a) Includes reclassification of ad-valorem tax for consistency with the current year presentation. (b) See Note 11 for additional information regarding our federal corporate income tax rate changes to regulatory liabilities. |
LEASES Leases (Tables)
LEASES Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases Under ASC 840 [Table Text Block] | The following table sets forth the required disclosures under Topic 842 for the comparative period under Topic 840, as reported in Note 15 of our Notes to the Consolidated Financial Statements in our Annual Report: December 31, Future minimum lease payments under non-cancellable operating leases 2018 (Millions of dollars) 2019 $ 6.3 2020 5.1 2021 4.5 2022 4.3 2023 4.2 Thereafter 3.8 Total future minimum lease payments $ 28.2 |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | March 31, Future minimum lease payments under non-cancellable operating leases 2019 (Millions of dollars) 2019 (excluding the three months ended March 31, 2019) $ 5.7 2020 7.4 2021 7.0 2022 6.7 2023 5.7 Thereafter 11.6 Total future minimum lease payments $ 44.1 Imputed interest (5.6 ) Total operating lease liability $ 38.5 Consolidated balance sheets as of March 31, 2019 Current operating lease liability $ 6.2 Long-term operating lease liability 32.3 Total operating lease liability $ 38.5 |
Other Information Related to Operating Leases [Table Text Block] | Three Months Ended March 31, Other information related to operating leases 2019 (Millions of dollars) Weighted-average remaining lease term 7 years Weighted-average discount rate 3.66% Supplemental cash flows information Lease payments $ (2.2 ) Right-of-use assets obtained in exchange for lease obligations $ 8.7 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Reclassification out of Accumulated Other Comprehensive Income [Table Text Block] | The following table sets forth the effect of reclassifications from accumulated other comprehensive loss in our consolidated statements of income for the periods indicated: Three Months Ended Affected Line Item in the Details About Accumulated Other March 31, Consolidated Statements Comprehensive Loss Components 2019 2018 of Income ( Thousands of dollars ) Pension and other postemployment benefit plan obligations (a) Amortization of net loss $ 8,821 $ 10,950 Amortization of unrecognized prior service credit (168 ) (1,142 ) 8,653 9,808 Reclassification of stranded tax effects (b) (1,218 ) — Regulatory adjustments (c) (7,222 ) (9,537 ) 213 271 Income before income taxes (53 ) (351 ) Income tax expense Total reclassifications for the period $ 160 $ (80 ) Net income (a) These components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 10 for additional detail of our net periodic benefit cost . (b) Reflects the impact of the adoption of ASU 2018-02 in fiscal year 2019 related to stranded tax effects in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act of 2017. See Note 1 of the Notes to Consolidated Financial Statements for additional information regarding our adoption of this standard. (c) Regulatory adjustments represent pension and other postemployment benefit costs expected to be recovered through rates and are deferred as part of our regulatory assets. See Note 3 for additional disclosures of regulatory assets and liabilities. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
EARNINGS PER SHARE [Line Items] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following tables set forth the computation of basic and diluted EPS from continuing operations for the periods indicated: Three Months Ended March 31, 2019 Income Shares Per Share Amount ( Thousands, except per share amounts ) Basic EPS Calculation Net income available for common stock $ 93,660 52,825 $ 1.77 Diluted EPS Calculation Effect of dilutive securities — 381 Net income available for common stock and common stock equivalents $ 93,660 53,206 $ 1.76 Three Months Ended March 31, 2018 Income Shares Per Share Amount ( Thousands, except per share amounts ) Basic EPS Calculation Net income available for common stock $ 90,835 52,604 $ 1.73 Diluted EPS Calculation Effect of dilutive securities — 293 Net income available for common stock and common stock equivalents $ 90,835 52,897 $ 1.72 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Employee Benefit Plans [Line Items] | |
Schedule of Net Benefit Costs [Table Text Block] | The following tables set forth the components of net periodic benefit cost for our pension and other postemployment benefit plans for the periods indicated: Pension Benefits Three Months Ended March 31, 2019 2018 ( Thousands of dollars ) Components of net periodic benefit cost Service cost $ 3,008 $ 3,230 Interest cost (a) 10,168 9,200 Expected return on assets (a) (15,485 ) (15,145 ) Amortization of net loss (a) 8,260 9,978 Net periodic benefit cost $ 5,951 $ 7,263 (a) These amounts, net of any amounts capitalized as a regulatory asset since adoption of ASU 2017-07 on January 1, 2018, have been recognized as other income (expense), net in the consolidated statements of income. See Note 12 for additional detail of our other income (expense). Other Postemployment Benefits Three Months Ended March 31, 2019 2018 ( Thousands of dollars ) Components of net periodic benefit cost (credit) Service cost $ 434 $ 589 Interest cost (a) 2,329 2,279 Expected return on assets (a) (3,147 ) (3,571 ) Amortization of unrecognized prior service credit (a) (168 ) (1,142 ) Amortization of net loss (a) 561 972 Net periodic benefit cost (credit) $ 9 $ (873 ) (a) These amounts, net of any amounts capitalized as a regulatory asset since adoption of ASU 2017-07 on January 1, 2018, have been recognized as other income (expense), net in the consolidated statements of income. See Note 12 for additional detail of our other income (expense). |
OTHER INCOME AND OTHER EXPENS_2
OTHER INCOME AND OTHER EXPENSE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Other Income and Other Expense Disclosure | The following table sets forth the components of other income and other expense for the periods indicated: Three Months Ended March 31, 2019 2018 ( Thousands of dollars ) Net periodic benefit cost other than service cost $ (1,599 ) $ (1,734 ) Other, net 2,028 (430 ) Total other income (expense), net $ 429 $ (2,164 ) |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | ||
Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Jan. 01, 2019USD ($) | |
Significant Accounting Policies [Line Items] | |||
Number of natural gas distribution services customers | 2,200,000 | ||
Segment Reporting, Disclosure of Major Customers | 0 | 0 | |
Capital Expenditures Incurred but Not yet Paid | $ 1,700,000 | $ 9,700,000 | |
Operating Lease, Right-of-Use Asset | 38,500,000 | $ 32,000,000 | |
Operating Lease, Liability | $ 38,500,000 | $ 32,000,000 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Unbilled Receivables, Current | $ 88,700 | $ 127,600 | |
Regulated Operating Revenue, Gas | 661,948 | $ 635,237 | |
Regulated Operating Revenue, Other | 3,227 | ||
Utilities Operating Expense, Other | (948) | ||
Regulated Operating Revenue | 661,000 | 638,464 | |
Natural gas sales to customers [Member] | |||
Regulated Operating Revenue, Gas | 621,492 | 594,926 | |
Transportation revenues [Member] | |||
Regulated Operating Revenue, Gas | 35,028 | 33,543 | |
Miscellaneous revenues [Member] | |||
Regulated Operating Revenue, Gas | 5,428 | 6,768 | |
Other revenues - natural gas sales related [Member] | |||
Other revenues - natural gas sales related | (2,944) | 1,030 | |
Other revenues [Member] | |||
Regulated Operating Revenue, Other | $ 1,996 | $ 2,197 |
REGULATORY ASSETS AND LIABILI_3
REGULATORY ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | $ 38,760 | $ 54,420 |
Regulatory Assets, Noncurrent | 429,518 | 437,479 |
Regulatory Liability, Current | (54,791) | (48,394) |
Regulatory Liability, Noncurrent | (511,743) | (520,866) |
Net regulatory assets (liabilities), current | (16,031) | 6,026 |
Net regulatory assets (liabilities), noncurrent | (82,225) | (83,387) |
Net Regulatory Assets | (98,256) | (77,361) |
Federal income tax rate changes [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Liability, Current | (32,312) | (30,934) |
Regulatory Liability, Noncurrent | (511,743) | (520,866) |
Regulatory Liabilities | (544,055) | (551,800) |
Over-recovered purchased-gas costs [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Liability, Current | (14,197) | (13,668) |
Regulatory Liability, Noncurrent | 0 | 0 |
Regulatory Liabilities | (14,197) | (13,668) |
Total regulated liabilities [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Liability, Current | (54,791) | (48,394) |
Regulatory Liability, Noncurrent | (511,743) | (520,866) |
Regulatory Liabilities | (566,534) | (569,260) |
Under-recovered purchased-gas costs [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 25,083 | |
Regulatory Assets, Noncurrent | 0 | |
Regulatory Assets | 25,083 | |
Pension and postretirement benefit costs [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 22,967 | 23,384 |
Regulatory Assets, Noncurrent | 414,253 | 421,726 |
Regulatory Assets | 437,220 | 445,110 |
Weather normalization [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Liability, Current | (8,282) | (3,792) |
Regulatory Liability, Noncurrent | 0 | 0 |
Regulatory Liabilities | (8,282) | (3,792) |
Reacquired debt costs [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 812 | 812 |
Regulatory Assets, Noncurrent | 6,285 | 6,487 |
Regulatory Assets | 7,097 | 7,299 |
MGP Costs [Member] [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 98 | 0 |
Regulatory Assets, Noncurrent | 7,611 | 7,724 |
Regulatory Assets | 7,709 | 7,724 |
Other regulatory assets [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 14,883 | 5,141 |
Regulatory Assets, Noncurrent | 1,369 | 1,542 |
Regulatory Assets | 16,252 | 6,683 |
Total regulatory assets, net of amortization [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 38,760 | 54,420 |
Regulatory Assets, Noncurrent | 429,518 | 437,479 |
Regulatory Assets | $ 468,278 | $ 491,899 |
CREDIT FACILITIES (Details)
CREDIT FACILITIES (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Short-term Debt [Line Items] | ||
Line of Credit Facility Sublimit | $ 20,000 | |
Line of Credit Facility Option to Increase Borrowing Capacity | $ 500,000 | |
Line of Credit Facility, Expiration Date | Oct. 1, 2023 | |
Ratio of Indebtedness to Net Capital | 0.43 | |
Letters of Credit Outstanding, Amount | $ 1,200 | |
Line of Credit Facility, Remaining Borrowing Capacity | 698,800 | |
Commercial paper maximum borrowing capacity | 700,000 | |
Commercial Paper | $ 295,500 | $ 299,500 |
Line of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Covenant Description | The ONE Gas Credit Agreement contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining ONE Gas’ total debt-to-capital ratio of no more than 70 percent at the end of any calendar quarter. |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Note Payable Due 2019 [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Covenant Description | The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those senior notes immediately due and payable in full. | |
Long-term Debt, Gross | $ 300 | |
Debt Instrument, Interest Rate, Stated Percentage | 2.07% | |
Note Payable Due 2024 [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Covenant Description | The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those senior notes immediately due and payable in full. | |
Long-term Debt, Gross | $ 300 | |
Debt Instrument, Interest Rate, Stated Percentage | 3.61% | |
Notes Payable Due 2044 [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Covenant Description | The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those senior notes immediately due and payable in full. | |
Long-term Debt, Gross | $ 600 | |
Debt Instrument, Interest Rate, Stated Percentage | 4.658% | |
Note Payable Due 2048 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 400 | $ 400 |
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | 4.50% |
LEASES (Details)
LEASES (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
Lessee, Lease, Description [Line Items] | |||
Operating Lease, Right-of-Use Asset | $ 38,500,000 | $ 32,000,000 | |
Operating Lease, Expense | $ 2,000,000 | ||
Operating Lease, Weighted Average Remaining Lease Term | 7 years | ||
Operating Lease, Weighted Average Discount Rate, Percent | 3.66% | ||
Operating Lease, Payments | $ (2,200,000) | ||
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | 8,700,000 | ||
Operating Leases, Future Minimum Payments Due under ASC 840 | $ 6,300,000 | ||
Operating Leases, Future Minimum Payments, Due in Two Years | 5,100,000 | ||
Operating Leases, Future Minimum Payments, Due in Three Years | 4,500,000 | ||
Operating Leases, Future Minimum Payments, Due in Four Years | 4,300,000 | ||
Operating Leases, Future Minimum Payments, Due in Five Years | 4,200,000 | ||
Operating Leases, Future Minimum Payments, Due Thereafter | 3,800,000 | ||
Operating Leases, Future Minimum Payments Due | $ 28,200,000 | ||
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year | 5,700,000 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Two | 7,400,000 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Three | 7,000,000 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Four | 6,700,000 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Five | 5,700,000 | ||
Lessee, Operating Lease, Liability, Payments, Due after Year Five | 11,600,000 | ||
Lessee, Operating Lease, Liability, Payments, Due | 44,100,000 | ||
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | (5,600,000) | ||
Operating Lease, Liability | 38,500,000 | $ 32,000,000 | |
Operating Lease, Liability, Current | 6,200,000 | ||
Operating Lease, Liability, Noncurrent | $ 32,300,000 | ||
Lessee, Operating Lease, Option to Extend | 10 years | ||
Minimum [Member] | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, Operating Lease, Term of Contract | 1 year | ||
Maximum [Member] | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, Operating Lease, Term of Contract | 15 years |
EQUITY (Details)
EQUITY (Details) - Subsequent Event [Member] | 3 Months Ended |
Jun. 30, 2019$ / shares | |
Common Stock, Dividends, Per Share, Declared | $ 0.50 |
Common Stock, Dividends, Declared, Annualized Basis | $ 2 |
Dividends Payable, Date of Record | May 15, 2019 |
Dividends Payable, Date to be Paid | May 31, 2019 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Amortization of net loss | $ 8,821 | $ 10,950 |
Amortization of unrecognized prior service cost | (168) | (1,142) |
Reclassification adjustment, before tax and regulatory adjustments | 8,653 | 9,808 |
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | (1,218) | 0 |
Regulatory adjustments | (7,222) | (9,537) |
Reclassification adjustment, before tax | 213 | 271 |
Reclassification adjustment, Tax | (53) | (351) |
Reclassification adjustment, net of tax | $ 160 | $ (80) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Basic EPS Calculation | ||
Net income available for common stock | $ 93,660 | $ 90,835 |
Weighted Average Number of Shares Outstanding, Basic | 52,825 | 52,604 |
Earnings Per Share, Basic | $ 1.77 | $ 1.73 |
Diluted EPS Calculation | ||
Net income available for common stock | $ 93,660 | $ 90,835 |
Effect of dilutive securities on income | $ 0 | $ 0 |
Effect of dilutive securities on shares | 381 | 293 |
Weighted Average Number of Shares Outstanding, Diluted | 53,206 | 52,897 |
Earnings Per Share, Diluted | $ 1.76 | $ 1.72 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Employee Benefit Plans [Line Items] | |||
Capitalized non-service cost components as a regulatory asset | $ 2,200 | $ 1,500 | |
Components of net periodic benefit cost: | |||
Amortization of unrecognized prior service cost | 168 | $ 1,142 | |
Amortization of net loss | (8,821) | (10,950) | |
ONE Gas Pension Plans [Member] | |||
Components of net periodic benefit cost: | |||
Service cost | 3,008 | 3,230 | |
Interest cost | 10,168 | 9,200 | |
Expected return on assets | (15,485) | (15,145) | |
Amortization of net loss | 8,260 | 9,978 | |
Net periodic benefit cost | 5,951 | 7,263 | |
ONE Gas Postretirement Benefit Plans [Member] | |||
Components of net periodic benefit cost: | |||
Service cost | 434 | 589 | |
Interest cost | 2,329 | 2,279 | |
Expected return on assets | (3,147) | (3,571) | |
Amortization of unrecognized prior service cost | (168) | (1,142) | |
Amortization of net loss | 561 | 972 | |
Net periodic benefit cost | $ 9 | $ (873) |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | |
Reduction in income tax expense for the amortization of the regulatory liability associated with excess ADIT that was returned to customers | $ 6,800,000 | ||
Reduction to revenues due to the change in tax rates collected in our rates | $ 36,600,000 | ||
Oklahoma Natural Gas tax reform regulatory liability | 15,800,000 | ||
Change in KGS tax reform regulatory liability [Line Items] | 2,400,000 | ||
Kansas Gas Service tax reform regulatory liability | $ 16,600,000 | ||
Texas Gas Service one-time refunds related to tax reform | $ 6,600,000 |
OTHER INCOME AND OTHER EXPENS_3
OTHER INCOME AND OTHER EXPENSE (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Other, net | $ 429 | $ (2,164) |
Net periodic cost other than service cost [Member] | ||
Other, net | (1,599) | (1,734) |
Other, net [Member] | ||
Other, net | $ 2,028 | $ (430) |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Dec. 31, 2017USD ($) | Dec. 31, 2016 | Mar. 31, 2019 | Sep. 30, 2018 | |
Commitments and Contingencies [Line Items] | |||||
Number Of Former Manufactured Gas Sites Where We Own Or Retain Legal Responsibility For Environmental Conditions | 12 | ||||
Number of sites where regulatory closure has been achieved | 3 | ||||
AAO associated with MGP costs requested amount, cap | $ 15 | ||||
Regulatory asset expected to be recorded for MGP costs accrued at January 1, 2017 | $ 5.9 | ||||
Number of sites with ongoing groundwater monitoring | 8 | ||||
Environmental Reserve Estimate Range, Low | 5.6 | 4 | |||
Environmental Reserve Estimate Range, High | 7 | 7 | |||
Environmental Reserve Estimate, Actual | 1.6 | ||||
Percentage yield of high consequence pipeline areas | 30.00% |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Details) | 3 Months Ended | |||
Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($)MMcf | Sep. 30, 2018USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||||
Derivative, Nonmonetary Notional Amount | MMcf | 14,300 | |||
Premiums recorded in other current assets on natural gas contracts held | $ 4,100,000 | |||
Fair Value Assets, Transfers between Levels | $ 0 | $ 0 | ||
Amount of corporate bonds included in other current assets | 1,500,000 | |||
Amount of treasury notes included in other current assets | 1,400,000 | |||
Long-term Debt, including current maturities | 1,285,587,000 | 1,285,483,000 | ||
Long-term Debt | 1,300,000,000 | 1,300,000,000 | ||
Fair Value, Inputs, Level 1 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||||
Fair value, natural gas call options | 2,100,000 | |||
Fair Value, Inputs, Level 2 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||||
Long-term Debt, Fair Value | $ 0 | $ 1,400,000,000 | $ 1,400,000,000 |