| (Mark One) | ||
|
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the fiscal year ended September 30, 2006 | ||
| OR | ||
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from to |
| Texas and Virginia | 75-1743247 | |
|
(State or other jurisdiction
of
incorporation or organization) |
(IRS employer
identification no.) |
|
|
Three Lincoln Centre,
Suite 1800
5430 LBJ Freeway, Dallas, Texas (Address of principal executive offices) |
75240
(Zip code) |
|
Name of Each Exchange
|
||
|
Title of Each Class
|
on Which Registered
|
|
| Common stock, No Par Value | New York Stock Exchange |
2
| AEC |
Atmos Energy Corporation
|
|
| AEH |
Atmos Energy Holdings, Inc.
|
|
| AEM |
Atmos Energy Marketing, LLC
|
|
| AES |
Atmos Energy Services, LLC
|
|
| APB |
Accounting Principles Board
|
|
| APS |
Atmos Pipeline and Storage, LLC
|
|
| ATO |
Trading symbol for Atmos Energy Corporation common stock on the
New York Stock Exchange
|
|
| Bcf |
Billion cubic feet
|
|
| COSO |
Committee of Sponsoring Organizations of the Treadway Commission
|
|
| EITF |
Emerging Issues Task Force
|
|
| FASB |
Financial Accounting Standards Board
|
|
| FERC |
Federal Energy Regulatory Commission
|
|
| FIN |
FASB Interpretation
|
|
| Fitch |
Fitch Ratings, Ltd.
|
|
| FSP |
FASB Staff Position
|
|
| GRIP |
Gas Reliability Infrastructure Program
|
|
| Heritage |
Heritage Propane Partners, L.P.
|
|
| iFERC |
Inside FERC
|
|
| KPSC |
Kentucky Public Service Commission
|
|
| LGS |
Louisiana Gas Service Company and LGS Natural Gas Company, which
were acquired July 1, 2001
|
|
| LPSC |
Louisiana Public Service Commission
|
|
| Mcf |
Thousand cubic feet
|
|
| MDWQ |
Maximum daily withdrawal quantity
|
|
| MMcf |
Million cubic feet
|
|
| Moodys |
Moodys Investor Services, Inc.
|
|
| MPSC |
Mississippi Public Service Commission
|
|
| MVG |
Mississippi Valley Gas Company, which was acquired
December 3, 2002 |
|
| NYMEX |
New York Mercantile Exchange, Inc.
|
|
| NYSE |
New York Stock Exchange
|
|
| RRC |
Railroad Commission of Texas
|
|
| RSC |
Rate Stabilization Clause
|
|
| S&P |
Standard & Poors Corporation
|
|
| SEC |
United States Securities and Exchange Commission
|
|
| SFAS |
Statement of Financial Accounting Standards
|
|
| TXU Gas |
TXU Gas Company, which was acquired on October 1, 2004
|
|
| USP |
U.S. Propane, L.P.
|
|
| VCC |
Virginia Corporation Commission
|
|
| WNA |
Weather Normalization Adjustment
|
3
16
ITEM 1.
Business
the utility segment, which includes our regulated natural gas
distribution and related sales operations,
the natural gas marketing segment, which includes a variety of
nonregulated natural gas management services,
the pipeline and storage segment, which includes our regulated
and nonregulated natural gas transmission and storage
services and
the other nonutility segment, which includes all of our other
nonregulated nonutility operations.
deliver superior shareholder value,
improve the quality and consistency of earnings growth, while
operating our natural gas utility and nonutility businesses
exceptionally well and
enhance and strengthen a culture built on our core values.
4
Table of Contents
Atmos Energy Colorado-Kansas Division,
Atmos Energy Kentucky Division,
Atmos Energy Louisiana Division,
Atmos Energy Mid-States Division,
Atmos Energy Mid-Tex Division,
Atmos Energy Mississippi Division and
Atmos Energy West Texas Division.
5
Table of Contents
October May
October May
November April
December March
October May
November April
November April
October May
October May
October May
January December
(1)
Effective beginning with the
2006-2007
winter heating season.
6
Table of Contents
7
Table of Contents
8
Table of Contents
9
Table of Contents
10
Table of Contents
Year Ended September 30
2006
2005
(1)
2004
2003
(1)
2002
2,886,042
2,862,822
1,506,777
1,498,586
1,247,247
275,577
274,536
151,381
151,008
122,156
2,661
2,715
2,436
3,799
2,118
8,714
9,639
8,397
9,514
10,576
8,205
8,128
10,145
9,891
7,244
3,181,199
3,157,840
1,679,136
1,672,798
1,389,341
2,527
2,587
3,271
3,473
3,368
87%
89%
96%
101%
94%
144,780
162,016
92,208
97,953
77,386
87,006
92,401
44,226
45,611
35,796
26,161
29,434
22,330
23,738
14,499
5,629
3,348
4,642
7,884
10,988
8,457
9,084
9,813
9,326
5,875
272,033
296,283
173,219
184,512
144,544
126,960
122,098
87,746
70,159
69,589
398,993
418,381
260,965
254,671
214,133
$
2,068,736
$
1,791,172
$
923,773
$
873,375
$
535,981
1,061,783
869,722
400,704
367,961
221,728
276,186
229,649
155,336
151,969
70,164
40,664
27,889
31,851
48,625
37,951
103,936
86,853
77,178
65,921
31,731
3,551,305
3,005,285
1,588,842
1,507,851
897,555
62,215
59,996
31,714
30,461
28,786
37,071
37,859
17,172
15,770
11,185
$
3,650,591
$
3,103,140
$
1,637,728
$
1,554,082
$
937,526
$
0.49
$
0.49
$
0.36
$
0.43
$
0.41
$
10.02
$
7.41
$
6.55
$
5.76
$
3.87
4,402
4,327
2,742
2,817
2,255
11
Table of Contents
Year Ended September 30, 2006
Colorado-
Mid-
West
Total
Kansas
Kentucky
Louisiana
States
Texas
Mississippi
Mid-Tex
Other
(4)
Utility
213,566
158,408
330,694
277,998
273,520
241,406
1,390,450
2,886,042
21,440
18,228
23,108
36,686
25,984
27,868
122,263
275,577
84
240
681
808
643
205
2,661
312
8,402
8,714
543
1,637
1,034
2,166
2,825
8,205
235,945
178,513
353,802
316,399
310,880
272,742
1,512,918
3,181,199
5,466
4,349
1,319
3,515
3,561
2,757
1,697
2,527
99%
100%
78%
95%
100%
102%
72%
87%
15,113
9,249
12,131
15,065
15,609
12,601
65,012
144,780
5,901
4,526
6,944
11,328
6,309
6,440
45,558
87,006
419
1,830
6,945
3,933
8,250
4,784
26,161
619
5,010
5,629
1,390
1,237
226
1,962
3,642
8,457
23,442
16,842
19,075
33,564
32,823
30,933
115,354
272,033
9,680
25,871
6,310
20,654
15,135
1,702
47,608
126,960
33,122
42,713
25,385
54,218
47,958
32,635
162,962
398,993
$
71,000
$
50,271
$
98,502
$
106,742
$
93,693
$
92,515
$
412,334
$
$
925,057
$
28,235
$
19,874
$
40,741
$
38,148
$
33,332
$
44,533
$
154,412
$
(1,756
)
$
357,519
$
13,578
$
11,636
$
21,201
$
22,172
$
13,690
$
10,596
$
74,375
$
(2,755
)
$
164,493
$
6,663
$
4,423
$
8,788
$
10,867
$
21,509
$
14,110
$
111,844
$
$
178,204
$
$
$
$
$
22,947
$
$
$
$
22,947
$
22,524
$
14,338
$
27,772
$
35,555
$
2,215
$
23,276
$
71,703
$
4,511
$
201,894
$
19,466
$
16,645
$
32,218
$
38,307
$
27,374
$
15,389
$
134,762
$
23,581
$
307,742
$
252,584
$
190,959
$
328,310
$
436,916
$
253,086
$
226,690
$
1,262,516
$
132,240
$
3,083,301
6,601
3,937
8,214
8,015
14,831
6,415
27,856
75,869
263
220
412
416
341
437
1,458
855
4,402
12
Table of Contents
Year Ended September 30, 2005
Colorado-
Mid-
West
Total
Kansas
Kentucky
Louisiana
States
Texas
Mississippi
Mid-Tex
Other
(4)
Utility
209,321
159,216
348,576
276,667
267,278
244,136
1,357,628
2,862,822
20,914
18,350
23,850
36,519
25,410
28,350
121,143
274,536
81
239
684
816
664
231
2,715
279
9,360
9,639
476
1,650
1,066
2,139
2,797
8,128
231,071
179,455
372,426
314,936
305,003
275,947
1,479,002
3,157,840
5,437
4,241
1,301
3,510
3,536
2,583
1,904
2,587
99%
98%
78%
93%
99%
96%
80%
89%
16,404
10,741
13,134
16,222
19,292
12,985
73,238
162,016
5,929
4,891
6,811
11,806
7,493
6,711
48,760
92,401
338
1,858
8,205
4,477
9,057
5,499
29,434
246
3,102
3,348
1,355
1,396
241
2,296
3,796
9,084
24,272
18,886
19,945
36,474
36,660
32,549
127,497
296,283
8,388
26,066
7,046
20,142
12,390
1,309
46,757
122,098
32,660
44,952
26,991
56,616
49,050
33,858
174,254
418,381
$
70,542
$
52,302
$
94,350
$
110,012
$
90,316
$
91,610
$
398,234
$
$
907,366
$
26,679
$
18,618
$
37,994
$
38,427
$
29,701
$
49,241
$
146,449
$
(515
)
$
346,594
$
13,693
$
11,739
$
21,911
$
23,615
$
13,249
$
10,830
$
64,460
$
$
159,497
$
5,013
$
3,288
$
9,626
$
12,283
$
19,846
$
12,494
$
102,360
$
$
164,910
$
25,157
$
18,657
$
24,819
$
35,687
$
27,520
$
19,045
$
84,965
$
515
$
236,365
$
20,690
$
17,525
$
31,198
$
34,176
$
29,066
$
15,925
$
115,024
$
36,970
$
300,574
$
244,250
$
183,931
$
318,869
$
416,825
$
263,285
$
206,511
$
1,167,425
$
125,000
$
2,926,096
6,530
3,908
8,151
7,958
15,000
6,356
33,701
81,604
267
236
421
412
346
467
1,398
780
4,327
13
Table of Contents
Year Ended September 30
2006
2005
2004
2003
2002
746
624
638
644
641
73
69
80
94
101
467
401
237
202
117
1,286
1,094
955
940
859
336,516
273,201
265,090
294,785
273,692
590,985
563,949
9,395
11,648
12,788
$
3,156,524
$
2,106,278
$
1,618,602
$
1,668,493
$
1,031,874
160,567
153,289
19,758
20,298
18,720
5,898
5,302
3,393
2,853
5,985
$
3,322,989
$
2,264,869
$
1,641,753
$
1,691,644
$
1,056,579
230
216
122
88
83
(1)
The operational and statistical information includes the
operations of the Mississippi Division since the
December 3, 2002 acquisition date and the Mid-Tex and Atmos
Pipeline Texas Divisions since the October 1,
2004 acquisition date.
(2)
A heating degree day is equivalent to each degree that the
average of the high and the low temperatures for a day is below
65 degrees. The colder the climate, the greater the number of
heating degree days. Heating degree days are used in the natural
gas industry to measure the relative coldness of weather and to
compare relative temperatures between one geographic area and
another. Normal degree days are based on
30-year
average National Weather Service data for selected locations.
For service areas that have weather normalized operations,
normal degree days are used instead of actual degree days in
computing the total number of heating degree days.
(3)
Sales volumes, revenues, operating margins, operating expense
and operating income reflect segment operations, including
intercompany sales and transportation amounts.
(4)
The Other column represents our utility shared services unit,
which provides administrative and other support to our seven
regulated utility divisions. Certain costs incurred by this unit
are not allocated to our utility divisions.
14
Table of Contents
Effective
Authorized
Authorized
Date of Last
Rate Base
Rate of
Return on
Division
Jurisdiction
Rate Action
(thousands)
(1)
Return
(1)
Equity
(1)
Texas
5/24/04
$
417,111
8.258
%
10.00
%
Colorado
7/1/05
84,711
8.95
%
11.25
%
Kansas
3/1/04
(2)
(2
)
(2
)
Kentucky
12/21/99
(2)
(2
)
(2
)
Trans LA
10/1/04
81,645
9.14
%
10.50% - 11.50%
LGS
10/1/04
170,358
9.23
%
10.88% - 11.50%
Georgia
12/20/05
62,380
7.57
%
10.13
%
Illinois
11/1/00
24,564
9.18
%
11.56
%
Iowa
3/1/01
5,000
(2
)
11.00
%
Missouri
10/14/95
(2)
10.58
%
12.15
%
Tennessee
11/15/95
111,970
(2
)
(2
)
Virginia
8/1/04
30,672
8.46% - 8.96%
9.50% -10.50%
Texas
5/24/04
769,721
8.258
%
10.00
%
Mississippi
1/1/05
196,801
8.23
%
9.80
%
Amarillo
9/1/03
36,844
9.88
%
12.00
%
Lubbock
3/1/04
43,300
9.15
%
11.25
%
West Texas
5/1/04
87,500
8.77
%
10.50
%
15
Table of Contents
Effective
Authorized
Bad
Performance-
Date of Last
Debt/
Debt
Based Rate
Division
Jurisdiction
Rate Action
Equity Ratio
Rider
(5)
WNA
Program
(3)
Texas
5/24/04
50/50
No
N/A
N/A
Colorado
7/1/05
52/48
No
No
No
Kansas
3/1/04
(2)
Yes
Yes
No
Kentucky
12/21/99
(2)
No
Yes
Yes
Trans LA
10/1/04
50/50
No
(4)
No
LGS
10/1/04
53/47
No
(4)
No
Georgia
12/20/05
55/45
No
Yes
Yes
Illinois
11/1/00
67/33
No
No
No
Iowa
3/1/01
57/43
No
No
No
Missouri
10/14/95
(2)
No
No
No
Tennessee
11/15/95
56/44
No
Yes
Yes
Virginia
8/1/04
52/48
Yes
Yes
No
Texas
5/24/04
50/50
No
(4)
No
Mississippi
1/1/05
47/53
No
Yes
No
Amarillo
9/1/03
50/50
Yes
Yes
No
Lubbock
3/1/04
50/50
No
Yes
No
West Texas
5/1/04
50/50
No
Yes
No
(1)
The rate base and authorized rate of return presented in this
table are the rate base and rate of return from the last base
rate case for each jurisdiction. These rate bases and rates of
return are not necessarily indicative of current or future rate
bases or rates of return.
(2)
A rate base, rate of return, return on equity or debt/equity
ratio was not included in the respective state commissions
final decision.
(3)
The performance-based rate program provides incentives to
natural gas utilities to minimize purchased gas costs by
allowing the utility and its customers to share the purchased
gas cost savings.
(4)
During 2006, our Louisiana and Mid-Tex Divisions received
authorization to implement WNA beginning in the
2006-2007
winter heating season.
(5)
The bad debt rider allows us to recover from ratepayers the gas
cost portion of uncollectible accounts.
Table of Contents
Most Recent
Increase (Decrease) to Revenue
Effective
Most Recent
for the Year Ended September 30
Division
Date
Rate Action
Jurisdiction
2006
2005
2004
(In thousands)
8/1/06
GRIP
(1)
Texas
$
5,205
$
1,802
$
4/1/04
Show Cause
Colorado
(1,900
)
1/1/06
Ad Valorem Tax
Kansas
1,565
3/1/04
Rate Case
Kansas
2,500
2/1/06
Stable Rate
Filing
(2)
LGS
3,326
10/1/04
Stable Rate
Filing
(2)
LGS
225
8/1/04
Rate Case
Virginia
372
12/20/05
Rate Case
Georgia
409
2/1/06
GRIP
(1)
Texas
25,313
(3)
Stable Rate
Filing
(2)
Mississippi
4,300
10,545
11/1/05
Rate Restructuring
Mississippi
(600
)
12/1/05
GRIP
(1)
Lubbock
1,263
3/1/04
Rate Case
Lubbock
1,525
3/1/06
GRIP
(1)
West Texas
2,539
5/1/04
Rate Case
West Texas
3,200
$
39,020
$
6,327
$
16,242
(1)
In 2003, the Texas Legislature approved the Gas Reliability
Infrastructure Program (GRIP) which allows natural gas utilities
the opportunity to include in their rate base annually approved
capital costs incurred in the prior calendar year. Natural gas
utilities that enter the program will be required to file a
complete rate case at least once every five years.
(2)
A stable rate filing is a regulatory mechanism designed to allow
us to refresh our rates on a periodic basis without filing a
formal rate case.
(3)
The MPSC had formerly required that we file for rate adjustments
every six months. Through May 2005, rate filings were made in
May and November of each year and the rate adjustments typically
became effective in June and December. See further discussion
under the recent ratemaking activity for our Atmos Energy
Mississippi Division below.
Division
Rate Action
Jurisdiction
Revenue Requested
(In thousands)
Stable Rate
Filing
(1)
LGS
$
10,753
Rate Case
Missouri
3,396
Rate
Proceeding
(2)
Tennessee
3,400
System-wide Case
Texas
60,844
$
78,393
(1)
The Louisiana Division has included the Rate Stabilization
Clause increase in rates. The increase is subject to refund,
pending final resolution of the Stable Rate Filing.
(2)
The Tennessee rate proceeding was settled in October 2006. See
below for information regarding the settlement.
17
Table of Contents
18
Table of Contents
19
Table of Contents
20
Table of Contents
21
Table of Contents
22
Table of Contents
ITEM 1A.
Risk
Factors
23
Table of Contents
24
Table of Contents
25
Table of Contents
26
Table of Contents
ITEM 1B.
Unresolved
Staff Comments
ITEM 2.
Properties
27
Table of Contents
Maximum
Daily
Cushion
Total
Delivery
Usable Capacity
Gas
Capacity
Capability
State
(Mcf)
(Mcf)
(1)
(Mcf)
(Mcf)
4,442,696
6,322,283
10,764,979
109,100
3,639,000
2,640,000
6,279,000
55,000
1,544,633
2,181,737
3,726,370
48,000
450,000
50,000
500,000
30,000
10,076,329
11,194,020
21,270,349
242,100
39,128,475
13,128,025
52,256,500
1,235,000
3,492,900
3,295,000
6,787,900
71,000
438,583
300,973
739,556
56,000
43,059,958
16,723,998
59,783,956
1,362,000
53,136,287
27,918,018
81,054,305
1,604,100
(1)
Cushion gas represents the volume of gas that must be retained
in a facility to maintain reservoir pressure.
28
Table of Contents