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What changed in SPIRE INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SPIRE INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+281 added−306 removedSource: 10-K (2023-11-16) vs 10-K (2022-11-16)

Top changes in SPIRE INC's 2023 10-K

281 paragraphs added · 306 removed · 219 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

30 edited+5 added−5 removed32 unchanged
Biggest changeNatural Gas Storage Spire Missouri believes it currently has ample storage capacity to meet the demands of its distribution system, particularly to augment its supply during peak demand periods; however, see related discussion of Spire STL Pipeline under the caption “—The Utilities’ ability to meet their customers’ natural gas requirements may be impaired if contracted gas supplies, interstate pipeline and/or storage services are not available or delivered in a timely manner” under Item 1A, Risk Factors, and in Note 15 , Regulatory Matters, of the Notes to Financial Statements in Item 8.
Biggest changeNatural Gas Storage Spire Missouri believes it currently has ample storage capacity to meet the demands of its distribution system, particularly to augment its supply during peak demand periods.
In addition, Spire Alabama has 2.0 Bcf of LNG storage that can provide the system with up to an additional 0.2 Bcf of natural gas daily to meet peak day demand. Spire Gulf obtains adequate storage capacity through Gulf South Pipeline Company, LP, and Enstor Gas, LLC’s Bay Gas Storage.
In addition, Spire Alabama has 2.0 Bcf of on-system LNG storage that can provide the system with up to an additional 0.2 Bcf of natural gas daily to meet peak day demand. Spire Gulf obtains adequate storage capacity through Gulf South Pipeline Company, LP, and Enstor Gas, LLC’s Bay Gas Storage.
We offer incentives for weight management and gym membership, as well as employee assistance programs to provide counseling services and emotional support, and we have a formalized comprehensive well-being program that focuses on the physical, emotional, social and financial health of every employee.
To support employee wellness, we offer incentives for weight management and gym membership, as well as employee assistance programs to provide counseling services and emotional support, and we have a formalized comprehensive well-being program that focuses on the physical, emotional, social and financial health of every employee.
The field is designed to provide approximately 0.3 Bcf of natural gas withdrawals on a peak day, and provides the ability to reinject natural gas during the heating season to replenish or increase deliverability, subject to maximum annual net withdrawals of approximately 4.0 Bcf of natural gas based on the inventory level that Spire Missouri plans to maintain.
The field is designed to provide approximately 0.35 Bcf of natural gas withdrawals on a peak day and provides the ability to reinject natural gas during the heating season to replenish or increase deliverability, subject to maximum annual net withdrawals of approximately 4.0 Bcf of natural gas based on the inventory level that Spire Missouri plans to maintain.
To secure access to the markets it serves, Spire Marketing contracts for transportation capacity on various pipelines from pipeline companies directly and from other parties through the secondary capacity market. Throughout fiscal 2022, Spire Marketing held approximately 1.1 Bcf per day of firm transportation capacity.
To secure access to the markets it serves, Spire Marketing contracts for transportation capacity on various pipelines from pipeline companies directly and from other parties through the secondary capacity market. Throughout fiscal 2023, Spire Marketing held approximately 1 Bcf per day of firm transportation capacity.
In fiscal year 2022 , Spire Missouri purchased natural gas from 24 different suppliers to meet its total service area current gas sales and storage injection requirements. Spire Missouri entered into firm agreements with suppliers including major producers and marketers providing flexibility to meet the temperature-sensitive needs of its customers.
In fiscal 2023 , Spire Missouri purchased natural gas from 24 different suppliers to meet its total service area current gas sales and storage injection requirements. Spire Missouri entered into firm agreements with suppliers including major producers and marketers providing flexibility to meet the temperature-sensitive needs of its customers.
Natural gas purchased by Spire Missouri for delivery to its service areas included 48.3 billion cubic feet (Bcf) through the Southern Star Central Gas Pipeline, Inc.
Natural gas purchased by Spire Missouri for delivery to its service areas included 50.3 billion cubic feet (Bcf) through the Southern Star Central Gas Pipeline, Inc.
Spire Missouri also holds firm transportation arrangements on several other interstate pipeline systems that provide access to gas supplies upstream. Some of Spire Missouri’s commercial and industrial customers purchased their own gas with Spire Missouri transporting 52.0 Bcf to them through its distribution system.
Spire Missouri also holds firm transportation arrangements on several other interstate pipeline systems that provide access to gas supplies upstream. Some of Spire Missouri’s commercial and industrial customers purchased their own gas with Spire Missouri transporting 51.2 Bcf to them through its distribution system.
Spire is committed to transforming its business and pursuing growth through growing organically, investing in infrastructure, and advancing through innovation. The Company has two key business segments: Gas Utility and Gas Marketing. The Gas Utility segment includes the regulated operations of Spire Missouri, Spire Alabama, Spire Gulf Inc. (“Spire Gulf”) and Spire Mississippi Inc. (“Spire Mississippi”) (collectively, the “Utilities”).
Spire is committed to transforming its business and pursuing growth through growing organically, investing in infrastructure, and advancing through innovation. The Company has three reportable business segments: Gas Utility, Gas Marketing and Midstream. The Gas Utility segment includes the regulated operations of Spire Missouri, Spire Alabama, Spire Gulf Inc. (“Spire Gulf”) and Spire Mississippi Inc. (“Spire Mississippi”) (collectively, the “Utilities”).
In fiscal 2022, Spire Alabama purchased natural gas from 27 different suppliers to meet current gas sales, storage injection, and liquefied natural gas (LNG) liquefaction requirements, of which one supplier is under a long-term supply agreement.
In fiscal 2023, Spire Alabama purchased natural gas from 24 different suppliers to meet current gas sales, storage injection, and liquefied natural gas (LNG) liquefaction requirements, of which one supplier is under a long-term supply agreement.
In new multi-family and commercial rental markets, the Utilities’ competitive exposures are presently limited to space and water heating applications. Spire Missouri and Spire Alabama offer gas transportation service to its large commercial and industrial customers. Transportation customers represent approximately 3% and 15% of fiscal 2022 operating revenues for Spire Missouri and Spire Alabama, respectively.
In new multi-family and commercial rental markets, the Utilities’ competitive exposures are presently limited to space and water heating applications. Spire Missouri and Spire Alabama offer gas transportation service to its large commercial and industrial customers. Transportation customers represent approximately 2% and 14% of fiscal 2023 operating revenues for Spire Missouri and Spire Alabama, respectively.
Direct use of renewables will continue to grow in the future and compete against distributed generation using natural gas. 8 Table of Contents Residential, commercial, and industrial customers represent approximately 94% and 81% of fiscal 2022 operating revenues for Spire Missouri and Spire Alabama, respectively.
Direct use of renewables will continue to grow in the future and compete against distributed generation using natural gas. 8 Table of Contents Residential, commercial, and industrial customers represent approximately 95% and 83% of fiscal 2023 operating revenues for Spire Missouri and Spire Alabama, respectively.
Further, Spire STL Pipeline LLC (“Spire STL Pipeline”), a wholly owned subsidiary of Spire, may deliver up to 400,000 million British thermal units (MMBtu) per day of natural gas into eastern Missouri, of which Spire Missouri is the foundation shipper with a contractual commitment of 350,000 MMBtu per day.
Further, Spire STL Pipeline may deliver up to 400,000 million British thermal units (MMBtu) per day of natural gas into eastern Missouri, of which Spire Missouri is the foundation shipper with a contractual commitment of 350,000 MMBtu per day.
Spire Missouri has a contractual right to store 21.5 Bcf of gas in MRT’s storage facility located in Unionville, Louisiana, 16.3 Bcf of gas storage in Southern Star’s system storage facilities located in Kansas and Oklahoma, and 1.4 Bcf of firm storage on PEPL’s system storage.
Spire Missouri has a contractual right to store 21.6 Bcf of gas in MRT’s storage facility located in Unionville, Louisiana, 16.0 Bcf of gas storage in Southern Star’s system storage facilities located in Kansas and Oklahoma, 1.4 Bcf of firm storage on PEPL’s system storage, and 1.0 Bcf of firm storage with Spire Storage Salt Plains.
Should that condition change, the Company could experience labor disputes, work stoppages or other disruptions that could negatively impact the Company’s system operations, customer service, results of operations and cash flows. 6 Table of Contents The following table presents the Company’s various labor agreements as of September 30, 2022: Employees Contract Start Contract End Union Local Covered Date Date Spire Missouri United Steel, Paper and Forestry, Rubber Manufacturing, Allied-Industrial and Service Workers International Union (USW) 884 68 August 10, 2021 July 31, 2024 USW 11-6 843 August 1, 2021 July 31, 2024 USW 11-6-03 101 August 1, 2021 July 31, 2024 USW 12561 130 August 1, 2022 July 31, 2025 USW 14228 44 August 1, 2022 July 31, 2025 USW 11-267 28 August 1, 2022 July 31, 2025 International Brotherhood of Electrical Workers 53 2 October 1, 2022 September 30, 2025 Gas Workers Metal Trades locals of the United Association of Journeyman and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada 781-Kansas City 216 August 1, 2022 July 31, 2025 Gas Workers Metal Trades locals of the United Association of Journeyman and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada 781-Monett 52 August 1, 2022 July 31, 2025 Total Spire Missouri 1,484 Spire Alabama USW 12030 235 May 1, 2020 April 30, 2023 United Association of Gas Fitters 548 221 May 1, 2022 April 30, 2025 Total Spire Alabama 456 Spire Gulf USW 541 68 August 1, 2020 July 31, 2023 Total Spire 2,008 7 Table of Contents Operating Revenues and Customer Information The following tables present information on Spire’s revenues and volume sold and transported (before intersegment eliminations), and annual average numbers of customers for the three years ended September 30, 2022, 2021 and 2020.
Should that condition change, the Company could experience labor disputes, work stoppages or other disruptions that could negatively impact the Company’s system operations, customer service, results of operations and cash flows. 6 Table of Contents The following table presents the Company’s various labor agreements as of September 30, 2023: Employees Contract Start Contract End Union Local Covered Date Date Spire Missouri United Steel, Paper and Forestry, Rubber Manufacturing, Allied-Industrial and Service Workers International Union (USW) 884 67 August 10, 2021 July 31, 2024 USW 11-6 873 August 1, 2021 July 31, 2024 USW 11-6-03 98 August 1, 2021 July 31, 2024 USW 12561 132 August 1, 2022 July 31, 2025 USW 14228 40 August 1, 2022 July 31, 2025 USW 11-267 28 August 1, 2022 July 31, 2025 International Brotherhood of Electrical Workers 53 1 October 1, 2022 September 30, 2025 Gas Workers Metal Trades locals of the United Association of Journeyman and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada 781-Kansas City 215 August 1, 2022 July 31, 2025 Gas Workers Metal Trades locals of the United Association of Journeyman and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada 781-Monett 49 August 1, 2022 July 31, 2025 Total Spire Missouri 1,503 Spire Alabama USW 12030 210 May 1, 2023 April 30, 2026 United Association of Gas Fitters 548 207 May 1, 2022 April 30, 2025 Total Spire Alabama 417 Spire Gulf USW 541 61 August 1, 2023 July 31, 2026 Total Spire 1,981 7 Table of Contents Operating Revenues and Customer Information The following tables present information on Spire’s revenues and volume sold and transported (before intersegment eliminations), and annual average numbers of customers for the three years ended September 30, 2023, 2022 and 2021.
(Southern Star) system, 26.3 Bcf through the Spire STL Pipeline, 26.3 Bcf through the Enable Mississippi River Transmission LLC (MRT) system, 6.3 Bcf through the Panhandle Eastern Pipe Line Company, LP (PEPL) system, 5.5 Bcf through the Rockies Express Pipeline, LLC (REX) system, and 4.5 Bcf through the Tallgrass Interstate Gas Transmission, LLC (TIGT) system.
(Southern Star) system, 35.8 Bcf through the Enable Mississippi River Transmission LLC (MRT) system, 22.9 Bcf through the Spire STL Pipeline, 6.0 Bcf through the Tallgrass Interstate Gas Transmission, LLC (TIGT) system, 4.3 Bcf through the Panhandle Eastern Pipe Line Company, LP (PEPL) system, and 2.8 Bcf through the Rockies Express Pipeline, LLC (REX) system.
GAS MARKETING Spire Marketing is engaged in the marketing of natural gas and related services throughout the United States, which includes customers within and outside of the Utilities’ service areas. For fiscal 2022 and 2021, Spire Marketing volumes averaged 1.73 Bcf/day and 2.02 Bcf/day, respectively.
GAS MARKETING Spire Marketing is engaged in the marketing of natural gas and related services throughout the U.S., which includes customers within and outside of the Utilities’ service areas. For fiscal 2023 and 2022, Spire Marketing volumes averaged 1.40 Bcf/day and 1.73 Bcf/day, respectively.
The purchased volumes are delivered to Spire Alabama’s system using a variety of firm transportation, interruptible transportation and storage capacity arrangements designed to meet the system’s varying levels of demand.
Certain volumes are purchased under firm contractual commitments with other volumes purchased on a spot market basis. The purchased volumes are delivered to Spire Alabama’s system using a variety of firm transportation, interruptible transportation and storage capacity arrangements designed to meet the system’s varying levels of demand.
Approximately 68.2 Bcf was purchased for delivery by Southern Natural Gas, 3.7 Bcf by Transco, and 11.0 Bcf through intrastate pipelines to the Spire Alabama delivery points for its residential, commercial, and industrial customers.
Approximately 47.8 Bcf was purchased for delivery by Southern Natural Gas, 5.6 Bcf by BBT-AlaTenn, 3.8 Bcf by Transco, and 18.2 Bcf through intrastate pipelines to the Spire Alabama delivery points for its residential, commercial, and industrial customers.
Spire STL Pipeline is a wholly owned subsidiary of Spire which owns and operates a 65-mile pipeline connecting the Rockies Express Pipeline in Scott County, Illinois, to delivery points in St. Louis County, Missouri, including Spire Missouri’s storage facility. Spire STL Pipeline’s operating revenue is derived primarily from Spire Missouri as its foundation shipper.
Spire STL Pipeline owns and operates a 65-mile pipeline connecting the Rockies Express Pipeline in Scott County, Illinois, to multiple delivery points in St. Louis County, Missouri, including Spire Missouri. Spire STL Pipeline’s operating revenue is derived primarily from Spire Missouri as its foundation shipper. The pipeline is under the jurisdiction of the Federal Energy Regulatory Commission (FERC).
The fiscal 2022 peak day send out for Spire Alabama was 0.5 Bcf on February 14, 2022, when the average temperature was 32 degrees Fahrenheit in Birmingham, of which 100% was met with supplies transported through Southern Natural Gas, Transco, and intrastate facilities.
The fiscal 2023 peak day send out for Spire Alabama was 0.6 Bcf of natural gas on December 23, 2022, when the average temperature was 13 degrees Fahrenheit in Birmingham, of which 80% was met with supplies transported through Southern Natural Gas, Transco, and intrastate facilities. The remaining 20% was fulfilled with LNG.
We regularly review and adjust our affirmative action plans based on placement and utilization rates, and we strive to create an even more diverse and inclusive work environment by committing to and achieving the goals of the CEO Action for Diversity & Inclusion Pledge.
We regularly review and adjust our affirmative action plans based on placement and utilization rates, and we strive to create an even more diverse and inclusive work environment.
Gas Utility Operating Revenues (% of Total) 2022 2021 2020 Residential 73 % 58 % 68 % Commercial & Industrial 17 % 28 % 22 % Transportation 6 % 6 % 6 % Other 4 % 8 % 4 % Total 100 % 100 % 100 % Gas Utility Volume Sold and Transported (In millions of CCF) 2022 2021 2020 Residential 994.7 1,069.6 1,033.5 Commercial & Industrial 468.9 479.0 464.1 Transportation 1,617.6 1,614.7 1,637.8 Interruptible 11.8 15.0 14.5 Total System 3,093.0 3,178.3 3,149.9 Off-System 82.0 69.4 83.2 Total 3,175.0 3,247.7 3,233.1 Gas Utility Customers 2022 2021 2020 Residential 1,618,515 1,612,385 1,599,693 Commercial & Industrial 113,077 112,635 112,566 Transportation 1,023 846 847 Interruptible 50 63 67 Total 1,732,665 1,725,929 1,713,173 Total annual average number of customers for Spire Missouri and Spire Alabama for fiscal 2022 was 1,199,932 and 430,137, respectively.
Gas Utility Operating Revenues (% of Total) 2023 2022 2021 Residential 67 % 73 % 58 % Commercial & Industrial 25 % 17 % 28 % Transportation 5 % 6 % 6 % Other 3 % 4 % 8 % Total 100 % 100 % 100 % Gas Utility Volume Sold and Transported (In millions of CCF) 2023 2022 2021 Residential 965.3 994.7 1,069.6 Commercial & Industrial 468.7 468.9 479.0 Transportation 1,662.9 1,617.6 1,614.7 Interruptible 10.9 11.8 15.0 Total System 3,107.8 3,093.0 3,178.3 Off-System 112.9 82.0 69.4 Total 3,220.7 3,175.0 3,247.7 Gas Utility Customers 2023 2022 2021 Residential 1,621,822 1,618,515 1,612,385 Commercial & Industrial 112,753 113,077 112,635 Transportation 1,013 1,023 846 Interruptible 45 50 63 Total 1,735,633 1,732,665 1,725,929 Total annual average number of customers for Spire Missouri and Spire Alabama for fiscal 2023 was 1,203,003 and 430,290, respectively.
The fiscal year 2022 peak day send out of natural gas to Spire Missouri customers, including transportation customers, occurred on January 20, 2022. The average temperature was 11 degrees Fahrenheit in both St. Louis and Kansas City. On that day, Spire Missouri’s customers consumed 1.58 Bcf of natural gas.
The fiscal 2023 peak day send out of natural gas to Spire Missouri East customers, including transportation customers, occurred on December 23, 2022. The average temperature was 6 degrees Fahrenheit in St. Louis, and on that day Spire Missouri East customers consumed 1.04 Bcf of natural gas. This peak day demand was met with natural gas transported to St.
In their first year, construction and maintenance employees and service employees receive 160–200 hours of technical and safety training. Field operations employees average 40 hours annually of training and Operator Qualification instruction.
In their first year, each construction and maintenance employee receives 80 hours of safety training, while each service and installation employee receives 200 hours of training. Field operations employees average 24 hours of technical and procedural training annually.
For eastern Missouri, this peak day demand was met with natural gas transported to St. Louis through the MRT, Missouri Gas Pipeline LLC, Spire STL Pipeline, and Southern Star transportation systems, and from Spire Missouri’s on-system storage.
Louis through the MRT, Missouri Gas Pipeline LLC, Spire STL Pipeline, and Southern Star transportation systems, and from Spire Missouri’s on-system storage. The fiscal 2023 peak day send out of natural gas to Spire Missouri West customers, including transportation customers, occurred on December 22, 2022.
The facility consists of two storage fields operating under one FERC market-based rate tariff currently authorized to provide up to 55 Bcf of storage capacity to customers. The actual storage capacity was 23 Bcf as of September 30, 2022, and management is in the process of expanding it to 39 Bcf by 2025. 10 Table of Contents
Spire Storage West is engaged in the storage of natural gas serving markets primarily in the western region of the U.S. The facility is located in southwestern Wyoming and consists of two storage fields operating under one FERC market-based rate tariff currently authorized to provide up to 55 Bcf of storage capacity to customers.
It is also connected to two intrastate natural gas pipeline systems. 5 Table of Contents Spire Alabama purchases natural gas from various natural gas producers and marketers. Certain volumes are purchased under firm contractual commitments with other volumes purchased on a spot market basis.
Spire Alabama’s distribution system is connected to two major interstate natural gas pipeline systems, Southern Natural Gas Company, L.L.C. (Southern Natural Gas) and Transcontinental Gas Pipe Line Company, LLC (Transco). It is also connected to two intrastate natural gas pipeline systems. 5 Table of Contents Spire Alabama purchases natural gas from various natural gas producers and marketers.
As of September 30, 2022 , Spire Marketing has contracted for approximately 28.2 B cf of such storage and park and loan capacity for the 2022-2023 winter season. 9 Table of Contents OTHER Other components of the Company’s consolidated information include: • Spire's natural gas midstream operations consisting of Spire STL Pipeline and Spire Storage West LLC (“Spire Storage”), described below; • Spire’s subsidiaries engaged in the operation of a propane pipeline and risk management, among other activities; and • unallocated corporate items, including certain debt and associated interest costs.
The facility operates under intrastate regulation and has a certificated capacity of 13 Bcf and working capacity of 10 Bcf. OTHER Other components of the Company’s consolidated information include Spire's subsidiaries engaged in the operation of a propane pipeline and risk management, among other activities, and unallocated corporate items, including certain debt and associated interest costs. 10 Table of Contents
For western Missouri, this peak day demand was met with natural gas transported to Kansas City through the Southern Star, PEPL, TIGT, and REX transportation systems. Spire Alabama’s distribution system is connected to two major interstate natural gas pipeline systems, Southern Natural Gas Company, L.L.C. (Southern Natural Gas) and Transcontinental Gas Pipe Line Company, LLC (Transco).
The average temperature was -3 degrees Fahrenheit in Kansas City, and on that day Spire Missouri West customers consumed 0.91 Bcf of natural gas. This peak day demand was met with natural gas transported to Kansas City through the Southern Star, PEPL, TIGT, and REX transportation systems.
Removed
As of September 30, 2022, Spire had 3,584 employees, including 2,347 for Spire Missouri and 1,009 for Spire Alabama.
Added
The Midstream segment includes Spire STL Pipeline LLC (“Spire STL Pipeline”) and Spire Storage (consisting of the operations of Spire Storage West LLC and Spire Storage Salt Plains LLC), which are subsidiaries engaged in the transportation and storage of natural gas. As of September 30, 2023, Spire had 3,589 employees, including 1,967 for Spire Missouri and 802 for Spire Alabama.
Removed
We continue to implement processes, procedures and programs that have helped us reduce our employee injury rate for the eighth fiscal year in a row, marking a 21% year-over-year improvement and an overall improvement of 67% since fiscal year 2015.
Added
We continue to implement processes, procedures and programs that reflect our focus on consistently reducing our employee injury and motor vehicle accident rates. In 2023, we held our 10 th annual safety summit, and we encourage employees to identify potential safety improvements in the workplace, which is one of the driving forces behind reducing motor vehicle incidents and work-related injuries.
Removed
See related discussion under the caption “—The Utilities’ ability to meet their customers’ natural gas requirements may be impaired if contracted gas supplies, interstate pipeline and/or storage services are not available or delivered in a timely manner” under Item 1A, Risk Factors, and in Note 15 , Regulatory Matters, of the Notes to Financial Statements in Item 8.
Added
We have also installed safety cameras in all Company vehicles, which are accompanied by driver coaching initiatives, to promote safe driving habits.
Removed
The pipeline is under the jurisdiction of the Federal Energy Regulatory Commission (FERC) and is currently permitted to deliver natural gas supply into eastern Missouri under a temporary certificate authorization from FERC. See related discussion under the caption “—Failing to secure a permanent re-authorization of the Spire STL Pipeline to operate could adversely affect the Company” under “Item 1A.
Added
As of September 30, 2023 , Spire Marketing has contracted for approximately 18 B cf of such storage and park and loan capacity for the 2023-2024 winter season. 9 Table of Contents MIDSTREAM Spire Midstream consists of three facilities located in the U.S.: Spire STL Pipeline, Spire Storage West, and Spire Storage Salt Plains.
Removed
Risk Factors” and in Note 15 , Regulatory Matters, of the Notes to Financial Statements in Item 8. Spire Storage is engaged in the storage of natural gas in the western region of the United States.
Added
The actual storage capacity was 23 Bcf as of September 30, 2023, and management is in the process of expanding it to 39 Bcf by 2025. Spire Storage Salt Plains is located in north central Oklahoma and serves markets in the midcontinent and midwestern U.S.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

104 edited+13 added−29 removed48 unchanged
Biggest changeAny damage to the Spire Storage facilities or pipelines, or lack of integrity to its storage fields, including damages caused by a blow-out, to the extent not covered by insurance, could have a material adverse effect on the Company’s financial condition and results of operations. The Company’s storage assets are connected to third-party-owned pipelines.
Biggest changeAny such disruptions, as well as any negative effects from the risks discussed below, could result in an impairment of Spire's investment in the project, and such impairment could have a material adverse effect on the Company's financial condition and results of operations. 15 Table of Contents Any damage to the Spire Storage facilities or pipelines, or lack of integrity to its storage fields, including damages caused by a blow-out, to the extent such impacts are self-insured or not covered by insurance, could have a material adverse effect on the Company’s financial condition and results of operations.
Spire and Spire Missouri assess goodwill for impairment annually or more frequently if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company and Spire Missouri assess their long-lived assets for impairment whenever events or circumstances indicate that an asset’s carrying amount may not be recoverable.
Spire and Spire Missouri assess goodwill for impairment annually or more frequently if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company and Spire Missouri assess their long-lived assets for impairment whenever events or circumstances indicate an asset’s carrying amount may not be recoverable.
Uncertainties exist in assessing the value, risks, profitability, and liabilities associated with certain businesses or assets and there is a possibility that anticipated operating and financial efficiencies expected to result from an acquisition or investment do not develop. Additionally, there are no assurances that resources expended will achieve their intended result.
Uncertainties exist in assessing the value, risks, profitability, and liabilities associated with certain businesses or assets and there is a possibility that anticipated operating and financial efficiencies expected to result from an acquisition or investment do not develop. Additionally, there are no assurances resources expended will achieve their intended result.
In addition, there have been a number of federal, state and local legislative and regulatory initiatives proposed in recent years in an attempt to control or limit the effects of global warming and overall climate change, including greenhouse gas emissions, such as methane and carbon dioxide.
There have been a number of federal, state and local legislative and regulatory initiatives proposed in recent years in an attempt to control or limit the effects of global warming and overall climate change, including greenhouse gas emissions, such as methane and carbon dioxide.
Spire Missouri and Spire Alabama are allowed to retain 25% of the net margins achieved as a result of such off-system sales and capacity release. The Utilities’ ability to retain such income in the future is subject to regulatory discretion.
Spire Missouri and Spire Alabama are allowed to retain 25% of the net margins achieved as a result of such off-system sales and capacity release. The Utilities’ ability to retain such income in the future is also subject to regulatory discretion.
Such weather events could also disrupt our usual gas supplies and make it impossible or extremely costly to find replacement gas for our customers. To the extent such impacts are not covered by insurance or recovered in rates, the foregoing events could have a material adverse effect on the Company’s financial condition and results of operations.
Such weather events could also disrupt our usual gas supplies and make it impossible or extremely costly to find replacement gas for our customers. To the extent such impacts are self-insured, or not covered by insurance or recovered in rates, the foregoing events could have a material adverse effect on the Company’s financial condition and results of operations.
The value of these net operating losses could be reduced if the Company cannot generate enough taxable income in the future to utilize all of the net operating losses generated prior to the Tax Cuts and Jobs Act of 2017 before they expire due to lower-than-expected financial performance or regulatory actions.
The value of these net operating losses could be reduced if the Company cannot generate enough taxable income in the future to utilize all of the net operating losses generated prior to the Tax Cuts and Jobs Act of 2017 before they expire due to income tax policy changes, lower-than-expected financial performance and/or regulatory actions.
To the extent that acquisitions or investments are made, such transactions involve a number of risks, including but not limited to, the assumption of material liabilities, the diversion of management’s attention from daily operations, difficulties in assimilation and retention of employees, securing adequate capital to support the transaction, and regulatory approval.
To the extent acquisitions or investments are made, such transactions involve a number of risks, including but not limited to, the assumption of material liabilities, the diversion of management’s attention from daily operations, difficulties in assimilation and retention of employees, securing adequate capital to support the transaction, and obtaining regulatory approval.
A loss of confidential or proprietary data or security breaches of technology for operations or business processes could adversely affect the Company’s and its subsidiaries’ reputation, diminish customer confidence, disrupt operations, and subject the Company and its subsidiaries to possible financial liability, any of which could have a material effect on the Company’s and its subsidiaries’ financial condition and results of operations.
A loss of confidential or proprietary data or security breaches of technology for operations or business processes could adversely affect the Company’s reputation, diminish customer confidence, disrupt operations, and subject the Company to possible financial liability, any of which could have a material effect on its financial condition and results of operations.
Spire Marketing’s inability to enter into derivatives instruments or other commercial risk hedging transactions on favorable terms, or at all, could increase operating expenses and expose it to unhedged commercial risks, including potential adverse changes in commodity prices.
In that event, Spire Marketing’s inability to enter into derivatives instruments or other commercial risk hedging transactions on favorable terms, or at all, could increase operating expenses and expose it to unhedged commercial risks, including potential adverse changes in commodity prices.
Poor investment returns or lower interest rates may necessitate accelerated funding of the plans to meet minimum federal government requirements, which could have an adverse impact on the Company’s and its subsidiaries’ financial condition and results of operations.
Poor investment returns or lower interest rates may necessitate accelerated funding of the plans to meet minimum federal government requirements, which could have an adverse impact on the Company’s financial condition and results of operations.
Such investments are subject to review, and there is risk that any material disallowance of costs under ISRS could adversely affect the timing of revenues and cash flows. The Utilities’ ability to obtain and timely implement rate increases and rate supplements to maintain the current rate of return is subject to regulatory review and approval.
Such investments are subject to review, and there is risk that any material disallowance of costs under ISRS could adversely affect the timing of revenues and cash flows. 11 Table of Contents The Utilities’ ability to obtain and timely implement rate increases and rate supplements to maintain the current rate of return is subject to regulatory review and approval.
The Utilities face the risk that larger commercial or industrial customers may bypass gas distribution services by gaining distribution directly from interstate pipelines or, in the case of Spire Alabama and Spire Gulf, also from municipally or publicly owned gas distributors located adjacent to its service territory.
The Utilities face the risk that larger commercial or industrial customers may bypass gas distribution services by directly connecting with interstate pipelines or, in the case of Spire Alabama and Spire Gulf, also from municipally or publicly owned gas distributors located adjacent to its service territory.
Natural gas transportation, distribution and storage activities inherently involve a variety of hazards and operations risks, such as leaks, accidental explosions, damage caused by third parties, and mechanical problems, which could cause substantial financial losses.
Natural gas transportation, distribution and storage activities inherently involve a variety of integrity issues, hazards and operations risks, such as leaks, accidental explosions, blowouts, damage caused by third parties, and mechanical problems, which could cause substantial financial losses.
The Utilities are subject to federal, state and local environmental laws and regulations affecting many aspects of their present and future operations. These laws and regulations require the Utilities to obtain and comply with a wide variety of environmental licenses, permits, inspections, and approvals.
The Utilities and Midstream companies are subject to federal, state and local environmental laws and regulations affecting many aspects of their present and future operations. These laws and regulations require these businesses to obtain and comply with a wide variety of environmental licenses, permits, inspections, and approvals.
Recessions and volatility in the domestic and international financial markets have negatively affected the asset values of Spire’s pension plans at various times in the past.
Recessions and volatility in the domestic and international financial markets have negatively affected the asset values of the Company’s pension plans at various times in the past.
The adoption in the future of this type of legislation by Congress or similar legislation by states or localities, or the adoption of related regulations by federal, state or local governments mandating a substantial reduction in greenhouse gas emissions, restricting the use of fossil fuels, such as natural gas, or restricting the construction of infrastructure necessary to deliver natural gas to customers could have far-reaching and significant impacts on the energy industry.
Adoption of this type of legislation by Congress or similar legislation by states or localities, or the adoption of related regulations by federal, state or local governments mandating a substantial reduction in greenhouse gas emissions, restricting the use of fossil fuels, such as natural gas, or restricting the construction of infrastructure could have far-reaching and significant impacts on the energy industry.
The discovery of presently unknown environmental conditions, including former manufactured gas plant sites, and claims against the Utilities under environmental laws and regulations may result in expenditures and liabilities, which could be material.
The discovery of presently unknown environmental conditions, including former manufactured gas plant sites, and adverse claims under environmental laws and regulations may result in expenditures and liabilities, which could be material.
Gas Marketing uses bilateral contracts and derivative instruments such as futures contracts, options and swaps to hedge or mitigate ongoing commercial risks. Most standardized swaps, under the Dodd-Frank Act, are required to be cleared through a registered clearing facility and traded on a designated exchange or swap execution facility, subject to certain exceptions.
Spire Marketing uses bilateral contracts and derivative instruments such as futures contracts, options and swaps to hedge or mitigate ongoing commercial risks. Most standardized swaps, under the Dodd-Frank Act and regulations from the CFTC, are required to be cleared through a registered clearing facility and traded on a designated exchange or swap execution facility, subject to certain exceptions.
These tools and systems support critical functions including Spire and its subsidiaries’ integrated planning, scheduling and dispatching of field resources, its automated meter reading system, customer care and billing, procurement and accounts payable, operational plant logistics, management reporting, and external financial reporting.
These tools and systems support critical functions including the Company’s integrated planning, scheduling and dispatching of field resources, its automated meter reading system, customer care and billing, procurement and accounts payable, operational plant logistics, management reporting, and external financial reporting.
When considering any investment in Spire or the Utilities’ securities, investors should carefully consider the following information, as well as information contained in the caption “Forward-Looking Statements,” Item 7A, and other documents Spire, Spire Missouri, and Spire Alabama file with the SEC.
When considering any investment in these companies’ securities, investors should carefully consider the following information, as well as information contained in the caption “Forward-Looking Statements,” Item 7A, and other documents Spire, Spire Missouri, and Spire Alabama file with the SEC.
Another possible impact of climate change may be more frequent and more severe weather events, such as hurricanes and tornadoes, which could increase costs to repair damaged facilities and restore service to customers or result in lost revenues if the Company were unable to deliver natural gas to customers.
Another possible impact of climate change may be more frequent and more severe weather events, such as significant wind or flooding events, which could increase costs to repair damaged facilities and restore service to customers or result in lost revenues if the Company were unable to deliver natural gas to customers.
The Company and its subsidiaries are subject to cybersecurity risks primarily related to breaches of security pertaining to sensitive customer, employee, and vendor information maintained by the Company, its subsidiaries, or its third-party vendors in the normal course of business, as well as breaches in the technology that manages natural gas distribution operations and other business processes.
The Company is subject to cybersecurity risks primarily related to breaches of security pertaining to sensitive customer, employee, and vendor information maintained by the Company, its subsidiaries, or its third-party vendors in the normal course of business, as well as breaches in the technology that manages natural gas supply and control operations and other business processes.
The Utilities are involved in legal or administrative proceedings before various courts and governmental bodies with respect to general claims, rates, environmental issues, gas cost prudence reviews and other matters. For further details, see Contingencies in Note 16 to the financial statements in Item 8.
The Company may be involved in legal or administrative proceedings before various courts and governmental bodies with respect to general claims, rates, environmental issues, gas cost prudence reviews and other matters. For further details, see Contingencies in Note 16 to the financial statements in Item 8.
Failure to comply with these laws and regulations and failure to obtain any required permits and licenses may result in costs to the Utilities in the form of fines, penalties or business interruptions, which may be material.
Failure to comply with these laws and regulations and failure to obtain any required permits and licenses may result in costs in the form of fines, penalties, business interruptions or other enforcement actions, which may be material.
The Company acknowledges that increased dependence on technology increases the Company’s exposure to cyberattack. The Company and its subsidiaries closely monitor both preventive and detective measures to manage these risks and maintain cyber risk insurance to mitigate a significant portion, but not all, of these risks and losses.
The Company acknowledges increased dependence on technology increases its exposure to cyberattack. The Company closely monitors both preventive and detective measures to manage these risks and maintain cyber risk insurance to mitigate a significant portion, but not all, of these risks and losses.
A cyberattack may disrupt Spire ’ s operations or lead to a loss or misuse of confidential and proprietary information or potential liability.
A cyberattack may disrupt the Company ’ s operations or lead to a loss or misuse of confidential and proprietary information or potential liability.
In addition, existing environmental laws and regulations could be revised or reinterpreted and/or new laws and regulations could be adopted or become applicable to the Utilities or their facilities, thereby impacting the Utilities’ cost of compliance.
In addition, existing environmental laws and regulations could be revised or reinterpreted and/or new laws and regulations could be adopted or become applicable to these companies or their facilities, thereby impacting the cost of compliance.
Periods of slowed economic activity generally result in decreased energy consumption, particularly by industrial and large commercial companies, a loss of existing customers, and fewer new customers especially in newly constructed buildings. As a consequence, national or regional recessions or other downturns in economic activity could adversely affect the Utilities’ revenues and cash flows or restrict their future growth.
Periods of slowed economic activity generally result in decreased energy consumption, particularly by industrial and large commercial companies, a loss of existing customers, and fewer new customers. As a consequence, national or regional recessions or other downturns in economic activity could adversely affect revenues and cash flows or restrict future growth.
Although the Company and its subsidiaries have, when possible, developed alternative sources of technology and built redundancy into their computer networks and tools, there can be no assurance that these efforts to date would protect against all potential issues related to the loss of any such technologies or the Utilities’ use of such technologies.
Although the Company has, when possible, developed alternative sources of technology and built redundancy into its computer networks and tools, there can be no assurance these efforts to date would protect against all potential issues related to the loss of any such technologies or the Company’s use of such technologies.
The Company and its subsidiaries are subject to various workforce risks, including, but not limited to, the risk that it will be unable to attract and retain qualified personnel; that it will be unable to effectively transfer to new personnel the knowledge and expertise of an aging workforce as those workers retire; and that it will be unable to reach collective bargaining arrangements with the unions that represent certain of its workers, which could result in work stoppages.
The Company and its subsidiaries are subject to various workforce risks, including, but not limited to, the risk that it will be unable to attract and retain qualified personnel; that it will be unable to effectively transfer to new personnel the knowledge and expertise of an aging workforce as those workers retire; and that it will be unable to reach collective bargaining arrangements with the unions that represent certain of its workers, which could result in work stoppages. 20 Table of Contents The Company may be adversely affected by economic conditions.
Cash requirements for increased operating costs, increased funding levels of defined benefit pension and postretirement costs, capital expenditures, and other increases in the costs of doing business can require outlays of cash prior to the authorization of increases in rates charged to customers, as approved by the MoPSC, APSC, and MSPSC.
Cash requirements for increased gas supply costs, operating costs, increased funding levels of defined benefit pension and postretirement costs, capital expenditures, interest expense and other increases in the costs of doing business, including inflation, can require outlays of cash prior to the authorization of increases in rates charged to customers, as approved by the MoPSC, APSC, or MSPSC.
If any pipeline connection were to become unavailable for volumes of natural gas due to repairs, damage to the facility, lack of capacity or any other reason, Spire STL Pipeline’s ability to continue shipping natural gas to end markets could be restricted, and to the extent not mitigated by contractual indemnification, insurance or tariffs, would thereby reduce its revenues.
If any pipeline connection were to become unavailable for volumes of natural gas due to repairs, damage to the facility, lack of capacity or any other reason, the ability to continue receiving or delivering natural gas could be restricted, and to the extent not mitigated by contractual indemnification, insurance or tariffs, would thereby reduce its revenues.
However, significantly warmer-than-normal weather conditions in the Utilities’ service areas and other factors, such as climate change, alternative energy sources and increased efficiency of gas furnaces and other appliances, may result in reduced profitability and decreased cash flows attributable to lower gas sales. Furthermore, continuation of these adjustment factors is subject to regulatory discretion.
However, significantly warmer-than-normal weather conditions in the Utilities’ service areas and other factors, such as climate change, alternative energy sources and increased efficiency of gas furnaces and other appliances, may result in reduced profitability and decreased cash flows attributable to lower gas sales.
The failure of these or other similarly important technologies, or the Company’s or its subsidiaries’ inability to have these technologies supported, updated, expanded, or integrated into other technologies, could hinder their business operations and, to the extent not covered by insurance, could adversely impact their financial condition and results of operations.
The failure of these or other similarly important technologies, or the Company’s inability to have these technologies supported, updated, expanded, or integrated into other technologies, could hinder its business operations and, to the extent such impacts are self-insured or not covered by insurance, could adversely impact its financial condition and results of operations.
Adverse decisions regarding these matters, to the extent they require the Utilities to make payments in excess of amounts provided for in their financial statements, or to the extent they are not covered by insurance, could adversely affect the Utilities’ results of operations and financial condition.
Adverse decisions regarding these matters, to the extent they require the Company to make payments in excess of amounts provided for in its financial statements, or to the extent they are self-insured or not covered by insurance, could adversely affect the results of operations and financial condition.
In addition, Spire Marketing has concentrations of counterparty credit risk in that a significant portion of its transactions are with (or are associated with) energy producers, utility companies, and pipelines.
In addition, Spire Marketing has concentrations of counterparty credit risk in that a significant portion of its transactions are with (or are associated with) utility companies and their marketing affiliates.
To the extent the impacts of such catastrophic events are not covered by insurance or recovered in rates, this could have a material adverse effect on the Company's financial condition and results of operations.
To the extent the impacts of such catastrophic events are not covered by insurance or recovered in rates, this could have a material adverse effect on the Company's financial condition and results of operations. Workforce risks may affect the Company ’ s financial results.
Also, Gas Marketing profitability may be impacted by the effects of the expiration, in the normal course of business, of certain of its natural gas supply contracts if those contracts cannot be replaced and/or renewed with arrangements with similar terms and pricing.
Also, Spire Marketing profitability may be impacted by the effects of the expiration, in the normal course of business, of certain of its natural gas supply, sales, transportation and storage contracts if, because of competition or other reasons, those contracts cannot be replaced and/or renewed with arrangements with similar terms and pricing.
To the extent Spire engages in any of the above activities together with or through one or more of its subsidiaries, including the Utilities, such subsidiaries may face the same risks. Changes in accounting standards may adversely impact the Company ’ s financial condition and results of operations.
To the extent Spire engages in any of the above activities together with or through one or more of its subsidiaries, including the Utilities, such subsidiaries may face the same risks. Unexpected losses may adversely affect Spire ’ s or its subsidiaries ’ financial condition and results of operations.
There is no assurance that such credit ratings for any of the Spire companies will remain in effect for any given period of time or that such ratings will not be lowered, suspended or withdrawn entirely by the rating agencies, if, in each rating agency’s judgment, circumstances so warrant.
Currently, Spire, Spire Missouri, and Spire Alabama have investment-grade credit ratings. There is no assurance such credit ratings for any of these companies will remain in effect for any given period of time or such ratings will not be lowered, suspended or withdrawn entirely by the rating agencies, if, in each rating agency’s judgment, circumstances so warrant.
Catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes, tropical storms, winter storms, terrorist acts, acts of civil unrest, pandemic illnesses or other similar occurrences could adversely affect the Utilities’ facilities and operations, as well as those of Spire STL Pipeline and Spire Storage.
Catastrophic events may adversely affect the Company ’ s facilities and operations. Catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes, tropical storms, winter storms, terrorist acts, acts of civil unrest, pandemic illnesses or other similar occurrences could adversely affect the Utilities’ facilities and operations, as well as those of Midstream.
Spire STL Pipeline is dependent upon third-party pipelines and other facilities to provide delivery options to and from its pipeline.
Midstream is dependent upon third-party pipelines and other facilities to provide delivery options to and from its facilities.
Pipeline and Hazardous Materials Safety Administration (PHMSA) requires pipeline operators to develop integrity management programs to comprehensively evaluate their pipelines and to take additional measures to protect pipeline segments located in areas where a leak or rupture could potentially do the most harm. PHMSA constantly updates its regulations to ensure the highest levels of pipeline safety.
Pipeline and Hazardous Materials Safety Administration (PHMSA) requires pipeline and natural gas storage operators to develop integrity management programs to evaluate their pipelines comprehensively and to take additional measures to protect pipeline segments located in areas where a leak or rupture could potentially do the most harm.
Spire Marketing’s ability to deliver natural gas to its customers is contingent upon the ability of natural gas producers, other gas marketers, and interstate pipelines to fulfill delivery obligations to Spire Marketing under firm contracts. To the extent that it is unable to obtain the necessary supplies, Spire Marketing’s financial position and results of operations may be adversely impacted.
Spire Marketing’s ability to deliver natural gas to its customers is contingent upon the performance of its suppliers and capability of pipeline and storage operators to fulfill delivery obligations to Spire Marketing under firm contracts. To the extent that it is unable to obtain the necessary supplies, Spire Marketing’s financial position and results of operations may be adversely impacted.
These concentrations of counterparties have the potential to affect the Company’s overall exposure to credit risk, either positively or negatively, in that each of these three groups may be affected similarly by changes in economic, industry, or other conditions. Spire Marketing also has concentrations of credit risk in certain individually significant counterparties.
The concentration of counterparties ha s the potential to affect the Company’s overall exposure to credit risk, either positively or negatively, in that customers in this group may be affected similarly by changes in economic, industry, or other conditions. Spire Marketing also has concentrations of credit risk in certain individually significant counterparties.
The Utilities are subject to regulation by federal, state and local authorities. At the state level, the Utilities are regulated in Missouri by the Missouri Public Service Commission (MoPSC), in Alabama by the Alabama Public Service Commission (APSC), and in Mississippi by the Mississippi Public Service Commission (MSPSC).
At the state level, the Utilities are regulated in Missouri by the Missouri Public Service Commission (MoPSC), in Alabama by the Alabama Public Service Commission (APSC), and in Mississippi by the Mississippi Public Service Commission (MSPSC).
Such presentation could result in volatility in the Company’s operating revenues. As a natural gas market participant, Spire Marketing is subject to applicable FERC- and Commodity Futures Trading Commission (CFTC)-administered statutes, rules, regulations and orders, including those directed generally to prevent manipulation of or fraud involving natural gas physical transactions and financial instruments, such as futures, options and swaps.
As a participant in the natural gas market, Spire Marketing is subject to applicable statutes, rules, regulations and orders administered by FERC and the Commodity Futures Trading Commission (CFTC), including those directed generally to prevent fraud or manipulation involving natural gas transactions (physical or financial transactions).
The Company is required to maintain pipeline integrity programs that are intended to assess pipeline integrity. Any repair, remediation, preventative or mitigating actions may require significant capital and operating expenditures.
The Company is required to maintain programs that are intended to assess pipeline integrity. Any repair, remediation, preventative or mitigating actions may require significant capital and operating expenditures. PHMSA constantly updates its regulations to ensure the highest levels of pipeline safety.
The Alabama Utilities’ gas supply charges are submitted for APSC review on a monthly basis, regardless of whether there is a request for a change, so prudence review occurs on an ongoing basis.
The Alabama Utilities’ gas supply charges are submitted for APSC review on a monthly basis, regardless of whether there is a request for a change, so prudence review occurs on an ongoing basis. Spire Mississippi’s PGA is adjusted on a monthly basis for the most recent charges and is filed at the MSPSC on a monthly basis.
The Utilities ’ liquidity may be adversely affected by delays in recovery of their costs, due to regulation. In the normal course of business, there is a lag between when the Utilities incur increases in certain of their costs and the time in which those costs are considered for recovery in the ratemaking process.
In the normal course of business, there is a lag between when the Utilities incur increases in certain of their costs and the time in which those costs are considered for recovery in the ratemaking process.
Item 1A. Risk Factors Spire’s and the Utilities’ business and financial results are subject to a number of risks and uncertainties, including those set forth below. The risks described below are those the Company and the Utilities consider to be material.
Item 1A. Risk Factors Spire’s, Spire Missouri’s and Spire Alabama’s businesses and financial results are subject to a number of risks and uncertainties, including those set forth below. The risks described below are those management considers to be material.
Those impacts could include reducing the value of its net operating losses and could result in material charges to earnings. Further, the Company’s financial condition and results of operations may be adversely impacted. Notably, the Inflation Reduction Act became effective on August 16, 2022. This new law provides various credits and incentives with respect to clean energy.
Further, the Company’s financial condition and results of operations may be adversely impacted. Notably, the Inflation Reduction Act became effective on August 16, 2022. This new law provides various tax credits and incentives with respect to clean energy.
If, in the normal course of business, Spire or any of its subsidiaries becomes a party to litigation, such litigation could result in substantial monetary judgments, fines, or penalties or be resolved on unfavorable terms. In accordance with customary practice, Spire and its subsidiaries maintain insurance against a significant portion of, but not all, risks and losses.
Such litigation or proceedings could result in substantial monetary judgments, fines, penalties, business interruption or other enforcement actions against the Company and its subsidiaries or be resolved on unfavorable terms. In accordance with customary industry practices, the Utilities and other Spire businesses maintain insurance against a significant portion, but not all, of these risks and losses.
Increased competition in the natural gas storage business could reduce the demand and drive rates down for the Company’s natural gas storage services. 14 Table of Contents Storage businesses are affected by various gas market fundamentals which impact the level of demand for storage services and the rates that can be charged for these services.
Storage businesses are affected by various gas market fundamentals which impact the level of demand for storage services and the rates that can be charged for these services.
If a substantial disruption in interstate natural gas pipelines’ transmission and storage capacity were to occur during periods of heavy demand, the Utilities’ financial results could be adversely impacted. In particular, the natural gas supply provided to Spire Missouri by Spire STL Pipeline is at risk due to the order issued by the U.S.
If a substantial disruption in interstate natural gas pipelines’ transmission and storage capacity were to occur during periods of heavy demand, the Utilities’ financial results could be adversely impacted.
Changes to income tax policy, laws and regulations, including but not limited to changes in tax rates, the deductibility of certain expenses including interest and state and local income taxes and/or changes in the deductibility of certain expenditures for property, could adversely impact the Company.
Changes to income tax policy, laws and regulations, including but not limited to changes in tax rates, the deductibility of certain expenses including interest and/or changes in the deductibility of certain expenditures for property, could adversely impact the Company. Those impacts could include reducing the value of its net operating losses and could result in material charges to earnings.
Reduced access to credit or increased credit requirements, which may also be caused by factors such as higher overall natural gas prices, may limit Spire Marketing’s ability to enter into certain transactions.
Additionally, under such circumstances, certain counterparties may require Spire Marketing to provide prepayments or cash deposits, amounts of which would be dependent upon natural gas market conditions. Reduced access to credit or increased credit requirements, which may also be caused by factors such as higher overall natural gas prices, may limit Spire Marketing’s ability to enter into certain transactions.
These higher prices may increase bad debt expenses and ultimately reduce earnings. Rapid increases in the price of purchased gas may result in an increase in short-term debt. To lower financial exposure to commodity price fluctuations, Spire Missouri enters into contracts to hedge the forward commodity price of its natural gas supplies.
Rapid increases in the price of purchased gas may result in an increase in short-term debt. To lower financial exposure to commodity price fluctuations, Spire Missouri enters into contracts to hedge the forward commodity price of its natural gas supplies. As part of this strategy, Spire Missouri may use fixed-price forward physical purchase contracts, swaps, futures, and option contracts.
Attractive acquisition and investment opportunities may be difficult to complete on economically acceptable terms. It is possible for Spire to expend considerable resources pursuing acquisitions and investments but, for a variety of reasons, decide not to move forward. Similarly, investment opportunities may be hindered or halted by regulatory or legal actions.
From time to time, Spire may seek to grow through strategic acquisitions, investments or other business arrangements. Attractive acquisition and investment opportunities may be difficult to complete on economically acceptable terms. It is possible for Spire to expend considerable resources pursuing acquisitions and investments that for a variety of reasons do not move forward.
Changes in the regional economies, politics, regulations and weather patterns of these states could negatively impact the Utilities’ growth opportunities and the usage patterns and financial condition of customers and could adversely affect the Utilities’ earnings, cash flows, and financial position. The Utilities may be adversely affected by economic conditions.
Midstream is focused on the Rocky Mountain/Western and Midcontinent regions. Changes in the regional economies, politics, regulations and weather patterns of these states could negatively impact growth opportunities and the usage patterns and financial condition of customers and could adversely affect earnings, cash flows, and financial position.
The Company and its subsidiaries have pension and other postretirement benefit plans that provide benefits to many of their employees and retirees. Costs of providing benefits and related funding requirements of these plans are subject to changes in the market value of the assets that fund the plans.
Costs of providing benefits and related funding requirements of these plans are subject to changes in the market value of the assets that fund the plans.
The Utilities’ earnings are primarily generated by the sale of heating energy. Spire Missouri and Spire Mississippi each have a Weather Normalization Adjustment rider, Spire Alabama has a Temperature Adjustment Rider, and Spire Gulf has a Weather Impact Normalization Factor.
Spire Missouri and Spire Mississippi each have a Weather Normalization Adjustment rider, Spire Alabama has a Temperature Adjustment Rider, and Spire Gulf has a Weather Impact Normalization Factor.
The Utilities ’ ability to meet their customers ’ natural gas requirements may be impaired if contracted gas supplies, interstate pipeline and/or storage services are not available or delivered in a timely manner. In order to meet their customers’ annual and seasonal natural gas demands, the Utilities must obtain sufficient supplies, interstate pipeline capacity, and storage capacity.
RISKS THAT RELATE TO OPERATIONAL FACTORS The Company ’ s ability to meet its customers ’ natural gas requirements may be impaired if contracted gas supplies, interstate pipeline and/or storage services are not available or delivered in a timely manner.
Renegotiated terms of new agreements, or increases in FERC-authorized rates of existing agreements, may impact Gas Marketing’s future profitability. Profitability may also be adversely impacted if pipeline capacity or future storage capacity secured is not fully utilized. 19 Table of Contents Reduced access to credit and/or capital markets may prevent the Gas Marketing business from executing operating strategies.
Renegotiated terms of new agreements, or increases in FERC-authorized rates of existing agreements, may impact Spire Marketing’s future profitability. Profitability may also be adversely impacted if pipeline capacity or future storage capacity secured is not fully utilized.
The Company has significantly reduced its current federal and state income tax obligations over the past few years through tax planning strategies including the use of bonus depreciation deductions for certain expenditures for property. As a result, the Company has generated large annual taxable losses that have resulted in significant federal and state net operating losses.
The Company has significantly reduced its current federal and state income tax obligations over the past few years through tax planning strategies and application of tax rules which included the use of bonus depreciation deductions for certain expenditures for property.
Changes to income tax policy, certain tax elections, tax regulations and future taxable income could adversely impact the Company ’ s financial condition and results of operations.
Accordingly, the Utilities’ liquidity can be adversely impacted to the extent higher costs are not timely recovered from their customers. Changes to income tax policy, certain tax elections, tax regulations and future taxable income could adversely impact the Company ’ s financial condition and results of operations.
Climate change, and regulatory, public policy, or legislative changes to address the potential for climate change, could adversely affect operations and financial results of the Company. Management believes it is likely that any such resulting impacts would occur over a long period of time and thus would be difficult to quantify with any degree of specificity.
Management believes it is likely that any such resulting impacts would occur over a long period of time and thus would be difficult to quantify with any degree of specificity.
Although Spire Marketing may qualify for exceptions to certain of these CFTC rules, its derivatives counterparties are subject to capital, margin, documentation and business conduct requirements imposed as a result of the Dodd-Frank Act.
In addition, the CFTC’s rules require companies, including Spire Marketing, to maintain regulatory records of swap transactions, and to report swaps to centralized swap data repositories, among other compliance obligations. 13 Table of Contents Although Spire Marketing may qualify for exceptions to certain of these CFTC rules, its derivatives counterparties are likely subject to capital, margin, documentation and business conduct requirements imposed as a result of the Dodd-Frank Act.
To the extent climate change results in warmer temperatures, financial results could be adversely affected through lower gas volumes and revenues and reduced marketing opportunities.
Furthermore, these mechanisms do not fully mitigate the impact of warmer weather and continuation of these adjustment factors is subject to regulatory discretion. To the extent climate change results in warmer temperatures, financial results could be adversely affected through lower gas volumes and revenues and reduced marketing opportunities.
Due to the subjectivity of the assumptions and estimates underlying the impairment analysis, Spire and Spire Missouri cannot provide assurance that future analyses will not result in impairment. These assumptions and estimates include projected cash flows, current and future rates for contracted capacity, growth rates, weighted average cost of capital and market multiples.
Due to the subjectivity of the assumptions and estimates underlying the impairment analysis, Spire and Spire Missouri cannot provide assurance that future analyses will not result in impairment.
Any costs, gains, or losses experienced through hedging procedures, including carrying costs, generally flow through the PGA clause, thereby limiting Spire Missouri’s exposure to earnings volatility.
However, Spire Missouri does not hedge the entire exposure of energy assets or positions to market price volatility, and the coverage will vary over time. Any costs, gains, or losses experienced through hedging procedures, including carrying costs, generally flow through the PGA clause, thereby limiting Spire Missouri’s exposure to earnings volatility.
The Company plans to continue to increase capacity, improve operating performance, and improve the integrity of its storage fields and associated above-ground facilities of Spire Storage. Construction of such assets is subject to various risks and uncertainties, including supply chain and labor disruptions, weather conditions during construction, equipment failures and construction quality issues.
Construction of such assets is subject to various risks and uncertainties, including supply chain and labor disruptions, weather conditions during construction, equipment failures and construction quality issues.
Spire is a holding company with no significant assets other than the stock of its operating subsidiaries and cash investments. Spire, and Spire Missouri prior to the holding company’s formation in 2000, has paid common stock dividends continuously since 1946.
Spire, and Spire Missouri prior to the holding company’s formation in 2000, has paid common stock dividends continuously since 1946.
To the extent environmental compliance costs are not fully covered by insurance or recovered in rates from customers, those costs may have an adverse effect on the Utilities’ financial condition and results of operations. The Utilities ’ business activities are concentrated in three states. The Utilities provide natural gas distribution services to customers in Alabama, Mississippi, and Missouri.
To the extent environmental compliance costs are self-insured, or not fully covered by insurance or recovered in rates from customers, those costs may have an adverse effect on financial condition and results of operations. 12 Table of Contents The Utilities ’ liquidity may be adversely affected by delays in recovery of their costs, due to regulation.
Spire Mississippi’s PGA is adjusted on a monthly basis for the most recent charges and is filed at the MSPSC on a monthly basis. 17 Table of Contents Increases in the prices the Utilities charge for gas may also adversely affect revenues because they could lead customers to reduce usage and cause some customers to have trouble paying the resulting higher bills.
Increases in the prices the Utilities charge for gas may also adversely affect revenues because they could lead customers to reduce usage and cause some customers to have trouble paying the resulting higher bills. These higher prices may increase bad debt expenses and ultimately reduce earnings.
However, unanticipated events or a combination of events, failure in resources needed to respond to events, or slow or inadequate response to events may have an adverse impact on the operations, financial condition, and results of operations of the Company and its subsidiaries.
Emergency planning and training programs are in place to respond to events that could cause business interruptions ; however, unanticipated events or a combination of events, failure in resources needed to respond to events, or slow or inadequate response to events may have an adverse impact.
In connection with acquisitions, Spire and Spire Missouri recorded goodwill and long-lived assets that could become impaired and adversely affect its financial condition and results of operations.
For more information, including regulatory provisions affecting the Utilities’ plans, see Note 13 , Pension Plans and Other Postretirement Benefits, of the Notes to Financial Statements in Item 8. In connection with acquisitions, Spire and Spire Missouri recorded goodwill and long-lived assets that could become impaired and adversely affect its financial condition and results of operations.
Other than fixed-price forward physical purchase contracts, Spire Alabama, Spire Gulf, and Spire Mississippi currently do not utilize risk mitigation strategies that incorporate commodity hedge instruments, but Spire Alabama has the ability to do so through its GSA. Environmental laws and regulations may require significant expenditures or increase operating costs.
Other than fixed-price forward physical purchase contracts, Spire Alabama, Spire Gulf, and Spire Mississippi currently do not utilize risk mitigation strategies that incorporate commodity hedge instruments, but Spire Alabama has the ability to do so through its GSA. 18 Table of Contents Risk management policies, including the use of derivative instruments, may not fully protect Spire Marketing ’ s sales and results of operations from volatility and may result in financial losses.
Spire’s ability to pay dividends to its shareholders is dependent on the ability of its subsidiaries to generate sufficient net income and cash flows to pay upstream dividends and make loans or loan repayments.
Spire’s ability to pay dividends to its shareholders is dependent on the ability of its subsidiaries to generate sufficient net income and cash flows to pay upstream dividends and make loans or loan repayments. 16 Table of Contents A downgrade in Spire ’ s and/or its subsidiaries ’ credit ratings and/or reduced access to credit and capital markets may negatively affect its cost of capital or prevent it from executing operating strategies.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSpire Missouri The principal properties of Spire Missouri consist of its gas distribution system, which includes more than 31,000 miles of main and related service lines, odorization and regulation facilities, and customer meters.
Biggest changeSpire Missouri The principal properties of Spire Missouri consist of its gas distribution system, which includes more than 32,000 miles of main and related service lines, odorization and regulation facilities, and customer meters.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeGeiselhart 63 Senior Vice President, Chief Strategy and Corporate Development Officer January 2015 S. B. Carter 50 Senior Vice President, Chief Operating Officer of Distribution Operations January 2019 Senior Vice President, Commercial Operations (until December 2018) January 2017 President, Spire Missouri December 2018 (1) The information provided relates to the Company and its principal subsidiaries.
Biggest changeGeiselhart 64 Senior Vice President, Chief Strategy and Corporate Development Officer January 2015 (1) The information provided relates to the Company and its principal subsidiaries. Many of the executive officers have served or currently serve as officers or directors for other subsidiaries of the Company.
Lindsey 56 Executive Vice President, Chief Operating Officer January 2020 Executive Vice President, Chief Executive Officer of Gas Utilities and Distribution Operations (until December 2019) October 2012 Chief Executive Officer, Spire Missouri December 2018 Chief Executive Officer, Spire Alabama September 2014 S. P.
Lindsey 57 President and Chief Executive Officer October 2023 Executive Vice President, Chief Operating Officer (until October 2023) January 2020 Executive Vice President, Chief Executive Officer of Gas Utilities and Distribution Operations (until December 2019) October 2012 Chief Executive Officer, Spire Missouri December 2018 Chief Executive Officer, Spire Alabama September 2014 S.
Rasche 62 Executive Vice President and Chief Financial Officer November 2013 Chief Financial Officer, Spire Missouri (until January 2020) May 2012 Chief Financial Officer, Spire Alabama (until January 2020) September 2014 M. C. Darrell 64 Senior Vice President, Chief Legal and Compliance Officer May 2012 M. C.
Rasche 63 Executive Vice President and Chief Financial Officer November 2013 Chief Financial Officer, Spire Missouri (until January 2020) May 2012 Chief Financial Officer, Spire Alabama (until January 2020) September 2014 M. C. Darrell (4) 65 Senior Vice President, Chief Legal and Compliance Officer May 2012 M. C.
Item 4. Mine Safety Disclosures Not applicable. 24 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS – Listed below are executive officers as defined by the SEC for Spire. Their ages, at September 30, 2022, and positions are listed below along with their business experience during the past five years. Name Age Position with Company (1) Appointed (2) S.
Item 4. Mine Safety Disclosures Not applicable. 21 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS – Listed below are executive officers as defined by the SEC for Spire as of November 16, 2023, along with their ages (as of September 30, 2023), positions and business experience during the past five years.
Sitherwood 62 President and Chief Executive Officer February 2012 Chairman of the Board, Spire Missouri January 2015 Chairman of the Board, Spire Alabama September 2014 S. L.
Sitherwood (3) 63 Executive Vice President, Senior Advisor October 2023 President and Chief Executive Officer (until October 2023) February 2012 Chairman of the Board, Spire Missouri January 2015 Chairman of the Board, Spire Alabama September 2014 S. P.
Officers of Spire Missouri and Spire Alabama are normally reappointed by their boards of directors in January of each year. 25 Table of Contents PART II
(2) Officers of Spire are normally reappointed by its Board of Directors in November of each year. Officers of Spire Missouri and Spire Alabama are normally reappointed by their boards of directors in January of each year. (3) Ms. Sitherwood has announced she will retire effective January 1, 2024. (4) Mr.
Removed
Many of the executive officers have served or currently serve as officers or directors for other subsidiaries of the Company. (2) Officers of Spire are normally reappointed by its Board of Directors in November of each year.
Added
Name Age Position with Company (1) Appointed (2) S. L.
Added
Darrell has announced he will retire effective December 1, 2023. 22 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−1 removed2 unchanged
Biggest changePerformance Graph COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN * September 30 2017 2018 2019 2020 2021 2022 Spire Inc. $ 100.00 $ 101.64 $ 124.10 $ 78.42 $ 93.66 $ 99.28 S&P 500 Utilities Index 100.00 102.93 130.82 124.32 138.01 145.71 S&P 500 Index 100.00 117.91 122.93 141.55 184.02 155.55 * Cumulative total return is based on a $100 investment on September 30, 2017, assuming reinvestment of dividends.
Biggest changePerformance Graph COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN * September 30 2018 2019 2020 2021 2022 2023 Spire Inc. $ 100.00 $ 122.09 $ 77.17 $ 92.14 $ 97.66 $ 92.65 S&P 500 Utilities Index 100.00 127.10 120.79 134.09 141.56 131.63 S&P 500 Index 100.00 104.25 120.05 156.07 131.92 160.44 * Cumulative total return is based on a $100 investment on September 30, 2018, assuming reinvestment of dividends.
For disclosures related to securities authorized for issuance under equity compensation plans, see Note 3 , Stock-Based Compensation, of the Notes to Financial Statements in Item 8. 26 Table of Contents During the three months ended September 30, 2022, the only repurchases of the Company’s common stock were pursuant to elections by employees to have shares of stock withheld to cover employee tax withholding obligations upon the vesting of performance-based and time-vested restricted stock and stock units.
For disclosures related to securities authorized for issuance under equity compensation plans, see Note 3 , Stock-Based Compensation, of the Notes to Financial Statements in Item 8. 23 Table of Contents During the three months ended September 30, 2023, the only repurchases of the Company’s common stock were pursuant to elections by employees to have shares of stock withheld to cover employee tax withholding obligations upon the vesting of performance-based and time-vested restricted stock and stock units.
Dividends are payable on the Company’s common stock at the discretion of its Board of Directors (the “Board”). Spire, and Spire Missouri prior to the holding company’s formation in 2000, has paid common stock dividends continuously since 1946, with 2022 marking the 19th consecutive year of increasing dividends on an annualized basis.
Dividends are payable on the Company’s common stock at the discretion of its Board of Directors (the “Board”). Spire, and Spire Missouri prior to the holding company’s formation in 2000, has paid common stock dividends continuously since 1946, with 2023 marking the 20th consecutive year of increasing dividends on an annualized basis.
As of September 30, 2022 and 2021, the amount under the mortgage’s formula that was available to pay dividends was $1,579.4 million and $1,413.4 million, respectively. Spire Alabama Spire Alabama common stock is owned by its parent, Spire Inc., and is not traded on any stock exchange.
As of September 30, 2023 and 2022, the amount under the mortgage’s formula that was available to pay dividends was $1,678.5 million and $1,579.4 million, respectively. Spire Alabama Spire Alabama common stock is owned by its parent, Spire Inc., and is not traded on any stock exchange.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Spire Spire’s common stock trades on The New York Stock Exchange (NYSE) under the symbol “SR”. The number of holders of record as of November 11, 2022 was 2,636.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Spire Spire’s common stock trades on The New York Stock Exchange (NYSE) under the symbol “SR”. The number of holders of record as of November 10, 2023 was 2,531.
The S&P 500 Utilities Index is comprised of 29 utilities heavily weighted to large capitalization (median market cap of $21.9 billion) electric utilities. In 2020, stocks of small and mid cap electric utilities and gas utility companies (like Spire) in general traded lower relative to the large cap electric sector.
The S&P 500 Utilities Index is comprised of 30 utilities heavily weighted to large capitalization (median market cap of $22.3 billion) electric utilities. In 2023, stocks of small and mid cap electric utilities and gas utility companies (like Spire) in general traded lower relative to the large cap electric sector.
The following table provides information on those repurchases: Period (a) Total Number of Shares Purchased (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs July 1, 2022 - July 31, 2022 182 $76.32 — — August 1, 2022 - August 31, 2022 — — — — September 1, 2022 - September 30, 2022 340 68.87 — — Total 522 $71.47 — — Spire Missouri Spire Missouri common stock is owned by its parent, Spire Inc., and is not traded on any stock exchange.
The following table provides information on those repurchases: Period (a) Total Number of Shares Purchased (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs July 1, 2023 – July 31, 2023 — — — — August 1, 2023 – August 31, 2023 — — — — September 1, 2023 – September 30, 2023 749 $60.65 — — Total 749 $60.65 — — Spire Missouri Spire Missouri common stock is owned by its parent, Spire Inc., and is not traded on any stock exchange.
Removed
Since then, Spire has outperformed both the S&P 500 Utilities and the S&P 500 Indices.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+42 added−51 removed87 unchanged
Biggest changeGas Gas Utility Marketing Other Eliminations Consolidated Year Ended September 30, 2022 Operating Income $ 339.9 $ 46.9 $ 21.4 $ — $ 408.2 Operation and maintenance expenses 413.3 14.6 37.1 (15.4 ) 449.6 Depreciation and amortization 227.9 1.4 8.0 — 237.3 Taxes, other than income taxes 176.2 0.6 2.7 — 179.5 Less: Gross receipts tax expense (109.6 ) (0.2 ) — — (109.8 ) Contribution Margin [Non-GAAP] 1,047.7 63.3 69.2 (15.4 ) 1,164.8 Natural gas costs 788.8 171.4 — (36.3 ) 923.9 Gross receipts tax expense 109.6 0.2 — — 109.8 Operating Revenues $ 1,946.1 $ 234.9 $ 69.2 $ (51.7 ) $ 2,198.5 Gas Gas Utility Marketing Other Eliminations Consolidated Year Ended September 30, 2021 Operating Income $ 374.0 $ 58.5 $ 17.7 $ — $ 450.2 Operation and maintenance expenses 422.2 17.1 40.2 (13.7 ) 465.8 Depreciation and amortization 204.4 1.2 7.5 — 213.1 Taxes, other than income taxes 157.0 0.9 2.2 — 160.1 Less: Gross receipts tax expense (93.9 ) (0.1 ) — — (94.0 ) Contribution Margin [Non-GAAP] 1,063.7 77.6 67.6 (13.7 ) 1,195.2 Natural gas costs 961.7 18.8 0.1 (34.3 ) 946.3 Gross receipts tax expense 93.9 0.1 — — 94.0 Operating Revenues $ 2,119.3 $ 96.5 $ 67.7 $ (48.0 ) $ 2,235.5 Gas Gas Utility Marketing Other Eliminations Consolidated Year Ended September 30, 2020 Operating Income (Loss) $ 334.3 $ 9.3 $ (137.2 ) $ — $ 206.4 Operation and maintenance expenses 421.3 11.8 38.2 (12.7 ) 458.6 Depreciation and amortization 189.7 0.6 7.0 — 197.3 Taxes, other than income taxes 146.5 1.1 0.8 — 148.4 Impairment loss — — 148.6 — 148.6 Less: Gross receipts tax expense (91.1 ) (0.4 ) — — (91.5 ) Contribution Margin [Non-GAAP] 1,000.7 22.4 57.4 (12.7 ) 1,067.8 Natural gas costs 660.2 65.1 0.4 (29.6 ) 696.1 Gross receipts tax expense 91.1 0.4 — — 91.5 Operating Revenues $ 1,752.0 $ 87.9 $ 57.8 $ (42.3 ) $ 1,855.4 34 Table of Contents Select changes from the year ended September 30, 2021 to the year ended September 30, 2022 are summarized in the following table and discussed below.
Biggest changeGas Gas Utility Marketing Midstream Other Eliminations Consolidated Year Ended September 30, 2023 Operating Income (Loss) $ 350.8 $ 49.3 $ 24.3 $ (5.8 ) $ — $ 418.6 Operation and maintenance expenses 461.8 19.4 30.5 21.9 (16.0 ) 517.6 Depreciation and amortization 244.4 1.5 8.4 0.5 — 254.8 Taxes, other than income taxes 210.3 1.2 2.9 0.1 — 214.5 Less: Gross receipts tax expense (131.5 ) (0.3 ) — — — (131.8 ) Contribution Margin [Non-GAAP] 1,135.8 71.1 66.1 16.7 (16.0 ) 1,273.7 Natural gas costs 1,189.6 107.7 — — (36.5 ) 1,260.8 Gross receipts tax expense 131.5 0.3 — — — 131.8 Operating Revenues $ 2,456.9 $ 179.1 $ 66.1 $ 16.7 $ (52.5 ) $ 2,666.3 Gas Gas Utility Marketing Midstream Other Eliminations Consolidated Year Ended September 30, 2022 Operating Income $ 339.9 $ 46.9 $ 20.8 $ 0.6 $ — $ 408.2 Operation and maintenance expenses 413.3 14.6 22.2 14.9 (15.4 ) 449.6 Depreciation and amortization 227.9 1.4 7.5 0.5 — 237.3 Taxes, other than income taxes 176.2 0.6 2.6 0.1 — 179.5 Less: Gross receipts tax expense (109.6 ) (0.2 ) — — — (109.8 ) Contribution Margin [Non-GAAP] 1,047.7 63.3 53.1 16.1 (15.4 ) 1,164.8 Natural gas costs 788.8 171.4 — — (36.3 ) 923.9 Gross receipts tax expense 109.6 0.2 — — — 109.8 Operating Revenues $ 1,946.1 $ 234.9 $ 53.1 $ 16.1 $ (51.7 ) $ 2,198.5 Gas Gas Utility Marketing Midstream Other Eliminations Consolidated Year Ended September 30, 2021 Operating Income (Loss) $ 374.0 $ 58.5 $ 19.5 $ (1.8 ) $ — $ 450.2 Operation and maintenance expenses 422.2 17.1 24.2 16.0 (13.7 ) 465.8 Depreciation and amortization 204.4 1.2 6.9 0.6 — 213.1 Taxes, other than income taxes 157.0 0.9 2.0 0.2 — 160.1 Less: Gross receipts tax expense (93.9 ) (0.1 ) — — — (94.0 ) Contribution Margin [Non-GAAP] 1,063.7 77.6 52.6 15.0 (13.7 ) 1,195.2 Natural gas costs 961.7 18.8 — 0.1 (34.3 ) 946.3 Gross receipts tax expense 93.9 0.1 — — — 94.0 Operating Revenues $ 2,119.3 $ 96.5 $ 52.6 $ 15.1 $ (48.0 ) $ 2,235.5 31 Table of Contents Select changes from the year ended September 30, 2022 to the year ended September 30, 2023 are summarized in the following table and discussed below.
Net Economic Earnings and Net Economic Earnings Per Share Net economic earnings and net economic earnings per share are non-GAAP measures that exclude from net income the impacts of fair value accounting and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture and restructuring activities, and the largely non-cash impacts of impairments and other non-recurring or unusual items such as certain regulatory, legislative or GAAP standard-setting actions.
Net Economic Earnings and Net Economic Earnings Per Share Net economic earnings and net economic earnings per share are non-GAAP measures that exclude from net income, as applicable, the impacts of fair value accounting and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture and restructuring activities, and the largely non-cash impacts of impairments and other non-recurring or unusual items such as certain regulatory, legislative or GAAP standard-setting actions.
ACCOUNTING PRONOUNCEMENTS The Company, Spire Missouri and Spire Alabama have evaluated recently issued accounting standards and concluded that none will have a material impact on their financial position or results of operations upon adoption. 41 Table of Contents CRITICAL ACCOUNTING ESTIMATES Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources are based upon our financial statements, which have been prepared in accordance with GAAP, which requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
ACCOUNTING PRONOUNCEMENTS The Company, Spire Missouri and Spire Alabama have evaluated recently issued accounting standards and concluded that none will have a material impact on their financial position or results of operations upon adoption. 38 Table of Contents CRITICAL ACCOUNTING ESTIMATES Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources are based upon our financial statements, which have been prepared in accordance with GAAP, which requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
Changes in the wholesale cost of natural gas (including cash payments for margin deposits associated with Spire Missouri’s use of natural gas derivative instruments), variations in the timing of collections of gas cost under the Utilities’ PGA clauses and GSA riders, the seasonality of accounts receivable balances, and the utilization of storage gas inventories cause short-term cash requirements to vary during the year and from year to year, and may cause significant variations in the Company’s cash provided by or used in operating activities.
Changes in the wholesale cost of natural gas (including cash payments for margin deposits associated with Spire Missouri’s use of natural gas derivative instruments), variations in the timing of collections of gas cost under the Utilities’ PGA clauses and GSA riders, the seasonality of accounts receivable balances, and the utilization of stored gas inventories cause short-term cash requirements to vary during the year and from year to year, and may cause significant variations in the Company’s cash provided by or used in operating activities.
For more information, see Note 15 , Regulatory Matters, of the Notes to Financial Statements in Item 8. 42 Table of Contents Employee Benefits and Postretirement Obligations – Pension and postretirement obligations are calculated by actuarial consultants that utilize several statistical factors and other assumptions provided by management related to future events, such as discount rates, returns on plan assets, compensation increases, and mortality rates.
For more information, see Note 15 , Regulatory Matters, of the Notes to Financial Statements in Item 8. 39 Table of Contents Employee Benefits and Postretirement Obligations – Pension and postretirement obligations are calculated by actuarial consultants that utilize several statistical factors and other assumptions provided by management related to future events, such as discount rates, returns on plan assets, compensation increases, and mortality rates.
Refer to Note 10 , Derivative Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8 for additional details on the Company’s interest rate swap transactions.
Refer to Note 10 , Derivative Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8 for details on the Company’s interest rate swap transactions.
The Utilities also have risk management policies that allow for the purchase of natural gas derivative instruments with the goal of managing its price risk associated with purchasing natural gas on behalf of its customers. These policies prohibit speculation. As of September 30, 2022, Spire Missouri had active natural gas derivative positions, but Spire Alabama did not.
The Utilities also have risk management policies that allow for the purchase of natural gas derivative instruments with the goal of managing its price risk associated with purchasing natural gas on behalf of its customers. These policies prohibit speculation. As of September 30, 2023, Spire Missouri had active natural gas derivative positions, but Spire Alabama did not.
Spire Gulf is regulated by the APSC, and Spire Mississippi is regulated by the MSPSC. 28 Table of Contents Gas Marketing Spire Marketing is engaged in the marketing of natural gas and related activities on a non-regulated basis and is reported in the Gas Marketing segment. Spire Marketing markets natural gas to customers across the U.S.
Spire Gulf is regulated by the APSC, and Spire Mississippi is regulated by the MSPSC. 25 Table of Contents Gas Marketing Spire Marketing is engaged in the marketing of natural gas and related activities on a non-regulated basis and is reported in the Gas Marketing segment. Spire Marketing markets natural gas to customers across the U.S.
Spire had no temporary cash investments as of September 30, 2022 or 2021. Short-term Debt The Company’s short-term cash requirements can be met through the sale of commercial paper or the use of a revolving credit facility.
Spire had no temporary cash investments as of September 30, 2023 or 2022. Short-term Debt The Company’s short-term cash requirements can be met through the sale of commercial paper or the use of a revolving credit facility.
Nearly all of Spire’s earnings are derived from its Gas Utility segment, which reflects the regulated activities of the Utilities. Due to the seasonal nature of the Utilities’ business and the volumetric Spire Missouri rate design, earnings of Spire and each of the Utilities are typically concentrated during the heating season of November through April each fiscal year.
Most of Spire’s earnings are derived from its Gas Utility segment, which reflects the regulated activities of the Utilities. Due to the seasonal nature of the Utilities’ business and the volumetric Spire Missouri rate design, earnings of Spire and each of the Utilities are typically concentrated during the heating season of November through April each fiscal year.
In addition, the following discussion should be read in conjunction with the audited financial statements and accompanying notes thereto of Spire, Spire Missouri and Spire Alabama included in “Item 8. Financial Statements and Supplementary Data.” OVERVIEW The Company has two reportable segments: Gas Utility and Gas Marketing.
In addition, the following discussion should be read in conjunction with the audited financial statements and accompanying notes thereto of Spire, Spire Missouri and Spire Alabama included in “Item 8. Financial Statements and Supplementary Data.” OVERVIEW The Company has three reportable segments: Gas Utility, Gas Marketing, and Midstream.
Although Spire Marketing’s uncollectible amounts are closely monitored and have not been significant, increases in uncollectible amounts from customers are possible and could adversely affect Spire Marketing’s liquidity and results of operations. 30 Table of Contents Spire Marketing carefully monitors the creditworthiness of counterparties to its transactions.
Although Spire Marketing’s uncollectible amounts are closely monitored and have not been significant, increases in uncollectible amounts from customers are possible and could adversely affect Spire Marketing’s liquidity and results of operations. Spire Marketing carefully monitors the creditworthiness of counterparties to its transactions.
The discussion and analysis of the results for the year ended September 30, 2021 compared to the results of the year ended September 30, 2020 can be found in Part II, Item 7 of Spire Inc.’s fiscal 2021 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (SEC) on November 22, 2021.
The discussion and analysis of the results for the year ended September 30, 2022 compared to the results of the year ended September 30, 2021 can be found in Part II, Item 7 of Spire Inc.’s fiscal 2022 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (SEC) on November 16, 2022.
At September 30, 2022 and 2021, Spire Marketing’s unmatched fixed-price positions were not material to Spire’s financial position or results of operations. As mentioned above, Spire Marketing uses natural gas futures, options and swap contracts traded on or cleared through the NYMEX and ICE to manage the commodity price risk associated with its fixed-price natural gas purchase and sale commitments.
At September 30, 2023 and 2022, Spire Marketing’s unmatched fixed-price positions were not material to Spire’s financial position or results of operations. 41 Table of Contents As mentioned above, Spire Marketing uses natural gas futures, options and swap contracts traded on or cleared through the NYMEX and ICE to manage the commodity price risk associated with its fixed-price natural gas purchase and sale commitments.
The tables below reflect the sensitivity of Spire’s plans to potential changes in key assumptions: Pension Plan Benefits: Estimated Increase/ (Decrease) to Estimated Increase/ Increase/ Projected (Decrease) to Annual Actuarial Assumptions (Decrease) Benefit Obligation Net Pension Cost* Discount Rate 0.25 % $ (10.6 ) $ 0.4 (0.25 )% 11.1 (0.4 ) Expected Return on Plan Assets 0.25 % — (1.2 ) (0.25 )% — 1.2 Rate of Future Compensation Increase 0.25 % 0.7 0.2 (0.25 )% (0.7 ) (0.2 ) Postretirement Benefits: Estimated Increase/ (Decrease) to Estimated Increase/ Projected (Decrease) to Annual Increase/ Postretirement Net Postretirement Actuarial Assumptions (Decrease) Benefit Obligation Benefit Cost* Discount Rate 0.25 % $ (2.8 ) $ 0.1 (0.25 )% 2.9 (0.1 ) Expected Return on Plan Assets 0.25 % — (0.7 ) (0.25 )% — 0.7 * Excludes the impact of regulatory deferral mechanism.
The tables below reflect the sensitivity of Spire’s plans to potential changes in key assumptions: Pension Plan Benefits: Estimated Increase/ (Decrease) to Estimated Increase/ Increase/ Projected (Decrease) to Annual Actuarial Assumptions (Decrease) Benefit Obligation Net Pension Cost* Discount Rate 0.25 % $ (9.3 ) $ 0.1 (0.25 )% 9.7 (0.1 ) Expected Return on Plan Assets 0.25 % — (1.0 ) (0.25 )% — 1.0 Rate of Future Compensation Increase 0.25 % 0.6 0.1 (0.25 )% (0.6 ) (0.1 ) Postretirement Benefits: Estimated Increase/ (Decrease) to Estimated Increase/ Projected (Decrease) to Annual Increase/ Postretirement Net Postretirement Actuarial Assumptions (Decrease) Benefit Obligation Benefit Cost* Discount Rate 0.25 % $ (2.5 ) $ — (0.25 )% 2.6 — Expected Return on Plan Assets 0.25 % — (0.7 ) (0.25 )% — 0.7 * Excludes the impact of regulatory deferral mechanism.
These unrealized gains and losses result primarily from two sources: 1) changes in the fair values of physical and/or financial derivatives prior to the period of settlement; and 2) ineffective portions of accounting hedges, required to be recorded in earnings prior to settlement, due to differences in commodity price changes between the locations of the forecasted physical purchase or sale transactions and the locations of the underlying hedge instruments; • Lower of cost or market adjustments to the carrying value of commodity inventories resulting when the net realizable value of the commodity falls below its original cost, to the extent that those commodities are economically hedged; and • Realized gains and losses resulting from the settlement of economic hedges prior to the sale of the physical commodity. 31 Table of Contents These adjustments eliminate the impact of timing differences and the impact of current changes in the fair value of financial and physical transactions prior to their completion and settlement.
These unrealized gains and losses result primarily from two sources: 1) changes in the fair values of physical and/or financial derivatives prior to the period of settlement; and 2) ineffective portions of accounting hedges, required to be recorded in earnings prior to settlement, due to differences in commodity price changes between the locations of the forecasted physical purchase or sale transactions and the locations of the underlying hedge instruments; • Lower of cost or market adjustments to the carrying value of commodity inventories resulting when the net realizable value of the commodity falls below its original cost, to the extent that those commodities are economically hedged; and • Realized gains and losses resulting from the settlement of economic hedges prior to the sale of the physical commodity.
Therefore, management believes that contribution margin is a useful supplemental measure, along with the remaining operating expenses, for assessing the Company’s and the Utilities’ performance. EARNINGS This section contains discussion and analysis of the results for the year ended September 30, 2022 compared to the results for the year ended September 30, 2021.
Therefore, management believes that contribution margin is a useful supplemental measure, along with the remaining operating expenses, for assessing the Company’s and the Utilities’ performance. 29 Table of Contents EARNINGS This section contains discussion and analysis of the results for the year ended September 30, 2023 compared to the results for the year ended September 30, 2022.
The following sections present and discuss the financial metrics in total and by registrant and segment. 32 Table of Contents Spire The following tables reconcile the Company’s net economic earnings to the most comparable GAAP number, net income.
The following sections present and discuss the financial metrics in total and by registrant and segment. Spire The following tables reconcile the Company’s net economic earnings to the most comparable GAAP number, net income.
Spire’s natural gas purchase obligations totaled $2,107.1, including $946.8 for fiscal 2023, representing the minimum payments required under existing natural gas transportation and storage contracts and natural gas supply agreements. The amounts reflect fixed obligations as well as obligations to purchase natural gas at future market prices, calculated using forward market prices as of September 30, 2022.
Spire’s natural gas purchase obligations totaled $1,613.2, including $650.1 for fiscal 2024, representing the minimum payments required under existing natural gas transportation and storage contracts and natural gas supply agreements. The amounts reflect fixed obligations as well as obligations to purchase natural gas at future market prices, calculated using forward market prices as of September 30, 2023.
Based on average short-term borrowings during fiscal 2022, an increase of 100 basis points in the underlying average interest rate for short-term debt would have caused an increase in interest expense (and a decrease in pre-tax earnings and cash flows) of approximately $7.5 on an annual basis.
Based on average short-term borrowings during fiscal 2023, an increase of 100 basis points in the underlying average interest rate for short-term debt would have caused an increase in interest expense (and a decrease in pre-tax earnings and cash flows) of approximately $8.4 on an annual basis.
In February 2021, Spire issued 3.5 million equity units for an aggregate stated amount of $175.0, resulting in net proceeds of $169.3 after underwriting fees and other issuance costs. See Note 5 , Shareholders’ Equity, of the Notes to Financial Statements in Item 8 for additional discussion of these equity units.
For additional information about the ATM program, see Note 5 of the Notes to Financial Statements in Item 8. In February 2021, Spire issued 3.5 million equity units for an aggregate stated amount of $175.0, resulting in net proceeds of $169.3 after underwriting fees and other issuance costs.
Per Gas Gas Consol- Diluted Utility Marketing Other idated Share** Year Ended September 30, 2022 Net Income (Loss) [GAAP] $ 198.6 $ 35.6 $ (13.4 ) $ 220.8 $ 3.95 Adjustments, pre-tax: Fair value and timing adjustments — (11.4 ) — (11.4 ) (0.22 ) Income tax effect of adjustments* 4.1 2.8 — 6.9 0.13 Net Economic Earnings (Loss) [Non-GAAP] $ 202.7 $ 27.0 $ (13.4 ) $ 216.3 $ 3.86 Year Ended September 30, 2021 Net Income (Loss) [GAAP] $ 237.2 $ 44.8 $ (10.3 ) $ 271.7 $ 4.96 Adjustments, pre-tax: Missouri regulatory adjustments (9.0 ) — — (9.0 ) (0.17 ) Fair value and timing adjustments 0.3 3.0 — 3.3 0.06 Acquisition, divestiture and restructuring activities — — (1.3 ) (1.3 ) (0.02 ) Income tax effect of adjustments* 2.1 (0.8 ) 0.3 1.6 0.03 Net Economic Earnings (Loss) [Non-GAAP] $ 230.6 $ 47.0 $ (11.3 ) $ 266.3 $ 4.86 Year Ended September 30, 2020 Net Income (Loss) [GAAP] $ 213.6 $ 7.0 $ (132.0 ) $ 88.6 $ 1.44 Adjustments, pre-tax: Impairments — — 148.6 148.6 2.89 Fair value and timing adjustments (0.3 ) 2.8 — 2.5 0.05 Income tax effect of adjustments* 0.1 (0.7 ) (31.3 ) (31.9 ) (0.62 ) Net Economic Earnings (Loss) [Non-GAAP] $ 213.4 $ 9.1 $ (14.7 ) $ 207.8 $ 3.76 * Income tax effect is calculated by applying federal, state and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling items and then adding any estimated effects of enacted state or local income tax laws for periods before the related effective date and, in the case of fiscal 2022, includes the $4.1 Spire Missouri regulatory adjustment discussed below. ** Net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted earnings per share calculation, which includes reductions for cumulative preferred dividends and participating shares. 33 Table of Contents Reconciliations of contribution margin to the most directly comparable GAAP measure are shown below.
Per Gas Gas Consol- Diluted Utility Marketing Midstream Other idated Share** Year Ended September 30, 2023 Net Income (Loss) [GAAP] $ 200.5 $ 39.1 $ 12.0 $ (34.1 ) $ 217.5 $ 3.85 Adjustments, pre-tax: Fair value and timing adjustments — 11.4 — — 11.4 0.21 Acquisition activities — — 2.5 — 2.5 0.05 Income tax effect of adjustments* — (2.9 ) (0.4 ) — (3.3 ) (0.06 ) Net Economic Earnings (Loss) [Non-GAAP] $ 200.5 $ 47.6 $ 14.1 $ (34.1 ) $ 228.1 $ 4.05 Year Ended September 30, 2022 Net Income (Loss) [GAAP] $ 198.6 $ 35.6 $ 11.1 $ (24.5 ) $ 220.8 $ 3.95 Adjustments, pre-tax: Fair value and timing adjustments — (11.4 ) — — (11.4 ) (0.22 ) Income tax effect of adjustments* 4.1 2.8 — — 6.9 0.13 Net Economic Earnings (Loss) [Non-GAAP] $ 202.7 $ 27.0 $ 11.1 $ (24.5 ) $ 216.3 $ 3.86 Year Ended September 30, 2021 Net Income (Loss) [GAAP] $ 237.2 $ 44.8 $ 11.1 $ (21.4 ) $ 271.7 $ 4.96 Adjustments, pre-tax: Missouri regulatory adjustments (9.0 ) — — — (9.0 ) (0.17 ) Fair value and timing adjustments 0.3 3.0 — — 3.3 0.06 Divestiture activities — — — (1.3 ) (1.3 ) (0.02 ) Income tax effect of adjustments* 2.1 (0.8 ) — 0.3 1.6 0.03 Net Economic Earnings (Loss) [Non-GAAP] $ 230.6 $ 47.0 $ 11.1 $ (22.4 ) $ 266.3 $ 4.86 * Income tax effect is calculated by applying federal, state and local income tax rates applicable to ordinary income to the amounts of the pre-tax reconciling items and then adding any estimated effects of enacted state or local income tax laws for periods before the related effective date and, in the case of fiscal 2022, includes the $4.1 Spire Missouri regulatory adjustment discussed below. ** Net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted earnings per share calculation, which includes reductions for cumulative preferred dividends and participating shares. 30 Table of Contents Reconciliations of contribution margin to the most directly comparable GAAP measure are shown below.
Information about the fair values of Spire Marketing’s exchange-traded/cleared natural gas derivative instruments is presented below: Derivative Derivatives Fair Cash and Cash Values Margin Margin Net balance of derivative assets at September 30, 2021 $ 52.1 $ (39.3 ) $ 12.8 Changes in fair value 43.3 — 43.3 Settlements/purchases - net (84.8 ) — (84.8 ) Changes in cash margin — 54.5 54.5 Net balance of derivative assets at September 30, 2022 $ 10.6 $ 15.2 $ 25.8 As of September 30, 2022 Maturity by Fiscal Year Total 2023 2024 2025 2026 Fair values of exchange-traded/cleared natural gas derivatives - net $ 14.7 $ 12.5 $ 2.5 $ (0.3 ) $ — Fair values of basis swaps - net (3.2 ) (2.9 ) (0.2 ) (0.1 ) — Fair values of puts and calls - net (1.9 ) (1.9 ) — — — Position volumes: MMBtu - net (short) long futures/swap/option positions 84.1 50.3 19.5 13.0 1.3 MMBtu - net (short) long basis swap positions (16.0 ) (13.6 ) (1.8 ) (0.6 ) — MMBtu - net (short) puts and calls positions (1.4 ) (1.4 ) — — — Certain of Spire Marketing’s physical natural gas derivative contracts are designated as normal purchases or normal sales, as permitted by GAAP.
Information about the fair values of Spire Marketing’s exchange-traded/cleared natural gas derivative instruments is presented below: Derivative Derivatives Fair Cash and Cash Values Margin Margin Net balance of derivative assets at September 30, 2022 $ 10.6 $ 15.2 $ 25.8 Changes in fair value (35.0 ) — (35.0 ) Settlements/purchases - net 12.2 — 12.2 Changes in cash margin — 3.1 3.1 Net balance of derivative assets at September 30, 2023 $ (12.2 ) $ 18.3 $ 6.1 As of September 30, 2023 Maturity by Fiscal Year Total 2024 2025 2026 2027 2028 Fair values of exchange-traded/cleared natural gas derivatives - net $ (12.1 ) $ (8.6 ) $ (3.3 ) $ (0.2 ) $ — $ — Fair values of basis swaps - net 0.5 0.7 — (0.1 ) (0.1 ) — Fair values of puts and calls - net (0.1 ) (0.1 ) — — — — Position volumes [millions of MMBtu, long or (short)]: Net futures/swap/option positions 21.4 7.9 9.9 2.3 1.2 0.1 Net basis swap positions 14.1 6.2 3.7 2.2 1.8 0.2 Net puts and calls positions (0.8 ) (0.8 ) — — — — Certain of Spire Marketing’s physical natural gas derivative contracts are designated as normal purchases or normal sales, as permitted by GAAP.
Current year short-term debt, net issuances were $365.5, or $341.5 higher than in fiscal 2021. In addition, the combination of lower net repayments of long-term debt ($59.6) and higher cash generated from the issuance of common stock ($50.9) in fiscal 2022 contributed $110.5 to the year-over-year increase.
As noted above, 2022 net short-term debt issuances were $365.5, which was $341.5 higher than in 2021. In addition, the combination of lower net repayments of long-term debt ($59.6) and higher cash generated from the issuance of common stock ($50.9) in 2022 contributed $110.5 to the year-over-year increase.
Effective March 5, 2022, Spire Missouri was authorized by the MoPSC to issue conventional term loans, first mortgage bonds, unsecured debt, preferred stock and common stock in an aggregate amount of up to $800.0 for financings placed any time before December 31, 2024. As of September 30, 2022, the entire amount remained available under this authorization.
Effective March 5, 2022, Spire Missouri was authorized by the MoPSC to issue conventional term loans, first mortgage bonds, unsecured debt, preferred stock and common stock in an aggregate amount of up to $800.0 for financings placed any time before December 31, 2024.
Access to debt markets is dependent on current conditions in the credit and capital markets. Management focuses on maintaining a strong balance sheet and believes the Utilities currently have adequate access to credit and capital markets and will have sufficient capital resources to meet their foreseeable obligations. See the “Capital Resources” section for additional information.
Access to debt markets is dependent on current conditions in the credit and capital markets. Management focuses on maintaining a strong balance sheet and believes the Utilities currently have adequate access to credit and capital markets and will have sufficient liquidity and capital resources to meet their foreseeable obligations.
The notes are senior unsecured obligations and rank equal in right to payment with all other senior unsecured indebtedness of Spire Alabama. Also on October 13, 2022, Spire Gulf issued $30.0 of first mortgage bonds due October 15, 2037, bearing interest at 5.61% payable semi-annually.
Also on October 13, 2022, Spire Gulf issued $30.0 of first mortgage bonds due October 15, 2037, bearing interest at 5.61% payable semi-annually. The bonds rank equal in right to payment with the other first mortgage bonds issued by Spire Gulf.
Spire Alabama’s total system volume sold and transported was 1,010.8 million CCF during the year ended September 30, 2022, compared with 1,009.4 million CCF during the prior year. Off-system sales volume for fiscal 2022 totaled 63.1 million CCF compared with 47.5 million CCF for fiscal 2021.
Spire Alabama’s total system volume sold and transported was 1,026.2 million CCF during the year ended September 30, 2023, compared with 1,010.8 million CCF during the prior year. Off-system sales volume for fiscal 2023 totaled 98.8 million CCF compared with 63.1 million CCF for fiscal 2022.
Using each long-term debt instrument’s stated maturity and fixed rates or variable rates as of September 30, 2022, interest payments are projected to total $1,560.2, of which $116.2 is due in fiscal 2023.
Using each long-term debt instrument’s stated maturity and fixed rates or variable rates as of September 30, 2023, interest payments are projected to total $1,817.3, of which $150.7 is due in fiscal 2024.
For discussions of other regulatory matters for Spire, Spire Missouri, and Spire Alabama, see Note 15 , Regulatory Matters, of the Notes to Financial Statements in Item 8.
For information relative to environmental matters, see Contingencies in Note 16 of the Notes to Financial Statements in Item 8. REGULATORY MATTERS For discussions of regulatory matters for Spire, Spire Missouri, and Spire Alabama, see Note 15 , Regulatory Matters, of the Notes to Financial Statements in Item 8.
NON-GAAP MEASURES Net income, earnings per share and operating income reported by Spire, Spire Missouri and Spire Alabama are determined in accordance with GAAP. Spire, Spire Missouri and Spire Alabama also provide the non-GAAP financial measures of net economic earnings, net economic earnings per share and contribution margin.
Credit limits for customers are established and monitored. 28 Table of Contents NON-GAAP MEASURES Net income, earnings per share and operating income reported by Spire, Spire Missouri and Spire Alabama are determined in accordance with GAAP. Spire, Spire Missouri and Spire Alabama also provide the non-GAAP financial measures of net economic earnings, net economic earnings per share and contribution margin.
Other Other components of the Company’s consolidated information include: • Spire STL Pipeline, a subsidiary of Spire providing interstate natural gas pipeline transportation services; • Spire Storage, a subsidiary of Spire providing interstate natural gas storage services; • Spire’s subsidiaries engaged in the operation of a propane pipeline and risk management, among other activities; and • unallocated corporate items, including certain debt and associated interest costs.
Other Other components of the Company’s consolidated information include Spire's subsidiaries engaged in the operation of a propane pipeline and risk management, among other activities, and unallocated corporate items, including certain debt and associated interest costs.
Spire’s material cash requirements as of September 30, 2022, are related to capital expenditures, principal and interest payments on long-term debt, natural gas purchase obligations, and dividends. Total Company capital expenditures are planned to be $700 for fiscal 2023, though Spire had purchase commitments for only a small portion of these as of September 30, 2022.
Spire’s material cash requirements as of September 30, 2023, are related to capital expenditures, principal and interest payments on long-term debt, natural gas purchase obligations, and common and preferred stock dividends. Total Company capital expenditures are planned to be $765 for fiscal 2024, though Spire had purchase commitments for less than a quarter of these as of September 30, 2023.
Portions of such an increase may be offset through the Utilities’ application of PGA and GSA carrying costs. At September 30, 2022, Spire had fixed-rate long-term debt totaling $2,958.9, of which $1,348.0 was issued by Spire Missouri, $575.0 was issued by Spire Alabama, and $1,035.9 was issued by Spire and other subsidiaries.
Portions of such an increase may be offset through the Utilities’ application of PGA and GSA carrying costs. At September 30, 2023, Spire had fixed-rate long-term debt totaling $3,432.7, of which $1,498.0 was issued by Spire Missouri, $750.0 was issued by Spire Alabama, and $1,184.7 was issued by Spire and other subsidiaries.
As detailed in Note 6 , Long-Term Debt, of the Notes to Financial Statements in Item 8, $281.2 of the total $3,258.9 principal amount is due in fiscal 2023.
As detailed in Note 6 , Long-Term Debt, of the Notes to Financial Statements in Item 8, $156.6 of the total $3,732.7 principal amount is due in fiscal 2024.
Including the current portion of long-term debt, the Company’s long-term consolidated capitalization consisted of 46% equity at September 30, 2022 and 47% equity at September 30, 2021. For more information about equity, see Note 5 of the Notes to Financial Statements in Item 8.
See Note 5 , Shareholders’ Equity, of the Notes to Financial Statements in Item 8 for additional discussion of these equity units. Including the current portion of long-term debt, the Company’s long-term consolidated capitalization consisted of 44% equity at September 30, 2023 and 46% equity at September 30, 2022.
A significant offset to these increases was a $329.1 decline in cash generated from the issuance of long-term debt, coupled with $8.7 higher common stock dividend payments. Net cash provided by financing activities was up $219.4 in fiscal 2021 compared to fiscal 2020.
A significant offset to these increases was a $329.1 decline in cash generated from the issuance of long-term debt, coupled with $8.7 higher common stock dividend payments.
Spire dividends declared and payable as of September 30, 2022, totaled $41.2, while annualized dividends based on the regular quarterly amounts declared on November 10, 2022, are estimated at $165.9.
Spire dividends declared and payable as of September 30, 2023, totaled $43.1, while annualized dividends based on the regular quarterly amounts declared on November 10, 2023, are estimated at $175.3.
Gas Marketing Spire Marketing utilizes its natural gas supply agreements, transportation agreements, park and loan agreements, storage agreements and other executory contracts to support a variety of services to its customers at competitive prices.
See the “Liquidity and Capital Resources” section for additional information. 27 Table of Contents Gas Marketing Spire Marketing utilizes its natural gas supply agreements, transportation agreements, park and loan agreements, storage agreements and other executory contracts to support a variety of services to its customers at competitive prices.
Commodity price risk associated with these contracts has the potential to impact earnings and cash flows. To minimize this risk, Spire Marketing has a risk management policy that provides for daily monitoring of a number of business measures, including fixed price commitments.
To minimize this risk, Spire Marketing has a risk management policy that provides for daily monitoring of a number of business measures, including fixed price commitments. In accordance with the risk management policy, Spire Marketing manages the price risk associated with its fixed price commitments.
LIQUIDITY AND CAPITAL RESOURCES Recent Cash Flows 2022 2021 2020 Net cash provided by operating activities $ 55.0 $ 249.8 $ 469.9 Net cash used in investing activities (546.7 ) (622.0 ) (631.6 ) Net cash provided by financing activities 500.9 379.4 160.0 Net cash provided by operating activities decreased $194.8 from 2021 to 2022 and decreased $220.1 from 2020 to 2021.
LIQUIDITY AND CAPITAL RESOURCES Recent Cash Flows 2023 2022 2021 Net cash provided by operating activities $ 440.2 $ 55.0 $ 249.8 Net cash used in investing activities (695.5 ) (546.7 ) (622.0 ) Net cash provided by financing activities 260.6 500.9 379.4 Net cash provided by operating activities increased $385.2 from 2022 to 2023 after decreasing $194.8 from 2021 to 2022.
Below is a reconciliation of the beginning and ending balances for physical natural gas contracts accounted for as derivatives, none of which will settle beyond fiscal 2023: Net balance of derivative liabilities at September 30, 2021 $ (61.5 ) Changes in fair value 101.0 Settlements (48.4 ) Net balance of derivative liabilities at September 30, 2022 $ (8.9 ) 45 Table of Contents For further details related to Spire Marketing’s derivatives and hedging activities, see Note 10 , Derivative Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8.
Below is a reconciliation of the beginning and ending balances for physical natural gas contracts accounted for as derivatives, none of which will settle beyond fiscal 2024: Net balance of derivative liabilities at September 30, 2022 $ (8.9 ) Changes in fair value 19.6 Settlements (1.7 ) Net balance of derivative liabilities at September 30, 2023 $ 9.0 For further details related to Spire Marketing’s derivatives and hedging activities, see Note 10 , Derivative Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8. 42 Table of Contents Counterparty Credit Risk Spire Marketing has concentrations of counterparty credit risk in that a significant portion of its transactions are with energy producers, utility companies and pipelines.
ENVIRONMENTAL MATTERS The Utilities and other Spire subsidiaries own and operate natural gas distribution, transmission and storage facilities, the operations of which are subject to various environmental laws, regulations and interpretations.
For more information about equity, see Note 5 of the Notes to Financial Statements in Item 8. ENVIRONMENTAL MATTERS The Utilities and other Spire subsidiaries own and operate natural gas distribution, transmission and storage facilities, the operations of which are subject to various environmental laws, regulations and interpretations.
In the Gas Marketing segment, these include: • the risks of competition; • fluctuations and volatility in natural gas prices; • the changing flow and availability of natural gas; • new national infrastructure projects; • the ability to procure firm transportation and storage services at reasonable rates; • credit and/or capital market access; and • counterparty risks.
In the Gas Marketing segment, these include: • the risks of competition; • fluctuations and volatility in natural gas prices; • the changing flow and availability of natural gas; • new national infrastructure projects; • the ability to procure firm transportation and storage services at reasonable rates; • credit and/or capital market access; and • counterparty risks. 26 Table of Contents In the Midstream segment, these include: • the impact of seasonal weather patterns; • fluctuations and volatility in natural gas prices; • the changing flow and availability of natural gas; • the efficiency of the injection and withdrawal processes for natural gas storage; • competitive factors in the energy industry; • energy and other regulation in Spire's storage and transportation service areas; and • counterparty risks.
Spire Missouri’s tariff rates are approved by the MoPSC, whereas Spire Alabama’s tariff rates are approved by the APSC.
Spire Missouri’s tariff rates are approved by the MoPSC, whereas Spire Alabama’s tariff rates are approved by the APSC. Spire Gulf and Spire Mississippi have tariff rates that are approved by the APSC and MSPSC, respectively.
Their debt is rated by two rating agencies: Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service (“Moody’s”). As of September 30, 2022, the debt ratings of the Company, Spire Missouri and Spire Alabama (shown in the following table) remain at investment grade with a stable outlook (other than Moody's negative outlook for Spire Missouri debt).
As of September 30, 2023, the debt ratings of the Company, Spire Missouri and Spire Alabama (shown in the following table) remain at investment grade with a stable outlook (other than Moody's negative outlook for Spire Alabama debt).
These favorable impacts were partly offset by a $13.3 reduction attributable to weather/volumetric impacts that were impacted by weather mitigation. Temperatures in Spire Alabama’s service area during fiscal 2022 were 4.1% warmer than during fiscal 2021 and 9.7% warmer than normal.
These favorable impacts were partly offset by a $30.6 reduction attributable to weather/volumetric impacts, and a $7.1 decrease in off-system sales. Temperatures in Spire Alabama’s service area during fiscal 2023 were 10.7% warmer than during fiscal 2022 and 18.8% warmer than normal.
As of September 30, 2022, Spire Missouri had active derivative positions, but Spire Alabama has had no gas supply derivative instrument activity since 2010.
As of September 30, 2023, Spire Missouri had active derivative positions, but Spire Alabama has had no gas supply derivative instrument activity since 2010. The Utilities believe they will continue to be able to obtain sufficient gas supply.
Temperatures in Spire Missouri’s service areas during fiscal 2022 were 5.7% warmer than during fiscal 2021 and 9.5% warmer than normal. The Spire Missouri total system volume sold and transported was 1,602.8 million centum of cubic feet (CCF) for the year ended September 30, 2022, compared with 1,666.9 million CCF last year.
The Spire Missouri total system volume sold and transported was 1,592.0 million centum of cubic feet (CCF) for the year ended September 30, 2023, compared with 1,602.8 million CCF last year. Total off-system volume sold and transported was 14.5 million CCF for fiscal 2023, compared with 19.1 million for fiscal 2022.
Spire has a shelf registration statement on Form S-3 on file with the SEC for the issuance and sale of up to 250,000 shares of common stock under its Dividend Reinvestment and Direct Stock Purchase Plan. There were 158,535 and 153,190 shares at September 30, 2022 and November 11, 2022, respectively, remaining available for issuance under this Form S-3.
The notes are senior unsecured obligations of the Company. Spire has a shelf registration statement on Form S-3 on file with the SEC for the issuance and sale of up to 250,000 shares of common stock under its Dividend Reinvestment and Direct Stock Purchase Plan.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Critical assumptions and judgments also include projections of future taxable income to determine the ability to utilize net operating losses and credit carryforwards prior to their expiration. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Gas Gas Other, Net of Changes from FY21 to FY22 Utility Marketing Eliminations Consolidated Net Income $ (38.6 ) $ (9.2 ) $ (3.1 ) $ (50.9 ) Net Economic Earnings [Non-GAAP] (27.9 ) (20.0 ) (2.1 ) (50.0 ) Operating Revenues (173.2 ) 138.4 (2.2 ) (37.0 ) Contribution Margin [Non-GAAP] (16.0 ) (14.3 ) (0.1 ) (30.4 ) Operating Expenses (8.9 ) (2.5 ) (4.8 ) (16.2 ) Interest Expense 13.2 Income Tax (9.6 ) The increase in interest expense was primarily driven by higher levels of short-term borrowings in fiscal 2022, combined with the impact of net long-term debt issuances and higher average short-term interest rates.
Gas Gas Other, Net of Changes FY23 from FY22 Utility Marketing Midstream Eliminations Consolidated Net Income $ 1.9 $ 3.5 $ 0.9 $ (9.6 ) $ (3.3 ) Net Economic Earnings [Non-GAAP] (2.2 ) 20.6 3.0 (9.6 ) 11.8 Operating Revenues 510.8 (55.8 ) 13.0 (0.2 ) 467.8 Contribution Margin [Non-GAAP] 88.1 7.8 13.0 (0.0 ) 108.9 Operation and Maintenance Expenses 48.5 4.8 8.3 6.4 68.0 Other Income (Expense) 32.1 Interest Expense 65.9 Income Tax (20.1 ) The increase in interest expense reflects the significant increase in short-term interest rates and higher long-term debt levels versus the prior year, combined with higher average levels of short-term borrowings in the current year.
See Note 13 , Pension Plans and Other Postretirement Benefits, of the Notes to Financial Statements in Item 8 for information regarding the regulatory treatment of these costs.
See Note 13 , Pension Plans and Other Postretirement Benefits, of the Notes to Financial Statements in Item 8 for information regarding the regulatory treatment of these costs. 40 Table of Contents Income Taxes – Income tax calculations require estimates due to book-tax differences, estimates with respect to regulatory treatment of certain items, and uncertainty in the interpretation of tax laws and regulations.
Income tax expense for the current year was lower by $4.0, as the impact of lower pre-tax book income was partly offset by a $4.1 charge resulting from TCJA reconciliations from the 2021 Missouri rate order that was completed late in the first quarter of fiscal 2022. 37 Table of Contents Spire Alabama Year Ended September 30, 2022 2021 Operating Income $ 112.6 $ 117.0 Operation and maintenance expenses 130.1 132.5 Depreciation and amortization 66.8 62.1 Taxes, other than income taxes 38.1 37.1 Less: Gross receipts tax expense (25.5 ) (25.1 ) Contribution Margin [Non-GAAP] 322.1 323.6 Natural gas costs 161.5 145.3 Gross receipts tax expense 25.5 25.1 Operating Revenues $ 509.1 $ 494.0 Net Income $ 68.5 $ 73.8 The $15.1 increase in operating revenues reflects a $13.6 increase in gas cost recoveries pursuant to the GSA mechanism, off-system sales in the current year contributing $9.8 to revenue growth, and $4.3 higher net rate adjustments under the RSE mechanism.
Net income increased $2.6 over the comparable prior-year period. 34 Table of Contents Spire Alabama Year Ended September 30, 2023 2022 Operating Income $ 119.7 $ 112.6 Operation and maintenance expenses 136.4 130.1 Depreciation and amortization 69.3 66.8 Taxes, other than income taxes 43.0 38.1 Less: Gross receipts tax expense (29.9 ) (25.5 ) Contribution Margin [Non-GAAP] 338.5 322.1 Natural gas costs 202.7 161.5 Gross receipts tax expense 29.9 25.5 Operating Revenues $ 571.1 $ 509.1 Net Income $ 66.0 $ 68.5 The $62.0 increase in operating revenues reflects a $73.8 increase in gas cost recoveries pursuant to the GSA mechanism, $22.0 higher net rate adjustments under the RSE mechanism, and higher gross receipts taxes of $4.4.
Unrealized gains or losses are recorded in each period until being replaced with the actual gains or losses realized when the associated physical transactions occur.
These adjustments eliminate the impact of timing differences and the impact of current changes in the fair value of financial and physical transactions prior to their completion and settlement. Unrealized gains or losses are recorded in each period until being replaced with the actual gains or losses realized when the associated physical transactions occur.
Some of the factors impacting the level of off-system sales include the availability and cost of Spire’s natural gas supply, the weather in its service areas and the weather in other markets.
Spire Missouri and Spire Alabama also have off-system sales and capacity release income streams that are regulated by tariff but remain subject to fluctuations in market conditions. Some of the factors impacting the level of off-system sales include the availability and cost of Spire’s natural gas supply, the weather in its service areas and the weather in other markets.
The bonds rank equal in right to payment with the other first mortgage bonds issued by Spire Gulf. The bonds were issued under a supplemental indenture with collateral fall away provisions whereby, under certain conditions, Spire Gulf may elect to exchange the bonds, which are secured, for unsecured notes.
The bonds were issued under a supplemental indenture with collateral fall away provisions whereby, under certain conditions, Spire Gulf may elect to exchange the bonds, which are secured, for unsecured notes. On February 13, 2023, Spire Missouri issued $400.0 aggregate principal amount of its 4.80% Series First Mortgage Bonds due 2033. Interest is payable semi-annually.
The decrease in Gas Utility operating revenues for fiscal 2022 was attributable to the following factors: Spire Missouri – Fiscal 2021 OFO charges $ (195.8 ) Spire Missouri – Off-system sales and capacity release (120.1 ) Spire Missouri and Spire Alabama – Volumetric usage (net of weather mitigation) (9.9 ) Spire Missouri and Spire Alabama – Higher PGA/GSA gas cost recoveries 99.9 Spire Missouri – 2021 rate order effects 18.1 Spire Missouri and Spire Alabama – Higher gross receipts taxes 15.7 Spire Alabama – Off-system sales and capacity release 9.8 Spire Alabama – RSE: net adjustments 4.3 All other factors 4.8 Total Variation $ (173.2 ) The decrease in revenues was driven primarily by a $199.8 decrease in Spire Missouri gas costs (including $195.8 of cover charges and OFO penalties to certain wholesale customers in the prior year), a $120.1 decrease in Spire Missouri off-system sales, and higher segment weather/volumetric impacts of $9.9.
The increase in Gas Utility operating revenues for fiscal 2023 was attributable to the following factors: Spire Missouri and Spire Alabama – Higher PGA/GSA gas cost recoveries $ 436.1 Spire Missouri – 2021 and 2022 rate case outcomes 60.7 Spire Alabama – RSE: net adjustments 22.0 Spire Missouri and Spire Alabama – Higher gross receipts taxes 21.5 Spire EnergySouth 6.9 Spire Missouri – Volumetric usage including weather mitigation impact 4.1 Spire Alabama – Volumetric usage including weather mitigation impact (30.6 ) Spire Missouri and Spire Alabama – Lower off-system sales (12.3 ) All other factors 2.4 Total Variation $ 510.8 The primary driver of revenue growth in the current year was $436.1 in higher gas cost recoveries at the utilities of Spire Missouri and Spire Alabama, reflecting higher average gas costs being passed through to customers.
Long-term Debt and Equity At September 30, 2022, including the current portion but excluding unamortized discounts and debt issuance costs, Spire had long-term debt totaling $3,258.9, of which $1,648.0 was issued by Spire Missouri, $575.0 was issued by Spire Alabama, and $205.9 was issued by other subsidiaries.
Long-term Debt and Equity At September 30, 2023, Spire had outstanding principal of long-term debt totaling $3,732.7, of which $1,798.0 was issued by Spire Missouri, $750.0 was issued by Spire Alabama, and $229.7 was issued by other subsidiaries.
Spire Alabama has no standing authority to issue long-term debt and must petition the APSC for each planned issuance. After fiscal year end, on October 13, 2022, Spire Alabama issued $90.0 of notes due October 15, 2029, bearing interest at 5.32% and $85.0 of notes due October 15, 2032, bearing interest at 5.41%. Interest is payable semi-annually.
On October 13, 2022, Spire Alabama issued $90.0 of notes due October 15, 2029, bearing interest at 5.32% and $85.0 of notes due October 15, 2032, bearing interest at 5.41%. Interest is payable semi-annually. The notes are senior unsecured obligations and rank equal in right to payment with all other senior unsecured indebtedness of Spire Alabama.
These negative impacts were partly offset by higher PGA/GSA gas cost recoveries of $99.9, an $18.1 increase in revenues as a result of the Spire Missouri 2021 rate order, higher segment gross receipts taxes of $15.7, a $9.8 increase in Spire Alabama off-system sales, and a $4.3 increase in revenues due to Spire Alabama’s rate adjustments under the RSE mechanism. 35 Table of Contents The year-over-year decrease in Gas Utility contribution margin was attributable to the following factors: Spire Missouri – Off-system sales and capacity release $ (26.3 ) Spire Missouri and Spire Alabama – Volumetric usage (net of weather mitigation) (9.2 ) Spire Missouri – 2021 rate order effects 18.1 Spire Alabama – RSE: net adjustments 3.8 Spire Alabama – Off-system and capacity release 1.5 All other factors (3.9 ) Total Variation $ (16.0 ) The contribution margin decrease resulted primarily from lower Missouri off-system sales, Spire Missouri and Spire Alabama volumetric impacts of $9.2, partly offset by an $18.1 increase resulting from the 2021 Missouri rate order, Spire Alabama rate adjustments under the RSE mechanism, and higher volumetric margins.
These benefits were only partly offset by a $30.6 reduction due to volume/usage at Spire Alabama, and a combined $12.3 reduction in off-system sales between Spire Missouri and Spire Alabama. 32 Table of Contents The year-over-year increase in Gas Utility contribution margin was attributable to the following factors: Spire Missouri – 2021 and 2022 rate case outcomes $ 60.7 Spire Alabama – RSE: net adjustments 19.6 Spire Missouri - Volumetric usage including weather mitigation impact 5.4 Spire EnergySouth 3.3 Spire Alabama – Volumetric usage including weather mitigation impact (2.2 ) All other factors 1.3 Total Variation $ 88.1 The contribution margin growth was primarily driven by the $60.7 increase from the Spire Missouri 2022 and 2021 rate order implementations, $19.6 from favorable rate adjustments within the RSE framework at Spire Alabama, and a $3.3 increase at Spire EnergySouth.
However, the timing of recovery for cash payments related to margin requirements may cause short-term cash requirements to vary.
However, the timing of recovery for cash payments related to margin requirements may cause short-term cash requirements to vary. For more information about the Utilities’ natural gas derivative instruments, see Note 10 , Derivative Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8.
Source of Funds It is management’s view that the Company, Spire Missouri and Spire Alabama have adequate access to capital markets and will have sufficient capital resources, both internal and external, to meet anticipated requirements. 39 Table of Contents The Company’s, Spire Missouri’s and Spire Alabama’s access to capital markets, including the commercial paper market, and their respective financing costs, may depend on the credit rating of the entity that is accessing the capital markets.
For further discussion of this pending acquisition, see Note 16 , Commitments and Contingencies, of the Notes to Financial Statements in Item 8. 36 Table of Contents Source of Funds It is management’s view that the Company, Spire Missouri and Spire Alabama have adequate access to capital markets and will have sufficient capital resources, both internal and external, to meet anticipated requirements.
For more information about the Utilities’ natural gas derivative instruments, see Note 10 , Derivative Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8. 44 Table of Contents Gas Marketing In the course of its business, Spire’s non-regulated gas marketing subsidiary, Spire Marketing, enters into contracts to purchase and sell natural gas at fixed prices and natural gas index-based prices.
Gas Marketing In the course of its business, Spire’s non-regulated gas marketing subsidiary, Spire Marketing, enters into contracts to purchase and sell natural gas at fixed prices and natural gas index-based prices. Commodity price risk associated with these contracts has the potential to impact earnings and cash flows.
Other operating expenses were $3.1 lower than the prior year, primarily reflecting lower current year operating expenses at Spire Storage and STL Pipeline. 36 Table of Contents Spire Missouri Year Ended September 30, 2022 2021 Operating Income $ 204.0 $ 228.6 Operation and maintenance expenses 255.7 261.1 Depreciation and amortization 145.3 129.2 Taxes, other than income taxes 129.0 110.9 Less: Gross receipts tax expense (79.6 ) (64.3 ) Contribution Margin [Non-GAAP] 654.4 665.5 Natural gas costs 587.0 786.8 Gross receipts tax expense 79.6 64.3 Operating Revenues $ 1,321.0 $ 1,516.6 Net Income $ 114.9 $ 144.1 The $195.6 decrease in operating revenues reflects a $120.1 decrease in 0ff-system sales and lower gas costs of $109.5 (as commodity cost recovery increases in the current year of $86.3 were more than offset by last year's $195.8 of cover charges and OFO penalties to certain wholesale customers).
Spire Missouri Year Ended September 30, 2023 2022 Operating Income $ 207.1 $ 204.0 Operation and maintenance expenses 296.2 255.7 Depreciation and amortization 158.7 145.3 Taxes, other than income taxes 157.5 129.0 Less: Gross receipts tax expense (96.7 ) (79.6 ) Contribution Margin [Non-GAAP] 722.8 654.4 Natural gas costs 943.4 587.0 Gross receipts tax expense 96.7 79.6 Operating Revenues $ 1,762.9 $ 1,321.0 Net Income $ 117.5 $ 114.9 Operating revenues for the twelve months ended September 30, 2023 were $441.9 higher than the comparable prior-year period.
Contribution margin decreased $1.5, which was principally a result of unfavorable weather/volumetric impacts totaling $7.2. This negative impact was mostly offset by net favorable RSE adjustments of $3.8 and off-system sales contributing $1.5 in growth in fiscal 2022.
Contribution margin increased $16.4, which was principally a result of net favorable RSE adjustments of $19.6. This growth was tempered by unfavorable weather/volumetric impacts totaling $2.2, after applying weather mitigation. Excluding the impact of the NSC Transfer of $1.1, the increase in O&M of $5.2 was largely due to a $2.3 increase in bad debt expense.
Current year incremental optimization of storage and transportation assets in the Southeast during the third and fourth quarters of fiscal 2022 and favorable fair value adjustments only partly offset the benefits from the extreme weather in the prior year. The variance in revenues primarily reflects higher commodity pricing in fiscal 2022.
The decline in operating revenues primarily reflects lower commodity pricing in fiscal 2023 versus the prior year. Gas Marketing contribution margin increased $7.8 from the same period last year, driven by incremental optimization of storage and transportation assets in the current year, which were only partly offset by unfavorable year-over-year fair value adjustments of $22.8.
Spire and Spire Missouri also have a universal shelf registration statement on Form S-3 on file with the SEC for the issuance of various equity and debt securities, which expires on May 9, 2025. 40 Table of Contents On February 6, 2019, Spire entered into an “at-the-market” (ATM) equity distribution agreement pursuant to which the Company may offer and sell, from time to time, shares of its common stock pursuant to Spire’s universal shelf registration statement and a prospectus supplement.
There were 244,182 and 237,891 shares at September 30, 2023 and November 10, 2023, respectively, remaining available for issuance under this Form S-3. Spire and Spire Missouri also have a universal shelf registration statement on Form S-3 on file with the SEC for the issuance of various equity and debt securities, which expires on May 9, 2025.
The drivers of the lower capital expenditures were a $61.8 spending decline in the Utilities, a $8.1 decline for Spire Storage, and a slight decline at Spire STL Pipeline. In fiscal 2021, the Company used $9.6 less cash in investing activities than in fiscal 2020, primarily driven by a $13.6 decrease in capital expenditures.
In 2022, the Company used $75.3 less cash in investing activities than in 2021, primarily driven by a $72.6 decrease in capital expenditures, with Gas Utility down $61.8 and Midstream down $10.4.
Included in the Spire Missouri increase is a $3.4 charge pertaining to meter cost recovery that was disallowed by the MoPSC. Taxes, other than income taxes, increased $19.2, and were driven by the higher pass-through gross receipts taxes mentioned earlier, combined with higher property taxes resulting from the continued infrastructure build-out by the utilities.
These increases were only partly offset by a $5.3 reduction in outside services, favorable administrative and general (A&G) expenses, and lower employee-related expenses. Taxes, other than income taxes, increased $34.1, and were driven by $21.9 in higher pass-through gross receipts taxes, along with higher property taxes resulting from the continued infrastructure build-out by the Utilities.
Gas Marketing Both net income and net economic earnings reflect the strong operating results in the prior year, driven by storage positions that resulted in optimization of market conditions in the second quarter of fiscal 2021 due to extreme weather as a result of Winter Storm Uri.
Gas Marketing Net income growth of $3.5 reflects the strong operating results experienced in the current-year, driven by favorable market conditions in the first half of fiscal 2023 that allowed the business to take advantage of regional basis differentials to optimize storage and transportation positions.
Removed
Spire Gulf and Spire Mississippi have tariff rates that are approved by the APSC and MSPSC, respectively. 29 Table of Contents Spire Missouri and Spire Alabama also have off-system sales and capacity release income streams that are regulated by tariff but remain subject to fluctuations in market conditions.
Added
Midstream Spire’s midstream operations consist of Spire STL Pipeline and Spire Storage (composed of Spire Storage West LLC and Spire Salt Plains Storage LLC). Spire STL Pipeline owns and operates a FERC-regulated 65-mile pipeline connecting the Rockies Express Pipeline in Scott County, Illinois, to delivery points in St. Louis County, Missouri, including Spire Missouri’s storage facility.
Removed
Except in certain situations discussed under the caption “—The Utilities’ ability to meet their customers’ natural gas requirements may be impaired if contracted gas supplies, interstate pipeline and/or storage services are not available or delivered in a timely manner” under Item 1A, Risk Factors, and in Note 15 , Regulatory Matters, of the Notes to Financial Statements in Item 8, the Utilities believe they will continue to be able to obtain sufficient gas supply.
Added
Spire STL Pipeline’s operating revenue is derived primarily from Spire Missouri as its foundation shipper. Spire Storage is engaged in the storage of natural gas in the western region of the U.S.
Removed
Overview The past two years have offered numerous challenges. During severe winter weather in fiscal 2021, we were successful in providing safe, reliable service for our service areas in addition to driving value from investments in transportation and storage capacity we made at Spire Marketing.
Added
Spire Storage consists of two storage fields in Wyoming operating under one FERC market-based rate tariff, and a storage field in Oklahoma that operates under intrastate jurisdiction with authorizations from FERC under Section 311 of the Natural Gas Policy Act to provide certain interstate storage, transportation, and hub services.
Removed
With regard to the Spire STL Pipeline, while operating under a temporary certificate, we continue to work with regulators and constituents regarding obtaining a permanent certificate.
Added
Midstream In its Midstream segment, Spire seeks to drive growth through supporting natural gas grid reliability, the ability to manage exposure to gas price volatility, and providing access to key supply basins for the shipment of natural gas. These transportation and storage operations serve a variety of natural gas customers, including Spire’s other businesses.
Removed
As discussed in Note 15 , Regulatory Matters, of the Notes to Financial Statements in Item 8, we also received an order in our 2021 Missouri rate review which was inconsistent with precedent established by the MoPSC in prior rate cases.

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