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What changed in Atmos Energy's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Atmos Energy's 2023 and 2024 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 2024 report.

+146 added−151 removedSource: 10-K (2024-11-18) vs 10-K (2023-11-14)

Top changes in Atmos Energy's 2024 10-K

146 paragraphs added · 151 removed · 123 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

32 edited+4 added−3 removed51 unchanged
Biggest changeAnnual Formula Rate Mechanisms State Infrastructure Programs Formula Rate Mechanisms Colorado System Safety and Integrity Rider (SSIR) — Kansas Gas System Reliability Surcharge (GSRS), System Integrity Program (SIP) — Kentucky Pipeline Replacement Program (PRP) — Louisiana (1) Rate Stabilization Clause (RSC) Mississippi System Integrity Rider (SIR) Stable Rate Filing (SRF) Tennessee (1) Annual Rate Mechanism (ARM) Texas Gas Reliability Infrastructure Program (GRIP), (1) Dallas Annual Rate Review (DARR), Rate Review Mechanism (RRM) Virginia Steps to Advance Virginia Energy (SAVE) — (1) Infrastructure mechanisms in Texas, Louisiana and Tennessee allow for the deferral of all expenses associated with capital expenditures incurred pursuant to these rules, which primarily consists of interest, depreciation and other taxes (Texas only), until the next rate proceeding (rate case or annual rate filing), at which time investment and costs would be recoverable through base rates. 9 Table of Contents The following table summarizes our annual formula rate mechanisms with effective dates during the fiscal years ended September 30, 2023, 2022 and 2021: Division Jurisdiction Test Year Ended Increase (Decrease) in Annual Operating Income EDIT Impact Increase (Decrease) in Annual Operating Income Excluding EDIT Effective Date (In thousands) 2023 Filings: Louisiana Louisiana 12/2022 $ 14,466 $ 17 $ 14,483 07/01/2023 Mid-Tex DARR (1) 09/2022 17,345 51 17,396 06/14/2023 Mid-Tex ATM Cities 12/2022 12,825 — 12,825 06/09/2023 West Texas Amarillo, Lubbock, Dalhart and Channing 12/2022 6,938 — 6,938 06/09/2023 West Texas Triangle 12/2022 717 — 717 06/01/2023 West Texas Environs 12/2022 1,332 — 1,332 06/01/2023 Mid-Tex Environs 12/2022 5,983 — 5,983 06/01/2023 Kentucky/Mid-States Tennessee ARM 09/2022 14 (1,509) (1,495) 06/01/2023 Atmos Pipeline - Texas Texas 12/2022 84,931 — 84,931 05/17/2023 Colorado-Kansas Kansas SIP 12/2022 772 — 772 04/01/2023 Colorado-Kansas Colorado SSIR 12/2023 1,971 — 1,971 01/01/2023 Mississippi Mississippi - SIR 10/2023 8,560 — 8,560 11/01/2022 Mississippi Mississippi - SRF 10/2023 12,188 778 12,966 11/01/2022 Kentucky/Mid-States Kentucky PRP 09/2023 1,588 — 1,588 10/02/2022 Mid-Tex Mid-Tex Cities RRM 12/2021 81,402 (395) 81,007 10/01/2022 West Texas West Texas Cities RRM 12/2021 7,315 (41) 7,274 10/01/2022 Kentucky/Mid-States Virginia - SAVE 09/2023 477 — 477 10/01/2022 Total 2023 Filings $ 258,824 $ (1,099) $ 257,725 2022 Filings: Kentucky/Mid-States Tennessee ARM 09/2021 $ 2,466 $ — $ 2,466 07/01/2022 Louisiana Louisiana 12/2021 17,650 (10,389) 7,261 07/01/2022 West Texas Amarillo, Lubbock, Dalhart and Channing 12/2021 6,122 — 6,122 06/11/2022 West Texas Triangle 12/2021 1,549 — 1,549 06/11/2022 West Texas Environs 12/2021 1,221 — 1,221 06/11/2022 Mid-Tex ATM Cities 12/2021 12,815 — 12,815 06/10/2022 Mid-Tex Environs 12/2021 5,646 — 5,646 06/10/2022 Mid-Tex DARR (2) 09/2021 13,201 — 13,201 05/25/2022 Atmos Pipeline - Texas Texas 12/2021 78,750 — 78,750 05/18/2022 Colorado-Kansas Kansas SIP 12/2021 623 — 623 04/01/2022 Colorado-Kansas Kansas GSRS 09/2021 1,820 — 1,820 02/01/2022 Colorado-Kansas Colorado SSIR 12/2022 2,610 — 2,610 01/01/2022 Mid-Tex Mid-Tex Cities RRM 12/2020 21,673 33,851 55,524 12/01/2021 West Texas West Texas Cities RRM 12/2020 151 3,347 3,498 12/01/2021 Mississippi Mississippi - SIR 10/2022 8,354 2,123 10,477 11/01/2021 Mississippi Mississippi - SRF 10/2022 (5,624) 4,317 (1,307) 11/01/2021 Kentucky/Mid-States Virginia - SAVE 09/2022 327 — 327 10/01/2021 Total 2022 Filings $ 169,354 $ 33,249 $ 202,603 10 Table of Contents 2021 Filings: Mid-Tex Environs 12/2020 $ 4,632 $ — $ 4,632 09/01/2021 Louisiana Louisiana 12/2020 (2,407) 24,192 21,785 07/01/2021 Mid-Tex ATM Cities (3) 12/2020 11,085 — 11,085 06/11/2021 West Texas Triangle (3) 12/2020 416 — 416 06/11/2021 West Texas Environs (3) 12/2020 1,267 — 1,267 06/11/2021 Mid-Tex DARR (3) 09/2020 1,708 15,114 16,822 06/09/2021 Kentucky/Mid-States Tennessee ARM 09/2020 10,260 — 10,260 06/01/2021 Atmos Pipeline - Texas Texas 12/2020 43,868 — 43,868 05/11/2021 Colorado-Kansas Kansas GSRS 09/2020 1,695 — 1,695 02/01/2021 Colorado-Kansas Colorado SSIR 12/2021 2,366 — 2,366 01/01/2021 Mid-Tex Mid-Tex Cities RRM 12/2019 82,645 — 82,645 12/01/2020 West Texas West Texas Cities RRM 12/2019 5,645 — 5,645 12/01/2020 Mississippi Mississippi - SIR 10/2021 10,556 — 10,556 11/01/2020 Mississippi Mississippi - SRF 10/2021 5,856 — 5,856 11/01/2020 Kentucky/Mid-States Virginia - SAVE 09/2021 305 — 305 10/01/2020 Kentucky/Mid-States Kentucky PRP 09/2021 1,562 — 1,562 10/01/2020 Total 2021 Filings $ 181,459 $ 39,306 $ 220,765 (1) The rate increase for this filing was approved based on the effective date herein; however, the new rates were implemented beginning September 1, 2023.
Biggest changeThe following table summarizes our annual formula rate mechanisms with effective dates during the fiscal years ended September 30, 2024, 2023, and 2022: Division Jurisdiction Test Year Ended Increase (Decrease) in Annual Operating Income EDIT Impact Increase (Decrease) in Annual Operating Income Excluding EDIT Effective Date (In thousands) 2024 Filings: Louisiana Louisiana 12/2023 $ 35,645 $ (11,785) $ 23,860 07/01/2024 Mid-Tex ATM Cities 12/2023 17,104 — 17,104 06/07/2024 West Texas Amarillo, Lubbock, Dalhart and Channing 12/2023 7,344 — 7,344 06/07/2024 Kentucky/Mid-States Tennessee ARM 09/2023 18,570 (4,348) 14,222 06/01/2024 Mid-Tex DARR 09/2023 37,809 (14,782) 23,027 06/01/2024 West Texas Triangle 12/2023 1,300 — 1,300 06/01/2024 West Texas Environs 12/2023 1,379 — 1,379 06/01/2024 Mid-Tex Environs 12/2023 8,529 — 8,529 06/01/2024 Atmos Pipeline - Texas Texas 12/2023 82,440 — 82,440 05/14/2024 Colorado-Kansas Kansas SIP 12/2023 708 — 708 04/01/2024 Colorado-Kansas Colorado SSIR 12/2024 2,017 — 2,017 01/01/2024 Mississippi Mississippi - SIR 10/2024 10,969 — 10,969 12/01/2023 Mississippi Mississippi - SRF 10/2024 11,539 (472) 11,067 12/01/2023 Colorado-Kansas Kansas GSRS 09/2023 1,752 — 1,752 11/02/2023 Kentucky/Mid-States Kentucky PRP 09/2024 2,906 — 2,906 10/01/2023 Mid-Tex Mid-Tex Cities RRM 12/2022 98,585 185 98,770 10/01/2023 West Texas West Texas Cities RRM 12/2022 8,594 (112) 8,482 10/01/2023 Kentucky/Mid-States Virginia - SAVE 09/2024 573 — 573 10/01/2023 Total 2024 Filings $ 347,763 $ (31,314) $ 316,449 10 Table of Contents 2023 Filings: Louisiana Louisiana 12/2022 $ 14,466 $ 17 $ 14,483 07/01/2023 Mid-Tex DARR (1) 09/2022 17,345 51 17,396 06/14/2023 Mid-Tex ATM Cities 12/2022 12,825 — 12,825 06/09/2023 West Texas Amarillo, Lubbock, Dalhart and Channing 12/2022 6,938 — 6,938 06/09/2023 West Texas Triangle 12/2022 717 — 717 06/01/2023 West Texas Environs 12/2022 1,332 — 1,332 06/01/2023 Mid-Tex Environs 12/2022 5,983 — 5,983 06/01/2023 Kentucky/Mid-States Tennessee ARM 09/2022 14 (1,509) (1,495) 06/01/2023 Atmos Pipeline - Texas Texas 12/2022 84,931 — 84,931 05/17/2023 Colorado-Kansas Kansas SIP 12/2022 772 — 772 04/01/2023 Colorado-Kansas Colorado SSIR 12/2023 1,971 — 1,971 01/01/2023 Mississippi Mississippi - SIR 10/2023 8,560 — 8,560 11/01/2022 Mississippi Mississippi - SRF 10/2023 12,188 778 12,966 11/01/2022 Kentucky/Mid-States Kentucky PRP 09/2023 1,588 — 1,588 10/02/2022 Mid-Tex Mid-Tex Cities RRM 12/2021 81,402 (395) 81,007 10/01/2022 West Texas West Texas Cities RRM 12/2021 7,315 (41) 7,274 10/01/2022 Kentucky/Mid-States Virginia - SAVE 09/2023 477 — 477 10/01/2022 Total 2023 Filings $ 258,824 $ (1,099) $ 257,725 2022 Filings: Kentucky/Mid-States Tennessee ARM 09/2021 $ 2,466 $ — $ 2,466 07/01/2022 Louisiana Louisiana 12/2021 17,650 (10,389) 7,261 07/01/2022 West Texas Amarillo, Lubbock, Dalhart and Channing 12/2021 6,122 — 6,122 06/11/2022 West Texas Triangle 12/2021 1,549 — 1,549 06/11/2022 West Texas Environs 12/2021 1,221 — 1,221 06/11/2022 Mid-Tex ATM Cities 12/2021 12,815 — 12,815 06/10/2022 Mid-Tex Environs 12/2021 5,646 — 5,646 06/10/2022 Mid-Tex DARR (2) 09/2021 13,201 — 13,201 05/25/2022 Atmos Pipeline - Texas Texas 12/2021 78,750 — 78,750 05/18/2022 Colorado-Kansas Kansas SIP 12/2021 623 — 623 04/01/2022 Colorado-Kansas Kansas GSRS 09/2021 1,820 — 1,820 02/01/2022 Colorado-Kansas Colorado SSIR 12/2022 2,610 — 2,610 01/01/2022 Mid-Tex Mid-Tex Cities RRM 12/2020 21,673 33,851 55,524 12/01/2021 West Texas West Texas Cities RRM 12/2020 151 3,347 3,498 12/01/2021 Mississippi Mississippi - SIR 10/2022 8,354 2,123 10,477 11/01/2021 Mississippi Mississippi - SRF 10/2022 (5,624) 4,317 (1,307) 11/01/2021 Kentucky/Mid-States Virginia - SAVE 09/2022 327 — 327 10/01/2021 Total 2022 Filings $ 169,354 $ 33,249 $ 202,603 (1) The rate increase for this filing was approved based on the effective date herein; however, the new rates were implemented beginning September 1, 2023.
In addition, in accordance with and pursuant to such NYSE listing standards, our Chief Executive Officer during fiscal 2023, John K. Akers, certified to the New York Stock Exchange that he was not aware of any violations by the Company of NYSE corporate governance listing standards.
In addition, in accordance with and pursuant to such NYSE listing standards, our Chief Executive Officer during fiscal 2024, John K. Akers, certified to the New York Stock Exchange that he was not aware of any violations by the Company of NYSE corporate governance listing standards.
The strength of our succession planning process is evident through our long history of promoting our leaders from within the organization.
The strength of our succession planning process is evident through our long history of promoting most of our leaders from within the organization.
Pipeline and Storage Segment Overview Our pipeline and storage segment consists of the pipeline and storage operations of APT and our natural gas transmission operations in Louisiana.
Pipeline and Storage Segment Overview Our pipeline and storage segment consists of the regulated pipeline and storage operations of APT and our natural gas transmission operations in Louisiana.
We also target jobs fairs including those focused on minority, veteran and women candidates and partner with local colleges and universities to identify and recruit qualified applicants in each of the cities and towns we serve. Finally, we believe we offer a competitive benefits program to help retain our employees.
We also target jobs fairs including those focused on minority, veteran, and women candidates and partner with local colleges and universities to identify and recruit qualified 13 Table of Contents applicants in each of the cities and towns we serve. Finally, we believe we offer a competitive benefits program to help retain our employees.
Atmos Energy's vision is to be the safest provider of natural gas services. We will be recognized for exceptional customer service, for being a great employer and for achieving superior financial results. Since 2011, our operating strategy has focused on modernizing our business and infrastructure while reducing regulatory lag.
Atmos Energy's vision is to be the safest provider of natural gas services. We will be recognized for exceptional customer service, for being a great employer, and for achieving superior financial results. Our operating strategy is focused on modernizing our business and infrastructure while reducing regulatory lag.
The principal means to compete against alternative fuels is lower prices, and natural gas historically has maintained its price advantage in the residential, commercial and industrial markets. 12 Table of Contents Our pipeline and storage operations have historically faced competition from other existing intrastate pipelines seeking to provide or arrange transportation, storage and other services for customers.
The principal means to compete against alternative fuels is lower prices, and natural gas historically has maintained its price advantage in the residential, commercial, and industrial markets. Our pipeline and storage operations have historically faced competition from other existing intrastate pipelines seeking to provide or arrange transportation, storage, and other services for customers.
GRIP allows us to include in our rate base annually approved capital costs incurred in the prior calendar year provided that we file a complete rate case at least once every five 5 Table of Contents years; the most recent of which was filed in May 2023.
GRIP allows us to include in our rate base annually approved capital costs incurred in the prior calendar year provided that we file a complete rate case at least once every five 5 Table of Contents years; the most recent of which was completed in December 2023.
We will also provide copies of these reports free of charge upon request to Shareholder Relations at the address and telephone number appearing below: 13 Table of Contents Shareholder Relations Atmos Energy Corporation P.O.
We will also provide copies of these reports free of charge upon request to Shareholder Relations at the address and telephone number appearing below: Shareholder Relations Atmos Energy Corporation P.O.
At September 30, 2023, we held 1,021 franchises having terms generally ranging from five to 35 years. A significant number of our franchises expire each year, which require renewal prior to the end of their terms. Historically, we have successfully renewed these franchises and believe that we will continue to be able to renew our franchises as they expire.
At September 30, 2024, we held 1,026 franchises having terms generally ranging from five to 35 years. A number of our franchises expire each year, which require renewal prior to the end of their terms. Historically, we have successfully renewed these franchises and believe that we will continue to be able to renew our franchises as they expire.
Operating Segments As of September 30, 2023, we manage and review our consolidated operations through the following reportable segments: • The distribution segment is primarily comprised of our regulated natural gas distribution and related sales operations in eight states. • The pipeline and storage segment is comprised primarily of the pipeline and storage operations of our Atmos Pipeline-Texas division and our natural gas transmission operations in Louisiana.
Operating Segments We manage and review our consolidated operations through the following reportable segments: • The distribution segment is comprised of our regulated natural gas distribution and related sales operations in eight states. • The pipeline and storage segment is comprised primarily of the regulated pipeline and storage operations of our Atmos Pipeline-Texas division and our natural gas transmission operations in Louisiana.
Through our annual formula rate mechanisms and infrastructure programs, we have the ability to recover approximately 90 percent of our capital expenditures within six months and substantially all of our capital expenditures within twelve months. • Authorization in tariffs, statute or commission rules that allows us to defer certain elements of our cost of service such as depreciation, ad valorem taxes and pension costs, until they are included in rates. • WNA mechanisms in seven states that serve to minimize the effects of weather on approximately 96 percent of our distribution residential and commercial revenues. • The ability to recover the gas cost portion of bad debts in five states which represents approximately 80 percent of our distribution residential and commercial revenues. 6 Table of Contents The following tables provides a jurisdictional rate summary for our regulated operations as of September 30, 2023.
Through our annual formula rate mechanisms and infrastructure programs, we have the ability to begin recovering approximately 90 percent of our capital expenditures within six months and substantially all of our capital expenditures within twelve months. • Authorization in tariffs, statute or commission rules that allows us to defer certain elements of our cost of service such as depreciation, ad valorem taxes, pension costs, and certain safety related expenses, until they are included in rates. • WNA mechanisms in seven states that serve to minimize the effects of weather on approximately 97 percent of our distribution residential and commercial revenues. • The ability to recover the gas cost portion of bad debts in six states which represents approximately 89 percent of our distribution residential and commercial revenues. 6 Table of Contents The following tables provides a jurisdictional rate summary for our regulated operations as of September 30, 2024.
Our recent ratemaking activity is discussed in greater detail below. Annual Formula Rate Mechanisms As an instrument to reduce regulatory lag, formula rate mechanisms allow us to refresh our rates on an annual basis without filing a formal rate case.
New rates were implemented on October 1, 2024. Our recent ratemaking activity is discussed in greater detail below. Annual Formula Rate Mechanisms As an instrument to reduce regulatory lag, formula rate mechanisms allow us to refresh our rates on an annual basis without filing a formal rate case.
Department of Transportation, develops and enforces regulations for the safe, reliable and environmentally sound operation of the pipeline transportation system. The PHMSA pipeline safety statutes provide for states to assume safety authority over intrastate natural transmission and distribution gas pipelines.
The Pipeline and Hazardous Materials Safety Administration (PHMSA), within the U.S. Department of Transportation, develops and enforces regulations for the safe, reliable, and environmentally sound operation of the pipeline transportation system. The PHMSA pipeline safety statutes provide for states to assume safety authority over intrastate natural transmission and distribution gas pipelines.
We currently have specific infrastructure programs in all of our distribution divisions with tariffs in place to permit the investment associated with these programs to have their surcharge rate adjusted annually to recover approved capital costs incurred in a prior test-year period. The following table summarizes our annual formula rate mechanisms by state.
We currently have specific infrastructure programs in all of our distribution divisions with tariffs in place to permit the investment associated with these programs to have their surcharge rate adjusted annually to recover approved capital costs incurred in a prior test-year period.
Major suppliers during fiscal 2023 were Cima Energy, LP, ConocoPhillips Company, EnLink Gas Marketing LP, Enterprise Navitas Midstream Midland Basin LLC, Hartree Partners, L.P., Sequent Energy Management LLC, Symmetry Energy Solutions, LLC, Targa Gas Marketing LLC, Texla Energy Management, Inc. and Twin Eagle Resource Management, LLC.
Major suppliers during fiscal 2024 were Cima Energy, LP, ConocoPhillips Company, EnLink Gas Marketing LP, Enterprise Navitas Midstream Midland Basin LLC, Hartree Partners, L.P., Sequent Energy Management LLC, Symmetry Energy Solutions, LLC, Targa Gas Marketing LLC, Tenaska Marking Ventures, and Texla Energy Management, Inc.
At September 30, 2023, we had 5,019 employees. We monitor our workforce data on a calendar year basis. As of December 31, 2022, the last date for which information is available, 61 percent of our employees worked in field roles and 39 percent worked in support/shared services roles. No employees are subject to a collective bargaining agreement.
At September 30, 2024, we had 5,260 employees. We monitor our workforce data on a calendar year basis. As of December 31, 2023, the last date for which information is available, 61 percent of our employees worked in field roles and 39 percent worked in support/shared services roles.
The peak-day demand for our distribution operations in fiscal 2023 was on December 23, 2022, when sales to customers reached approximately 4.2 Bcf. Currently, our distribution divisions utilize 35 pipeline transportation companies, both interstate and intrastate, to transport our natural gas.
The peak-day demand for our distribution operations in fiscal 2024 was on January 15, 2024, when sales to customers reached approximately 4.3 Bcf. Currently, our distribution divisions utilize 34 pipeline transportation companies, both interstate and intrastate, to transport our natural gas.
To recruit and hire individuals with a variety of skills, talents, backgrounds and experiences, we value and cultivate our strong relationships with various community and diversity outreach sources.
None of our employees have chosen to work under a collective bargaining agreement. To recruit and hire individuals with a variety of skills, talents, backgrounds, and experiences, we value and cultivate our strong relationships with various community and diversity outreach sources.
Our ratemaking outcomes include the refund (return) of excess deferred income taxes (EDIT) resulting from previously enacted tax reform legislation and do not reflect the true economic benefit of the outcomes because they do not include the corresponding income tax benefit. The following tables summarize the annualized ratemaking outcomes we implemented in each of the last three fiscal years.
Our ratemaking outcomes include the refund (return) of excess deferred income taxes (EDIT) resulting from previously enacted tax reform legislation and do not reflect the true economic benefit of the outcomes because they do not include the corresponding income tax benefit.
(9) The West Texas rate base represents a "system-wide," or 100 percent, of the West Texas Division's rate base. (10) The West Texas Cities approved the Formula Rate Mechanism filing with rates effective October 1, 2023, which included a rate base of $965.3 million, an authorized return of 7.35%, a debt/equity ratio of 42/58 and an authorized ROE of 9.80%.
(10) The West Texas Cities approved the Formula Rate Mechanism filing with rates effective October 1, 2024, which included a rate base of $1.1 billion, an authorized return of 7.41%, a debt/equity ratio of 42/58 and an authorized ROE of 9.80%.
Rate Case Filings A rate case is a formal request from Atmos Energy to a regulatory authority to increase rates that are charged to customers. Rate cases may also be initiated when the regulatory authorities request us to justify our rates. This process is referred to as a “show cause” action.
Rate cases may also be initiated when the regulatory authorities request us to justify our rates. This process is referred to as a “show cause” action.
Division Service Areas Communities Served Customer Meters Mid-Tex Texas, including the Dallas/Fort Worth Metroplex 550 1,856,356 Kentucky/Mid-States Kentucky 220 185,630 Tennessee 165,267 Virginia 25,083 Louisiana Louisiana 270 378,483 West Texas Amarillo, Lubbock, Midland 80 330,490 Mississippi Mississippi 110 273,586 Colorado-Kansas Colorado 170 129,197 Kansas 142,292 We operate in our service areas under terms of non-exclusive franchise agreements granted by the various cities and towns that we serve.
Division Service Areas Communities Served Customer Meters Mid-Tex Texas, including the Dallas/Fort Worth Metroplex 550 1,804,265 Kentucky/Mid-States Kentucky 220 176,903 Tennessee 161,193 Virginia 23,777 Louisiana Louisiana 270 360,870 West Texas Amarillo, Lubbock, Midland 80 314,503 Mississippi Mississippi 110 251,147 Colorado-Kansas Colorado 170 129,727 Kansas 139,435 We operate in our service areas under terms of non-exclusive franchise agreements granted by the various cities and towns that we serve.
Division Jurisdiction Effective Date of Last Rate/GRIP Action Rate Base (thousands) (1) Authorized Rate of Return (1) Authorized Debt/ Equity Ratio (1) Authorized Return on Equity (1) Atmos Pipeline — Texas Texas (5) 05/17/2023 $4,055,375 8.87% 47/53 11.50% Colorado-Kansas Colorado 05/14/2023 229,565 7.00% 42-45/55-58 9.3% - 9.6% Colorado SSIR 01/01/2023 31,993 7.00% 42-45/55-58 9.3% - 9.6% Kansas 05/09/2023 295,070 (4) (4) (4) Kansas SIP 04/01/2023 13,270 7.03% 44/56 9.10% Kentucky/Mid-States Kentucky 05/20/2022 568,506 6.82% 45/55 9.23% Kentucky-PRP 10/02/2022 14,375 6.94% 45/55 9.45% Tennessee 06/01/2023 499,447 7.58% 38/62 9.80% Virginia 04/01/2019 47,827 7.43% 42/58 9.20% Virginia-SAVE 10/01/2022 11,753 7.43% 42/58 9.20% Louisiana Louisiana 07/01/2023 1,094,373 7.30% (4) (4) Mid-Tex Mid-Tex Cities (7) 10/01/2022 5,234,981 (6) 7.28% 42/58 9.80% Mid-Tex ATM Cities 06/09/2023 5,932,535 (6) 7.97% 40/60 9.80% Mid-Tex Environs 06/01/2023 5,932,542 (6) 7.97% 40/60 9.80% Mid-Tex — Dallas 09/01/2023 5,904,692 (6) 7.43% 40/60 9.80% Mississippi Mississippi 11/01/2022 525,348 7.53% (4) (4) Mississippi - SIR 11/01/2022 390,276 7.53% (4) (4) West Texas West Texas Cities (8) (10) 10/01/2022 855,328 (9) 7.28% 42/58 9.80% West Texas - ALDC 06/09/2023 960,622 (9) 7.35% 41/59 (4) West Texas - Environs 06/01/2023 958,159 (9) 7.97% 40/60 9.80% West Texas - Triangle 06/01/2023 56,279 7.71% 40/60 9.80% Division Jurisdiction Bad Debt Rider (2) Formula Rate Infrastructure Mechanism Performance Based Rate Program (3) WNA Period Atmos Pipeline — Texas Texas No Yes Yes N/A N/A Colorado-Kansas Colorado No No Yes No N/A Kansas Yes No Yes Yes October-May Kentucky/Mid-States Kentucky Yes No Yes Yes November-April Tennessee Yes Yes Yes Yes October-April Virginia Yes No Yes No January-December Louisiana Louisiana No Yes Yes No December-March Mid-Tex Cities Texas Yes Yes Yes No November-April Mid-Tex — Dallas Texas Yes Yes Yes No November-April Mississippi Mississippi No Yes Yes No November-April West Texas Texas Yes Yes Yes No October-May 7 Table of Contents (1) The rate base, authorized rate of return, authorized debt/equity ratio and authorized return on equity presented in this table are those from the most recent approved regulatory filing for each jurisdiction.
Division Jurisdiction Effective Date of Last Rate/GRIP Action Rate Base (thousands) (1) Authorized Rate of Return (1) Authorized Debt/ Equity Ratio (1) Authorized Return on Equity (1) Atmos Pipeline — Texas Texas 05/14/2024 $4,773,699 8.49% 40/60 11.45% Colorado-Kansas Colorado 05/14/2023 229,565 7.00% 42-45/55-58 9.3% - 9.6% Colorado SSIR 01/01/2024 52,820 7.00% / 3.97% 42/58 (4) Kansas 05/09/2023 295,070 (4) (4) (4) Kansas GSRS 11/02/2023 16,546 (4) (4) (4) Kansas SIP 04/01/2024 19,908 (4) (4) (4) Kentucky/Mid-States Kentucky 05/20/2022 568,506 6.82% 45/55 9.23% Kentucky-PRP 10/01/2023 40,504 6.94% 45/55 9.45% Tennessee 06/01/2024 554,053 7.64% 38/62 9.80% Virginia 12/01/2023 71,450 7.57% 39/61 9.90% Virginia-SAVE 10/01/2023 16,422 7.43% 42/58 9.20% Louisiana Louisiana 07/01/2024 1,227,842 7.43% 42/58 9.80% Mid-Tex Mid-Tex Cities (5) 10/01/2023 6,070,321 (6) 7.35% 42/58 9.80% Mid-Tex ATM Cities 06/07/2024 7,009,146 (6) 7.97% 40/60 9.80% Mid-Tex Environs 06/01/2024 7,009,154 (6) 7.97% 40/60 9.80% Mid-Tex — Dallas 06/01/2024 6,844,772 (6) 7.47% 40/60 9.80% Mississippi Mississippi (7) 12/01/2023 591,882 7.82% 39/61 10.34% Mississippi - SIR (7) 12/01/2023 472,676 7.82% 39/61 10.34% West Texas West Texas Cities (8) (10) 10/01/2023 965,289 (9) 7.35% 42/58 9.80% West Texas - ALDC 06/07/2024 1,062,054 (9) 7.35% 41/59 (4) West Texas - Environs 06/01/2024 1,059,604 (9) 7.97% 40/60 9.80% West Texas - Triangle 06/01/2024 65,124 7.71% 40/60 9.80% 7 Table of Contents Division Jurisdiction Bad Debt Rider (2) Formula Rate Infrastructure Mechanism Performance Based Rate Program (3) WNA Period Atmos Pipeline — Texas Texas No Yes Yes N/A N/A Colorado-Kansas Colorado No No Yes No N/A Kansas Yes No Yes Yes October-May Kentucky/Mid-States Kentucky Yes No Yes Yes November-April Tennessee Yes Yes Yes Yes October-April Virginia Yes No Yes No January-December Louisiana Louisiana No Yes Yes No December-March Mid-Tex Cities Texas Yes Yes Yes No November-April Mid-Tex — Dallas Texas Yes Yes Yes No November-April Mississippi Mississippi Yes Yes Yes No November-April West Texas Texas Yes Yes Yes No October-May (1) The rate base, authorized rate of return, authorized debt/equity ratio, and authorized return on equity presented in this table are those from the most recent approved regulatory filing for each jurisdiction.
The following table summarizes our recent rate case activity during the fiscal years ended September 30, 2023, 2022 and 2021: Division State Increase in Annual Operating Income EDIT Impact Increase in Annual Operating Income Excluding EDIT Effective Date (In thousands) 2023 Rate Case Filings: Colorado-Kansas Colorado $ 913 $ (54) $ 859 05/14/2023 Colorado-Kansas Kansas 2,027 6,845 8,872 05/09/2023 Total 2023 Rate Case Filings $ 2,940 $ 6,791 $ 9,731 2022 Rate Case Filings: Kentucky/Mid-States Kentucky (1) $ 5,938 $ 7,379 $ 13,317 05/20/2022 Total 2022 Rate Case Filings $ 5,938 $ 7,379 $ 13,317 2021 Rate Case Filings: West Texas (ALDC) Texas $ 5,119 $ 1,168 $ 6,287 06/01/2021 Total 2021 Rate Case Filings $ 5,119 $ 1,168 $ 6,287 (1) The rate case outcome for Kentucky is inclusive of the fiscal 2022 pipeline replacement program. 11 Table of Contents Other Ratemaking Activity The following table summarizes other ratemaking activity during the fiscal years ended September 30, 2023, 2022 and 2021: Division Jurisdiction Rate Activity Increase (Decrease) in Annual Operating Income Effective Date (In thousands) 2023 Other Rate Activity: Colorado-Kansas Kansas Ad Valorem (1) $ 1,320 02/01/2023 Total 2023 Other Rate Activity $ 1,320 2022 Other Rate Activity: Colorado-Kansas Kansas Ad Valorem (1) $ (370) 02/01/2022 Total 2022 Other Rate Activity $ (370) 2021 Other Rate Activity: Colorado-Kansas Kansas Ad-Valorem (1) $ (877) 02/01/2021 Total 2021 Other Rate Activity $ (877) (1) The Ad Valorem filing relates to property taxes that are either over or undercollected compared to the amount included in our Kansas service area's base rates.
The following table summarizes our recent rate case activity during the fiscal years ended September 30, 2024, 2023, and 2022: Division State Increase in Annual Operating Income EDIT Impact Increase (Decrease) in Annual Operating Income Excluding EDIT Effective Date (In thousands) 2024 Rate Case Filings: Atmos Pipeline - Texas Texas $ 27,024 $ (36,921) $ (9,897) 12/13/2023 Kentucky/Mid-States Virginia 2,434 (939) 1,495 12/01/2023 Total 2024 Rate Case Filings $ 29,458 $ (37,860) $ (8,402) 2023 Rate Case Filings: Colorado-Kansas Colorado $ 913 $ (54) $ 859 05/14/2023 Colorado-Kansas Kansas 2,027 6,845 8,872 05/09/2023 Total 2023 Rate Case Filings $ 2,940 $ 6,791 $ 9,731 2022 Rate Case Filings: Kentucky/Mid-States Kentucky (1) $ 5,938 $ 7,379 $ 13,317 05/20/2022 Total 2022 Rate Case Filings $ 5,938 $ 7,379 $ 13,317 (1) The rate case outcome for Kentucky is inclusive of the fiscal 2022 pipeline replacement program.
There are no administrative or judicial proceedings arising under environmental quality statutes pending or known to be contemplated by governmental agencies which would have a material adverse effect on us or our operations. The Pipeline and Hazardous Materials Safety Administration (PHMSA), within the U.S.
We believe that our properties and operations comply with, and are operated in conformity with, applicable safety and environmental statutes and regulations. 12 Table of Contents There are no administrative or judicial proceedings arising under environmental quality statutes pending or known to be contemplated by governmental agencies which would have a material adverse effect on us or our operations.
(7) The Mid-Tex Cities approved the Formula Rate Mechanism filing with rates effective October 1, 2023, which included a rate base of $6.1 billion, an authorized return of 7.35%, a debt/equity ratio of 42/58 and an authorized ROE of 9.80%. (8) The West Texas Cities includes all West Texas Division cities except Amarillo, Lubbock, Dalhart and Channing (ALDC).
(5) The Mid-Tex Cities approved the Formula Rate Mechanism filing with rates effective October 1, 2024, which included a rate base of $7.1 billion, an authorized return of 7.41%, a debt/equity ratio of 42/58 and an authorized ROE of 9.80%. (6) The Mid-Tex rate base represents a “system-wide,” or 100 percent, of the Mid-Tex Division’s rate base.
Rate Action Annual Increase (Decrease) in Operating Income EDIT Impact Annual Increase (Decrease) in Operating Income Excluding EDIT (In thousands) 2023 Filings: Annual formula rate mechanisms $ 258,824 $ (1,099) $ 257,725 Rate case filings 2,940 6,791 9,731 Other ratemaking activity 1,320 — 1,320 Total 2023 Filings $ 263,084 $ 5,692 $ 268,776 2022 Filings: Annual formula rate mechanisms $ 169,354 $ 33,249 $ 202,603 Rate case filings 5,938 7,379 13,317 Other ratemaking activity (370) — (370) Total 2022 Filings $ 174,922 $ 40,628 $ 215,550 2021 Filings: Annual formula rate mechanisms $ 181,459 $ 39,306 $ 220,765 Rate case filings 5,119 1,168 6,287 Other ratemaking activity (877) — (877) Total 2021 Filings $ 185,701 $ 40,474 $ 226,175 The following ratemaking efforts seeking $264.6 million in annual operating income were initiated during fiscal 2023 but had not been completed or implemented as of September 30, 2023: 8 Table of Contents Division Rate Action Jurisdiction Operating Income Requested (In thousands) Atmos Pipeline - Texas Rate Case Texas (1) $ 107,417 Colorado-Kansas Infrastructure Mechanism Kansas (2) 1,755 Kentucky/Mid-States Infrastructure Mechanism Virginia (3) 672 Kentucky/Mid-States Infrastructure Mechanism Kentucky (4) 3,424 Kentucky/Mid-States Rate Case Virginia 2,752 Mid-Tex Formula Rate Mechanism Mid-Tex Cities (5) 113,768 Mississippi Infrastructure Mechanism Mississippi 10,969 Mississippi Formula Rate Mechanism Mississippi 13,793 West Texas Formula Rate Mechanism West Texas Cities (6) 10,085 $ 264,635 (1) On October 24, 2023, APT and the intervening parties in its general rate case filed a Joint Notice of Settlement and Proposed Order.
The following tables summarize the annualized ratemaking outcomes we implemented in each of the last three fiscal years. 8 Table of Contents Rate Action Annual Increase (Decrease) in Operating Income EDIT Impact Annual Increase (Decrease) in Operating Income Excluding EDIT (In thousands) 2024 Filings: Annual formula rate mechanisms $ 347,763 $ (31,314) $ 316,449 Rate case filings 29,458 (37,860) (8,402) Other ratemaking activity (971) — (971) Total 2024 Filings $ 376,250 $ (69,174) $ 307,076 2023 Filings: Annual formula rate mechanisms $ 258,824 $ (1,099) $ 257,725 Rate case filings 2,940 6,791 9,731 Other ratemaking activity 1,320 — 1,320 Total 2023 Filings $ 263,084 $ 5,692 $ 268,776 2022 Filings: Annual formula rate mechanisms $ 169,354 $ 33,249 $ 202,603 Rate case filings 5,938 7,379 13,317 Other ratemaking activity (370) — (370) Total 2022 Filings $ 174,922 $ 40,628 $ 215,550 The following ratemaking efforts seeking $218.0 million in annual operating income were initiated during fiscal 2024 but had not been completed or implemented as of September 30, 2024: Division Rate Action Jurisdiction Operating Income Requested (In thousands) Colorado-Kansas Infrastructure Mechanism Kansas (1) $ 1,998 Kentucky/Mid-States Infrastructure Mechanism Virginia (2) 748 Kentucky/Mid-States Infrastructure Mechanism Kentucky (3) 3,441 Kentucky/Mid-States Rate Case Kentucky 33,654 Mid-Tex Formula Rate Mechanism Mid-Tex Cities (4) 133,414 Mississippi Infrastructure Mechanism Mississippi (5) 21,830 Mississippi Formula Rate Mechanism Mississippi (5) 16,244 West Texas Formula Rate Mechanism West Texas Cities (6) 6,709 $ 218,038 (1) The staff of the Kansas Corporation Commission recommended approval of the GSRS filing on October 17, 2024, subject to commission approval.
(2) The rate increase for this filing was approved based on the effective date herein; however, the new rates were implemented beginning September 1, 2022. (3) The rate increases for these filings were approved based on the effective dates herein; however, the new rates were implemented beginning September 1, 2021.
(2) The rate increase for this filing was approved based on the effective date herein; however, the new rates were implemented beginning September 1, 2022. 11 Table of Contents Rate Case Filings A rate case is a formal request from Atmos Energy to a regulatory authority to increase rates that are charged to customers.
(4) On September 29, 2023, the Kentucky Public Service Commission approved a rate increase of $2.9 million effective October 1, 2023. (5) The Mid-Tex Cities approved a rate increase of $98.6 million. New rates were implemented on October 1, 2023. (6) The West Texas Cities approved a rate increase of $8.6 million. New rates were implemented on October 1, 2023.
New rates were implemented October 1, 2024. (5) On November 4, 2024, the Mississippi Public Service Commission (MPSC) approved an increase in operating income of $24.0 million for the SIR filing and an increase in operating income of $3.8 million for the SRF filing. (6) The West Texas Cities approved a rate increase of $4.4 million.
New rates are anticipated to be implemented on January 1, 2024. (2) The Kansas Corporation Commission approved the GSRS filing on November 2, 2023, with rates effective November 2, 2023. (3) On September 11, 2023, the State Corporation Commission of Virginia approved a rate increase of $0.6 million effective October 1, 2023.
(2) On September 4, 2024, the State Corporation Commission of Virginia approved a rate increase of $0.7 million effective October 1, 2024. (3) On September 27, 2024, the Kentucky Public Service Commission approved a rate increase of $3.4 million effective October 2, 2024, subject to refund. (4) The Mid-Tex Cities approved a rate increase of $112.1 million.
From time to time, we receive inquiries regarding various environmental matters. We believe that our properties and operations comply with, and are operated in conformity with, applicable safety and environmental statutes and regulations.
From time to time, we receive inquiries regarding various environmental matters.
Removed
(5) On October 24, 2023, APT and the intervening parties in its general rate case filed a Joint Notice of Settlement and Proposed Order. The settlement proposes a rate base of $4.3 billion, an authorized return of 8.49%, a debt/equity ratio of 40/60 and an authorized ROE of 11.45%.
Added
(7) The Mississippi Public Service Commission approved a settlement at its meeting on November 4, 2024, which included a rate base of $1.2 billion and an authorized return of 7.80%. No debt/equity ratio or an authorized ROE was included in the commissions final order.
Removed
We anticipate the settlement agreement will be on the RRC's agenda for its December 13, 2023 meeting. (6) The Mid-Tex rate base represents a “system-wide,” or 100 percent, of the Mid-Tex Division’s rate base.
Added
(8) The West Texas Cities includes all West Texas Division cities except Amarillo, Lubbock, Dalhart and Channing (ALDC). (9) The West Texas rate base represents a "system-wide," or 100 percent, of the West Texas Division's rate base.
Removed
We anticipate the settlement agreement will be on the RRC's agenda for its December 13, 2023 meeting. If approved, the settlement would result in a $27.0 million increase in annual operating income, exclusive of the impact of the cessation of $36.9 million in excess deferred income tax refunds, which are substantially offset by a corresponding increase in income taxes.
Added
The following table summarizes our annual formula rate mechanisms by state. 9 Table of Contents Annual Formula Rate Mechanisms State Infrastructure Programs Formula Rate Mechanisms Colorado System Safety and Integrity Rider (SSIR) — Kansas Gas System Reliability Surcharge (GSRS), System Integrity Program (SIP) — Kentucky Pipeline Replacement Program (PRP) — Louisiana (1) Rate Stabilization Clause (RSC) Mississippi System Integrity Rider (SIR) Stable Rate Filing (SRF) Tennessee (1) Annual Rate Mechanism (ARM) Texas Gas Reliability Infrastructure Program (GRIP), (1) Dallas Annual Rate Review (DARR), Rate Review Mechanism (RRM) Virginia Steps to Advance Virginia Energy (SAVE) — (1) Infrastructure mechanisms in Texas, Louisiana, and Tennessee allow for the deferral of all expenses associated with capital expenditures incurred pursuant to these rules, which primarily consists of interest, depreciation, and other taxes (Texas only), until the next rate proceeding (rate case or annual rate filing), at which time investment and costs would be recoverable through base rates.
Added
Other Ratemaking Activity The following table summarizes other ratemaking activity during the fiscal years ended September 30, 2024, 2023, and 2022: Division Jurisdiction Rate Activity Increase (Decrease) in Annual Operating Income Effective Date (In thousands) 2024 Other Rate Activity: Colorado-Kansas Kansas Ad Valorem (1) $ (971) 02/01/2024 Total 2024 Other Rate Activity $ (971) 2023 Other Rate Activity: Colorado-Kansas Kansas Ad Valorem (1) $ 1,320 02/01/2023 Total 2023 Other Rate Activity $ 1,320 2022 Other Rate Activity: Colorado-Kansas Kansas Ad-Valorem (1) $ (370) 02/01/2022 Total 2022 Other Rate Activity $ (370) (1) The Ad Valorem filing relates to property taxes that are either over or undercollected compared to the amount included in our Kansas service area's base rates.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

24 edited+6 added−8 removed51 unchanged
Biggest changeAs a result, the availability of insurance covering such risks may become more limited, which could increase the risk that an event could adversely affect our operations or financial results. Technology and Cybersecurity Risks Increased dependence on technology may hinder the Company’s business operations and adversely affect its financial condition and results of operations if such technologies fail.
Biggest changeAs a result, the Company's contractors, suppliers, and other business partners may be unable to fulfill their contractual obligations or the availability of insurance covering such risks may become more limited, which could increase the risk that an event could adversely affect our operations or financial results.
Because of this process, we suffer the negative financial effects of having placed assets in service without the benefit of rate relief, which is commonly referred to as “regulatory lag.” Regulatory authorities in the states we serve have approved various infrastructure and annual rate adjustment mechanisms to effectively reduce the regulatory lag inherent in the ratemaking process.
Because of this process, we could suffer the negative financial effects of having placed assets in service without the benefit of rate relief, which is commonly referred to as “regulatory lag.” Regulatory authorities in the states we serve have approved various infrastructure and annual rate adjustment mechanisms to effectively reduce the regulatory lag inherent in the ratemaking process.
These factors include the following, which are organized by category: Regulatory and Legislative Risks We are subject to federal, state and local regulations that affect our operations and financial results. We are subject to regulatory oversight from various federal, state and local regulatory authorities in the eight states that we serve.
These factors include the following, which are organized by category: Regulatory and Legislative Risks We are subject to federal, state, and local regulations that affect our operations and financial results. We are subject to safety and financial regulatory oversight from various federal, state, and local regulatory authorities in the eight states that we serve.
We constantly monitor and maintain our pipeline and distribution systems to ensure that natural gas is delivered safely, reliably and efficiently through our network of more than 75,000 miles of distribution and transmission lines. As in recent years, natural gas distribution and pipeline companies are continuing to encounter increasing federal, state and local oversight of the safety of their operations.
We constantly monitor and maintain our pipeline and distribution systems to ensure that natural gas is delivered safely, reliably, and efficiently through our network of more than 80,000 miles of distribution and transmission lines. As in recent years, natural gas distribution and pipeline companies are continuing to encounter increasing federal, state, and local oversight of the safety of their operations.
Climate Risks Adverse weather conditions could affect our operations or financial results. We have weather-normalized rates for approximately 96 percent of our residential and commercial revenues in our distribution operations, which substantially mitigates the adverse effects of warmer-than-normal weather for meters in those service areas.
Climate Risks Adverse weather conditions could affect our operations or financial results. We have weather-normalized rates for approximately 97 percent of our residential and commercial revenues in our distribution operations, which substantially mitigates the adverse effects of warmer-than-normal weather for meters in those service areas.
Incidents that impact the health and availability of our workforce could threaten the continuity of our business operations. Natural disasters, terrorist activities or other significant events could adversely affect our operations or financial results. Natural disasters are always a threat to our assets and operations.
Incidents that impact the health and availability of our workforce could threaten the continuity of our business operations. Natural disasters, adverse weather, terrorist activities, or other significant events could adversely affect our operations or financial results. Natural disasters and adverse weather are always a threat to our assets and operations.
For example, the adoption of new regulations requiring more comprehensive or stringent safety standards could require installation of new or modified safety controls, new capital projects, or accelerated maintenance programs, all of which could require a potentially significant increase in operating costs. Distributing, transporting and storing natural gas involve risks that may result in accidents and additional operating costs.
For example, the adoption of new regulations requiring more comprehensive or stringent safety standards could require installation of new or modified safety controls, new capital projects, or accelerated maintenance programs, all of which could require a potentially significant increase in operating costs. 15 Table of Contents Distributing, transporting, and storing natural gas involve risks that may result in accidents and additional operating costs.
In the normal course of business, as a regulated entity, we often need to place assets in service and establish historical test periods before rate cases that seek to adjust our allowed returns to recover that investment can be filed. Further, the regulatory review process can be lengthy in the context of traditional ratemaking.
In the normal course of business, as a regulated entity, we often need to place assets in service and establish historical test periods before rate cases that seek to adjust 14 Table of Contents our allowed returns to recover that investment can be filed. Further, the regulatory review process can be lengthy in the context of traditional ratemaking.
The magnitude of these expenditures may be affected by a number of factors, including new policy and regulations, and the general state of the economy. 17 Table of Contents The liquidity required to fund our working capital, capital expenditures and other cash needs is provided from a combination of internally generated cash flows and external debt and equity financing.
The magnitude of these expenditures may be affected by a number of factors, including new policy and regulations, and the general state of the economy. The liquidity required to fund our working capital, capital expenditures, and other cash needs is provided from a combination of internally generated cash flows and external debt and equity financing.
The concentration of our operations in the State of Texas exposes our operations and financial results to economic conditions, weather patterns and regulatory decisions in Texas. Approximately 70 percent of our consolidated operations are located in the State of Texas.
The concentration of our operations in the State of Texas exposes our operations and financial results to economic conditions, weather patterns, and regulatory decisions in Texas. Approximately 75 percent of our consolidated operations are located in the State of Texas.
If customer 15 Table of Contents growth slows or existing customers choose to conserve their use of gas or choose another energy product, reduced gas purchases and customer billings could adversely impact our business.
If customer growth slows or existing customers choose to conserve their use of gas or choose another energy product, reduced gas purchases and customer billings could adversely impact our business.
Although we have taken steps to structure current and future transactions to comply with applicable current FERC regulations, changes in FERC regulations or their 14 Table of Contents interpretation by FERC or additional regulations issued by FERC in the future could also adversely affect our business, financial condition or financial results.
Although we have taken steps to structure current and future transactions to comply with applicable current FERC regulations, changes in FERC regulations or their interpretation by FERC or additional regulations issued by FERC in the future could also adversely affect our business, financial condition, or financial results.
The Company incurs significant costs associated with its compliance with existing PHMSA and comparable state regulations. Although we believe these are costs ultimately recoverable through our rates, the costs of complying with new laws and regulations may have at least a short-term adverse impact on our operating costs and financial results.
The Company incurs significant costs to comply with existing PHMSA and comparable state regulations. Although we believe these costs are ultimately recoverable through our rates, the costs of complying with new laws and regulations may have at least a short-term adverse impact on our operating costs and financial results.
Any attack on such systems that would result in the unauthorized release of customer, employee or other confidential or sensitive data could have a material adverse effect on our business reputation, increase our costs and expose us to additional material legal claims and liability.
Further, any attack on our technology systems that would result in the unauthorized release of confidential or sensitive data could have a material adverse effect on our business reputation, increase our costs, and expose us to material legal claims and liability.
Additionally, sustained cold weather could challenge our ability to adequately meet customer demand in our operations. Greenhouse gas emissions or other legislation or regulations intended to address climate change could increase our operating costs, adversely affecting our financial results, growth, cash flows and results of operations.
Additionally, sustained cold weather could challenge our ability to adequately meet customer demand in our operations. Legislation to reduce or eliminate greenhouse gas emissions or fossil fuels could increase our operating costs, adversely affecting our financial results, growth, cash flows, and results of operations.
Climate change could also cause shifts in population, including customers moving away from our service territories. It could also result in more frequent and more severe weather events, such as hurricanes and tornadoes, which could increase our costs to repair damaged facilities and restore service to our customers or impact the cost of gas.
It could also result in more frequent and more severe weather events, such as hurricanes and tornadoes, which could increase our costs to repair damaged facilities and restore service to our customers or impact the cost of gas.
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.
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 if such costs are not ultimately recoverable. ITEM 1B. Unresolved Staff Comments. Not applicable.
Cyber-attacks or acts of cyber-terrorism could disrupt our business operations and information technology systems or result in the loss or exposure of confidential or sensitive customer, employee or Company information.
Cyber-attacks or acts of cyber-terrorism could disrupt our business operations and information technology systems or result in the loss or exposure of confidential or sensitive customer, employee or Company information. Our business operations and information technology systems may be vulnerable to an attack by individuals or organizations intending to disrupt our business operations and information technology systems.
We use our information technology systems to manage our distribution and intrastate pipeline and storage operations and other business processes. Disruption of those systems could adversely impact our ability to safely deliver natural gas to our customers, operate our pipeline and storage systems or serve our customers timely.
Disruption of those systems could adversely impact our ability to safely deliver natural gas to our customers, operate our pipeline and storage systems, or serve our customers timely.
We must pay suppliers for gas when it is purchased, which can be significantly in advance of when these costs may be recovered through the collection of monthly customer bills for gas delivered.
Rapid increases in the costs of purchased gas would cause us to experience a significant increase in short-term or long-term debt. We must pay suppliers for gas when it is purchased, which can be significantly in advance of when these costs may be recovered through the collection of monthly customer bills for gas delivered.
Even though we have insurance coverage in place for many of these cyber-related risks, if such an attack or act of terrorism were to occur, our operations and financial results could be adversely affected to the extent not fully covered by such insurance coverage. 16 Table of Contents Compliance with and changes in cybersecurity requirements have a cost and operational impact on our business, and failure to comply with such laws and regulations could adversely impact our reputation, results of operations, financial condition and/or cash flows.
Even though we have insurance coverage in place for many of these cyber-related risks, if such an attack or act of terrorism were to occur, our operations and financial results could be adversely affected to the extent not fully covered by such insurance coverage.
This would likely lead to slower collections and higher than normal levels of accounts receivable. This, in turn, could increase our financing requirements. Additionally, should economic conditions deteriorate, our industrial customers could seek alternative energy sources, which could result in lower transportation volumes.
This would likely lead to slower collections and higher than normal levels of accounts receivable. This, in turn, could increase our financing requirements.
Six of the eight states in which we operate have passed legislation to prevent local governments from limiting the types of energy available to customers. However, federal, regional and/or state legislative and/or regulatory initiatives may attempt to control or limit the causes of climate change, including greenhouse gas emissions, such as carbon dioxide and methane.
Six of the eight states in which we operate have passed legislation to prevent local governments from limiting the types of energy available to customers.
Over the last several years, the Company has implemented or acquired a variety of technological tools including both Company-owned information technology and technological services provided by outside parties. These tools and systems support critical functions including scheduling and dispatching of service technicians, automated meter reading systems, customer care and billing, operational plant logistics, management reporting and external financial reporting.
Technology and Cybersecurity Risks The failure of technology may hinder the Company’s business operations and adversely affect its financial condition and results of operations. 16 Table of Contents The Company uses Company-owned information technology and technology hosted by third parties to support critical functions including scheduling and dispatching of service technicians, automated meter reading systems, customer care and billing, operational plant logistics, management reporting, and external financial reporting.
Removed
Our business operations and information technology systems may be vulnerable to an attack by individuals or organizations intending to disrupt our business operations and information technology systems, even though the Company has implemented policies, procedures and controls to prevent and detect these activities.
Added
The Company has implemented policies, procedures, and controls to identify, protect, detect, and respond to cyberattacks or acts of terrorism. However, these measures may be insufficient or become ineffective, and there are no assurances that cybersecurity breaches or acts of terrorism will not impact our business operations and strategy, results of operations, and financial condition in the future.
Removed
Accordingly, if such an attack or act of terrorism were to occur, our operations and financial results could be adversely affected. In addition, we use our information technology systems to protect confidential or sensitive customer, employee and Company information developed and maintained in the normal course of our business.
Added
Compliance with and changes in cybersecurity requirements have a cost and operational impact on our business, and failure to comply with such laws and regulations could adversely impact our reputation, results of operations, financial condition, and/or cash flows.
Removed
Such laws or regulations could impose costs tied to greenhouse gas emissions, operational requirements or restrictions, or additional charges to fund energy efficiency activities.
Added
However, federal, regional, and/or state legislative and/or regulatory initiatives may attempt to control or limit greenhouse gas emissions, such as carbon dioxide and methane, by requiring the adoption of new infrastructure or technology to limit greenhouse gas emissions, limiting our ability to serve new or existing customers, imposing costs or restrictions on end users of natural gas, or assessing additional charges to fund energy efficiency activities.
Removed
They could also provide a cost advantage to alternative energy sources, impose costs or restrictions on end users of natural gas, or result in other costs or requirements, such as costs associated with the adoption of new infrastructure and technology to respond to new mandates.
Added
Such laws or regulations could adversely affect our business, results of operations, and cash flows if the costs we incur to comply with these laws or regulations are not recovered or if the cost of providing natural gas services becomes prohibitively expensive, leading to a reduction in the demand for natural gas or fuel-switching to alternate sources of energy. 17 Table of Contents The operations and financial results of the Company could be adversely impacted as a result of climate change.
Removed
The focus on climate change could adversely impact the reputation of fossil fuel products or services.
Added
Climate change may result in a reduction in the demand for natural gas or cause shifts in the population of our service territories which could adversely impact the economic outlook for our service territories. These occurrences could adversely impact our financial results, growth, cash flows, and results of operations.
Removed
The occurrence of the foregoing events could put upward pressure on the cost of natural gas relative to other energy sources, increase our costs and the prices we charge to customers, reduce the demand for natural gas or cause fuel switching to other energy sources, and impact the competitive position of natural gas and the ability to serve new or existing customers, adversely affecting our business, results of operations and cash flows.
Added
Additionally, should economic conditions deteriorate, our industrial customers could seek alternative energy sources, which could result in lower transportation volumes. 18 Table of Contents Increased gas costs could adversely impact our customer base and customer collections and increase our level of indebtedness.
Removed
The operations and financial results of the Company could be adversely impacted as a result of climate change. As climate change occurs, our businesses could be adversely impacted. To the extent climate change results in materially increasing temperatures, financial results could be adversely affected through lower gas volumes and revenues.
Removed
Increased gas costs could adversely impact our customer base and customer collections and increase our level of indebtedness. Rapid increases in the costs of purchased gas would cause us to experience a significant increase in short-term or long-term debt.

Item 2. Properties

Properties — owned and leased real estate

5 edited+0 added−0 removed1 unchanged
Biggest changeThe following table summarizes our contracted storage capacity at September 30, 2023: Segment Division/Company Maximum Storage Quantity (MMBtu) Maximum Daily Withdrawal Quantity (Mcf) (1) Distribution Segment Colorado-Kansas Division 6,343,728 147,692 Kentucky/Mid-States Division 8,175,103 226,320 Louisiana Division 2,594,875 177,765 Mid-Tex Division 5,500,000 210,000 Mississippi Division 5,799,536 222,764 West Texas Division 5,000,000 161,000 Total 33,413,242 1,145,541 Pipeline and Storage Segment Trans Louisiana Gas Pipeline, Inc. 1,000,000 47,500 Total Contracted Storage Capacity 34,413,242 1,193,041 (1) Maximum daily withdrawal quantity (MDWQ) amounts will fluctuate depending upon the season and the month.
Biggest changeThe following table summarizes our contracted storage capacity at September 30, 2024: Segment Division/Company Maximum Storage Quantity (MMBtu) Maximum Daily Withdrawal Quantity (Mcf) (1) Distribution Segment Colorado-Kansas Division 6,343,728 147,692 Kentucky/Mid-States Division 8,175,103 226,320 Louisiana Division 2,594,875 177,765 Mid-Tex Division 6,000,000 190,000 Mississippi Division 5,799,536 222,764 West Texas Division 6,500,000 246,000 Total 35,413,242 1,210,541 Pipeline and Storage Segment Trans Louisiana Gas Pipeline, Inc. 1,500,000 71,250 Total Contracted Storage Capacity 36,913,242 1,281,791 (1) Maximum daily withdrawal quantity (MDWQ) amounts will fluctuate depending upon the season and the month.
The following table summarizes certain information regarding our underground gas storage facilities at September 30, 2023: State Working Capacity (Mcf) Base Gas (Mcf) (1) Total Capacity (Mcf) Maximum Daily Delivery Capability (Mcf) Distribution Segment Kentucky 7,956,991 9,562,283 17,519,274 146,660 Kansas 3,239,000 2,300,000 5,539,000 32,000 Mississippi 1,907,571 2,442,917 4,350,488 29,136 Total 13,103,562 14,305,200 27,408,762 207,796 Pipeline and Storage Segment Texas 53,083,549 19,678,025 72,761,574 2,460,000 Louisiana 411,040 256,900 667,940 56,000 Total 53,494,589 19,934,925 73,429,514 2,516,000 Total 66,598,151 34,240,125 100,838,276 2,723,796 (1) Base gas represents the volume of gas that must be retained in a facility to maintain reservoir pressure.
The following table summarizes certain information regarding our underground gas storage facilities at September 30, 2024: State Working Capacity (Mcf) Base Gas (Mcf) (1) Total Capacity (Mcf) Maximum Daily Delivery Capability (Mcf) Distribution Segment Kentucky 7,956,991 9,562,283 17,519,274 146,660 Kansas 3,239,000 2,300,000 5,539,000 32,000 Mississippi 1,907,571 2,442,917 4,350,488 29,136 Total 13,103,562 14,305,200 27,408,762 207,796 Pipeline and Storage Segment Texas 53,083,549 19,678,025 72,761,574 2,460,000 Louisiana 411,040 256,900 667,940 56,000 Total 53,494,589 19,934,925 73,429,514 2,516,000 Total 66,598,151 34,240,125 100,838,276 2,723,796 (1) Base gas represents the volume of gas that must be retained in a facility to maintain reservoir pressure.
Through our pipeline and storage segment we owned 5,645 miles of gas transmission lines. Storage Assets We own underground gas storage facilities in several states to supplement the supply of natural gas in periods of peak demand.
Through our pipeline and storage segment we owned 5,682 miles of gas transmission lines. Storage Assets We own underground gas storage facilities in several states to supplement the supply of natural gas in periods of peak demand.
ITEM 2. Properties. Distribution, transmission and related assets In our distribution segment, we owned an aggregate of 73,689 miles of underground distribution and transmission mains throughout our distribution systems. These mains are located on easements or rights-of-way. We maintain our mains through a program of continuous inspection and repair and believe that our system of mains is in good condition.
ITEM 2. Properties. Distribution, transmission, and related assets In our distribution segment, we owned an aggregate of 74,596 miles of underground distribution and transmission mains throughout our distribution systems. These mains are located on easements or rights-of-way. We maintain our mains through a program of continuous inspection and repair and believe that our system of mains is in good condition.
Unless otherwise noted, MDWQ amounts represent the MDWQ amounts as of November 1, which is the beginning of the winter heating season. 19 Table of Contents
Unless otherwise noted, MDWQ amounts represent the MDWQ amounts as of November 1, which is the beginning of the winter heating season. 21 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−0 removed0 unchanged
Biggest changeComparison of Five-Year Cumulative Total Return among Atmos Energy Corporation, S&P 500 Index and S&P 500 Utilities Industry Index Cumulative Total Return 9/30/2018 9/30/2019 9/30/2020 9/30/2021 9/30/2022 9/30/2023 Atmos Energy Corporation 100.00 123.80 106.18 100.53 119.08 127.01 S&P 500 Stock Index 100.00 104.25 120.05 156.07 131.92 160.44 S&P 500 Utilities Stock Index 100.00 127.10 120.79 134.09 141.56 131.63 21 Table of Contents The following table sets forth the number of securities authorized for issuance under our equity compensation plans at September 30, 2023.
Biggest changeComparison of Five-Year Cumulative Total Return among Atmos Energy Corporation, S&P 500 Index and S&P 500 Utilities Industry Index Cumulative Total Return 9/30/2019 9/30/2020 9/30/2021 9/30/2022 9/30/2023 9/30/2024 Atmos Energy Corporation 100.00 85.77 81.21 96.19 102.59 138.10 S&P 500 Stock Index 100.00 115.15 149.70 126.54 153.89 209.84 S&P 500 Utilities Stock Index 100.00 95.03 105.49 111.38 103.56 146.87 23 Table of Contents The following table sets forth the number of securities authorized for issuance under our equity compensation plans at September 30, 2024.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our stock trades on the New York Stock Exchange under the trading symbol “ATO.” The dividends paid per share of our common stock for fiscal 2023 and 2022 are listed below.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our stock trades on the New York Stock Exchange under the trading symbol “ATO.” The dividends paid per share of our common stock for fiscal 2024 and 2023 are listed below.
The graph and table below assume that $100.00 was invested on September 30, 2018 in our common stock, the S&P 500 and the S&P 500 Utilities Industry Index, as well as a reinvestment of dividends paid on such investments throughout the period.
The graph and table below assume that $100.00 was invested on September 30, 2019 in our common stock, the S&P 500 and the S&P 500 Utilities Industry Index, as well as a reinvestment of dividends paid on such investments throughout the period.
We sold no securities during fiscal 2023 that were not registered under the Securities Act of 1933, as amended. 20 Table of Contents Performance Graph The performance graph and table below compares the yearly percentage change in our total return to shareholders for the last five fiscal years with the total return of the S&P 500 Stock Index (S&P 500) and the total return of the S&P 500 Utilities Industry Index.
We sold no securities during fiscal 2024 that were not registered under the Securities Act of 1933, as amended. 22 Table of Contents Performance Graph The performance graph and table below compares the yearly percentage change in our total return to shareholders for the last five fiscal years with the total return of the S&P 500 Stock Index (S&P 500) and the total return of the S&P 500 Utilities Industry Index.
The Board of Directors typically declares dividends in the same fiscal quarter in which they are paid. As of October 31, 2023, there were 9,543 holders of record of our common stock. Future payments of dividends, and the amounts of these dividends, will depend on our financial condition, results of operations, capital requirements and other factors.
The Board of Directors typically declares dividends in the same fiscal quarter in which they are paid. As of October 31, 2024, there were 8,968 holders of record of our common stock. Future payments of dividends, and the amounts of these dividends, will depend on our financial condition, results of operations, capital requirements, and other factors.
Fiscal 2023 Fiscal 2022 Quarter ended: December 31 $ 0.74 $ 0.68 March 31 0.74 0.68 June 30 0.74 0.68 September 30 0.74 0.68 $ 2.96 $ 2.72 Dividends are payable at the discretion of our Board of Directors out of legally available funds.
Fiscal 2024 Fiscal 2023 Quarter ended: December 31 $ 0.805 $ 0.740 March 31 0.805 0.740 June 30 0.805 0.740 September 30 0.805 0.740 $ 3.22 $ 2.96 Dividends are payable at the discretion of our Board of Directors out of legally available funds.
Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders: 1998 Long-Term Incentive Plan 754,445 (1) $ — 631,409 Total equity compensation plans approved by security holders 754,445 — 631,409 Equity compensation plans not approved by security holders — — — Total 754,445 $ — 631,409 (1) Comprised of a total of 298,748 time-lapse restricted stock units, 206,140 director share units and 249,557 performance-based restricted stock units at the target level of performance granted under our 1998 Long-Term Incentive Plan.
Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders: 1998 Long-Term Incentive Plan 737,219 (1) $ — 407,966 Total equity compensation plans approved by security holders 737,219 — 407,966 Equity compensation plans not approved by security holders — — — Total 737,219 $ — 407,966 (1) Comprised of a total of 259,666 time-lapse restricted stock units, 215,515 director share units, and 262,038 performance-based restricted stock units at the target level of performance granted under our 1998 Long-Term Incentive Plan.

Item 7. Management's Discussion & Analysis

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

54 edited+13 added−17 removed53 unchanged
Biggest changeFor the Fiscal Year Ended September 30 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (In thousands, unless otherwise noted) Mid-Tex / Affiliate transportation revenue $ 621,987 $ 546,038 $ 497,730 $ 75,949 $ 48,308 Third-party transportation revenue 154,018 136,907 127,874 17,111 9,033 Other revenue 9,169 10,715 11,743 (1,546) (1,028) Total operating revenues 785,174 693,660 637,347 91,514 56,313 Total purchased gas cost (1,220) (1,583) 1,582 363 (3,165) Operating expenses 411,873 378,806 349,281 33,067 29,525 Operating income 374,521 316,437 286,484 58,084 29,953 Other non-operating income 44,787 26,791 18,549 17,996 8,242 Interest charges 60,096 52,890 46,925 7,206 5,965 Income before income taxes 359,212 290,338 258,108 68,874 32,230 Income tax expense 53,747 37,917 38,407 15,830 (490) Net income $ 305,465 $ 252,421 $ 219,701 $ 53,044 $ 32,720 Gross pipeline transportation volumes — MMcf 834,847 776,608 799,724 58,239 (23,116) Consolidated pipeline transportation volumes — MMcf 635,508 580,488 585,857 55,020 (5,369) Fiscal year ended September 30, 2023 compared with fiscal year ended September 30, 2022 Operating income for our pipeline and storage segment increased 18.4 percent.
Biggest changeReview of Financial and Operating Results Financial and operational highlights for our pipeline and storage segment for the fiscal years ended September 30, 2024, 2023, and 2022 are presented below. 29 Table of Contents For the Fiscal Year Ended September 30 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (In thousands, unless otherwise noted) Mid-Tex / Affiliate transportation revenue $ 715,117 $ 621,987 $ 546,038 $ 93,130 $ 75,949 Third-party transportation revenue 210,568 154,018 136,907 56,550 17,111 Other revenue 12,344 9,169 10,715 3,175 (1,546) Total operating revenues 938,029 785,174 693,660 152,855 91,514 Total purchased gas cost 146 (1,220) (1,583) 1,366 363 Operating expenses 436,955 411,873 378,806 25,082 33,067 Operating income 500,928 374,521 316,437 126,407 58,084 Other non-operating income 40,940 44,787 26,791 (3,847) 17,996 Interest charges 73,546 60,096 52,890 13,450 7,206 Income before income taxes 468,322 359,212 290,338 109,110 68,874 Income tax expense 96,840 53,747 37,917 43,093 15,830 Net income $ 371,482 $ 305,465 $ 252,421 $ 66,017 $ 53,044 Gross pipeline transportation volumes — MMcf 831,534 834,847 776,608 (3,313) 58,239 Consolidated pipeline transportation volumes — MMcf 635,728 635,508 580,488 220 55,020 Fiscal year ended September 30, 2024 compared with fiscal year ended September 30, 2023 Operating income for our pipeline and storage segment increased 33.8 percent.
Additionally, during the fiscal year ended September 30, 2023, we settled 7,272,261 shares that had been sold on a forward basis for net proceeds of $806.9 million. The net proceeds were used primarily to support capital spending and for other general corporate purposes.
Additionally, during the year ended September 30, 2023, we settled 7,272,261 shares that had been sold on a forward basis for net proceeds of $806.9 million. The net proceeds were used primarily to support capital spending and for other general corporate purposes.
Distribution Segment The distribution segment is primarily comprised of our regulated natural gas distribution and related sales operations in eight states. The primary factors that impact the results of our distribution operations are our ability to earn our authorized rates of return, competitive factors in the energy industry and economic conditions in our service areas.
Distribution Segment The distribution segment is comprised of our regulated natural gas distribution and related sales operations in eight states. The primary factors that impact the results of our distribution operations are our ability to earn our authorized rates of return, competitive factors in the energy industry, and economic conditions in our service areas.
As of September 30, 2023, our outlook and current debt ratings, which are all considered investment grade are as follows: S&P Moody’s Senior unsecured long-term debt A- A1 Short-term debt A-2 P-1 Outlook Stable Stable A significant degradation in our operating performance or a significant reduction in our liquidity caused by more limited access to the private and public credit markets as a result of deteriorating global or national financial and credit conditions could trigger a negative change in our ratings outlook or even a reduction in our credit ratings by the two credit rating agencies.
As of September 30, 2024, our outlook and current debt ratings, which are all considered investment grade, are as follows: S&P Moody’s Senior unsecured long-term debt A- A1 Short-term debt A-2 P-1 Outlook Stable Negative A significant degradation in our operating performance or a significant reduction in our liquidity caused by more limited access to the private and public credit markets as a result of deteriorating global or national financial and credit conditions could trigger a negative change in our ratings outlook or even a reduction in our credit ratings by the two credit rating agencies.
This risk is currently mitigated by rate design that allows us to collect from our customers the gas cost portion of our bad debt expense on approximately 80 percent of our residential and commercial revenues. Additionally, higher gas costs may require us to increase borrowings under our credit facilities, resulting in higher interest expense.
This risk is currently mitigated by rate design that allows us to collect from our customers the gas cost portion of our bad debt expense on approximately 89 percent of our residential and commercial revenues. Additionally, higher gas costs may require us to increase borrowings under our credit facilities, resulting in higher interest expense.
There can be no assurance that a rating will remain in effect for any given period of time or that a rating will not be lowered, or withdrawn entirely, by a rating agency if, in its judgment, circumstances so warrant. Debt Covenants We were in compliance with all of our debt covenants as of September 30, 2023.
There can be no assurance that a rating will remain in effect for any given period of time or that a rating will not be lowered, or withdrawn entirely, by a rating agency if, in its judgment, circumstances so warrant. Debt Covenants We were in compliance with all of our debt covenants as of September 30, 2024.
S ee Note 7 to the consolidated financial statements. (5) Represents liabilities for natural gas commodity financial instruments that were valued as of September 30, 2023. The ultimate settlement amounts of these remaining liabilities are unknown because they are subject to continuing market risk until the financial instruments are settled.
S ee Note 7 to the consolidated financial statements. (5) Represents liabilities for natural gas commodity financial instruments that were valued as of September 30, 2024. The ultimate settlement amounts of these remaining liabilities are unknown because they are subject to continuing market risk until the financial instruments are settled.
The fiscal year ended September 30, 2022 compared with fiscal year ended September 30, 2021 for our distribution segment is described in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2022.
The fiscal year ended September 30, 2023 compared with fiscal year ended September 30, 2022 for our distribution segment is described in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.
The execution of our capital spending program, the ability to recover these investments timely and our ability to access the capital markets to satisfy our financing needs are the primary drivers that affect our financial performance.
The execution of our capital spending program, the ability to recover these expenditures timely and our ability to access the capital markets to satisfy our financing needs are the primary drivers that affect our financial performance.
Revenues in our Texas and Mississippi service areas include franchise fees and gross receipts taxes, which are calculated as a percentage of revenue (inclusive of gas costs). Therefore, the amount of 25 Table of Contents these taxes included in revenues is influenced by the cost of gas and the level of gas sales volumes.
Revenues in our Texas and Mississippi service areas include franchise fees and gross receipts taxes, which are calculated as a percentage of revenue (inclusive of gas costs). Therefore, the amount of these taxes included in revenues is influenced by the cost of gas and the level of gas sales volumes.
We also received $171.1 million from the settlement of forward starting interest rate swaps related to a debt issuance completed in October 2023. Cash dividends increased due to an 8.8 percent increase in our dividend rate and an increase in shares outstanding.
We also received $171.1 million from the settlement of forward starting interest rate swaps related to a debt issuance completed in October 2023. Cash dividends increased due to an 8.8 percent increase in our dividend rate and an increase in shares 32 Table of Contents outstanding.
Decisions of regulatory authorities Issuance of new regulations or regulatory mechanisms Assessing the probability of the recoverability of deferred costs Continuing to meet the criteria of a cost-based, rate regulated entity for accounting purposes 23 Table of Contents Critical Accounting Policy Summary of Policy Factors Influencing Application of the Policy Pension and other postretirement plans Pension and other postretirement plan costs and liabilities are determined on an actuarial basis using a September 30 measurement date and are affected by numerous assumptions and estimates including the market value of plan assets, estimates of the expected return on plan assets, assumed discount rates and current demographic and actuarial mortality data.
Decisions of regulatory authorities Issuance of new regulations or regulatory mechanisms Assessing that the recoverability of deferred costs and utility assets is probable Continuing to meet the criteria of a cost-based, rate regulated entity for accounting purposes 25 Table of Contents Critical Accounting Policy Summary of Policy Factors Influencing Application of the Policy Pension and other postretirement plans Pension and other postretirement plan costs and liabilities are determined on an actuarial basis using a September 30 measurement date and are affected by numerous assumptions and estimates including the market value of plan assets, estimates of the expected return on plan assets, assumed discount rates, and current demographic and actuarial mortality data.
These risks and uncertainties include the following: federal, state and local regulatory and political trends and decisions, including the impact of rate proceedings before various state regulatory commissions; increased federal regulatory oversight and potential penalties; possible increased federal, state and local regulation of the safety of our operations; possible significant costs and liabilities resulting from pipeline integrity and other similar programs and related repairs; the inherent hazards and risks involved in distributing, transporting and storing natural gas; the availability and accessibility of contracted gas supplies, interstate pipeline and/or storage services; increased competition from energy suppliers and alternative forms of energy; failure to attract and retain a qualified workforce; natural disasters, terrorist activities or other events and other risks and uncertainties discussed herein, all of which are difficult to predict and many of which are beyond our control; increased dependence on technology that may hinder the Company's business if such technologies fail; the threat of cyber-attacks or acts of cyber-terrorism that could disrupt our business operations and information technology systems or result in the loss or exposure of confidential or sensitive customer, employee 22 Table of Contents or Company information; the impact of new cybersecurity compliance requirements; adverse weather conditions; the impact of greenhouse gas emissions or other legislation or regulations intended to address climate change; the impact of climate change; the capital-intensive nature of our business; our ability to continue to access the credit and capital markets to execute our business strategy; market risks beyond our control affecting our risk management activities, including commodity price volatility, counterparty performance or creditworthiness and interest rate risk; the concentration of our operations in Texas; the impact of adverse economic conditions on our customers; changes in the availability and price of natural gas; and increased costs of providing health care benefits, along with pension and postretirement health care benefits and increased funding requirements.
These risks and uncertainties include the following: federal, state, and local regulatory and political trends and decisions, including the impact of rate proceedings before various state regulatory commissions; increased federal regulatory oversight and potential penalties; possible increased federal, state, and local regulation of the safety of our operations; possible significant costs and liabilities resulting from pipeline integrity and other similar programs and related repairs; the inherent hazards and risks involved in distributing, transporting, and storing natural gas; the availability and accessibility of contracted gas supplies, interstate pipeline, and/or storage services; increased competition from energy suppliers and alternative forms of energy; failure to attract and retain a qualified workforce; natural disasters, adverse weather, terrorist activities, or other events and other risks and uncertainties discussed herein, all of which are difficult to predict and many of which are beyond our control; failure of technology that affects the Company's business operations; the threat of cyber-attacks or acts of cyber-terrorism that could disrupt our business operations and information technology systems or result in the loss or exposure of confidential or sensitive customer, employee, or Company 24 Table of Contents information; the impact of new cybersecurity compliance requirements; adverse weather conditions; the impact of legislation to reduce or eliminate greenhouse gas emissions or fossil fuels; the impact of climate change; the capital-intensive nature of our business; our ability to continue to access the credit and capital markets to execute our business strategy; market risks beyond our control affecting our risk management activities, including commodity price volatility, counterparty performance or creditworthiness, and interest rate risk; the concentration of our operations in Texas; the impact of adverse economic conditions on our customers; changes in the availability and price of natural gas; and increased costs of providing health care benefits, along with pension and postretirement health care benefits and increased funding requirements.
Cash flows from operating activities For the fiscal year ended September 30, 2023, cash flow provided by operating activities was $3,459.7 million compared with $977.6 million in the prior year. Fiscal 2023 operating cash flow included $2,021.9 million of cash received as a result of the conclusion of Texas securitization proceedings.
Cash flows from operating activities For the fiscal year ended September 30, 2024, cash flow provided by operating activities was $1,733.7 million compared with $3,459.7 million in the prior year. Fiscal 2023 operating cash flow included $2,021.9 million of cash received as a result of the conclusion of Texas securitization proceedings.
See Note 8 to the consolidated financial statements for further details. (2) Interest charges were calculated using the coupon rate for each debt issuance through the contractual maturity date. (3) Finance lease payments shown above include interest totaling $19.5 million. See Note 7 to the consolidated financial statements. (4) Operating lease payments shown above include interest totaling $47.7 million.
See Note 8 to the consolidated financial statements for further details. (2) Interest charges were calculated using the coupon rate for each debt issuance through the contractual maturity date. (3) Finance lease payments shown above include interest totaling $17.6 million. See Note 7 to the consolidated financial statements. (4) Operating lease payments shown above include interest totaling $61.6 million.
Over the last three fiscal years, approximately 87 percent of our capital spending has been committed to improving the safety and reliability of our system. For the fiscal year ended September 30, 2023, we had $2.8 billion in capital expenditures compared with $2.4 billion for the fiscal year ended September 30, 2022.
Over the last three fiscal years, approximately 86 percent of our capital spending has been committed to improving the safety and reliability of our system. For the fiscal year ended September 30, 2024, we had $2.9 billion in capital expenditures compared with $2.8 billion for the fiscal year ended September 30, 2023.
During fiscal 2023, we completed regulatory proceedings in our distribution segment resulting in a $178.2 million increase in annual operating income. Excluding the impact of the refund of excess deferred income taxes resulting from previously enacted tax reform legislation, our total fiscal 2023 annualized rate outcomes in our distribution segment were $183.8 million.
During fiscal 2024, we completed regulatory proceedings in our distribution segment resulting in a $266.8 million increase in annual operating income. Excluding the impact of the refund of excess deferred income taxes resulting from previously enacted tax reform legislation, our total fiscal 2024 annualized rate outcomes in our distribution segment were $234.5 million.
On February 10, 2023, APT made a GRIP filing that covered changes in net property, plant and equipment investment from January 1, 2022 through December 31, 2022 with a requested increase in operating income of $84.9 million. On May 17, 2023, the Texas Railroad Commission (RRC) approved the Company's GRIP filing.
On February 27, 2024, APT made a GRIP filing that covered changes in net property, plant and equipment investment from January 1, 2023 through December 31, 2023 with a requested increase in operating income of $82.4 million. On May 14, 2024, the Texas Railroad Commission (RRC) approved the Company's GRIP filing.
Excluding this cash inflow, operating cash flow in fiscal 2023 was $1,437.8 million. The year-over-year increase in operating cash flow reflects the positive effects of successful rate case outcomes achieved in fiscal 2022 and 2023 and decreased purchases of gas stored underground.
Excluding this cash inflow, operating cash flow in fiscal 2023 was $1,437.8 million, and the year-over-year increase in operating cash flow primarily reflects the positive effects of successful rate case outcomes achieved in fiscal 2024 and 2023.
Capital expenditures for fiscal 2023 were $2.8 billion. Over 85 percent was invested to improve the safety and reliability of our distribution and transportation systems, with a significant portion of this investment incurred under regulatory mechanisms that reduce regulatory lag to six months or less. During fiscal 2023, we completed approximately $1.6 billion of long-term debt and equity financing.
Approximately 83 percent was invested to improve the safety and reliability of our distribution and transportation systems, with a significant portion of this investment incurred under regulatory mechanisms that reduce regulatory lag to six months or less. During fiscal 2024, we completed approximately $2.0 billion of long-term debt and equity financing.
The following table details our consolidated net income by segment during the last three fiscal years: For the Fiscal Year Ended September 30 2023 2022 2021 (In thousands) Distribution segment $ 580,397 $ 521,977 $ 445,862 Pipeline and storage segment 305,465 252,421 219,701 Net income $ 885,862 $ 774,398 $ 665,563 During fiscal 2023, we recorded net income of $885.9 million, or $6.10 per diluted share, compared to net income of $774.4 million, or $5.60 per diluted share in the prior year.
The following table details our consolidated net income by segment during the last three fiscal years: 26 Table of Contents For the Fiscal Year Ended September 30 2024 2023 2022 (In thousands) Distribution segment $ 671,413 $ 580,397 $ 521,977 Pipeline and storage segment 371,482 305,465 252,421 Net income $ 1,042,895 $ 885,862 $ 774,398 During fiscal 2024, we recorded net income of $1,042.9 million, or $6.83 per diluted share, compared to net income of $885.9 million, or $6.10 per diluted share in the prior year.
Cash flows from operating, investing and financing activities for the years ended September 30, 2023, 2022 and 2021 are presented below. 29 Table of Contents For the Fiscal Year Ended September 30 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (In thousands) Total cash provided by (used in) Operating activities $ 3,459,743 $ 977,584 $ (1,084,251) $ 2,482,159 $ 2,061,835 Investing activities (2,795,280) (2,429,958) (1,963,655) (365,322) (466,303) Financing activities (696,769) 1,387,205 3,143,821 (2,083,974) (1,756,616) Change in cash and cash equivalents and restricted cash and cash equivalents (32,306) (65,169) 95,915 32,863 (161,084) Cash and cash equivalents and restricted cash and cash equivalents at beginning of period 51,554 116,723 20,808 (65,169) 95,915 Cash and cash equivalents and restricted cash and cash equivalents at end of period $ 19,248 $ 51,554 $ 116,723 $ (32,306) $ (65,169) Cash flows for the fiscal year ended September 30, 2022 compared with fiscal year ended September 30, 2021 is described in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2022.
Cash flows from operating, investing, and financing activities for the years ended September 30, 2024, 2023, and 2022 are presented below. 31 Table of Contents For the Fiscal Year Ended September 30 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (In thousands) Total cash provided by (used in) Operating activities $ 1,733,746 $ 3,459,743 $ 977,584 $ (1,725,997) $ 2,482,159 Investing activities (2,922,769) (2,795,280) (2,429,958) (127,489) (365,322) Financing activities 1,478,631 (696,769) 1,387,205 2,175,400 (2,083,974) Change in cash and cash equivalents and restricted cash and cash equivalents 289,608 (32,306) (65,169) 321,914 32,863 Cash and cash equivalents and restricted cash and cash equivalents at beginning of period 19,248 51,554 116,723 (32,306) (65,169) Cash and cash equivalents and restricted cash and cash equivalents at end of period $ 308,856 $ 19,248 $ 51,554 $ 289,608 $ (32,306) Cash flows for the fiscal year ended September 30, 2023 compared with fiscal year ended September 30, 2022 is described in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.
As of September 30, 2023, our equity capitalization was 61.5 percent. As of September 30, 2023, we had approximately $2.7 billion in total liquidity, consisting of $15.4 million in cash and cash equivalents, $466.8 million in funds available through equity forward sales agreements and $2,252.5 million in undrawn capacity under our credit facilities.
As of September 30, 2024, our equity capitalization was 61.0 percent. As of September 30, 2024, we had approximately $4.8 billion in total liquidity, consisting of $307.3 million in cash and cash equivalents, $1,380.6 million in funds available through equity forward sales agreements, and $3,094.4 million in undrawn capacity under our credit facilities.
Substantially all of our financial instruments are valued using external market quotes and indices. 32 Table of Contents The following table shows the components of the change in fair value of our financial instruments for the fiscal year ended September 30, 2023 (in thousands): Fair value of contracts at September 30, 2022 $ 377,862 Contracts realized/settled (174,107) Fair value of new contracts 5,379 Other changes in value 161,122 Fair value of contracts at September 30, 2023 370,256 Netting of cash collateral — Cash collateral and fair value of contracts at September 30, 2023 $ 370,256 The fair value of our financial instruments at September 30, 2023, is presented below by time period and fair value source: Fair Value of Contracts at September 30, 2023 Maturity in years Source of Fair Value Less than 1 1-3 4-5 Greater than 5 Total Fair Value (In thousands) Prices actively quoted $ (10,513) $ 380,769 $ — $ — $ 370,256 Prices based on models and other valuation methods — — — — — Total Fair Value $ (10,513) $ 380,769 $ — $ — $ 370,256 RECENT ACCOUNTING DEVELOPMENTS Recent accounting developments and their impact on our financial position, results of operations and cash flows are described in Note 2 to the consolidated financial statements.
The following table shows the components of the change in fair value of our financial instruments for the fiscal year ended September 30, 2024 (in thousands): Fair value of contracts at September 30, 2023 $ 370,256 Contracts realized/settled (264,650) Fair value of new contracts 4,790 Other changes in value (21,745) Fair value of contracts at September 30, 2024 88,651 Netting of cash collateral — Cash collateral and fair value of contracts at September 30, 2024 $ 88,651 34 Table of Contents The fair value of our financial instruments at September 30, 2024, is presented below by time period and fair value source: Fair Value of Contracts at September 30, 2024 Maturity in years Source of Fair Value Less than 1 1-3 4-5 Greater than 5 Total Fair Value (In thousands) Prices actively quoted $ (5,233) $ 93,884 $ — $ — $ 88,651 Prices based on models and other valuation methods — — — — — Total Fair Value $ (5,233) $ 93,884 $ — $ — $ 88,651 RECENT ACCOUNTING DEVELOPMENTS Recent accounting developments and their impact on our financial position, results of operations and cash flows are described in Note 2 to the consolidated financial statements.
The net proceeds were used primarily to support capital spending and for other general corporate purposes. We also received $197.1 million from the settlement of forward starting interest rate swaps related to a debt issuance completed in October 2022.
The net proceeds were used primarily to support capital spending and for other general corporate purposes. We also received $231.1 million from the settlement of forward starting interest rate swaps related to a debt issuance completed in October 2024. Cash dividends increased due to an 8.8 percent increase in our dividend rate and an increase in shares outstanding.
Our commitment to modernizing our natural gas distribution and transmission systems requires a significant level of capital spending. We have the ability to begin recovering a significant portion of these investments timely through rate designs and mechanisms that reduce or eliminate regulatory lag and separate the recovery of our approved rate from customer usage patterns.
We have the ability to begin recovering a significant portion of our expenditures timely through rate designs and mechanisms that reduce or eliminate regulatory lag and separate the recovery of our approved rate from customer usage patterns.
At September 30, 2023, we were committed to purchase 65.5 Bcf within one year and 72.3 Bcf within two to three years under indexed contracts. At September 30, 2023, we were committed to purchase 20.6 Bcf within one year under fixed price contracts with a weighted average price of $2.80 per Mcf.
At September 30, 2024, we were committed to purchase 25.9 Bcf within one year and 38.7 Bcf within two to three years under indexed contracts. At September 30, 2024, we were committed to purchase 6.8 Bcf within one year under fixed price contracts with a weighted average price of $3.10 per Mcf.
The following table presents our capitalization as of September 30, 2023 and 2022: September 30 2023 2022 (In thousands, except percentages) Short-term debt $ 241,933 1.4 % $ 184,967 1.1 % Long-term debt (1) 6,555,701 37.1 % 7,962,104 45.3 % Shareholders’ equity (2) 10,870,064 61.5 % 9,419,091 53.6 % Total capitalization, including short-term debt $ 17,667,698 100.0 % $ 17,566,162 100.0 % (1) Inclusive of our finance leases, but exclusive of AEK's securitized long-term debt.
The following table presents our capitalization as of September 30, 2024 and 2023: September 30 2024 2023 (In thousands, except percentages) Short-term debt $ — — % $ 241,933 1.4 % Long-term debt (1) 7,785,297 39.0 % 6,555,701 37.1 % Shareholders’ equity 12,157,669 61.0 % 10,870,064 61.5 % Total capitalization, including short-term debt $ 19,942,966 100.0 % $ 17,667,698 100.0 % (1) Inclusive of our finance leases, but exclusive of AEK's securitized long-term debt.
APT provides transportation and storage services to our Mid-Tex Division, other third-party local distribution companies, industrial and electric generation customers, as well as marketers and producers. Over 80 percent of this segment's revenues are derived from these APT services. As part of its pipeline operations, APT owns and operates five underground storage facilities in Texas.
APT provides transportation and storage services to our Mid-Tex Division, other third-party local distribution companies, industrial, and electric generation customers, as well as marketers and producers. Over 80 percent of this segment's revenues are derived from these APT services. These revenues are subject to traditional ratemaking governed by the Texas Railroad Commission (RRC).
The following table shows our operating income by distribution division, in order of total rate base, for the fiscal years ended September 30, 2023, 2022 and 2021. The presentation of our distribution operating income is included for financial reporting purposes and may not be appropriate for ratemaking purposes.
The following table shows our operating income by distribution division, in order of total rate base, for the fiscal years ended September 30, 2024, 2023, and 2022.
Additionally, cash dividends increased due to an 8.8 percent increase in our dividend rate and an increase in shares outstanding. 30 Table of Contents The following table shows the number of shares issued for the fiscal years ended September 30, 2023, 2022 and 2021: For the Fiscal Year Ended September 30 2023 2022 2021 Shares issued: Direct Stock Purchase Plan 64,871 68,693 79,921 Retirement Savings Plan and Trust 69,716 72,339 84,265 1998 Long-Term Incentive Plan (LTIP) 189,337 427,929 242,216 Equity Issuance (1) 7,272,261 7,907,883 6,130,875 Total shares issued 7,596,185 8,476,844 6,537,277 (1) Share amounts do not include shares issued under forward sale agreements until the shares have been settled.
The following table shows the number of shares issued for the fiscal years ended September 30, 2024, 2023, and 2022: For the Fiscal Year Ended September 30 2024 2023 2022 Shares issued: Direct Stock Purchase Plan 60,756 64,871 68,693 Retirement Savings Plan and Trust 67,134 69,716 72,339 1998 Long-Term Incentive Plan (LTIP) 236,703 189,337 427,929 Equity Issuance (1) 6,401,469 7,272,261 7,907,883 Total shares issued 6,766,062 7,596,185 8,476,844 (1) Share amounts do not include shares issued under forward sale agreements until the shares have been settled.
Planned Debt Issuance Date Amount Hedged Effective Interest Rate (In thousands) Fiscal 2025 $ 600,000 1.75 % Fiscal 2026 300,000 2.16 % $ 900,000 The liquidity provided by these sources is expected to be sufficient to fund the Company's working capital needs and capital expenditures program.
As of September 30, 2024, we had the following forward starting interest rate swaps in place to hedge future planned debt issuances: Planned Debt Issuance Date Amount Hedged Effective Interest Rate (In thousands) Fiscal 2026 $ 300,000 2.16 % $ 300,000 The liquidity provided by these sources is expected to be sufficient to fund the Company's working capital needs and capital expenditures program.
At September 30, 2023, $760.5 million of equity is available for issuance under this ATM equity sales program. Additionally, as of September 30, 2023, we had $466.8 million in available proceeds from outstanding forward sale agreements.
As of the date of this report, $10.0 million of equity is available for issuance under this ATM equity sales program. Additionally, as of September 30, 2024, we had $1.4 billion in available proceeds from outstanding forward sale agreements issued under the ATM program.
For the Fiscal Year Ended September 30 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (In thousands, unless otherwise noted) Operating revenues $ 4,099,690 $ 4,035,194 $ 3,241,973 $ 64,496 $ 793,221 Purchased gas cost 2,061,920 2,210,302 1,501,695 (148,382) 708,607 Operating expenses 1,345,144 1,220,347 1,121,764 124,797 98,583 Operating income 692,626 604,545 618,514 88,081 (13,969) Other non-operating income (expense) 24,988 6,946 (20,694) 18,042 27,640 Interest charges 77,185 49,921 36,629 27,264 13,292 Income before income taxes 640,429 561,570 561,191 78,859 379 Income tax expense 60,032 39,593 115,329 20,439 (75,736) Net income $ 580,397 $ 521,977 $ 445,862 $ 58,420 $ 76,115 Consolidated distribution sales volumes — MMcf 289,948 292,266 308,833 (2,318) (16,567) Consolidated distribution transportation volumes — MMcf 152,963 152,709 152,513 254 196 Total consolidated distribution throughput — MMcf 442,911 444,975 461,346 (2,064) (16,371) Consolidated distribution average cost of gas per Mcf sold $ 7.11 $ 7.56 $ 4.86 $ (0.45) $ 2.70 Fiscal year ended September 30, 2023 compared with fiscal year ended September 30, 2022 Operating income for our distribution segment increased 14.6 percent.
For the Fiscal Year Ended September 30 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (In thousands, unless otherwise noted) Operating revenues $ 3,915,141 $ 4,099,690 $ 4,035,194 $ (184,549) $ 64,496 Purchased gas cost 1,620,515 2,061,920 2,210,302 (441,405) (148,382) Operating expenses 1,440,192 1,345,144 1,220,347 95,048 124,797 Operating income 854,434 692,626 604,545 161,808 88,081 Other non-operating income 30,106 24,988 6,946 5,118 18,042 Interest charges 117,086 77,185 49,921 39,901 27,264 Income before income taxes 767,454 640,429 561,570 127,025 78,859 Income tax expense 96,041 60,032 39,593 36,009 20,439 Net income $ 671,413 $ 580,397 $ 521,977 $ 91,016 $ 58,420 Consolidated distribution sales volumes — MMcf 283,977 289,948 292,266 (5,971) (2,318) Consolidated distribution transportation volumes — MMcf 156,389 152,963 152,709 3,426 254 Total consolidated distribution throughput — MMcf 440,366 442,911 444,975 (2,545) (2,064) Consolidated distribution average cost of gas per Mcf sold $ 5.71 $ 7.11 $ 7.56 $ (1.40) $ (0.45) Fiscal year ended September 30, 2024 compared with fiscal year ended September 30, 2023 Operating income for our distribution segment increased 23.4 percent.
See "Ratemaking Activity" above for further information. 27 Table of Contents The demand fee our Louisiana natural gas transmission pipeline charges to our Louisiana distribution division increases five percent annually and has been approved by the Louisiana Public Service Commission until September 30, 2027.
New rates were implemented effective December 13, 2023. The demand fee our Louisiana natural gas transmission pipeline charges to our Louisiana distribution division increases five percent annually and has been approved by the Louisiana Public Service Commission until September 30, 2027.
These factors include regulatory changes, the price for our services, the demand for such products and services, margin requirements resulting from significant changes in commodity prices, operational risks and other factors.
Cash Flows Our internally generated funds may change in the future due to a number of factors, some of which we cannot control. These factors include regulatory changes, the price for our services, the demand for such products and services, margin requirements resulting from significant changes in commodity prices, operational risks, and other factors.
For the Fiscal Year Ended September 30 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (In thousands) Mid-Tex $ 345,545 $ 315,644 $ 310,293 $ 29,901 $ 5,351 Kentucky/Mid-States 87,258 84,098 73,259 3,160 10,839 Louisiana 80,942 73,486 72,388 7,456 1,098 West Texas 62,351 53,604 51,104 8,747 2,500 Mississippi 78,517 65,947 65,337 12,570 610 Colorado-Kansas 40,674 26,000 32,778 14,674 (6,778) Other (2,661) (14,234) 13,355 11,573 (27,589) Total $ 692,626 $ 604,545 $ 618,514 $ 88,081 $ (13,969) Pipeline and Storage Segment Our pipeline and storage segment consists of the pipeline and storage operations of our Atmos Pipeline–Texas Division (APT) and our natural gas transmission operations in Louisiana.
The presentation of our distribution operating income is included for financial reporting purposes and may not be appropriate for ratemaking purposes. 28 Table of Contents For the Fiscal Year Ended September 30 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (In thousands) Mid-Tex $ 464,616 $ 345,545 $ 315,644 $ 119,071 $ 29,901 Kentucky/Mid-States 90,601 87,258 84,098 3,343 3,160 Louisiana 94,362 80,942 73,486 13,420 7,456 West Texas 72,929 62,351 53,604 10,578 8,747 Mississippi 97,512 78,517 65,947 18,995 12,570 Colorado-Kansas 42,816 40,674 26,000 2,142 14,674 Other (8,402) (2,661) (14,234) (5,741) 11,573 Total $ 854,434 $ 692,626 $ 604,545 $ 161,808 $ 88,081 Pipeline and Storage Segment Our pipeline and storage segment consists of the pipeline and storage operations of our Atmos Pipeline–Texas Division (APT) and our natural gas transmission operations in Louisiana.
During the year ended September 30, 2023, we implemented ratemaking regulatory actions which resulted in an increase in annual operating income of $263.1 million. Excluding the impact of the refund of excess deferred income taxes resulting from previously enacted tax reform legislation, our total fiscal 2023 rate outcomes were $268.8 million.
Excluding the impact of the refund of excess deferred income taxes resulting from previously enacted tax reform legislation, our total fiscal 2024 rate outcomes were $307.1 million. Additionally, we had ratemaking efforts in progress at September 30, 2024, seeking a total increase in annual operating income of $218.0 million.
The fiscal year ended September 30, 2022 compared with fiscal year ended September 30, 2021 for our pipeline and storage segment is described in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2022.
The fiscal year ended September 30, 2023 compared with fiscal year ended September 30, 2022 for our pipeline and storage segment is described in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. 30 Table of Contents LIQUIDITY AND CAPITAL RESOURCES The liquidity required to fund our working capital, capital expenditures, and other cash needs is provided from a combination of internally generated cash flows and external debt and equity financing.
The commercial paper program and credit facilities provide cost-effective, short-term financing until it can be replaced with a balance of long-term debt and equity financing that achieves the Company's desired capital structure. Additionally, we have various uncommitted trade credit lines with our gas suppliers that we utilize to purchase natural gas on a monthly basis.
Additionally, we have a $1.5 billion commercial paper program and four committed revolving credit facilities with $3.1 billion in total availability from third-party lenders. The commercial paper program and credit facilities provide cost-effective, short-term financing until it can be replaced with a balance of long-term debt and equity financing that achieves the Company's desired capital structure.
Finally, higher gas costs, as well as competitive factors in the industry and general economic conditions may cause customers to conserve or, in the case of industrial consumers, to use alternative energy sources.
Finally, higher gas costs, as well as competitive factors in the industry and general economic conditions may cause customers to conserve or, in the case of industrial consumers, to use alternative energy sources. 27 Table of Contents Review of Financial and Operating Results Financial and operational highlights for our distribution segment for the fiscal years ended September 30, 2024, 2023, and 2022 are presented below.
Additionally, we had ratemaking efforts in progress at September 30, 2023, seeking a total increase in annual operating income of $264.6 million. During fiscal year 2023, we refunded $160.3 million in excess deferred tax liabilities to customers. These refunds also reduced our income tax expense, resulting in an immaterial impact to our fiscal 2023 and 2022 results.
During fiscal year 2024, we refunded $133.6 million in excess deferred tax liabilities to customers. These refunds also reduced our income tax expense, resulting in an immaterial impact to our fiscal 2024 and 2023 results. Capital expenditures for fiscal 2024 were $2.9 billion.
We have a shelf registration statement on file with the Securities and Exchange Commission (SEC) that allows us to issue up to $5.0 billion in common stock and/or debt securities. As of the date of this report, $3.1 billion of securities remained available for issuance under the shelf registration statement, which expires March 31, 2026.
Additionally, we have various uncommitted trade credit lines with our gas suppliers that we utilize to purchase natural gas on a monthly basis. We have a shelf registration statement on file with the Securities and Exchange Commission (SEC) that allows us to issue up to $5.0 billion in common stock and/or debt securities.
The year-over-year increase in net income of $111.5 million largely reflects positive rate outcomes driven by safety and reliability spending, partially offset by increased line locating costs, system maintenance activities and an increase in depreciation expense and property taxes associated with increased capital investments.
The year-over-year increase in net income of $157.0 million largely reflects positive rate outcomes driven by safety and reliability spending.
Cash flows from financing activities Our financing activities used $696.8 million of cash for fiscal year 2023 compared with $1,387.2 million of cash provided by financing activities for fiscal year 2022.
Cash flows from financing activities Our financing activities provided $1,478.6 million of cash for fiscal year 2024 compared with $696.8 million of cash used by financing activities for fiscal year 2023. During the fiscal year ended September 30, 2024, we received approximately $2.0 billion in net proceeds from the issuance of long-term debt and equity.
Key drivers for the change in operating income include: • a $166.4 million increase in rate adjustments, primarily in our Mid-Tex Division. • an $18.4 million increase related to residential customer growth, primarily in our Mid-Tex Division, and increased industrial load. • an $11.7 million increase in consumption, net of WNA. • a $7.5 million decrease in refunds of excess deferred taxes to customers, which is substantially offset in income tax expense.
Key drivers for the change in operating income include: • a $219.2 million increase in rate adjustments, primarily in our Mid-Tex Division. • a $24.8 million increase related to residential customer growth, primarily in our Mid-Tex Division, and increased industrial load. • a $10.6 million decrease in bad debt expense, as discussed in Note 6 to the consolidated financial statements.
We also completed a public offering of $200 million of 2.625% senior notes due September 2029 that were used to repay our $200 million floating-rate term loan. Additionally, during the year ended September 30, 2022, we settled 7,907,833 shares that had been sold on a forward basis for net proceeds of $776.8 million.
We also completed a public offering of $325 million of 5.90% senior notes due October 2033, and received net proceeds from the offering, after the underwriting discount and offering expenses, of $339.0 million. Additionally, during the fiscal year ended September 30, 2024, we settled 6,401,469 shares that had been sold on a forward basis for net proceeds of $750.0 million.
Our debt covenants are described in Note 8 to the consolidated financial statements. 31 Table of Contents Contractual Obligations and Commercial Commitments The following table provides information about contractual obligations and commercial commitments at September 30, 2023.
Our debt covenants are described in Note 8 to the consolidated financial statements.
Interest charges increased $27.3 million primarily due to the issuance of long-term debt during the first quarter of fiscal 2023.
Interest charges increased $39.9 million primarily due to the issuance of long-term debt during fiscal 2024. The increase in interest charges is also due to the amortization of the Texas regulatory asset that is discussed in Note 3 to the consolidated financial statements.
General economic and market conditions Assumed investment returns by asset class Assumed future salary increases Assumed discount rate Projected timing of future cash disbursements Health care cost experience trends Participant demographic information Actuarial mortality assumptions Impact of legislation Impact of regulation Impairment assessments We review the carrying value of our long-lived assets, including goodwill and identifiable intangibles, whenever events or changes in circumstance indicate that such carrying values may not be recoverable, and at least annually for goodwill, as required by U.S. accounting standards.
General economic and market conditions Assumed investment returns by asset class Assumed future salary increases Assumed discount rate Projected timing of future cash disbursements Health care cost experience trends Participant demographic information Actuarial mortality assumptions Impact of legislation Impact of regulation RESULTS OF OPERATIONS Overview Atmos Energy's vision is to be the safest provider of natural gas services.
Finally, Atmos Energy Kansas Securitization I, LLC, a special-purpose, wholly-owned subsidiary of Atmos Energy, issued $95 million in securitized long-term debt. During the fiscal year ended September 30, 2022, we received $1.6 billion in net proceeds from the issuance of long-term debt and equity. We completed a public offering of $600 million of 2.85% senior notes due February 2052.
Finally, Atmos Energy Kansas Securitization I, LLC, a special-purpose, wholly-owned subsidiary of Atmos Energy, issued $95 million in securitized long-term debt.
Key drivers for the change in operating income include: • an $87.3 million increase due to rate adjustments from GRIP filings approved in May 2022 and 2023. The increase in rates was driven by increased safety and reliability spending. • a $5.2 million net increase in APT's through-system activities primarily associated with increased volumes.
Key drivers for the change in operating income include: • a $68.4 million increase due to rate adjustments from the GRIP filings approved in May 2023 and 2024, and the rate case approved in December 2023. • a $39.0 million net increase in APT's through-system activities primarily associated with increased spreads. • a $27.8 million decrease in refunds of excess deferred taxes to customers, which is substantially offset in income tax expense. • a $14.5 million increase due to higher capacity contracted by tariff-based customers due to their increased peak day demand. • a $3.1 million decrease in property taxes, which is inclusive of a $5.4 million decrease related to the Texas property tax legislation discussed above.
Partially offset by: • a $33.1 million increase in operating expenses primarily attributable to increased depreciation expense and property taxes associated with increased capital investments, employee-related costs, and pipeline inspection activities. Other non-operating income increased $18.0 million primarily due to higher AFUDC largely as a result of increased capital spending.
Partially offset by: • a $50.0 million increase in depreciation expense associated with increased capital investments. • a $19.9 million increase in employee-related costs primarily due to an increase in headcount to support company growth. • a $2.7 million increase in property taxes, which is inclusive of a $15.7 million decrease related to the Texas property tax legislation discussed above. • a $26.9 million increase in other operation and maintenance expense, including higher costs associated with software maintenance, compliance activities, training, and other administrative costs.
Capital spending increased by $361.6 million, or 15 percent, as a result of planned increases to modernize our system and improve pipeline system safety and reliability in Texas and further enhance the safety, reliability, versatility and supply diversification of APT's system.
Capital spending in our distribution segment increased $322.2 million, primarily as a result of increased system modernization and customer growth spending. Capital spending in our pipeline and storage segment decreased $191.0 million, primarily due to the timing of spending for pipeline system safety and reliability in Texas.
Removed
The evaluation of our goodwill balances and other long-lived assets or identifiable assets for which uncertainty exists regarding the recoverability of the carrying value of such assets involves the assessment of future cash flows and external market conditions and other subjective factors that could impact the estimation of future cash flows including, but not limited to the commodity prices, the amount and timing of future cash flows, future growth rates and the discount rate.
Added
Our commitment to this vision requires significant levels of capital spending to modernize our natural gas distribution system and operating costs to deliver natural gas safely and reliably and in full compliance with the various safety regulations impacting our business.
Removed
Unforeseen events and changes in circumstances or market conditions could adversely affect these estimates, which could result in an impairment charge.
Added
Additionally, our fiscal 2024 results were favorably impacted by $21.1 million as a result of legislation that became effective during the first quarter of fiscal 2024 to reduce property tax expenses in Texas and $13.9 million as a result of a change to our bad debt recovery mechanism in Mississippi.
Removed
General economic and market conditions Projected timing and amount of future discounted cash flows Judgment in the evaluation of relevant data 24 Table of Contents RESULTS OF OPERATIONS Overview Atmos Energy strives to operate its businesses safely and reliably while delivering superior financial results.
Added
These increases were partially offset by increased employee-related costs, depreciation expense, and interest expense. During the year ended September 30, 2024, we implemented ratemaking regulatory actions which resulted in an increase in annual operating income of $376.3 million.
Removed
Review of Financial and Operating Results Financial and operational highlights for our distribution segment for the fiscal years ended September 30, 2023, 2022 and 2021 are presented below.
Added
However, this increase is offset by a corresponding increase in revenue resulting in no impact to net income.
Removed
Partially offset by: • a $65.4 million increase in depreciation expense and property taxes associated with increased capital investments. • a $20.2 million increase in line locate spending, primarily in our Mid-Tex Division. • a $4.9 million increase in bad debt expense primarily due to higher customer bills. • a $21.6 million increase in other operation and maintenance expense primarily due to increased insurance premiums, travel spending, information technology spending and other administrative costs.
Added
As part of its pipeline operations, APT owns and operates five underground storage facilities in Texas.
Removed
Other non-operating income increased $18.0 million primarily due to a higher allowance for funds used during construction (AFUDC) related to increased capital spending as well as unrealized gains on equity investments in the current 26 Table of Contents period compared to unrealized losses on equity investments in the prior period.
Added
On December 13, 2023, the RRC approved the settlement agreement between APT and the intervening parties for an increase in annual operating income of $27.0 million, exclusive of the impact of the cessation of $36.9 million in excess deferred income tax refunds, which are substantially offset by a corresponding increase in income taxes.
Removed
On October 24, 2023, APT and the intervening parties in its general rate case filed a Joint Notice of Settlement and Proposed Order.
Added
Partially offset by: • an $8.4 million increase in depreciation expense associated with increased capital investments. • an $18.1 million increase in operation and maintenance expense due to increased storage and compression maintenance and other compliance-related activities. Interest charges increased $13.5 million primarily due to the issuance of long-term debt during fiscal 2024.
Removed
Review of Financial and Operating Results Financial and operational highlights for our pipeline and storage segment for the fiscal years ended September 30, 2023, 2022 and 2021 are presented below.
Added
As of the date of this report, $1.1 billion of securities remained available for issuance under the shelf registration statement, which expires March 31, 2026.
Removed
Interest charges increased $7.2 million primarily due to the issuance of long-term debt during the first quarter of fiscal 2023.
Added
In the first half of fiscal 2025, we anticipate filing a new $8.0 billion shelf registration statement and a prospectus supplement under this new shelf registration statement for a new $1.7 billion ATM equity sales program to replace the former arrangements.
Removed
INFLATION REDUCTION ACT OF 2022 In August 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the Inflation Reduction Act) into law. The Inflation Reduction Act includes a new corporate alternative minimum tax (the Corporate AMT) of 15% on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.0 billion over a three-year period.
Added
We completed a public offering of $500 million of 6.20% senior notes due October 2053 and $400 million of 5.90% senior notes due October 2033, and received net proceeds from the offering, after the underwriting discount and offering expenses, of $889.4 million.
Removed
We currently anticipate this tax will apply to us within the next three years, and it could materially impact our cash tax payments. However, we don't anticipate any impact to our results of operations. Also, the Inflation Reduction Act imposes a methane emissions charge for methane emissions in excess of 25,000 metric tons carbon dioxide equivalent per year.
Added
On April 1, 2024, Moody's reaffirmed its long-term and short-term credit ratings and placed our ratings under negative outlook.
Removed
Based on our preliminary evaluation of the regulations, we currently do not anticipate this provision of the Inflation Reduction Act will have a material impact on our financial position, results of operations or cash flows.
Added
Contractual Obligations and Commercial Commitments The following table provides information about contractual obligations and commercial commitments at September 30, 2024. 33 Table of Contents Payments Due by Period Total Less than 1 year 1-3 years 3-5 years More than 5 years (In thousands) Contractual Obligations Long-term debt (1) $ 7,785,000 $ — $ 510,000 $ 650,000 $ 6,625,000 Securitized long-term debt 85,078 8,207 17,721 19,621 39,529 Interest charges (2) 5,854,623 318,117 635,037 592,054 4,309,415 Interest charges on securitized long-term debt 21,071 4,281 7,255 5,356 4,179 Finance leases (3) 66,506 3,438 7,070 7,338 48,660 Operating leases (4) 320,408 43,244 73,917 56,419 146,828 Financial instrument obligations (5) 7,637 7,324 313 — — Pension and postretirement benefit plan contributions (6) 273,428 27,596 51,411 65,310 129,111 Uncertain tax positions (7) 57,797 — 57,797 — — Total contractual obligations $ 14,471,548 $ 412,207 $ 1,360,521 $ 1,396,098 $ 11,302,722 (1) Long-term debt excludes our finance lease obligations, which are separately reported within this table.
Removed
Additionally, the Inflation Reduction Act 28 Table of Contents imposes an excise tax of 1% tax on the fair market value of net stock repurchases made after December 31, 2022. The impact of this provision will be dependent on the extent of share repurchases made in future periods.
Added
Substantially all of our financial instruments are valued using external market quotes and indices.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeHad interest rates associated with our short-term borrowings increased by an average of one percent, our interest expense would not have materially increased during 2023. 33 Table of Contents
Biggest changeHad interest rates associated with our short-term borrowings increased by an average of one percent, our interest expense would not have materially increased during 2024. 35 Table of Contents

Other ATO 10-K year-over-year comparisons