Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 20, 2020 | |
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Entity Registrant Name | ONE Gas, Inc. | |
Entity Incorporation, State or Country Code | OK | |
Entity Tax Identification Number | 46-3561936 | |
Entity Address, Address Line One | 15 East Fifth Street | |
Entity Address, City or Town | Tulsa, | |
Entity Address, State or Province | OK | |
Entity Address, Postal Zip Code | 74103 | |
City Area Code | (918) | |
Local Phone Number | 947-7000 | |
Entity Central Index Key | 0001587732 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 52,865,557 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Entity Small Business | false | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36108 | |
Trading Symbol | OGS | |
Security Exchange Name | NYSE | |
Entity Emerging Growth Company | false |
STATEMENTS OF INCOME
STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Regulated Operating Revenue | $ 528,168 | $ 661,000 |
Cost of natural gas | 226,139 | 365,076 |
Operating expenses | ||
Operations and maintenance | 104,839 | 108,275 |
Depreciation and amortization | 47,513 | 43,846 |
General taxes | 16,473 | 16,184 |
Total operating expenses | 168,825 | 168,305 |
Operating income | 133,204 | 127,619 |
Other expense, net | (5,788) | 429 |
Interest expense, net | (15,693) | (15,786) |
Income before income taxes | 111,723 | 112,262 |
Income taxes | (20,046) | (18,602) |
Net income | $ 91,677 | $ 93,660 |
Earnings per share | ||
Basic | $ 1.73 | $ 1.77 |
Diluted | $ 1.72 | $ 1.76 |
Weighted Average Number of Shares Outstanding, Basic [Abstract] | ||
Basic | 53,007 | 52,825 |
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||
Diluted | 53,268 | 53,206 |
Dividends declared per share of stock | $ 0.54 | $ 0.50 |
Retained Earnings [Member] | ||
Operating expenses | ||
Net income | $ 91,677 | $ 93,660 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF COMPREHENSIVE INCOME Parenthetical - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
STATEMENTS OF COMPREHENSIVE INCOME Parenthetical [Abstract] | ||
Pension and other postemployment benefit plans, tax | $ (74) | $ (53) |
STATEMENTS OF COMPREHENSIVE I_2
STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net income | $ 91,677 | $ 93,660 |
Other comprehensive income (loss), net of tax | ||
Change in pension and postemployment benefit plan liability, net of tax of $(53), $(68), $(159) and $(487), respectively | 224 | 160 |
Other comprehensive income, net of tax | 224 | 160 |
Comprehensive income | $ 91,901 | $ 93,820 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Document Fiscal Year Focus | 2020 | |
Property, plant and equipment | ||
Property, plant and equipment | $ 6,536,625 | $ 6,433,119 |
Accumulated depreciation and amortization | 1,901,738 | 1,867,893 |
Net property, plant and equipment | 4,634,887 | 4,565,226 |
Current assets | ||
Cash and cash equivalents | 11,069 | 17,853 |
Accounts receivable, net | 234,327 | 260,012 |
Materials and supplies | 53,390 | 55,732 |
Natural gas in storage | 48,032 | 104,259 |
Regulatory assets | 39,808 | 47,440 |
Other current assets | 21,041 | 20,906 |
Total current assets | 407,667 | 506,202 |
Goodwill and other assets | ||
Regulatory assets | 380,686 | 391,036 |
Goodwill | 157,953 | 157,953 |
Other assets | 93,712 | 87,883 |
Total goodwill and other assets | 632,351 | 636,872 |
Total assets | 5,674,905 | 5,708,300 |
Equity and long-term debt | ||
Common stock, $0.01 par value: authorized 250,000,000 shares; issued and outstanding 52,736,623 shares at September 30, 2019; issued 52,598,005 and outstanding 52,564,902 shares at December 31, 2018 | 529 | 528 |
Paid-in Capital | 1,729,587 | 1,733,092 |
Retained earnings | 465,411 | 402,509 |
Accumulated other comprehensive loss | (6,515) | (6,739) |
Total equity | 2,189,012 | 2,129,390 |
Long-term debt, excluding current maturities and net issuance costs of $11,048 and $11,457, respectively | 1,286,193 | 1,286,064 |
Total equity and long-term debt | 3,475,205 | 3,415,454 |
Commercial Paper | 474,695 | 516,500 |
Current liabilities | ||
Accounts payable | 82,088 | 120,490 |
Accrued taxes other than income | 46,774 | 47,956 |
Regulatory Liability, Current | 33,649 | 45,201 |
Customer deposits | 58,272 | 57,987 |
Other current liabilities | 80,675 | 84,603 |
Total current liabilities | 776,153 | 872,737 |
Deferred credits and other liabilities | ||
Deferred income taxes | 698,877 | 682,632 |
Regulatory Liability, Noncurrent | 494,210 | 503,518 |
Employee benefit obligations | 109,865 | 115,657 |
Other deferred credits | 120,595 | 118,302 |
Total deferred credits and other liabilities | 1,423,547 | 1,420,109 |
Commitments and contingencies | ||
Total liabilities and equity | 5,674,905 | 5,708,300 |
Over-recovered purchased-gas costs [Member] | ||
Current liabilities | ||
Regulatory Liability, Current | 27,367 | 27,623 |
Deferred credits and other liabilities | ||
Regulatory Liability, Noncurrent | $ 0 | $ 0 |
BALANCE SHEETS BALANCE SHEETS P
BALANCE SHEETS BALANCE SHEETS Parenthetical - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 52,860,808 | 52,771,749 |
Common stock, shares outstanding | 52,860,808 | 52,771,749 |
Debt issuance costs | $ 10,823 | $ 10,936 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2020 | |
Operating activities | ||
Net income | $ 91,677 | $ 93,660 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 47,513 | 43,846 |
Deferred income taxes | 6,856 | 4,828 |
Share-based compensation expense | 2,261 | 1,954 |
Provision for doubtful accounts | 3,077 | 2,263 |
Changes in assets and liabilities: | ||
Accounts receivable | 22,608 | (44,924) |
Materials and supplies | 2,342 | (2,562) |
Natural gas in storage | 56,227 | 55,820 |
Increase (Decrease) in Other Regulatory Assets | (9,888) | (11,169) |
Accounts payable | (34,227) | (53,172) |
Accrued taxes other than income | (1,182) | 4,263 |
Customer deposits | 285 | 1,218 |
Regulatory assets and liabilities | 4,932 | 29,090 |
Other assets and liabilities | (9,748) | (2,824) |
Cash provided by operating activities | 182,733 | 122,291 |
Investing activities | ||
Capital expenditures | (113,517) | (83,303) |
Other | (314) | (3,351) |
Proceeds from Sale of Other Assets, Investing Activities | 650 | 311 |
Cash used in investing activities | (113,181) | (86,343) |
Financing activities | ||
Repayments of notes payable, net | (41,805) | (4,000) |
Dividends paid | (28,543) | (26,343) |
Tax withholdings related to net share settlements of stock compensation | (5,988) | (7,300) |
Cash used in financing activities | (76,336) | (37,643) |
Change in cash and cash equivalents | (6,784) | (1,695) |
Cash and cash equivalents at beginning of period | 17,853 | 21,323 |
Cash and cash equivalents at end of period | 11,069 | 19,628 |
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, 2018 | 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 | 93,660 | 0 | 0 | |
Other comprehensive income | 160 | 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 per quarter as of 2019 and 2018, respectively | (26,343) | $ 0 | 227 | (26,570) | 0 | 0 |
Shares issued, ending balance at Mar. 31, 2019 | 52,686,634 | |||||
Equity, ending balance at Mar. 31, 2019 | $ 2,104,780 | $ 527 | 1,720,220 | 389,177 | 0 | (5,144) |
Document Period End Date | Mar. 31, 2020 | |||||
Shares issued, beginning balance at Dec. 31, 2019 | 52,771,749 | 52,771,749 | ||||
Equity, beginning balance at Dec. 31, 2019 | $ 2,129,390 | $ 528 | 1,733,092 | 402,509 | 0 | (6,739) |
Net income | 91,677 | 0 | 0 | 91,677 | 0 | 0 |
Other comprehensive income | 224 | $ 0 | 0 | 0 | 0 | 224 |
Common stock issued, shares | 89,059 | |||||
Common stock issued, value | (3,736) | $ 1 | (3,737) | 0 | 0 | 0 |
Common stock dividends - $0.50 and $0.46 per share per quarter as of 2019 and 2018, respectively | $ (28,543) | $ 0 | 232 | (28,775) | 0 | 0 |
Shares issued, ending balance at Mar. 31, 2020 | 52,860,808 | 52,860,808 | ||||
Equity, ending balance at Mar. 31, 2020 | $ 2,189,012 | $ 529 | $ 1,729,587 | $ 465,411 | $ 0 | $ (6,515) |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
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 2019 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 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, 2020 , are not necessarily indicative of the results that may be expected for a 12-month period. We provide natural gas distribution services to our approximately 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 primarily serve residential, commercial 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 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 business segment: regulated public utilities that deliver natural gas primarily to residential, commercial and transportation customers. The accounting policies for our segment are the same as those described in Note 1 of our Notes to Consolidated Financial Statements in our Annual Report. We evaluate our financial performance principally on net income. For the three months ended March 31, 2020 and 2019 , we had no single external customer from which we received 10 percent or more of our gross revenues. Property, Plant and Equipment - Accounts payable for construction work in process and asset removal costs decreased by approximately $4.2 million and $1.7 million for the three months ended March 31, 2020 and 2019, respectively. Such amounts are not included in capital expenditures in our consolidated statements of cash flows. Accounts Receivable - Accounts receivable represent valid claims against nonaffiliated customers for natural gas sold or services rendered, net of allowances for doubtful accounts. We assess the creditworthiness of our customers. Those customers who do not meet minimum standards may be required to provide security, including deposits and other forms of collateral, when appropriate and allowed by our tariffs. With approximately 2.2 million customers across three states, we are not exposed materially to a concentration of credit risk. We maintain an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends, consideration of the current environment and other information. We recover natural gas costs related to accounts written off when they are deemed uncollectible through the purchased-gas cost adjustment mechanisms in each of our jurisdictions. At March 31, 2020 and December 31, 2019, our allowance for doubtful accounts was $8.8 million and $6.6 million, respectively. Reclassification of Prior Year Presentation - Adjustments have been made to the consolidated statements of cash flows for the three months ended March 31, 2019, to separately disclose other investing receipts and expenditures for consistency with the current year presentation. 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 March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. In the first quarter 2020, we adopted this new guidance effective for contracts modified between March 12, 2020 and December 31, 2022. Our revolving lines of credit under the ONE Gas Credit Agreement and the ONE Gas 364-day Credit Agreement utilize LIBOR as the reference rate. If modified, we may elect the optional practical expedients to account for the modifications prospectively. Our adoption did not result in a material impact to our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. ASU 2019-12 also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This standard is effective for interim and annual periods in fiscal years beginning after December 15, 2020, and early adoption is permitted. We are currently assessing the timing and impacts of adopting this standard. 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. The deferred implementation costs should be amortized over the term of the hosting arrangement, including any probable renewals. We are party to hosting arrangements identified as service contracts for various information systems used in our operations. We adopted this new guidance using the prospective transition approach for implementation costs incurred in hosting arrangement service contracts beginning January 1, 2020. In certain jurisdictions, we have orders from our regulators allowing us to amortize deferred implementation costs for hosting arrangements entered into after January 1, 2020, over the life approved by our regulators for our internal-use software systems rather than the term of the hosting arrangement. The difference in amortization calculated between the term of the hosting arrangement and internal-use software life approved by our regulators is deferred as a regulatory asset and amortized over the remaining internal-use software life that exceeds the term of the hosting arrangement. Our adoption did not result in a material impact 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. We adopted this new guidance in the first quarter of 2020 using the modified retrospective method. Our financial assets within scope of this guidance primarily include our trade receivables from customers. Our policy for measuring our allowance for doubtful accounts is disclosed in the aforementioned policy for accounts receivable. We did not create any new accounting policies, nor did we modify any of our existing policies as a result of adopting this guidance. Our adoption did not result in a cumulative adjustment to our opening retained earnings or have a material impact to our consolidated financial statements. 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 allowed 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 |
REVENUE (Notes)
REVENUE (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue [Policy Text Block] | 2. REVENUE Accrued unbilled natural gas sales revenues at March 31, 2020 and December 31, 2019 , were $71.6 million and $109.7 million , respectively, and are included in accounts receivable on our consolidated balance sheets. The following table sets forth our revenues disaggregated by source for the periods indicated: Three Months Ended March 31, 2020 2019 (Thousands of dollars) Natural gas sales to customers $ 480,718 $ 621,492 Transportation revenues 33,757 35,028 Miscellaneous revenues 4,470 5,428 Total revenues from contracts with customers 518,945 661,948 Other revenues - natural gas sales related 6,547 (2,944 ) Other revenues 2,676 1,996 Total other revenues 9,223 (948 ) Total revenues $ 528,168 $ 661,000 |
REGULATORY ASSETS AND LIABILITI
REGULATORY ASSETS AND LIABILITIES (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | |
Schedule of Regulatory Assets and Liabilities | . REGULATORY ASSETS AND LIABILITIES The tables below present a summary of regulatory assets and liabilities, net of amortization, for the periods indicated: March 31, 2020 Current Noncurrent Total ( Thousands of dollars ) Pension and postemployment benefit costs $ 21,199 $ 363,467 $ 384,666 Reacquired debt costs 812 5,474 6,286 MGP remediation costs 98 9,685 9,783 Ad-valorem tax 3,593 — 3,593 Weather normalization 3,713 — 3,713 Other 10,393 2,060 12,453 Total regulatory assets, net of amortization 39,808 380,686 420,494 Federal income tax rate changes (6,282 ) (494,210 ) (500,492 ) Over-recovered purchased-gas costs (27,367 ) — (27,367 ) Total regulatory liabilities, net of amortization (33,649 ) (494,210 ) (527,859 ) Net regulatory assets and liabilities $ 6,159 $ (113,524 ) $ (107,365 ) December 31, 2019 Current Noncurrent Total ( Thousands of dollars ) Under-recovered purchased-gas costs $ 17,172 $ — $ 17,172 Pension and postemployment benefit costs 21,213 373,266 394,479 Reacquired debt costs 812 5,677 6,489 MGP remediation costs 98 9,709 9,807 Ad-valorem tax 2,921 — 2,921 Other 5,224 2,384 7,608 Total regulatory assets, net of amortization 47,440 391,036 438,476 Federal income tax rate changes (10,297 ) (503,518 ) (513,815 ) Over-recovered purchased-gas costs (27,623 ) — (27,623 ) Weather normalization (7,281 ) — (7,281 ) Total regulatory liabilities (45,201 ) (503,518 ) (548,719 ) Net regulatory assets and liabilities $ 2,239 $ (112,482 ) $ (110,243 ) 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. Federal income tax rate changes represent the effect of the Tax Cuts and Jobs Act of 2017. In each state, we received accounting orders requiring us to establish a 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 and to refund the reduction in ADIT due to the remeasurement resulting from the change in the effective tax rate. This balance reflects the balance portion of the credit resulting from the 2018 Oklahoma Natural Gas PBRC that was accrued in 2018 and is being credited to customers over a 12-month period that began in August 2019. In addition, this balance reflects the remeasurement of our ADIT in 2017 as a result of the Tax Cuts and Jobs Act of 2017. Our customers began receiving credit for this liability as determined by our regulators in 2019. Our customers receive credit annually based upon an amortization period in compliance with the tax normalization rules for the portions of EDIT stipulated by the Code and varying periods of five to ten years for all other components of EDIT. Three service areas in Texas have authorized EDIT to be credited to customers annually. The timing of the return of EDIT to customers in our remaining three service areas in Texas will be determined as we work with our regulators. Income tax expense for the first quarter 2020 and 2019 reflects credits of $6.9 million and $6.7 million , respectively, for the amortization of the regulatory liability associated with EDIT that was returned to customers. |
CREDIT FACILITIES (Notes)
CREDIT FACILITIES (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
Short-term Debt [Line Items] | |
Short-term Debt [Text Block] | 4. CREDIT FACILITY AND SHORT-TERM NOTES PAYABLE 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 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, 2020 , we had $474.7 million of commercial paper outstanding. The ONE Gas Credit Agreement is a $700 million revolving unsecured credit facility and includes a $20 million letter of credit subfacility and a $60 million swingline subfacility. We can 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. In October 2019, we exercised a one-year extension of the ONE Gas Credit Agreement and amended the agreement to provide that we may extend the maturity date by one year, subject to the lenders’ consent, two additional times. The ONE Gas Credit Agreement expires in October 2024 , 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, 2020 , our total debt-to-capital ratio was 45 percent and we were in compliance with all covenants under the ONE Gas Credit Agreement. At March 31, 2020 , we had $1.2 million in letters of credit issued and no borrowings under the ONE Gas Credit Agreement, with $698.8 million of remaining credit, which is available to repay any of our commercial paper borrowings. In April 2020, we entered into the ONE Gas 364-day Credit Agreement. The ONE Gas 364-day Credit Agreement is a $250 million revolving unsecured credit facility containing various customary conditions to borrowing and affirmative, negative and financial ratio maintenance covenants, all of which are substantially the same as those of the ONE Gas Credit Agreement. The ONE Gas 364-day Credit Agreement also contains provisions for an applicable margin rate and a quarterly facility fee, both of which adjust with changes in our credit rating. Based on our current credit ratings, borrowings, if any, will accrue interest at LIBOR plus 115 basis points, and the quarterly facility fee is 10 basis points. In the event LIBOR is not available, and such circumstances are unlikely to be temporary, our lenders may establish an alternative interest rate for the impacted loans by replacing LIBOR with one or more secured overnight financing-based rates or another alternate benchmark rate. We have not borrowed on the ONE Gas 364-day Credit Agreement. |
LONG-TERM DEBT (Notes)
LONG-TERM DEBT (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
Long-term Debt [Text Block] | 5. LONG-TERM DEBT 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 4.5 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, 2020 | |
Lessee, Lease, Description [Line Items] | |
Leases of Lessee Disclosure [Text Block] | LEASES In March 2020, we reassessed certain operating leases for office facilities which were extended or modified. At March 31, 2020, we recorded increases of $9.0 million and $9.4 million |
EQUITY (Notes)
EQUITY (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
Class of Stock [Line Items] | |
Stockholders' Equity Note Disclosure [Text Block] | EQUITY At-the-Market Equity Program - In February 2020, we initiated an at-the-market equity program by entering into an equity distribution agreement under which we may issue and sell shares of our common stock with an aggregate offering price up to $250 million (including any shares of common stock that may be sold pursuant to the master forward sale confirmation entered into in connection with the equity distribution agreement and the related supplemental confirmations). The program allows us to offer and sell our common stock at prices we deem appropriate. Sales of common stock are made by means of ordinary brokers’ transactions on the NYSE, in block transactions or as otherwise agreed to between us and the sales agent. We are under no obligation to offer and sell common stock under the program. As of March 31, 2020, we had not issued and sold any shares and had $250 million of equity available for issuance under the program. Dividends Declared - In April 2020, we declared a dividend of $0.54 per share ( $2.16 per share on an annualized basis) for shareholders of record as of May 13, 2020 , payable on June 1, 2020 . |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
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 2020 2019 of Income ( Thousands of dollars ) Pension and other postemployment benefit plan obligations (a) Amortization of net loss $ 10,623 $ 8,821 Amortization of unrecognized prior service credit (29 ) (168 ) 10,594 8,653 Reclassification of stranded tax effects (b) — (1,218 ) Regulatory adjustments (c) (10,296 ) (7,222 ) 298 213 Income before income taxes (74 ) (53 ) Income tax expense Total reclassifications for the period $ 224 $ 160 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 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, 2020 | |
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, 2020 Income Shares Per Share Amount ( Thousands, except per share amounts ) Basic EPS Calculation Net income available for common stock $ 91,677 53,007 $ 1.73 Diluted EPS Calculation Effect of dilutive securities — 261 Net income available for common stock and common stock equivalents $ 91,677 53,268 $ 1.72 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 |
EMPLOYEE BENEFIT PLANS (Notes)
EMPLOYEE BENEFIT PLANS (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
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, 2020 2019 ( Thousands of dollars ) Components of net periodic benefit cost Service cost $ 3,217 $ 3,008 Interest cost 8,545 10,168 Expected return on assets (15,280 ) (15,485 ) Amortization of net loss 10,580 8,260 Net periodic benefit cost $ 7,062 $ 5,951 Other Postemployment Benefits Three Months Ended March 31, 2020 2019 ( Thousands of dollars ) Components of net periodic benefit cost (credit) Service cost $ 423 $ 434 Interest cost 1,889 2,329 Expected return on assets (3,867 ) (3,147 ) Amortization of unrecognized prior service credit (29 ) (168 ) Amortization of net loss 43 561 Net periodic benefit cost (credit) $ (1,541 ) $ 9 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, 2020 and 2019 . 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 $5.4 million and $4.7 million as of March 31, 2020 and December 31, 2019 |
INCOME TAXES (Notes)
INCOME TAXES (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
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. As of March 31, 2020, we have no uncertain tax positions. Changes in tax laws or tax rates are recognized in the financial reporting period that includes the enactment date. We are no longer subject to income tax examination for years prior to 2017. |
OTHER INCOME AND OTHER EXPENSE
OTHER INCOME AND OTHER EXPENSE (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
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, 2020 2019 ( Thousands of dollars ) Net periodic benefit cost other than service cost $ (1,123 ) $ (1,599 ) Earnings (losses) on investments associated with nonqualified employee benefit plans (4,259 ) 2,441 Other, net (406 ) (413 ) Total other income (expense), net $ (5,788 ) $ 429 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies [Line Items] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES COVID-19 - We are providing essential services during the COVID-19 pandemic. We have implemented a comprehensive set of policies, procedures and guidelines to protect the safety of our employees, customers and communities, while continuing to provide natural gas service to our customers. We have suspended disconnects for nonpayment by our customers through May 15, 2020, based on orders or requests from our various regulators. Going forward, we expect a reduction in revenues from customers temporarily or permanently impacted by the pandemic, as well as incremental expenses for bad debts, personal protective equipment, cleaning supplies, outside services and other expenses. Management has also taken steps to reduce expenses that will partially mitigate the financial effects of COVID-19. We have received or expect to receive accounting orders in each of our jurisdictions authorizing us to accumulate and defer certain incremental costs incurred, including bad debt expenses, and certain lost revenues associated with COVID-19. Amounts expected to be deferred for later recovery under the accounting orders must be probable of recovery. Accordingly, there could be a delay in the recognition of amounts that may be approved for recovery until the conclusion of future regulatory proceedings. 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, 2020 and 2019 . 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. In Kansas, we have an AAO that allows Kansas Gas Service to defer and seek recovery of costs necessary for investigation and remediation at, and nearby, these 12 former MGP sites that are incurred after January 1, 2017, up to a cap of $15.0 million , net of any related insurance recoveries. Costs approved for recovery 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. 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, 2020 and 2019 . 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. 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 HCAs. 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 HCAs; • a verification of records for pipelines in class 3 and 4 locations and HCAs to confirm MAOPs; and • a requirement to test previously untested pipelines operating above 30 percent yield strength in HCAs. 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 six 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 GPAC met in June 2019 on 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 addresses the legislative mandates from the Pipeline Safety, Regulatory Certainty and Jobs Creation Act and will be called the Safety of Gas Transmission Pipelines: MAOP 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. On October 1, 2019, PHMSA published the first of the three final rulemakings referenced above, which addresses the 2011 congressional mandates. This final rule expands integrity management principles beyond HCAs and requires operators to collect traceable, verifiable and complete records moving forward, retain existing and new records for the life of the pipeline, and reconfirm pipeline MAOP in populated areas. The final rule also outlines methods for reconfirming a pipeline’s MAOP within 15 years. The first final rule becomes effective July 1, 2020. The potential capital and operating expenditures associated with compliance with the first final rulemaking are under review but are not expected to be material. PHMSA has indicated it now expects the second pending rulemaking to be issued as a final rule during 2020. The potential capital and operating expenditures associated with compliance with these pending rulemakings 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 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, 2020 | |
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, except for 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. We have not elected to designate any of our derivative instruments as hedges. 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 - Fair value not recorded - Change in fair value not recognized in earnings Mark-to-market - Recorded at fair value - Change in fair value recognized in, and recoverable through, the purchased-gas cost adjustment mechanisms Fair Value Measurements - 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, 2020 , we had no purchased natural gas call options. At December 31, 2019 , we held purchased natural gas call options for the heating season ended March 2020, with total notional amounts of 14.3 Bcf, for which we paid premiums of $4.4 million , and which had a fair value of $0.3 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 periods presented. 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. At March 31, 2020 and December 31, 2019, our other current and noncurrent assets include $2.3 million and $2.6 million of corporate bonds, respectively, and $3.0 million of United States treasury notes at both March 31, 2020 and December 31, 2019. The fair value of corporate bonds and United States treasury notes approximate our carrying value, and are classified as Level 2 and Level 1, respectively. 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, 2020 and December 31, 2019 . The estimated fair value of our long-term debt, including current maturities, was $1.5 billion at both March 31, 2020 and December 31, 2019 . The estimated fair value of our long-term debt at March 31, 2020 and December 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
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 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 business segment: regulated public utilities that deliver natural gas primarily to residential, commercial and transportation customers. The accounting policies for our segment are the same as those described in Note 1 of our Notes to Consolidated Financial Statements in our Annual Report. We evaluate our financial performance principally on net income. For the three months ended March 31, 2020 and 2019 , 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 March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. In the first quarter 2020, we adopted this new guidance effective for contracts modified between March 12, 2020 and December 31, 2022. Our revolving lines of credit under the ONE Gas Credit Agreement and the ONE Gas 364-day Credit Agreement utilize LIBOR as the reference rate. If modified, we may elect the optional practical expedients to account for the modifications prospectively. Our adoption did not result in a material impact to our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. ASU 2019-12 also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This standard is effective for interim and annual periods in fiscal years beginning after December 15, 2020, and early adoption is permitted. We are currently assessing the timing and impacts of adopting this standard. 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. The deferred implementation costs should be amortized over the term of the hosting arrangement, including any probable renewals. We are party to hosting arrangements identified as service contracts for various information systems used in our operations. We adopted this new guidance using the prospective transition approach for implementation costs incurred in hosting arrangement service contracts beginning January 1, 2020. In certain jurisdictions, we have orders from our regulators allowing us to amortize deferred implementation costs for hosting arrangements entered into after January 1, 2020, over the life approved by our regulators for our internal-use software systems rather than the term of the hosting arrangement. The difference in amortization calculated between the term of the hosting arrangement and internal-use software life approved by our regulators is deferred as a regulatory asset and amortized over the remaining internal-use software life that exceeds the term of the hosting arrangement. Our adoption did not result in a material impact 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. We adopted this new guidance in the first quarter of 2020 using the modified retrospective method. Our financial assets within scope of this guidance primarily include our trade receivables from customers. Our policy for measuring our allowance for doubtful accounts is disclosed in the aforementioned policy for accounts receivable. We did not create any new accounting policies, nor did we modify any of our existing policies as a result of adopting this guidance. Our adoption did not result in a cumulative adjustment to our opening retained earnings or have a material impact to our consolidated financial statements. 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 allowed 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 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Derivatives | Accounting Treatment - We record all derivative instruments at fair value, except for 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. We have not elected to designate any of our derivative instruments as hedges. 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 - Fair value not recorded - Change in fair value not recognized in earnings Mark-to-market - Recorded at fair value - Change in fair value recognized in, and recoverable through, the purchased-gas cost adjustment mechanisms |
Fair Value Measurement | Fair Value Measurements - 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. |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenues Disaggregated by Source [Table] | The following table sets forth our revenues disaggregated by source for the periods indicated: Three Months Ended March 31, 2020 2019 (Thousands of dollars) Natural gas sales to customers $ 480,718 $ 621,492 Transportation revenues 33,757 35,028 Miscellaneous revenues 4,470 5,428 Total revenues from contracts with customers 518,945 661,948 Other revenues - natural gas sales related 6,547 (2,944 ) Other revenues 2,676 1,996 Total other revenues 9,223 (948 ) Total revenues $ 528,168 $ 661,000 |
REGULATORY ASSETS AND LIABILI_2
REGULATORY ASSETS AND LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES | The tables below present a summary of regulatory assets and liabilities, net of amortization, for the periods indicated: March 31, 2020 Current Noncurrent Total ( Thousands of dollars ) Pension and postemployment benefit costs $ 21,199 $ 363,467 $ 384,666 Reacquired debt costs 812 5,474 6,286 MGP remediation costs 98 9,685 9,783 Ad-valorem tax 3,593 — 3,593 Weather normalization 3,713 — 3,713 Other 10,393 2,060 12,453 Total regulatory assets, net of amortization 39,808 380,686 420,494 Federal income tax rate changes (6,282 ) (494,210 ) (500,492 ) Over-recovered purchased-gas costs (27,367 ) — (27,367 ) Total regulatory liabilities, net of amortization (33,649 ) (494,210 ) (527,859 ) Net regulatory assets and liabilities $ 6,159 $ (113,524 ) $ (107,365 ) December 31, 2019 Current Noncurrent Total ( Thousands of dollars ) Under-recovered purchased-gas costs $ 17,172 $ — $ 17,172 Pension and postemployment benefit costs 21,213 373,266 394,479 Reacquired debt costs 812 5,677 6,489 MGP remediation costs 98 9,709 9,807 Ad-valorem tax 2,921 — 2,921 Other 5,224 2,384 7,608 Total regulatory assets, net of amortization 47,440 391,036 438,476 Federal income tax rate changes (10,297 ) (503,518 ) (513,815 ) Over-recovered purchased-gas costs (27,623 ) — (27,623 ) Weather normalization (7,281 ) — (7,281 ) Total regulatory liabilities (45,201 ) (503,518 ) (548,719 ) Net regulatory assets and liabilities $ 2,239 $ (112,482 ) $ (110,243 ) |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 2020 2019 of Income ( Thousands of dollars ) Pension and other postemployment benefit plan obligations (a) Amortization of net loss $ 10,623 $ 8,821 Amortization of unrecognized prior service credit (29 ) (168 ) 10,594 8,653 Reclassification of stranded tax effects (b) — (1,218 ) Regulatory adjustments (c) (10,296 ) (7,222 ) 298 213 Income before income taxes (74 ) (53 ) Income tax expense Total reclassifications for the period $ 224 $ 160 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 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, 2020 | |
EARNINGS PER SHARE [Line Items] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months Ended March 31, 2020 Income Shares Per Share Amount ( Thousands, except per share amounts ) Basic EPS Calculation Net income available for common stock $ 91,677 53,007 $ 1.73 Diluted EPS Calculation Effect of dilutive securities — 261 Net income available for common stock and common stock equivalents $ 91,677 53,268 $ 1.72 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 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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, 2020 2019 ( Thousands of dollars ) Components of net periodic benefit cost Service cost $ 3,217 $ 3,008 Interest cost 8,545 10,168 Expected return on assets (15,280 ) (15,485 ) Amortization of net loss 10,580 8,260 Net periodic benefit cost $ 7,062 $ 5,951 Other Postemployment Benefits Three Months Ended March 31, 2020 2019 ( Thousands of dollars ) Components of net periodic benefit cost (credit) Service cost $ 423 $ 434 Interest cost 1,889 2,329 Expected return on assets (3,867 ) (3,147 ) Amortization of unrecognized prior service credit (29 ) (168 ) Amortization of net loss 43 561 Net periodic benefit cost (credit) $ (1,541 ) $ 9 |
OTHER INCOME AND OTHER EXPENS_2
OTHER INCOME AND OTHER EXPENSE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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, 2020 2019 ( Thousands of dollars ) Net periodic benefit cost other than service cost $ (1,123 ) $ (1,599 ) Earnings (losses) on investments associated with nonqualified employee benefit plans (4,259 ) 2,441 Other, net (406 ) (413 ) Total other income (expense), net $ (5,788 ) $ 429 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) number in Millions, $ in Millions | 3 Months Ended | ||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Jan. 01, 2019USD ($) | |
Significant Accounting Policies [Line Items] | |||
Document Period End Date | Mar. 31, 2020 | ||
Number of natural gas distribution services customers | 2.2 | ||
Segment Reporting, Disclosure of Major Customers | 0 | 0 | |
Capital Expenditures Incurred but Not yet Paid | $ 4.2 | $ 1.7 | |
Operating Lease, Right-of-Use Asset | $ 32 | ||
Operating Lease, Liability | $ 32 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Unbilled Receivables, Current | $ 71,600 | $ 109,700 | |
Regulated Operating Revenue, Gas | 518,945 | $ 661,948 | |
Regulated Operating Revenue, Other | 9,223 | ||
Regulated Operating Revenue, Other Credit | (948) | ||
Regulated Operating Revenue | 528,168 | 661,000 | |
Natural gas sales to customers [Member] | |||
Regulated Operating Revenue, Gas | 480,718 | 621,492 | |
Transportation revenues [Member] | |||
Regulated Operating Revenue, Gas | 33,757 | 35,028 | |
Miscellaneous revenues [Member] | |||
Regulated Operating Revenue, Gas | 4,470 | 5,428 | |
Other revenues - natural gas sales related [Member] | |||
Other revenues - natural gas sales related | 6,547 | (2,944) | |
Other revenues [Member] | |||
Regulated Operating Revenue, Other | $ 2,676 | $ 1,996 |
REGULATORY ASSETS AND LIABILI_3
REGULATORY ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2017 | Dec. 31, 2019 | |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | ||
Regulatory Assets, Current | $ 39,808 | $ 47,440 | ||
Regulatory Assets, Noncurrent | 380,686 | 391,036 | ||
Regulatory Liability, Current | (33,649) | (45,201) | ||
Regulatory Liability, Noncurrent | (494,210) | (503,518) | ||
Net regulatory assets (liabilities), current | 6,159 | 2,239 | ||
Net regulatory assets (liabilities), noncurrent | (113,524) | (112,482) | ||
Net Regulatory Assets | (107,365) | (110,243) | ||
Reduction in income tax expense for the amortization of the regulatory liability associated with excess ADIT that was returned to customers | 6,900 | $ 6,700 | ||
Federal income tax rate changes [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Liability, Current | (6,282) | (10,297) | ||
Regulatory Liability, Noncurrent | (494,210) | (503,518) | ||
Regulatory Liabilities | (500,492) | (513,815) | ||
Over-recovered purchased-gas costs [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Liability, Current | (27,367) | (27,623) | ||
Regulatory Liability, Noncurrent | 0 | 0 | ||
Regulatory Liabilities | (27,367) | (27,623) | ||
Total regulated liabilities [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Liability, Current | (33,649) | (45,201) | ||
Regulatory Liability, Noncurrent | (494,210) | (503,518) | ||
Regulatory Liabilities | (527,859) | (548,719) | ||
Under-recovered purchased-gas costs [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Assets, Current | 17,172 | |||
Regulatory Assets, Noncurrent | 0 | |||
Regulatory Assets | 17,172 | |||
Pension and postretirement benefit costs [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Assets, Current | 21,199 | 21,213 | ||
Regulatory Assets, Noncurrent | 363,467 | 373,266 | ||
Regulatory Assets | 384,666 | 394,479 | ||
Weather normalization [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Assets, Current | 3,713 | |||
Regulatory Assets, Noncurrent | 0 | |||
Regulatory Assets | 3,713 | |||
Regulatory Liability, Current | (7,281) | |||
Regulatory Liability, Noncurrent | 0 | |||
Regulatory Liabilities | (7,281) | |||
Reacquired debt costs [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Assets, Current | 812 | 812 | ||
Regulatory Assets, Noncurrent | 5,474 | 5,677 | ||
Regulatory Assets | 6,286 | 6,489 | ||
MGP Costs [Member] [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Assets, Current | 98 | 98 | ||
Regulatory Assets, Noncurrent | 9,685 | 9,709 | ||
Regulatory Assets | 9,783 | 9,807 | ||
Ad valorem tax [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Assets, Current | 3,593 | 2,921 | ||
Regulatory Assets, Noncurrent | 0 | 0 | ||
Regulatory Assets | 3,593 | 2,921 | ||
Other regulatory assets [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Assets, Current | 10,393 | 5,224 | ||
Regulatory Assets, Noncurrent | 2,060 | 2,384 | ||
Regulatory Assets | 12,453 | 7,608 | ||
Total regulatory assets, net of amortization [Member] | ||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||||
Regulatory Assets, Current | 39,808 | 47,440 | ||
Regulatory Assets, Noncurrent | 380,686 | 391,036 | ||
Regulatory Assets | $ 420,494 | $ 438,476 |
CREDIT FACILITIES (Details)
CREDIT FACILITIES (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | |
Short-term Debt [Line Items] | |||
Line of Credit Facility Sublimit | $ 20,000 | ||
Line of Credit Facility Option to Increase Borrowing Capacity | $ 500,000 | ||
Ratio of Indebtedness to Net Capital | 0.45 | ||
Letters of Credit Outstanding, Amount | $ 1,200 | ||
Line of Credit Facility, Remaining Borrowing Capacity | 698,800 | ||
Commercial paper maximum borrowing capacity | $ 700,000 | $ 700,000 | |
Document Period End Date | Mar. 31, 2020 | ||
Commercial Paper | $ 474,695 | $ 516,500 | |
Proceeds from Unsecured Lines of Credit | $ 250,000 | ||
Line of Credit Facility, Description | In April 2020, we entered into the ONE Gas 364-day Credit Agreement. The ONE Gas 364-day Credit Agreement is a $250 million revolving unsecured credit facility containing various customary conditions to borrowing and affirmative, negative and financial ratio maintenance covenants, all of which are substantially the same as those of the ONE Gas Credit Agreement. The ONE Gas 364-day Credit Agreement also contains provisions for an applicable margin rate and a quarterly facility fee, both of which adjust with changes in our credit rating. Based on our current credit ratings, borrowings, if any, will accrue interest at LIBOR plus 115 basis points, and the quarterly facility fee is 10 basis points. In the event LIBOR is not available, and such circumstances are unlikely to be temporary, our lenders may establish an alternative interest rate for the impacted loans by replacing LIBOR with one or more secured overnight financing-based rates or another alternate benchmark rate. We have not borrowed on the ONE Gas 364-day Credit Agreement. | ||
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) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
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. |
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 |
Debt Instrument, Interest Rate, Stated Percentage | 4.50% |
LEASES (Details)
LEASES (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Lessee, Lease, Description [Line Items] | |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 9 |
Operating Lease Liability Incurred | $ 9.4 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Jun. 30, 2020 | Mar. 31, 2020 | |
Forward Contract Indexed to Issuer's Equity, Indexed Shares | $ 250 | |
Forward Contract Indexed to Issuer's Equity, Equity Available for Issuance | $ 250 | |
Subsequent Event [Member] | ||
Common Stock, Dividends, Per Share, Declared | $ 0.54 | |
Common Stock, Dividends, Declared, Annualized Basis | $ 2.16 | |
Dividends Payable, Date of Record | May 13, 2020 | |
Dividends Payable, Date to be Paid | Jun. 1, 2020 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Amortization of net loss | $ 10,623 | $ 8,821 |
Amortization of unrecognized prior service cost | (29) | (168) |
Reclassification adjustment, before tax and regulatory adjustments | 10,594 | 8,653 |
Stranded Deferred Tax Remeasurement Benefit | 0 | (1,218) |
Regulatory adjustments | (10,296) | (7,222) |
Reclassification adjustment, before tax | 298 | 213 |
Reclassification adjustment, Tax | (74) | (53) |
Reclassification adjustment, net of tax | $ 224 | $ 160 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Basic EPS Calculation | ||
Net income available for common stock | $ 91,677 | $ 93,660 |
Weighted Average Number of Shares Outstanding, Basic | 53,007 | 52,825 |
Earnings Per Share, Basic | $ 1.73 | $ 1.77 |
Diluted EPS Calculation | ||
Net income available for common stock | $ 91,677 | $ 93,660 |
Effect of dilutive securities on income | $ 0 | $ 0 |
Effect of dilutive securities on shares | 261 | 381 |
Weighted Average Number of Shares Outstanding, Diluted | 53,268 | 53,206 |
Earnings Per Share, Diluted | $ 1.72 | $ 1.76 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Employee Benefit Plans [Line Items] | |||
Document Period End Date | Mar. 31, 2020 | ||
Capitalized non-service cost components as a regulatory asset | $ 5,400 | $ 4,700 | |
Components of net periodic benefit cost: | |||
Amortization of unrecognized prior service cost | 29 | $ 168 | |
Amortization of net loss | (10,623) | (8,821) | |
ONE Gas Pension Plans [Member] | |||
Components of net periodic benefit cost: | |||
Service cost | 3,217 | 3,008 | |
Interest cost | 8,545 | 10,168 | |
Expected return on assets | (15,280) | (15,485) | |
Amortization of net loss | 10,580 | 8,260 | |
Net periodic benefit cost | 7,062 | 5,951 | |
ONE Gas Postretirement Benefit Plans [Member] | |||
Components of net periodic benefit cost: | |||
Service cost | 423 | 434 | |
Interest cost | 1,889 | 2,329 | |
Expected return on assets | (3,867) | (3,147) | |
Amortization of unrecognized prior service cost | (29) | (168) | |
Amortization of net loss | 43 | 561 | |
Net periodic benefit cost | $ (1,541) | $ 9 |
OTHER INCOME AND OTHER EXPENS_3
OTHER INCOME AND OTHER EXPENSE (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Other, net | $ (5,788) | $ 429 |
Net periodic cost other than service cost [Member] | ||
Other, net | (1,123) | (1,599) |
Earnings (losses) on investments associated with nonqualified employee benefit plans [Member] | ||
Earnings on Investments Associated with Nonqualified Employee Benefit Plans | (4,259) | 2,441 |
Other, net [Member] | ||
Other, net | $ (406) | $ (413) |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2020 | Dec. 31, 2017USD ($) | Sep. 30, 2018 | Jun. 30, 2018 | |
Commitments and Contingencies [Line Items] | ||||
Document Period End Date | Mar. 31, 2020 | |||
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 | |||
Number of sites with ongoing groundwater monitoring | 8 | |||
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, 2020USD ($)MMcf | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)MMcf | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |||
Document Period End Date | Mar. 31, 2020 | ||
Derivative, Nonmonetary Notional Amount | MMcf | 0 | 14,300 | |
Premiums recorded in other current assets on natural gas contracts held | $ 4,400,000 | ||
Fair Value Assets, Transfers between Levels | $ 0 | $ 0 | |
Corporate bonds in other assets | 2,300,000 | 2,600,000 | |
Treasury notes in other assets | 3,000,000 | 3,000,000 | |
Long-term Debt, including current maturities | 1,286,193,000 | 1,286,064,000 | |
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 | 300,000 | ||
Fair Value, Inputs, Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |||
Long-term Debt, Fair Value | $ 1,500,000,000 | $ 1,500,000,000 |