~~NON-REGULATED~~ OTHER

The Other category includes ~~Laclede Gas’~~the Utility's non-regulated propane services ~~business. In April 2011, Laclede Gas began~~business which involves providing ~~on a non-regulated basis,~~ propane-related services and storage to a third party, including the storage of propane, because the capacity of Laclede Gas’ propane cavern facility was no longer needed in its entirety to serve utility customers. More recently, Laclede Gas also began providing storage services toparties and its affiliate, Laclede Pipeline Company. Beginning July 1, 2013, propane-related services are included within Gas Utility operations pursuant to the Utility's new rate case.

Item 1A. Risk Factors

~~Laclede Gas’~~The Utility's business and financial results are subject to a number of risks and uncertainties, including those set forth below. The risks described below are those the Utility considers to be material.

Regulation of the Utility business may impact rates it is able to charge, costs, and profitability.

The Missouri Public Service Commission (MoPSC or Commission) regulates many aspects of the Utility’s distribution operations, including construction and maintenance of facilities, operations, safety, the rates that the Utility may charge customers, the terms of service to its customers, transactions with its affiliates, and the rate of return that it is allowed to realize; as well as the accounting treatment for certain aspects of its operations. For further discussion of these accounting matters, see Critical Accounting Policies pertaining to ~~Laclede Gas,~~the Utility, beginning on page ~~24. Laclede Gas’~~26. The Utility's ability to obtain and timely implement rate increases and rate supplements to maintain the current rate of return depends upon regulatory discretion. There can be no assurance that it will be able to obtain rate increases or rate supplements or continue earning the current authorized rates of return. Furthermore, in accordance with the Unanimous Stipulation and Agreement, the Utility will not file a general rate case, other than the currently pending MGE rate case, for non-gas costs prior to October 1, 2015 unless a significant, unusual event impacts any of its operations. The first general rate case filed after October 1, 2015, requires that it be for both the Utility and MGE.

~~Laclede Gas’~~The Utility could incur additional costs if required to adjust to new laws or regulations, revisions to existing laws or regulations or changes in interpretations of existing laws or regulations such as the Dodd-Frank Act. In addition, as the regulatory environment for the natural gas industry increases in complexity, the risk of inadvertent noncompliance could also increase. If the Utility fails to comply with applicable laws and regulations, whether existing or new, it could be subject to fines, penalties or other enforcement action by the authorities that regulate its operations.

The Utility is involved in legal or administrative proceedings before various courts and governmental bodies that could adversely affect our results of operations, cash flows and financial condition.

The Utility is involved in legal or administrative proceedings before various courts and governmental bodies with respect to general claims, rates, environmental issues, gas cost prudence reviews and other matters. Adverse decisions regarding these matters, to the extent they require us to make payments in excess of amounts provided for in our financial statements, or to the extent they are not covered by insurance, could adversely affect our results of operations, cash flows and financial condition.

The Utility's liquidity may be adversely affected by delays in recovery of its costs, due to regulation.

In the normal course of business, there may be a lag between when the Utility incurs increases in certain of its costs and the time in which those costs are considered for recovery in the ratemaking process. Cash requirements for increased operating costs, increased funding levels of defined benefit pension and postretirement costs, capital expenditures, and other increases in the costs of doing business may require outlays of cash prior to the authorization of increases in rates charged to customers, as approved by the MoPSC. Accordingly, the Utility’s liquidity may be adversely impacted to the extent higher costs are not timely recovered from its customers. In accordance with the Unanimous Stipulation and Agreement, the Utility will not file a general rate case for non-gas costs prior to October 1, 2015 unless a significant, unusual event impacts any of its operations. The first general rate case filed after October 1, 2015, is required to be for both the the Utility and MGE.

~~Laclede Gas’~~The Utility's ability to meet its customers’ natural gas requirements may be impaired if contracted gas supplies, interstate pipeline and/or storage services are not available or delivered in a timely manner.

In order to meet its customers’ annual and seasonal natural gas demands, the Utility must obtain sufficient supplies, interstate pipeline capacity, and storage capacity. If it is unable to obtain these, either from its suppliers’ inability to deliver the contracted commodity or the inability to secure replacement quantities, ~~Laclede Gas’~~the Utility's financial condition and results of operations may be adversely impacted. If a substantial disruption in interstate natural gas pipelines’ transmission and storage capacity were to occur during periods of heavy demand, the Utility’s financial results could be adversely impacted.

~~Laclede Gas’~~

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The Utility's liquidity and, in certain circumstances, its results of operations may be adversely affected by the cost of purchasing natural gas during periods in which natural gas prices are rising significantly.

~~Laclede Gas’~~The Utility's tariff rate schedules contain Purchased Gas Adjustment (PGA) Clauses that permit the Utility to file for rate adjustments to recover the cost of purchased gas. Changes in the cost of purchased gas are flowed through to customers and may affect uncollectible amounts and cash flows and can therefore impact the amount of capital resources. Currently, ~~Laclede Gas~~the Utility is allowed to adjust the gas cost component of its rates up to four times each year. The Utility must make a mandatory gas cost adjustment at the beginning of the winter, in November, and during the next twelve months it may make up to three additional discretionary gas cost adjustments, so long as each of these adjustments is separated by at least two months.

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The MoPSC typically approves the Utility’s PGA changes on an interim basis, subject to refund and the outcome of a subsequent audit and prudence review. Due to such review process, there is a risk of a disallowance of full recovery of these costs. Any material disallowance of purchased gas costs would adversely affect revenues. Increases in the prices the Utility charges for gas may also adversely affect revenues because they could lead customers to reduce usage and cause some customers to have trouble paying the resulting higher bills. These higher prices may increase bad debt expenses and ultimately reduce earnings. ~~Laclede Gas~~The Utility has used short-term borrowings in the past to finance storage inventories and purchased gas costs, and expects to do so in the future. Rapid increases in the price of purchased gas may result in an increase in short-term ~~debt because Laclede Gas must pay suppliers for gas in advance of when its customers pay for that gas.~~debt.

To lower financial exposure to commodity price fluctuations, ~~Laclede Gas~~the Utility enters into contracts to hedge the forward commodity price of its natural gas supplies. As part of this strategy, the Utility may use fixed-price, forward, physical purchase contracts, swaps, futures, and option contracts. However, the Utility does not hedge the entire exposure of energy assets or positions to market price volatility, and the coverage will vary over time. Any costs, gains, or losses experienced through hedging procedures, including carrying costs, generally flow through the PGA Clause, thereby limiting the Utility’s exposure to earnings volatility. However, variations in the timing of collections of such gas costs under the PGA Clause and the effect of cash payments for margin deposits associated with the Utility’s use of natural gas derivative instruments may cause short-term cash requirements to vary. These procedures remain subject to prudence review by the MoPSC.

~~Laclede Gas~~The Utility may be adversely affected by economic conditions.

Periods of slowed economic activity generally result in decreased energy consumption, particularly by industrial and large commercial companies. As a consequence, national or regional recessions or other downturns in economic activity could adversely affect ~~Laclede Gas’~~the Utility's revenues and cash flows or restrict its future growth. Economic conditions in its service territory may also adversely impact the Utility’s ability to collect its accounts receivable resulting in an increase to bad debt expenses.

~~Laclede Gas~~The Utility is dependent on bank lines of credit and continued access to capital markets to successfully execute its operating strategies.

In addition to longer-term debt that is issued by the Utility under its mortgage and deed of trust dated February 1, 1945, ~~Laclede Gas~~the Utility has relied, and continues to rely, upon shorter term borrowings or commercial paper supported by bank lines of credit to finance the execution of a portion of its operating strategies. The Utility is dependent on these capital sources to purchase its natural gas supply and maintain its properties. The availability and cost of these credit sources is cyclical and these capital sources may not remain available to the Utility, or it may not be able to obtain funds at a reasonable cost in the future. ~~Laclede Gas’~~The Utility's ability to borrow under its existing lines of credit depends on its compliance with the Utility’s obligations under the lines of credit. If the Utility were to breach any of the financial or other covenants under these agreements, its debt repayment obligations under them could be accelerated. ~~Laclede Gas’~~The Utility's ability to issue commercial paper supported by its lines of credit, to issue long-term bonds, or to obtain new lines of credit also depends on current conditions in the credit markets. The Utility’s access to funds under committed short-term credit facilities, which are currently provided by a number of banks, is dependent on the ability of the participating banks to meet their funding commitments. Those banks may not be able to meet their funding commitments if they experience shortages of capital and liquidity. Disruptions in the bank or capital financing markets as a result of economic uncertainty, changing or increased regulation of the financial sector, or failure of major financial institutions could adversely affect the Utility’s access to capital and negatively impact its ability to run its business and make strategic investments.

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A downgrade in the Utility’s credit rating may negatively affect its ability to access capital.

Standard & Poor’s rating group, Moody’s Investors Service, and Fitch Ratings from time to time implement new requirements for various ratings levels. To maintain its current credit ratings in light of any new requirements, ~~Laclede Gas~~The Utility may find it necessary to take steps to change its business plans in ways that may affect its results of operations. The Utility’s credit ratings remain at investment grade, but are subject to review and change by the rating agencies.

If the rating agencies lowered the Utility’s ratings, particularly below investment grade, it could significantly limit its ability to secure new or additional credit facilities and would increase its costs of borrowing. In addition, ~~Laclede Gas~~the Utility would likely be required to pay a higher interest rate in future long-term financings and the Utility’s potential pool of investors and funding sources would likely decrease. ~~Laclede Gas’~~The Utility's ability to borrow under current or new credit facilities and costs of that borrowing have a direct impact on its ability to execute operating strategies. Credit ratings are an independent assessment of the Utility’s ability to pay its obligations. Consequently, real or anticipated changes in credit ratings will generally affect the market value of the specific debt instruments that are rated.

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Unexpected losses may adversely affect the Utility’s financial condition and results of operations.

As with most businesses, there are operations and business risks inherent in the activities of ~~Laclede Gas.~~the Utility. If, in the normal course of business, ~~Laclede Gas~~the Utility becomes a party to litigation, such litigation could result in substantial monetary judgments, fines, or penalties or be resolved on unfavorable terms. In accordance with customary practice, ~~Laclede Gas~~the Utility maintains insurance against a significant portion of, but not all, risks and losses. In addition, in the normal course of its operations, ~~Laclede Gas~~the Utility may be exposed to loss from other sources, such as bad debt expense or the failure of a counterparty to meet its financial obligations. ~~Laclede Gas~~The Utility employs many strategies to gain assurance that such risks are appropriately managed, mitigated, or insured, as appropriate. To the extent a loss is not fully covered by insurance or other risk mitigation strategies, that loss could adversely affect the Utility’s financial condition and results of operations.

Numerous environmental laws and regulations may require significant expenditures or increase operating costs.

~~Laclede Gas~~The Utility is subject to federal, state and ~~state~~local environmental laws and regulations affecting many aspects of its present and future operations. These laws and regulations require ~~Laclede Gas~~the Utility to obtain and comply with a wide variety of environmental licenses, permits, inspections, and approvals. Failure to comply with these laws and regulations and failure to obtain any required permits and licenses may result in costs to the Utility in the form of fines, penalties or business interruptions, which may be material. In addition, existing environmental laws and regulations could be revised or reinterpreted and/or new laws and regulations could be adopted or become applicable to ~~Laclede Gas~~the Utility or its facilities, thereby impacting the Utility’s cost of compliance. The discovery of presently unknown environmental conditions, including former manufactured gas plant sites, and claims against the Utility under environmental laws and regulations may result in expenditures and liabilities, which could be material. To the extent environmental compliance costs are not fully covered by insurance or recovered in rates from the Utility’s customers, those costs may have an adverse effect on ~~Laclede Gas’~~the Utility's financial condition and results of operations.

~~Laclede Gas~~The Utility is subject to pipeline safety and system integrity laws and regulations that may require significant expenditures or significant increases in operating costs.

Such laws and regulations affect various aspects of ~~Laclede Gas’~~the Utility's present and future operations. These laws and regulations require the Utility to maintain pipeline safety and system integrity by identifying and reducing pipeline risks. Compliance with these laws and regulations, or future changes in these laws and regulations, may result in increased capital, operating and other costs which may not be recoverable in a timely manner from customers in rates. Failure to comply may result in fines, penalties, or injunctive measures that would not be recoverable from customers in rates and could result in a material effect on ~~Laclede Gas’~~the Utility's financial condition and results of operations.

Transporting, distributing, and storing natural gas and transporting and storing propane involves numerous risks that may result in accidents and other operating risks and costs.

There are inherent in gas distribution activities a variety of hazards and operations risks, such as leaks, accidental explosions, including third party damages, and mechanical problems, which could cause substantial financial losses. In addition, these risks could result in serious injury to employees and non-employees, loss of human life, significant damage to property, environmental pollution, impairment of operations, and substantial losses to ~~Laclede Gas.~~the Utility. The location of pipelines and storage facilities near populated areas, including residential areas, commercial business centers, and industrial sites, could increase the level of damages resulting from these risks. Similar risks also exist for the Utility's propane storage and transmission operations. These activities may subject the Utility to litigation or administrative proceedings from time to time.

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Such litigation or proceedings could result in substantial monetary judgments, fines, or penalties against the Utility or be resolved on unfavorable terms. In accordance with customary industry practices, ~~Laclede Gas~~the Utility maintains insurance against a significant portion, but not all, of these risks and losses. To the extent that the occurrence of any of these events is not fully covered by insurance, it could adversely affect the Utility’s financial condition and results of operations.

~~Increases~~Changes in the wholesale costs of purchased natural gas supplies may adversely impact the Utility’s competitive position compared with alternative energy sources.

~~Laclede Gas~~The Utility is the only distributor of natural gas within its franchised service area. Nevertheless, rising wholesale natural gas prices compared with prices for electricity, fuel oil, coal, propane, or other energy sources may affect the Utility’s retention of natural gas customers and adversely impact its financial condition and results of operations.

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Significantly warmer-than-normal weather conditions, the effects of global warming and climate change, and other factors that influence customer usage may affect the Utility’s sale of heating energy and adversely impact its financial position and results of operations.

~~Laclede Gas’~~The Utility's earnings are primarily generated by the sale of heating energy. The Utility has a weather mitigation rate ~~design,~~designs, approved by the MoPSC, which ~~provides~~provide better assurance of the recovery of the Utility’s fixed costs and margins during winter months despite variations in sales volumes due to the impacts of weather and other factors that affect customer usage.

However, significantly warmer-than-normal weather conditions in the Utility’s service area and other factors, such as global warming, ~~and~~ climate change and alternative energy sources, may result in reduced profitability and decreased cash flows attributable to lower gas ~~sales levels.~~sales. Furthermore, continuation of the weather mitigation rate design isat Laclede Gas or the straight fixed variable rate design at MGE are subject to regulatory discretion. In addition, the promulgation of regulations by the U.S. Environmental Protection Agency or the potential enactment of Congressional legislation addressing global warming and climate change may result in future additional compliance costs that could impact the Utility’s financial condition and results of operations.

Regional supply/demand fluctuations and changes in national pipeline infrastructure, as well as regulatory discretion, may adversely affect ~~Laclede Gas’~~the Utility's ability to profit from off-system sales and capacity release.

~~Laclede Gas’~~The Utility's income from off-system sales and capacity release is subject to fluctuations in market conditions and changing supply and demand conditions in areas the Utility holds pipeline capacity rights. Specific factors impacting the Utility’s income from off-system sales and capacity release include the availability of attractively-priced natural gas supply, availability of pipeline capacity, and market demand. Income from off-system sales and capacity release is shared with customers. The Utility is allowed to retain 15% to 25% of the first $6 million in annual income earned (depending on the level of income earned) and 30% of income exceeding $6 million annually. In accordance with the MoPSC agreement to suspend the procedural schedule in Laclede Gas' base rate proceeding, the Utility deferred, until fiscal year 2017, its ability to retain 15% of the first $2 million. MGE is allowed to retain 15% to 25% of the first $3.6 million in annual income earned (depending on the level of income earned) and 30% of income exceeding $3.6 million annually. The Utility’s ability to retain such income in the future is subject to regulatory discretion in a base rate proceeding.

Workforce risks may affect ~~Laclede Gas’~~the Utility's financial results.

~~Laclede Gas~~The Utility is subject to various workforce risks, including, but not limited to, the risk that it will be unable to attract and retain qualified personnel; that it will be unable to effectively transfer the knowledge and expertise of an aging workforce to new personnel as those workers retire; and that it will be unable to reach collective bargaining arrangements with the unions that represent certain of its workers, which could result in work stoppages.

Increased inter-dependence on technology may adversely hinder ~~Laclede Gas’~~the Utility's business operations and affect its financial condition and results of operations if such technologies fail or are compromised.

Over the last several years, ~~Laclede Gas~~the Utility has implemented a variety of technological tools including both company-owned information technology and technological services provided by outside parties. In fiscal year 2013, the Company completed its implementation of a Company-wide enterprise resource planning (ERP) system. These tools and systems support critical functions including the Utility’s integrated planning, scheduling and dispatching of field resources, and its automated meter reading ~~system.~~system, customer care and billing, procurement and accounts payable, operational plant logistics, management reporting, and external financial reporting. The failure of these or other similarly important technologies, or the Utility’s inability to have these technologies supported, updated, expanded, or integrated into other technologies, could hinder its business operations and adversely impact its financial condition and results of operations.

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Although the Utility has, when possible, developed alternative sources of technology and built redundancy into its computer networks and tools, there can be no assurance that these efforts to date would protect against all potential issues related to the loss of any such technologies or their use.

Furthermore, the Utility is subject to cyber-security risks primarily related to breaches of security pertaining to sensitive customer, employee, and vendor information maintained by the Utility in the normal course of business, as well as breaches in the technology that manages natural gas distribution operations and other business processes. A loss of confidential or proprietary data or security breaches of other technology business tools could adversely affect the Utility’s reputation, diminish customer confidence, disrupt operations, and subject the Utility to possible financial liability, any of which could have a material affect on the Utility’s financial condition and results of operations. The Utility closely monitors both preventive and detective measures to manage these ~~risks.~~

~~Table~~risks and maintains cyber risk insurance to mitigate a significant portion, but not all, of ~~Contents~~

~~Failure to successfully implement new technology may~~these risks and losses. To the extent that the occurrence of any of these cyber events is not fully covered by insurance, it could adversely ~~impact Laclede Gas’ business operations and~~ affect ~~its~~the Utility’s financial condition and results of operations.

~~In 2011,~~ Laclede Gas ~~began a multi-year project to replace its existing customer relationship~~has also completed the acquisition of the assets and ~~work management, financial, and supply chain software applications with a new suite~~liabilities of ~~systems including a company-wide enterprise resource planning (ERP) system,~~MGE in order to enhance its technology, customer service, and business processes. The implementation process involves a number of risks that may adversely impact Laclede Gas’ business operations and/or affect its financial condition and results of operations, if not implemented successfully. The new ERP systemKansas City. Through fiscal 2015, the Utility will replace multiple legacy systems, and successful implementation is expected to enhance and provide additional benefits to a variety of important business functions, including customer care and billing, procurement and accounts payable, operational plant logistics, management reporting, and external financial reporting. The ERP implementation is a complex and time-consuming project that involves substantial expenditures for system hardware, software, and implementation activities, as well asbe integrating MGE’s data into Laclede’s systems. During this time the ~~transformation of business and financial processes.~~

~~As with any large software project, there are many factors that may materially affect~~Utility will also be evaluating the schedule, cost, and execution/implementation of this project. Those factors include, among others: problems during the design, implementation, and testing phases; system delays and/or malfunctions; the risk that suppliers and contractors will not perform as required under their contracts; the diversion of management’s attention from daily operations to the project; re-works due to changes in business processes or financial reporting standards; and other events beyond the Utility’s control. These types of issues could disrupt Laclede Gas’ business operations and/or its ability to timely and accuratelysecurity controls both process and report key components of its financial results and and/or complete important business processes such as the evaluation of its internal controls and attestation activities pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Accordingly, material deviations from the project plan or unsuccessful execution of the plan may adversely affect the Utility’s financial position and results of operations. Currently, the first phase of this project is nearing completion and certain software applications and business processes are being placed into production. Work continues on the remaining phases of this extensive project.tool based in place at MGE.

Catastrophic events may adversely affect ~~Laclede Gas’~~the Utility's facilities and operations.

Catastrophic events such as fires, earthquakes, explosions, floods, tornados, terrorist acts, or other similar occurrences could adversely affect ~~Laclede Gas’~~the Utility's facilities and operations. ~~Laclede Gas~~The Utility has emergency planning and training programs in place to respond to events that could cause business interruptions. However, unanticipated events or combination of events, failure in resources needed to respond to events, or slow or inadequate response to events may have an adverse impact on the Utility’s operations, financial condition, and results of operations. The availability of insurance covering catastrophic events may be limited or may result in higher deductibles, higher premiums and more restrictive policy terms.

Changes in accounting standards may adversely impact ~~Laclede Gas’~~the Utility's financial condition and results of operations.

The SEC has not yet made a decision as to whether and how International Financial Reporting Standards (IFRS) should be incorporated into the United States (U.S.) financial reporting system, potentially replacingUtility is subject changes in U.S. Generally Accepted Accounting Principles (GAAP)., SEC regulations and other interpretations of financial reporting requirements for public utilities. The company has no control over the impact these changes may have on our financial condition or results of operations nor the timing of such a decision is unknown. IFRS is a comprehensive set of accounting standards promulgated by the International Accounting Standards Board (IASB), which are gaining worldwide acceptance. Incorporation of IFRS could take several forms, including full first-time adoption or a standard-by-standard adoption over a specified period of time. Unlike U.S. GAAP, IFRS does not currently address the accounting for rate-regulated activities, such as those of Laclede Gas. As such, if IFRS were fully adopted in its current state, Laclede Gas may be precluded from applying regulatory accounting principles, including the recognition of regulatory assets and regulatory liabilities. Although the IASB currently has a project on its agenda concerning the accounting for rate-regulated entities, the ultimate course of the project is unknown.changes. The potential issues associated with rate-regulated accounting, along with other potential changes ~~associated with the adoption of IFRS, may adversely impact Laclede Gas’ financial condition and results of operations, should full adoption of IFRS be required. Also, the~~considered by U.S. Financial Accounting Standards Board continues to consider various changes to U.S. GAAP ~~some~~may be significant.

RISKS RELATED TO THE COMPANY'S ACQUISITION OF MISSOURI GAS ENERGY (MGE) ASSETS AND LIABILITIES AS WELL AS THE ACQUISITION AGREEMENTS WITH SOUTHERN UNION COMPANY AND ALGONQUIN POWER & UTILITIES CORP REGARDING NEW ENGLAND GAS ASSETS AND LIABILITIES.

The New England Gas (NEG) transaction may not be completed or may be approved subject to unfavorable regulatory conditions, which could adversely affect anticipated benefits and/or Laclede Group's business, financial condition, results of operations and/or stock price.

On December 14, 2012, Laclede Group, through a wholly owned subsidiary, Plaza Massachusetts Acquisition, Inc. (Plaza Massachusetts), entered into an acquisition agreement to acquire from Southern Union Company (SUG) substantially all of the assets and liabilities of New England Gas Company (NEG). On February 11, 2013, the Company entered into an agreement with Algonquin Power & Utilities Corp. (APUC) that will allow an APUC subsidiary, through its acquisition of the stock of Plaza Massachusetts, to acquire the Company's rights to purchase the assets of NEG, subject to certain approvals and conditions. In order to close the NEG transaction, approval by the Massachusetts Department of Public Utilities (MDPU) of the acquisition of the assets of NEG by the APUC subsidiary must be received.

The sale of NEG to APUC is still pending before the MDPU. The acquisition agreement contains certain termination rights for both the Company and SUG, including, among others, the right to terminate if the transaction is not completed by October 14, 2013 (subject to up to four 30-day extensions under certain circumstances related to obtaining required regulatory approvals). The Company and SUG agreed to extend the NEG purchase agreement until December 14, 2013 to enable the MDPU to complete its review process. Nonetheless, there can be no assurance that APUC will be able to satisfy all of the required conditions on or before the end of the extension periods. The Company's agreement to acquire NEG remains in effect if APUC cannot satisfy the conditions for closing before the expiration of the extension periods.

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The pending transaction with APUC and SUG for the NEG assets subjects Laclede Group to a number of additional risks, including the following:

the Company’s estimate of the costs to complete the sale of NEG may vary significantly from actual results;

both before and after the sale of NEG to APUC, the attention of management may be diverted to the closing of the sale of NEG rather than to current operations, the integration of MGE or the pursuit of other opportunities that could be beneficial to the Company;

the potential loss of key employees of the Company or of NEG who may be uncertain about their future roles if and when the NEG sale is completed; and

the trading price of Laclede Group’s common stock may decline to the extent that the current market price reflects a market assumption that the transaction will be completed.

The occurrence of any of these events individually or in combination could have a material adverse effect on the Company's business, financial condition or results of operations or the trading price of its common stock.

On August 13, 2013, the Utility issued debt in the aggregate principal amount of $450 million to provide permanent financing for the acquisition of MGE and, as a result, the Company is subject to risks related to a higher level of indebtedness.

In connection with the MGE acquisition, the Utility incurred additional debt to pay a portion of the acquisition cost and transaction expenses. The Utility's total indebtedness as of September 30, 2013 was $1,011 million (including $121 million of short-term borrowings and $890 million of long-term debt).

The Utility’s debt service obligations with respect to this increased indebtedness could have an adverse impact on its earnings and cash flows (which after the acquisition include the earnings and cash flows of MGE) for as long as the indebtedness is outstanding.

Among other risks, the increase in indebtedness may:

make it more difficult for Laclede Gas to pay or refinance its debts as they become due during adverse economic and industry conditions;

limit the Utility’s flexibility to pursue other strategic opportunities or react to changes in its business and the industry in which it operates and, consequently, place it at a competitive disadvantage to competitors with less debt;

require an increased portion of the cash flows from operations of the Utility to be used for debt service payments, thereby reducing the availability of its cash flow to fund working capital, capital expenditures, dividend payments and other general corporate purposes;

result in a downgrade in the credit rating of Laclede Group’s or the Utility's indebtedness, which could limit its ability to borrow additional funds or increase the interest rates applicable to its indebtedness;

result in higher interest expense in the event of an increase in market interest rates for both long-term debt and short-term commercial paper or bank loans at variable rates;

reduce the amount of credit available to support hedging activities; and

require that additional terms, conditions or covenants be placed on the Utility.

Based upon current levels of operations, the Utility expects to be able to generate sufficient cash through earnings on a consolidated basis or through refinancing to make all of the principal and interest payments when such payments are due under its existing credit agreements, indentures and other instruments governing its outstanding indebtedness; but there can be no assurance that the Utility will be able to repay or refinance such borrowings and obligations in future periods.

In addition, in order to maintain investment-grade credit ratings, the Utility may consider it appropriate to reduce the amount of indebtedness outstanding following the acquisitions.

This may be accomplished in several ways, including issuing additional shares of common stock or securities convertible into shares of common stock, reducing discretionary uses of cash or a combination of these and other measures. Issuances of additional shares of common stock or securities convertible into shares of common stock would have the effect of increasing the Utility’s dividend payment obligations and might reduce the reported earnings per share.

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The acquisition of MGE and associated costs and integration efforts may adversely affect the Company's business, financial condition or results of operations, which may negatively affect the market price of Laclede Group's common shares.

While management currently anticipates that the acquisition of MGE will be ~~significant, as part~~accretive to the Utility's net economic earnings in fiscal year 2014, and thereafter, this expectation is based on preliminary estimates which may materially change. Laclede Group may encounter additional transaction and integration-related costs, may fail to realize all of ~~a joint effort~~the anticipated synergies and benefits of the acquisitions or be subject to other factors that affect those preliminary estimates.

The process of integrating the operations of MGE could cause an interruption of, or loss of momentum in, the activities of one or more of those businesses and the possible loss of key personnel. Integration could take longer than anticipated and could result in inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements. The diversion of management's attention and any delays or difficulties encountered in connection with the ~~IASB~~transaction and the integration of the companies' operations could have an adverse effect on the business, results of operations, financial condition or prospects of the Utility after the acquisitions are ultimately consummated.

The Utility expects to ~~converge accounting standards. If approved, adoption~~incur costs associated with integrating the operations of the utilities, and management’s estimate of the costs and the operating performance after the transaction closes may vary significantly from actual results. In accordance with the Unanimous Stipulation and Agreement, the Utility may amortize and recover certain transition costs in future rate case proceedings subject to review of other parties’ and the Missouri Public Service Commission’s (MoPSC or Commission) approval of the Company’s quantification of such cost. Potential differences regarding these quantifications may impact the Company’s financial results. Additional unanticipated costs may be incurred in the integration of the businesses.

The acquisition of MGE may not achieve its intended results, including anticipated synergies and cost savings.

Although we expect that the acquisition of MGE will result in various benefits, including a significant amount of synergies, cost savings and other financial and operational benefits, there can be no assurance regarding when or the extent to which we will be able to realize these synergies, cost savings or other benefits. Achieving the anticipated benefits, including synergies and cost savings, is subject to a number of uncertainties, including whether the assets acquired can be operated in the manner we intend. Events outside of our control, including but not limited to regulatory changes or developments, could also adversely affect our ability to realize the anticipated benefits from the MGE acquisition. Thus the integration of MGE may be unpredictable, subject to delays or changed circumstances, and we can give no assurance that the acquired assets will perform in accordance with our expectations or that our expectations with respect to integration, synergies or cost savings as a result of the MGE acquisition will materialize. In addition, our anticipated costs to achieve the integration of MGE may differ significantly from our current estimates. The integration may place an additional burden on our management and internal resources, and the diversion of management’s attention during the integration process could have an adverse effect on our business, financial condition and expected operating results.

We are dependent on ETE and SUG for certain transitional services for MGE to be provided pursuant to a continuing services agreement. The failure of ETE or SUG to perform its obligations under this agreement could adversely affect our business, financial results and financial condition.

We are initially dependent upon ETE and SUG to continue to provide certain shared services and business support functions in areas such as technology and human resources for a period of time after the close of the acquisition to facilitate the integration of MGE. The terms of these ~~changes~~arrangements are governed by a continuing services agreement. If ETE or SUG fails to perform its obligations under the continuing services agreement, we may not be able to perform such services or obtain such services from third parties on favorable terms or at all. In addition, upon termination of the continuing services agreement, if we are unable to perform such services or obtain such services from third parties, it could adversely ~~impact Laclede Gas’~~affect our business, financial results and financial condition.

In connection with the MGE acquisition, the Utility recorded goodwill and long-lived assets that could become impaired and adversely affect its financial condition and results of operations.

13The Utility will assess goodwill for impairment annually or more frequently if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company assesses its long-lived assets for impairment whenever events or circumstances indicate that an asset’s carrying amount may not be recoverable. To the extent the value of goodwill or long-lived assets becomes impaired, the Company may be required to incur impairment charges that could have a material impact on its results of operations. No impairment of long-lived assets was recorded during 2013.

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Since interest rates are a key component, among other assumptions, in the models used to estimate the fair values of our reporting units, as interest rates rise, the calculated fair values decrease and future impairments may occur. Due to the subjectivity of the assumptions and estimates underlying the impairment analysis, the Utility cannot provide assurance that future analyses will not result in impairment. These assumptions and estimates include projected cash flows, current and future rates for contracted capacity, growth rates, weighted average cost of capital and market multiples. For additional information, see Item 7, “Critical Accounting Policies.”

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The principal ~~utility~~ properties of ~~Laclede Gas~~the Utility consist of more than ~~16,000~~30,000 miles of gas main and related service pipes, meters, and regulators. Other physical properties include regional ~~office buildings~~service centers and ~~a holder station.~~related buildings. Extensive underground natural gas and propane storage facilities and equipment are located in an area in North St. Louis County extending under the Missouri River into St. Charles County. Substantially all of ~~Laclede Gas’~~the Utility's utility plant is subject to the liens of its mortgage.

All of the ~~utility~~ properties of ~~Laclede Gas~~the Utility are held in fee, or by easement, or under lease agreements. The principal lease agreements include underground storage rights that are of indefinite duration, the downtown St. Louis office building and ~~the headquarters~~MGE's Kansas City, Missouri office building. The current lease on the ~~headquarters~~downtown St. Louis office building extends through February 2015 with the option to renew for ~~up to~~a term of five additional years. The current lease on MGE's Kansas City office lease extends through November 30, 2015 with the option to renew for four additional terms of five years each.

For further information on ~~Laclede Gas’~~the Utility's leases see Note 1213 of the Notes to Financial Statements.

Item 3. Legal Proceedings

For a description of environmental matters, see Note 1213, Commitments and Contingencies, of the Notes to Financial Statements. For a description of pending regulatory matters of ~~Laclede Gas,~~the Utility, see the Regulatory and Other Matters discussion in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, on page ~~27.~~28.

~~Laclede Gas~~The Utility is involved in litigation, claims, and investigations arising in the normal course of business. Management, after discussion with counsel, believes the final outcome will not have a material effect on the financial position or results of operations reflected in the financial statements presented herein.

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EXECUTIVE OFFICERS OF THE REGISTRANT – Listed below are executive officers of ~~Laclede Gas.~~the Utility. Their ages, at September 30, ~~2012,~~2013, and positions held at ~~Laclede Gas~~the Utility are listed below along with their business experience during the past five years. Many of the executives currently serve as directors or officers of The Laclede Group or its affiliates.



Name, Age, and Position with the Utility		Appointed (1)

S. Sitherwood, Age 5253

	Chairman of the Board and Chief Executive Officer	October 2012
	Chairman of the Board, President and Chief Executive Officer (2)	February 2012

~~M. D. Waltermire,~~S. L. Lindsey, Age 5447

	~~Executive Vice President~~	~~May 2012~~
	~~Senior Vice~~ President ~~and Chief Financial Officer~~(3)	October ~~2007~~2012

S. P. Rasche, Age 5253

	Chief Financial Officer	May 2012
	Vice President, – Finance ~~(3)~~(4)	November 2009

M. C. Kullman, Age 5253

	Senior Vice President, Assistant Corporate Secretary	October 2013
	Corporate Secretary	May 2012
	Chief Governance Officer and Corporate Secretary	February 2004


(1)	Officers of Laclede are normally reappointed at the Annual Meeting of the Board of Directors in January of each year.

(2)

Ms. Sitherwood served as President of Atlanta Gas Light Company, Chattanooga Gas Company, and Florida City Gas, all of which are subsidiaries of AGL Resources, Inc., from November 2004 to September 2011. During that time, she also served as Senior Vice President of Southern Operations for AGL Resources, Inc. From September 2011 to February 2012, Ms. Sitherwood served as President of The Laclede Group, Inc. and became its President and Chief Executive Officer effective February 1, 2012.


(3)	Mr. Lindsey served as Senior Vice President, Southern Operations of AGL Resources, Inc. and President of its Atlanta Gas Light, Chattanooga Gas and Florida City Gas subsidiaries since December 2011. He also served as Vice President and General Manager of Atlanta Gas Light and Chattanooga Gas from 2005 to 2011.


(4)	Mr. Rasche served as the Chief Financial Officer for TLCVision Corporation from 2004 to May 2009.

Mr. ~~Douglas H. Yaeger,~~M. D. Waltermire, the ~~Utility’s~~Utility's previous ~~Chairman of the Board,~~Executive Vice President, ~~and Chief Executive Officer,~~ retired ~~at the end of January 2012. Ms. Sitherwood succeeded Mr. Yaeger in these positions effective February 1, 2012.~~

~~Effective~~ October 1, 2012, Mr. Steven L. Lindsey was appointed President of Laclede Gas. Ms. Sitherwood relinquished the title of President of Laclede Gas on that same date. Mr. Lindsey, age 46, served as Senior Vice President, Southern Operations of AGL Resources, Inc. and President of its Atlanta Gas Light, Chattanooga Gas and Florida City Gas subsidiaries since December 2011. He also served as Vice President and General Manager of Atlanta Gas Light and Chattanooga Gas from 2005 to 2011.2013.

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Part II

Item 5.5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

~~Laclede Gas’~~The Utility common stock is owned by its parent, The Laclede Group, Inc., and is not traded on any stock exchange.

Dividends declared on the common stock for the two most recent fiscal years were:


	Fiscal 2012		Fiscal 2011		Fiscal 2013		Fiscal 2012
1st Quarter	$	795.11	$	775.60	$	747.77	$	795.11
2nd Quarter		794.13		775.74	748.56		794.13
3rd Quarter		793.56		775.77	1,080.54		793.56
4th Quarter		793.62		775.32	592.87		793.62

~~Laclede Gas’~~The Utility mortgage contains several restrictions on its ability to pay cash dividends on its common stock, as described in further detail in Note 34, Stockholder’s Equity, of the Notes to Financial Statements.

Laclede Group periodically purchases common stock of ~~Laclede Gas~~the Utility with the price set at the book value of ~~Laclede Gas~~the Utility common stock as of the most recently completed fiscal quarter. The details on sales of common stock of ~~Laclede Gas~~the Utility to Laclede Group during the past three fiscal years are set forth below:

	Aggregate
	Purchase Price		Number
Date of Sale	(millions)		of Shares	Aggregate Purchase Price (millions)		Number of Shares

FY 2010
December 15, 2009	$	0.3	10
February 8, 2010		0.4	10
May 7, 2010		0.4	10
August 11, 2010		0.4	10

FY 2011
December 13, 2010		0.4	10	$	0.4	10
February 8, 2011		0.4	10	0.4		10
May 12, 2011		0.3	9	0.3		9
August 9, 2011		0.5	14	0.5		14

FY 2012
December 13, 2011		0.4	11	$	0.4	11
February 8, 2012		0.7	18	0.7		18
May 14, 2012		0.9	22	0.9		22
August 14, 2012		0.7	18	0.7		18
September 12, 2012		40.0	1,018	40.0		1,018

FY 2013
December 13, 2012				$	0.8	21
March 13, 2013				0.9		22
May 10, 2013				0.2		5
August 8, 2013				0.4		9
August 30, 2013				430.0		10,581
September 30, 2013				45.0		1,107

The proceeds from ~~Laclede Gas’~~the Utility's sales of stock were used to reduce its short-term ~~borrowings.~~borrowings and, in the case of the sale of August 30, 2013, to provide funds for payment of a portion of the purchase price for MGE. Exemption from registration was claimed under Section 4(2) of the Securities Act of 1933.

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~~Item 6. Selected Financial Data~~

~~Laclede Gas Company~~

Fiscal Years Ended September 30
(Thousands) 2012 2011 2010 2009 2008
Summary of Operations
Operating Revenues:
Utility $ 764,651 $ 913,190 $ 864,297 $ 1,053,993 $ 1,128,287
Other 2,976 19,138 10,327 2,246 2,693
Total Operating Revenues 767,627 932,328 874,624 1,056,239 1,130,980

Operating Expenses:
Utility
Natural and propane gas 414,846 549,947 519,905 699,984 770,097
Other operation expenses 144,440 147,889 141,995 146,542 144,611
Maintenance 22,911 25,049 27,244 27,818 25,827
Depreciation and amortization 40,739 39,214 37,572 36,751 35,303
Taxes, other than income taxes 53,672 60,752 61,407 68,639 69,023
Total Utility Operating Expenses 676,608 822,851 788,123 979,734 1,044,861
Other 209 7,985 4,343 2,238 2,641
Total Operating Expenses 676,817 830,836 792,466 981,972 1,047,502
Operating Income 90,810 101,492 82,158 74,267 83,478
Allowance for Funds Used During Construction 6 (98 ) (112 ) (152 ) (72 )
Other Income and (Income Deductions) – Net 2,699 923 2,681 3,280 1,278
Interest Charges:
Interest on long-term debt 22,958 23,161 24,583 24,583 19,851
Other interest charges 2,198 2,383 2,269 5,770 10,363
Total Interest Charges 25,156 25,544 26,852 30,353 30,214
Income Before Income Taxes 68,359 76,773 57,875 47,042 54,470
Income Tax Expense 18,460 22,996 18,150 13,859 15,264
Net Income 49,899 53,777 39,725 33,183 39,206
Dividends on Redeemable Preferred Stock — — — 15 35
Earnings Applicable to Common Stock $ 49,899 $ 53,777 $ 39,725 $ 33,168 $ 39,171

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Item 6. Selected Financial Data ~~(continued)~~

~~Laclede Gas Company~~The Utility

Fiscal Years Ended September 30
(Thousands) 2012 2011 2010 2009 2008

Dividends Declared –
Common Stock $ 37,345 $ 36,297 $ 35,195 $ 34,108 $ 32,811

Utility Plant
Gross Plant – End of Period $ 1,497,419 $ 1,386,590 $ 1,326,284 $ 1,280,238 $ 1,229,174
Net Plant – End of Period 1,019,299 928,683 884,084 855,929 823,197
Capital Expenditures 106,734 67,304 56,234 51,384 55,304
Property Retirements 10,055 14,800 10,946 9,732 15,629
Total Assets – End of Period $ 1,760,152 $ 1,643,046 $ 1,658,452 $ 1,600,287 $ 1,625,815

Capitalization – End of Period
Common Stock and Paid-In Capital $ 257,415 $ 212,970 $ 208,154 $ 203,754 $ 157,883
Retained Earnings 236,014 223,460 205,980 201,450 202,535
Accumulated Other Comprehensive Loss (2,101 ) (2,473 ) (2,875 ) (2,619 ) (1,790 )
Common Stock Equity 491,328 433,957 411,259 402,585 358,628
Redeemable Preferred Stock — — — — 467
Long-Term Debt 339,416 364,357 364,298 389,240 389,181
Total Capitalization $ 830,744 $ 798,314 $ 775,557 $ 791,825 $ 748,276



	Fiscal Years Ended September 30
(Thousands)	2013			2012			2011			2010			2009
Income statement data
Operating Revenues:
Utility	$	857,762		$	764,651		$	913,190		$	864,297		$	1,053,993
Other	1,603			2,976			19,138			10,327			2,246
Total Operating Revenues	859,365			767,627			932,328			874,624			1,056,239
Operating Expenses:
Utility
Natural and propane gas	469,098			414,846			549,947			519,905			699,984
Other operation and maintenance expenses	180,703			167,351			172,938			169,239			174,360
Depreciation and amortization	48,283			40,739			39,214			37,572			36,751
Taxes, other than income taxes	60,079			53,672			60,752			61,407			68,639
Total Utility Operating Expenses	758,163			676,608			822,851			788,123			979,734
Other	13,658			209			7,985			4,343			2,238
Total Operating Expenses	771,821			676,817			830,836			792,466			981,972
Operating Income	87,544			90,810			101,492			82,158			74,267
Other Income and (Income Deductions) – Net	2,009			2,705			825			2,569			3,128
Interest Charges	26,137			25,156			25,544			26,852			30,353
Income Before Income Taxes	63,416			68,359			76,773			57,875			47,042
Income Tax Expense	14,651			18,460			22,996			18,150			13,859
Income Before Income Taxes and Dividends on Redeemable Preferred Stock	48,765			49,899			53,777			39,725			33,183
Dividends on Redeemable Preferred Stock	—			—			—			—			15
Net Income	$	48,765		$	49,899		$	53,777		$	39,725		$	33,168
Common stock data
Dividends Declared – Common Stock	$	46,976		$	37,345		$	36,297		$	35,195		$	34,108
Statements of financial position data
Net Utility Plant	1,776,630			1,019,299			928,683			884,084			855,929
Other Property and Investments	54,016			46,358			46,950			45,864			40,549
Total Assets	2,981,016			1,760,152			1,643,046			1,658,452			1,600,287
Current Liabilities	326,900			242,791			231,462			276,226			251,913
Deferred Credits and Other Liabilities	792,474			686,617			613,270			606,669			556,549
Long-Term Debt (less current portion)	887,712			339,416			364,357			364,298			389,240
Cash flow data
Net cash provided by operating activities	125,486			118,967			156,975			92,580			216,442
Net cash used in investing activities	(1,104,824		)	(103,127		)	(66,562		)	(59,769		)	(51,645		)
Net cash provided by (used in) financing activities	1,000,852			(14,361		)	(90,499		)	(33,204		)	(166,558		)
Consolidated Net Economic Earnings Data (a)
Net Income (GAAP)	$	48,765		$	49,899		$	53,777		$	39,725		$	33,183
Unrealized loss (gain) on energy-related derivative contracts, net of tax	100			(110		)	26			91			(105		)
Acquisition, divestiture and restructuring activities	8,344			—			—			—			—
Net Economic Earnings (Non-GAAP)	$	57,209		$	49,789		$	53,803		$	39,816		$	33,078


(a)	This section contains the non-GAAP financial measures of net economic earnings and net economic earnings per share. Refer to the Earnings section of Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 22 for a discussion regarding the use of non-GAAP measures.

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ITEM 7.7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~LACLEDE GAS COMPANY~~The Utility

INTRODUCTION

This ~~management’s discussion~~section analyzes the financial condition and results of operations of ~~Laclede Gas Company (Laclede Gas or~~ the ~~Utility).~~Utility. It includes management’s view of factors that affect its business, explanations of past financial results including changes in earnings and costs from the prior year periods, and their effects on the Utility’s overall financial condition and liquidity.

The Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Utility’s financial statements and the notes thereto.

RESULTS OF OPERATIONS

Overview

~~Laclede Gas~~The Utility is a wholly owned subsidiary of The Laclede Group, Inc. (Laclede Group). ~~Laclede Gas~~The Utility is regulated by the Missouri Public Service Commission (MoPSC or Commission) and serves the City of St. Louis and ~~parts of ten counties in~~ eastern ~~Missouri.~~Missouri through Laclede Gas and Kansas City and western Missouri through Missouri Gas Energy (MGE). The Utility delivers natural gas to retail customers at rates and in accordance with tariffs authorized by the MoPSC. The Utility’s earnings are primarily generated by the sale of heating energy. The Utility’s weather mitigation rate design ~~lessens~~and MGE's straight fixed variable rate design lessen the impact of weather volatility on ~~Laclede Gas’~~its customers during cold winters and stabilizes the Utility’s earnings by recovering fixed costs more evenly during the heating season. Due to the seasonal nature of the business of the Utility, Laclede ~~Gas,~~Group’s earnings are typically concentrated in the November through April period, which generally corresponds with the heating season.

Ms. Suzanne Sitherwood became Laclede Gas’ Chairman, President, and Chief Executive Officer (CEO) effective February 1, 2012, succeeding Mr. Douglas H. Yaeger, who retired on that same date. Ms. Sitherwood also serves as President and CEO of The Laclede Group, Inc.

On April 26, 2012, Steven P. Rasche was appointed Chief Financial Officer and principal accounting officer of Laclede Gas effective May 1, 2012. On April 27, 2012, Laclede Group announced a new organizational structure that will position it to grow through execution of four strategic imperatives: 1) develop and invest in emerging technologies, 2) invest in infrastructure, 3) pursue growth through the acquisition of businesses to which the Laclede Group can apply its operating model, and 4) leverage current business unit competencies to enhance growth. Laclede Group’s Board of Directors approved the following appointments and promotions effective May 1, 2012. Some of these executives also currently serve as directors or officers of Laclede Gas.

•	Mark D. Waltermire was promoted to Executive Vice President, Chief Financial Officer. In this role, Mr. Waltermire oversees strategic planning and corporate development, information technology services, finance and accounting, supply chain functions and Laclede Energy Resources, Inc. (LER), an affiliate of Laclede Gas.

•	Michael R. Spotanski was appointed to the newly created position of Senior Vice President, Chief Integration and Innovation Officer. In his new role, Mr. Spotanski will lead Laclede Group’s efforts to integrate regulated natural gas distribution utilities and other businesses that it acquires as part of its growth strategy, as well as its efforts to develop and invest in emerging technologies. Previously, Mr. Spotanski was Senior Vice President, Operations and Marketing of Laclede Gas.

•	Mark C. Darrell was appointed to the position of Senior Vice President, General Counsel and Chief Compliance Officer. In this role, Mr. Darrell supervises Laclede Group’s corporate legal functions, including mergers and acquisition support, litigation, regulatory affairs, contracts and environmental matters. He is also responsible for the Laclede Group’s corporate compliance.

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•	Mary C. Kullman was promoted to Senior Vice President, Chief Administrative Officer and Corporate Secretary. In her new role, Ms. Kullman’s responsibilities include overseeing corporate communications, the development and implementation of standards for shared services, enterprise risk management and internal audit. She retains her previous role as corporate secretary and responsibility for corporate governance, securities and ethics.

•	Steven P. Rasche was promoted to Senior Vice President, Finance and Accounting and serves as principal accounting officer for Laclede Group. Mr. Rasche’s responsibilities include accounting, financial reporting and analysis, treasury, tax and investor relations. Mr. Rasche reports to Mr. Waltermire.

•	Richard A. Skau was appointed to Senior Vice President, Chief Human Resources Officer. In this role, Mr. Skau supervises Laclede Group’s efforts to attract, retain, develop and train employees to prepare them to execute on corporate strategy. His responsibilities also include employee relations, payroll, benefits, and diversity and inclusion.

~~Effective October 1, 2012, Mr. Steven L. Lindsey was appointed President of Laclede Gas. Ms. Suzanne Sitherwood, relinquished this title on that same date.~~

Based on the nature of the business of the Utility, as well as current economic conditions, management focuses on the following key variables in evaluating the financial condition and results of operations and managing the business:

•	~~the Utility’s ability to recover the costs of purchasing and distributing natural gas from its customers;~~
•	~~the impact of weather and other factors, such as customer conservation, on revenues and expenses;~~
•	~~changes in the regulatory environment at the federal, state, and local levels, as well as decisions by regulators, that impact the Utility’s ability to earn its authorized rate of return;~~
•	~~the Utility’s ability to access credit markets and maintain working capital sufficient to meet operating requirements; and,~~
•	~~the effect of natural gas price volatility on the business.~~

the Utility’s ability to recover the costs of purchasing and distributing natural gas from its customers;

the impact of weather and other factors, such as customer conservation, on revenues and expenses;

changes in the regulatory environment at the federal, state, and local levels, as well as decisions by regulators, that impact the Utility’s ability to earn its authorized rate of return in all service territories it serves;

the Utility’s ability to access credit markets and maintain working capital sufficient to meet operating requirements; and,

the effect of natural gas price volatility on the business; and,

the ability to integrate the operations of all acquisitions.

Further information regarding how management seeks to manage these key variables is discussed below.

~~Laclede Gas continues to provide~~The Utility provides reliable natural gas service at a reasonable cost, while maintaining and building a secure and dependable infrastructure. The Utility’s strategy focuses on improving both performance and ~~mitigating the impact of weather fluctuations on Laclede Gas’ customers while improving~~ the ability to recover its authorized distribution costs and rate of return. The Utility’s distribution costs are the essential, primarily fixed, expenditures it must incur to operate and maintain more than ~~16,000~~30,000 miles of mains and services comprising its natural gas distribution system and related storage facilities. The Utility’s distribution costs include wages and employee benefit costs, depreciation and maintenance expenses, and other ~~regulated~~ utility operating expenses, excluding natural and propane gas expense. Distribution costs are considered in the ratemaking process, and recovery of these types of costs is included in revenues generated through the Utility’s tariff rates, as approved by the MoPSC. The settlement of the Utility’s rate case in ~~2010~~July 2013 retained the Utility’s weather mitigation rate design that better ensures the recovery of its fixed costs and margins despite variations in sales volumes due to the impacts of weather and other factors that affect customer usage.

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The Utility’s income from off-system sales and capacity release remains subject to fluctuations in market conditions. The Utility is allowed to retain ~~15% to 25% of~~ the ~~first $6 million in~~following annual income ~~earned (depending on the level of income earned) and 30% of income exceeding $6 million annually.~~ (shown by legacy company):



Laclede Gas
Pre-tax Income	Customer Share	Company Share
First $2 million	100%	—%
Next $2 million	80%	20%
Next $2 million	75%	25%
Amounts exceeding $6 million	70%	30%

MGE
Pre-tax Income	Customer Share	Company Share
First $1.2 million	85%	15%
Next $1.2 million	80%	20%
Next $1.2 million	75%	25%
Amounts exceeding $3.6 million	70%	30%

Some of the factors impacting the level of off-system sales include the availability and cost of the Utility’s natural gas supply, the weather in its service area, and the weather in other markets. When ~~Laclede Gas’~~the Utility’s service area experiences warmer-than-normal weather while other markets experience colder weather or supply constraints, some of the Utility’s natural gas supply is available for off-system ~~sales and there may be a demand for such supply in other markets.~~sales. See the Regulatory and Other Matters section on page 2728 of this report for additional information on ~~regulatory issues.~~Laclede Gas' off-system sales.

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~~Laclede Gas~~he Utility works actively to reduce the impact of wholesale natural gas price volatility on its costs by strategically structuring its natural gas supply portfolio to increase its gas supply availability and pricing alternatives and through the use of derivative instruments to protect its customers from significant changes in the commodity price of natural gas. Nevertheless, the overall cost of purchased gas remains subject to fluctuations in market conditions. The Utility’s Purchased Gas Adjustment (PGA) Clause allows ~~Laclede Gas~~the Utility to flow through to customers, subject to prudence review by the MoPSC, the cost of purchased gas supplies, including costs, cost reductions, and related carrying costs associated with the use of derivative instruments to hedge the purchase price of natural gas, as well as gas inventory carrying costs. The Utility believes it will continue to be able to obtain sufficient gas supply. The price of natural gas supplies and other economic conditions may affect sales volumes, due to the conservation efforts of customers, and cash flows associated with the timing of collection of gas costs and related accounts receivable from customers.

The Utility relies on both short-term credit and long-term capital markets, as well as cash flows from operations, to satisfy its seasonal cash requirements and fund its cost of capital expenditures. ~~Laclede Gas’~~The Utility's ability to issue commercial paper supported by lines of credit, to issue long-term bonds, or to obtain new lines of credit is dependent on current conditions in the credit and capital markets. Management focuses on maintaining a strong balance sheet and believes it currently has adequate access to credit and capital markets and will have sufficient capital resources to meet its foreseeable obligations. See the Liquidity and Capital Resources section on page 2930 for additional information.

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EARNINGS

~~2012~~2013 vs. ~~2011~~2012

~~Laclede Gas’ earnings applicable to common stock~~The Utility's net income decreased by $1.1 million for the fiscal year ~~2012 were $49.9 million, a decrease of $3.9 million,~~ended September 30, 2013, compared with ~~fiscal year 2011.~~2012. The decrease in net income was primarily due to ~~the following factors, quantified on~~(on a pre-tax ~~basis:~~

	•	~~the effect of income from an April 2011 non-regulated sale of propane inventory no longer required to serve utility customers, totaling $10.0 million;~~
	•	lower system gas sales margins and other variations, totaling $7.8 million, primarily due to the effect of weather in the Utility’s service area during the fiscal year ended September 30, 2012, which was the warmest based on records dating back more than 100 years;
	•	~~increases in pension and group insurance expenses totaling $5.5 million; and~~
	•	~~increases in charitable contributions totaling $1.9 million.~~

basis) higher depreciation and amortization costs totaling $7.5 million and higher other operation and maintenance expenses totaling $13.4 million. These factors were partially offset ~~by:~~by higher Gas Utility operating margin (a non-GAAP measure, as discussed below) of $34.1 million and a reduction in other interest charges totaling $0.9 million.

	•	~~decreases in operation and maintenance expenses, excluding pension and group insurance expenses, totaling $11.1 million;~~
	•	~~higher Infrastructure System Replacement Surcharge (ISRS) revenues totaling $4.6 million; and~~
	•	~~higher net investment gains and other variations totaling $3.3 million.~~

Operating Revenues and Operating Expenses

~~2011 vs. 2010~~

~~Laclede Gas’ earnings applicable~~In addition to ~~common stock for fiscal year 2011 were $53.8 million, an increase~~operating revenues and operating expenses, management also uses the non-GAAP measure of ~~$14.1 million, compared with fiscal year 2010.~~operating margin when evaluating result of operations, as shown in the table below. The ~~increase in net income was primarily due to the following factors, quantified on a pre-tax basis:~~

	•	~~the benefit of the general rate increase, effective September 1, 2010, totaling $28.0 million;~~
	•	~~higher income from the non-regulated sale of propane inventory, totaling $4.0 million; and,~~
	•	~~decreases in operation and maintenance expenses, excluding pension and group insurance expenses, totaling $3.8 million.~~

~~These factors were partially offset by:~~

	•	~~increases in pension and group insurance expenses, totaling $7.5 million;~~
	•	~~lower ISRS revenues, totaling $6.2 million; and,~~
	•	~~lower system gas sales volumes and other variations, totaling $1.4 million.~~

~~Table of Contents~~

Utility ~~Operating Revenues~~

~~Laclede Gas~~ passes on ~~to Utility customers~~ (subject to prudence review by the MoPSC) increases and decreases in the wholesale cost of natural gas in accordance with its PGA ~~Clause.~~Clause to their customers. The volatility of the wholesale natural gas market results in fluctuations from period to period in the recorded levels of, among other items, revenues and natural gas cost expense. Nevertheless, increases and decreases in the cost of gas associated with system gas sales volumes have no direct effect on ~~net~~operating income. Reconciliations of operating margin to the most directly comparable GAAP measure are shown below:



(Millions)		Gas Utility		Other			Total
Year Ended September 30, 2013
	Operating Revenues	$	857.8	$	1.6		$	859.4
	Natural and propane gas expense	469.1		—			469.1
	Gross receipts tax expense	40.2		—			40.2
	Operating margin (non-GAAP)	348.5		1.6			350.1
	Remaining operating expenses	248.9		13.7			262.6
	Operating income (GAAP)	$	99.6	$	(12.1	)	$	87.5

Year Ended September 30, 2012
	Operating revenues	$	764.7	$	2.9		$	767.6
	Natural and propane gas expense	414.8		—			414.8
	Gross receipts tax expense	35.5		—			35.5
	Operating margin (non-GAAP)	314.4		2.9			317.3
	Remaining operating expenses	226.3		0.2			226.5
	Operating income (GAAP)	$	88.1	$	2.7		$	90.8

Year Ended September 30, 2011
	Operating revenues	$	913.2	$	19.1		$	932.3
	Natural and propane gas expense	549.9		—			549.9
	Gross receipts tax expense	42.9		—			42.9
	Operating margin (non-GAAP)	320.4		19.1			339.5
	Remaining operating expenses	230.1		8.0			238.1
	Operating income (GAAP)	$	90.3	$	11.1		$	101.4

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Gas Utility

Operating Revenues - Gas Utility Operating Revenues for fiscal year 2013 increased $93.1 million, compared to fiscal year 2012, was primarily attributable to the following factors:



(Millions)
Higher system sales volumes and other variations	$	101.3
Lower wholesale gas costs passed on to Utility customers	(30.6		)
Lower off-system sales volumes	(24.0		)
Higher prices charged for off-system sales	19.9
New customer revenue from MGE acquisition	22.0
Higher ISRS revenues	4.5
Total Variation	$	93.1

Temperatures experienced in the Utility’s service area during 2013 were 35.8% colder than the same period last year, which were the warmest on record. Total system therms sold and transported to the Utility’s customers within its service territory were 884.7 million for fiscal year 2013 compared with 718.0 million for fiscal year 2012. Total off-system therms sold and transported outside of the Utility’s service area were 229.4 million for fiscal year 2013 compared with 314.5 million for fiscal year 2012.

Operating Margin - Gas Utility operating margin was $348.5 million for fiscal year 2013, a $34.1 million increase over the same period last year. Of the $34.1 million increase, $15.2 million is attributed to the acquisition of MGE. The remaining increase is primarily due to increased sales margins reflecting colder weather this year totaling $13.3 million, higher Infrastructure System Replacement Surcharge (ISRS) revenues totaling $4.5 million, and other minor variations of $1.1 million.

Operating Expenses - Remaining operating expenses in fiscal year 2013 increased $22.6 million from fiscal year 2012. Other operation and maintenance expenses increased $4.0 million primarily due to increased compensation and benefits, maintenance, IT and professional fees, partially offset by a lower provision for uncollectible accounts and a decrease in customer accounts expenses. Depreciation and amortization expense increased $5.0 million primarily due to additional depreciable property. Taxes, other than income and gross receipts tax, increased $1.0 million primarily due to higher payroll taxes related to aforementioned employee expenses. The remaining increase is attributed to the acquisition of MGE.

Other

Other operating revenues and ~~net income.~~operating margin in fiscal year 2013 decreased $1.3 million from fiscal year 2012. Beginning July 2013, propane activities are now recorded within the regulated Gas Utility pursuant to the recent rate case filing. Other operating expenses increased $13.5 million primarily due to acquisition-related expenses for MGE.

Other Income and (Income Deductions) - Net

Other Income and (Income Deductions) - Net decreased by $0.7 million primarily due to lower net investment gains, increased charitable donations, and other minor variations.

Interest Charges

Interest charges during fiscal year 2013 increased $1.0 million from the same period last year primarily due to the issuance of long-term debt, partially offset by lower interest rates on long-term debt outstanding. The higher interest on long-term debt reflects the net effect of the March 2013, and August 2013 issuances of additional long-term debt of $100 million and $450 million, respectively, and the October 2012 maturity of $25 million of 6 1/2% first mortgage bonds. Average short-term interest rates were 0.3% for both fiscal years 2013 and 2012. Average short-term borrowings were $63.4 million and $122.0 million for fiscal years 2013 and 2012, respectively.

Income Taxes

Income tax expenses decreased $3.8 million in fiscal year 2013 from fiscal year 2012 primarily due to lower pre-tax income and various property-related deductions.

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2012 vs. 2011

Utility

The Utility's net income decreased by $3.9 million in fiscal year 2012 compared with fiscal year 2011. The decrease in net income was primarily due to (on a pre-tax basis) the effect of income from an April 2011 non-regulated sale of propane inventory totaling $10.0 million, lower system gas sales margins and other variations totaling $7.8 million, increases in pension and group insurance expenses totaling $5.5 million, and increases in charitable contributions totaling $1.9 million. These factors were partially offset by decreases in operation and maintenance expenses, excluding pension and group insurance expenses, totaling $11.1 million, higher Infrastructure System Replacement Surcharge (ISRS) revenues totaling $4.6 million, and higher net investment gains and other variations totaling $3.3 million.

Operating Revenues and Operating Expenses

Utility

Operating Revenues - Utility Operating Revenues for fiscal year 2012 decreased $148.5 million, compared to fiscal year ~~2011.~~ 2011, primarily attributable to the following factors:



(Millions)
Lower system sales volumes and other variations	$	(114.5	)
Lower prices charged for off-system sales	(44.6		)
Higher off-system sales volumes	38.8
Lower wholesale gas costs passed on to Utility customers	(32.8		)
Higher ISRS revenues	4.6
Total Variation	$	(148.5	)

Temperatures experienced in the Utility’s service area during 2012, which were the warmest on record, were 27.9% warmer than ~~the same period last year.~~in 2011. Total system therms sold and transported to the Utility’s customers within its service territory were 718.0 million for fiscal year 2012 compared with 885.4 million for fiscal year 2011. Total off-system therms sold and transported outside of the Utility’s service area were 314.5 million for fiscal year 2012 compared with 223.0 million for fiscal year 2011. ~~The decrease in Utility Operating Revenues was primarily attributable to the following factors:~~

(Millions)
Lower system sales volumes and other variations $ (114.5 )
Lower prices charged for off-system sales (44.6 )
Higher off-system sales volumes (reflecting more favorable market conditions as described in greater
detail in the Results of Operations - Overview)
38.8
Lower wholesale gas costs passed on to Utility customers (32.8 )
Higher ISRS revenues 4.6
Total Variation $ (148.5 )

~~2011 vs. 2010~~

Operating Margin - Gas Utility ~~Operating Revenues~~operating margin was $314.4 million for fiscal year ~~2011 increased $48.9~~2012, a $6.0 million decrease over the same period last year. The decrease is primarily due to decreased sales margins reflecting warmer weather totaling $7.8 million in 2012 compared to fiscal year ~~2010. Temperatures experienced in~~2011 as 2012 was the Utility’s service area during 2011 were essentially normal, but 1.1% colder than fiscal year 2010. Total system therms sold and transported to the Utility’s customers within its service territory were 885.4 million for fiscal year 2011 compared with 894.5 million for fiscal year 2010. Total off-system therms sold and transported outsidewarmest on record, partially offset by increased ISRS revenues of the Utility’s service area were 223.0 million for fiscal year 2011 compared with 71.0 million for fiscal year 2010. The increase in Utility Operating Revenues was primarily attributable to the following factors:$4.6 million.

(Millions)
Higher off-system sales volumes (reflecting more favorable market conditions as described in greater
detail in the Results of Operations - Overview)
$ 67.9
General rate increase, effective September 1, 2010 28.0
Lower wholesale gas costs passed on to Utility customers (20.5 )
Lower system sales volumes and other variations (15.3 )
Lower ISRS revenues (6.2 )
Lower prices charged for off-system sales (5.0 )
Total Variation $ 48.9

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~~Utility~~ Operating Expenses

~~2012 vs. 2011~~

~~Utility Operating Expenses~~ - Remainingoperating expenses in fiscal year 2012 decreased ~~$146.2~~$3.8 million, ~~or 17.8%,~~ from fiscal year 2011. Natural and propane gas expense decreased $135.1 million from last year’s level, primarily attributable to decreased system volumes purchased for sendout, lower rates charged by our suppliers, and lower off-system gas expense. Other operation and maintenance expenses decreased $5.6 million, ~~or 3.2%,~~ primarily due to a higher rate of overheads capitalized, decreased maintenance charges, a lower provision for uncollectible accounts, and a decrease in customer accounts expenses. These factors were partially offset by higher pension and group insurance expenses. Depreciation and amortization expense increased $1.5 million, ~~or 3.9%,~~ primarily due to additional depreciable property. Taxes, other than income taxes ~~decreased $7.1 million, or 11.7%, primarily due to decreased~~and gross receipts ~~taxes, attributable to decreased system sales revenues.~~

~~2011 vs. 2010~~

~~Utility Operating Expenses in fiscal year 2011~~tax, increased ~~$34.7~~$0.3 million, or 4.4%, from fiscal year 2010. Natural and propane gas expense increased $30.0 million from fiscal year 2010, primarily attributable to higher off-system gas expense, partially offset by lower rates charged by our suppliers and decreased system volumes purchased for sendout. Other operation and maintenance expenses increased $3.7 million, or 2.2%, primarily due to higher pension expense and increased group insurance charges, partially offset by a higher rate of overheads capitalized and decreased maintenance charges. Depreciation and amortization expense increased $1.6 million, or 4.4%, primarily due to additional depreciable property. Taxes, other than income taxes, decreased $0.7 million, or 1.1%, primarily due to decreased gross receipts taxes, attributable to decreased system sales revenues.payroll taxes.

Other

Other Operating Revenues and Operating Expenses

Other Operating Revenues decreased $16.2 million in fiscal year 2012 (compared to fiscal year 2011) ~~and increased $8.8 million in fiscal year 2011 (compared to fiscal year 2010)~~. Other Operating Expenses decreased $7.8 million in fiscal year 2012 (compared to fiscal year 2011) ~~and increased $3.6 million in fiscal year 2011 (compared to fiscal year 2010)~~. These year-to-year variations were primarily attributable to non-regulated sales of propane inventory in fiscal ~~years 2011 and 2010.~~year 2011. These transactions resulted in pre-tax income of $10.0 million in fiscal year ~~2011 and $6.0 million in fiscal year 2010.~~2011. This type of transaction did not recur in fiscal year 2012.

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~~Table of Contents~~

~~Laclede Gas has on file with~~On August 13, 2013, the ~~SEC an effective shelf registration on Form S-3 for issuance of $350~~Utility issued $450 million of first mortgage ~~bonds, unsecured debt,~~bonds. Of this, $100 million was issued at 2.00% maturing in August 2018, $250 million was issued at 3.40% maturing in August 2023, and ~~preferred~~$100 million was issued at 4.625% maturing in August 2043. The proceeds were used to fund a portion of the MGE acquisition.

On August 30, 2013, the Utility issued 10,581 shares of common stock ~~which expires May 28, 2013. The entire amount of this shelf registration remains available~~ to Laclede ~~Gas at this time.~~Group for $430 million, and on September 30, 2013, the Utility issued an additional 1,107 shares for $45 million, with the proceeds used to fund a portion of the MGE acquisition. Both the $450 million in bonds and the $475 million in equity were issued under financing authority from the MoPSC in the case giving authority to complete the acquisition of MGE.

The Utility has MoPSC authority to issue debt securities and preferred stock, including on a private placement basis, as well as to issue common stock, receive paid-in capital, and enter into capital lease agreements, all for a total of up to $518 million. This authorization was originally effective through June 30, 2013. In August 2012, ~~Laclede Gas~~the Utility filed a request with the MoPSC to extend this authority for an additional two years, to June 30, 2015. ~~This extension was approved October 24, 2012, to be effective on November 23, 2012.~~ During the year ended September 30, ~~2012,~~2013, pursuant to this authority, the Utility sold ~~1,087~~11,745 shares of its common stock to Laclede Group for ~~$42.7~~$476.5 million. For more information on these sales of stock, see Part II., Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. As of November ~~19, 2012, $473.1~~26, 2013, $370.8 million remains available under this authorization. ~~After the settlement~~

Table of the $100 million in bonds in March 2013, $373.1 million in authorization will remain, assuming no other uses in the interim. The amount, timing, and type of additional financing to be issued will depend on cash requirements and market conditions, as well as future MoPSC authorizations.Contents

At September 30, ~~2012, Laclede Gas~~2013, the Utility had fixed-rate long-term debt totaling ~~$365~~$890 million (including current maturities). On October 15, 2012, ~~Laclede Gas~~the Utility paid at maturity $25 million principal amount of 6 1/2% first mortgage bonds. While the remaining long-term debt issues are fixed-rate, they are subject to changes in their fair value as market interest rates change.

However, increases or decreases in fair value would impact earnings and cash flows only if ~~Laclede Gas~~the Utility were to reacquire any of these issues in the open market prior to maturity. Under GAAP applicable to ~~Laclede Gas’~~the Utility's regulated operations, losses or gains on early redemptions of long-term debt would typically be deferred as regulatory assets or regulatory liabilities and amortized over a future period. Of the Utility’s ~~$365~~$890 million in long-term debt, $50 million have no call option, ~~$235~~$410 million have make-whole call options, $350 million are callable at par three to six months prior to maturity, and $80 million are callable at par beginning in October 2013. None of the debt has any put options.

Shelf Registration Statement

On August 6, 2013, Laclede Gas and Laclede Group filed with the SEC a joint shelf registration statement on Form S-3 ASR for issuance of debt and equity securities, which expires August 5, 2016. The amount, timing, and type of additional financing to be issued under this shelf registration statement will depend on cash requirements and market conditions. Laclede Gas' $450 million issuance of bonds on August 13, 2013 was under this registration statement.

Other

The Utility’s access to capital markets, including the commercial paper market, and its financing costs, may depend on its credit rating. The credit ratings of the Utility remain at investment grade, but are subject to review and change by the rating agencies.

Utility capital expenditures were ~~$106.7~~$128.5 million for fiscal ~~2012,~~2013, compared with ~~$67.3~~$106.7 million and ~~$56.2~~$67.3 million for fiscal years 2012 and 2011, ~~and 2010,~~ respectively. ~~Utility capital expenditures are expected to be approximately $113 million in fiscal year 2013.~~ The increases in capital expenditures, compared with prior periods, are primarily attributable to additional expenditures for distribution plant and information technology investments. ~~During~~Utility capital expenditures are expected to be approximately $175 million in fiscal 2011, Laclede Gas began a multi-year project to enhance its technology, customer service, and business processes by replacing its existing customer relationship and work management, financial, and supply chain software applications.year 2014.

Capitalization at September 30, ~~2012,~~2013, consisted of 52.3% common stock equity and 47.7% long-term debt compared to 59.1% common stock equity and 40.9% long-term debt ~~compared to 54.4% common stock equity and 45.6% long-term debt~~ at September 30, ~~2011.~~2012.

~~Laclede Gas’~~The Utility's ratio of earnings to fixed charges was 3.3 for fiscal year 2013, 3.6 for fiscal year 2012, and 3.8 for fiscal year ~~2011, and 3.0 for fiscal year 2010.~~2011.

It is management’s view that ~~Laclede Gas~~the Utility has adequate access to capital markets and will have sufficient capital resources, both internal and external, to meet anticipated capital requirements, which primarily include capital expenditures, scheduled maturities of long-term debt, short-term seasonal needs, and dividends.

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CONTRACTUAL OBLIGATIONS

As of September 30, ~~2012, Laclede Gas~~2013, the Utility had contractual obligations with payments due as summarized

below (in millions):

Payments due by period
Less than 1-3 3-5 More than
Contractual Obligations Total 1 Year Years Years 5 Years
Principal Payments on Long-Term Debt (a) $ 365.0 $ 25.0 $ — $ — $ 340.0
Interest Payments on Long-Term Debt (a) 438.2 22.1 42.7 42.7 330.7
Capital Leases (b) 0.2 0.1 0.1 — —
Operating Leases (b) 8.3 3.8 4.3 0.2 —
Purchase Obligations – Natural Gas (c) 298.5 225.5 58.8 13.6 0.6
Purchase Obligations – Other (d) 85.1 24.8 21.5 18.2 20.6
Total (e) $ 1,195.3 $ 301.3 $ 127.4 $ 74.7 $ 691.9



			Payments due by period
			Less than		1-3		3-5		More than
Contractual Obligations	Total		1 Year		Years		Years		5 Years
Principal Payments on Long-Term Debt	$	890.0	$	—	$	—	$	100.0	$	790.0
Interest Payments on Long-Term Debt	687.7		39.7		79.3		79.3		489.4
Capital Leases (a)	0.2		0.1		0.1		—		—
Operating Leases (a)	11.4		5.9		4.9		0.6		—
Purchase Obligations – Natural Gas (b)	792.9		388.5		197.3		143.3		63.8
Purchase Obligations – Other (c)	76.0		25.6		19.1		18.4		12.9
Other Long-Term Liabilities	159.2		15.2		30.9		31.5		81.6
Total (d)	$	2,617.4	$	475.0	$	331.6	$	373.1	$	1,437.7

~~(a)~~

The principal and interest payments on long-term debt included in the table above do not include obligations associated with Laclede Gas’ commitment to issue $100 million of first mortgage bonds in private placements scheduled for settlement in March 2013. Of this $100 million, $55 million will be issued at 3.00% for a 10-year term, and $45 million will be issued at 3.40% for a 15-year term. Refer to ~~Long-term Debt, Equity, and Shelf Registrations~~ ~~on page 29 for additional information.~~

~~(b)~~(a)

Lease obligations are primarily for office space, vehicles, and power operated equipment. Additional payments will be incurred if renewal options are exercised under the provisions of certain agreements.

~~(c)~~

(b)

These purchase obligations represent the minimum payments required under existing natural gas transportation and storage contracts and natural gas supply agreements. These amounts reflect fixed obligations as well as obligations to purchase natural gas at future market prices, calculated using September 30, ~~2012~~2013 NYMEX futures prices. ~~Laclede Gas~~The Utility recovers the costs related to its purchases, transportation, and storage of natural gas through the operation of its PGA Clause, subject to prudence review by the MoPSC; however, variations in the timing of collections of gas costs from customers affect short-term cash requirements. Additional contractual commitments are generally entered into prior to or during the heating season.

~~(d)~~
(c)	These purchase obligations primarily reflect miscellaneous agreements for the purchase of materials and the procurement of services necessary for normal operations.

~~(e)~~

(d)

~~The category of Other Long-Term Liabilities has been excluded from the table above because there are no material amounts of contractual obligations under this category.~~ Long-term liabilities associated with unrecognized tax benefits, totaling ~~$5.6~~$2.0 million, have been excluded from the table above because the timing of future cash outflows, if any, cannot be reasonably estimated. Also, commitments related to pension and postretirement benefit plans have been excluded from the table above. ~~Laclede Gas~~The Utility expects to make contributions to its qualified, trusteed pension plans totaling ~~$23.3~~$24.0 million in fiscal year ~~2013. Laclede Gas~~2014. The Utility anticipates a ~~$0.5~~$0.4 million contribution relative to its non-qualified pension plans during fiscal year ~~2013.~~2014. With regard to the postretirement benefits, the Utility anticipates it will contribute ~~$15.7~~$19.2 million to the qualified trusts and ~~$0.8~~$0.3 million directly to participants from ~~Laclede Gas’~~the Utility's funds during fiscal year ~~2013.~~2014. For further discussion of the Utility’s pension and postretirement benefit plans, refer to Note 23, Pension ~~Plans~~ and Other Postretirement Benefits, of the Notes to Financial Statements.

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MARKET RISK

Commodity Price Risk

~~Laclede Gas’~~The Utility's commodity price risk, which arises from market fluctuations in the price of natural gas, is primarily managed through the operation of ~~its~~Laclede Gas' and MGE's PGA ~~Clause.~~Clauses. The PGA ~~Clause allows Laclede Gas~~Clauses allow the Utility to flow through to customers, subject to prudence review by the MoPSC, the cost of purchased gas supplies. The Utility is allowed the flexibility to make up to three discretionary PGA changes during each year, in addition to its mandatory November PGA change, so long as such changes are separated by at least two months. The Utility is able to mitigate, to some extent, changes in commodity prices through the use of physical storage supplies and regional supply diversity. ~~Laclede Gas~~The Utility and MGE also ~~has a~~have risk management ~~policy~~policies that ~~allows~~allow for the purchase of natural gas derivative instruments with the goal of managing its price risk associated with purchasing natural gas on behalf of its customers. ~~This policy prohibits~~These policies prohibit speculation. Costs and cost reductions, including carrying costs, associated with the Utility’s use of natural gas derivative instruments are allowed to be passed on to the Utility’s customers through the operation of its PGA Clause. Accordingly, ~~Laclede Gas~~the Utility does not expect any adverse earnings impact as a result of the use of these derivative instruments. However, the timing of recovery for cash payments related to margin requirements may cause short-term cash requirements to vary. Nevertheless, carrying costs associated with such requirements, as well as other variations in the timing of collections of gas costs, are recovered through the PGA Clause. For more information about the Utility’s natural gas derivative instruments, see Note 89, Derivative Instruments and Hedging Activities, of the Notes to Financial Statements.

Interest Rate Risk

The Utility is subject to interest rate risk associated with its long-term and short-term debt issuances. Based on average short-term borrowings during fiscal year ~~2012,~~2013, an increase of 100 basis points in the underlying average interest rate for short-term debt would have caused an increase in interest expense of approximately ~~$1.2~~$0.6 million on an annual basis. Portions of such increases may be offset through the application of PGA carrying costs. At September 30, ~~2012, Laclede Gas~~2013, the Utility had fixed-rate long-term debt totaling ~~$365 million (including current maturities).~~$890 million. While these long-term debt issues are fixed-rate, they are subject to changes in fair value as market interest rates change. However, increases or decreases in fair value would impact earnings and cash flows only if ~~Laclede Gas~~the Utility were to reacquire any of these issues in the open market prior to maturity. Under GAAP applicable to ~~Laclede Gas’~~the Utility's regulated operations, losses or gains on early redemptions of long-term debt would typically be deferred as regulatory assets or regulatory liabilities and amortized over a future period.

ENVIRONMENTAL MATTERS

~~Laclede Gas~~The Utility owns and operates natural gas distribution, transmission, and storage facilities, the operations of which are subject to various environmental laws, regulations, and interpretations. While environmental issues resulting from such operations arise in the ordinary course of business, such issues have not materially affected ~~Laclede Gas’~~the Utility's financial position and results of operations. As environmental laws, regulations, and their interpretations change, however, ~~Laclede Gas~~the Utility may be required to incur additional costs. For information relative to environmental matters, see Note 1213, Commitments and Contingencies, of the Notes to Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS

~~Laclede Gas~~The Utility has no off-balance sheet arrangements.

Item 7A.7A. Quantitative and Qualitative Disclosures About Market Risk

For this discussion, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk, on page 3234 of this report.

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Item 8. Financial Statements and Supplementary Data
		~~2012~~2013 10-K Page

	Management Report on Internal Control Over Financial Reporting	3435
	Reports of Independent Registered Public Accounting Firm	~~35-36~~36

	Financial Statements:

	For Years Ended September 30, 2013, 2012, ~~2011,~~ and ~~2010:~~2011:
	Statements of Income	3738
	Statements of Comprehensive Income	3839
	Statements of Common Shareholder’s Equity	4243
	Statements of Cash Flows	4344
	As of September 30, ~~2012~~2013 and ~~2011:~~2012:
	Balance Sheets	~~39-40~~40
	Statements of Capitalization	4142
	Notes to Financial Statements:
	Note 1 Summary of Significant Accounting Policies	4445
	Note 2 MGE Acquisition	51
	Note 3 Pension Plans and Other Postretirement Benefits	4953
	Note 34 Stockholder’s Equity	5761
	Note 45 Long-Term Debt	5862
	Note 56 Notes Payable and Credit Agreements	5862
	Note 67 Fair Value of Financial Instruments	5963
	Note 78 Fair Value Measurements	6064
	Note 89 Derivative Instruments and Hedging Activities	6164
	Note 910 Income Taxes	6467
	Note 1011 Other Income and (Income Deductions) – Net	6568
	Note 1112 Information By Operating Segment	6668
	Note 1213 Commitments and Contingencies	6770
	Note 1314 Interim Financial Information (Unaudited)	6972

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Management Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal controls over financial reporting. ~~Laclede Gas’~~The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~Laclede Gas’~~The Company’s management, including our Chief Executive Officer and Chief Financial Officer, conducted an assessment of the effectiveness of ~~Laclede Gas’~~the Company’s internal control over financial reporting as of September 30, ~~2012.~~2013. In making this assessment, management used the criteria in Internal Control –- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As permitted, that assessment excluded the business operations of Missouri Gas Energy (MGE), which was completed on September 3, 2013, and whose financial statements constitute 53 percent and 38 percent of net and total assets, respectively, 3 percent of revenues, and 4 percent of net income, of the financial statement amounts as of and for the year ended September 30, 2013. Refer to Note 2, Acquisition of MGE in the Notes to Financial Statements for further discussion of the acquisition. Based on that assessment, management concluded that ~~Laclede Gas’~~the Company’s internal control over financial reporting was effective as of September 30, ~~2012.~~2013. Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on the ~~Laclede Gas’~~Company’s internal control over financial reporting, which is included herein.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Laclede Gas Company

St. Louis, Missouri

We have audited the internal control over financial reporting of Laclede Gas Company (a wholly owned subsidiary of The Laclede Group, Inc.) (the "Company") as of September 30, ~~2012,~~2013, based on criteria established in Internal Control —- Integrated ~~Framework~~Framework(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal controls over financial reporting at Missouri Gas Energy (“MGE”), which was acquired on September 3, 2013 and whose financial statements constitute 53 percent and 38 percent of net and total assets, respectively, three percent of total revenues, and four percent of net income of the consolidated financial statements as of and for the year ended September 30, 2013. Accordingly, our audit did not include the internal control over financial reporting at MGE. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting,, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting,, including the possibility of collusion or improper management override of controls,, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, ~~2012,~~2013, based on the criteria established in Internal Control —- Integrated ~~Framework~~Framework(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements and financial statement schedule as of and for the year ended September 30, ~~2012~~2013 of the Company and our report dated November ~~19, 2012~~26, 2013 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

St. Louis,, Missouri

November ~~19, 2012~~26, 2013

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Laclede Gas Company

St. Louis, Missouri

We have audited the accompanying balance sheets and statements of capitalization of Laclede Gas Company (a wholly owned subsidiary of The Laclede Group, Inc.) (the “Company”) as of September 30, ~~2012~~2013 and ~~2011,~~2012, and the related statements of income, comprehensive income, common shareholder’s equity, and cash flows for each of the three years in the period ended September 30, ~~2012.~~2013. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of Laclede Gas Company as of September 30, ~~2012~~2013 and ~~2011,~~2012, and the results of its operations and its cash flows for each of the three years in the period ended September 30, ~~2012,~~2013, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of September 30, ~~2012,~~2013, based on the criteria established in Internal ~~Control—Integrated~~Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November ~~19, 2012~~26, 2013 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

St. Louis, Missouri

November ~~19, 2012~~

26, 2013

Table of Contents



LACLEDE GAS COMPANY
STATEMENTS OF INCOME
(Thousands)
Years Ended September 30	2013		2012		2011
Operating Revenues:
Utility	$	857,762	$	764,651	$	913,190
Other	1,603		2,976		19,138
Total Operating Revenues	859,365		767,627		932,328
Operating Expenses:
Utility
Natural and propane gas	469,098		414,846		549,947
Other operation and maintenance expenses	180,703		167,351		172,938
Depreciation and amortization	48,283		40,739		39,214
Taxes, other than income taxes	60,079		53,672		60,752
Total Utility Operating Expenses	758,163		676,608		822,851
Other	13,658		209		7,985
Total Operating Expenses	771,821		676,817		830,836
Operating Income	87,544		90,810		101,492
Other Income and (Income Deductions) - Net	2,009		2,705		825
Interest Charges:
Interest on long-term debt	24,884		22,958		23,161
Other interest charges	1,253		2,198		2,383
Total Interest Charges	26,137		25,156		25,544
Income Before Income Taxes	63,416		68,359		76,773
Income Tax Expense	14,651		18,460		22,996
Net Income	$	48,765	$	49,899	$	53,777

See the accompanying Notes to Financial Statements.

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LACLEDE GAS COMPANY
STATEMENTS OF COMPREHENSIVE INCOME
(Thousands)
Years Ended September 30	2013			2012			2011
Net Income	$	48,765		$	49,899		$	53,777
Other Comprehensive Income (Loss) Before Tax:
Net gains (losses) on cash flow hedging derivative instruments:
Net hedging gains arising during the period	123			297			355
Reclassification adjustment for gains included in net income	(211		)	—			(466		)
Net unrealized gains (losses) on cash flow hedging derivative instruments	(88		)	297			(111		)
Defined benefit pension and other postretirement benefit plans:
Net actuarial (loss) gain arising during the period	(120		)	(3,397		)	339
Amortization of actuarial loss included in net periodic pension and other postretirement benefit cost	195			3,706			426
Net defined benefit pension and other postretirement benefit plans	75			309			765
Other Comprehensive Income (Loss), Before Tax	(13		)	606			654
Income Tax Expense (Benefit) Related to Items of Other Comprehensive Income (Loss)	(8		)	234			252
Other Comprehensive Income (Loss), Net of Tax	(5		)	372			402
Comprehensive Income	$	48,760		$	50,271		$	54,179

See the accompanying Notes to Financial Statements.

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LACLEDE GAS COMPANY
BALANCE SHEETS
(Thousands)
September 30	2013			2012
ASSETS
Utility Plant	$	2,271,189		$	1,497,419
Less – Accumulated depreciation and amortization	494,559			478,120
Net Utility Plant	1,776,630			1,019,299
Goodwill	247,078			—
Other Property and Investments	54,016			46,358
Current Assets:
Cash and cash equivalents	23,916			2,402
Accounts receivable:
Utility	101,118			64,027
Non-utility	967			1,244
Associated companies	1,111			4,315
Other	14,148			17,288
Allowance for doubtful accounts	(7,942		)	(7,601		)
Inventories:
Natural gas stored underground	164,740			89,852
Propane gas at FIFO cost	8,962			8,963
Materials and supplies at average cost	8,027			3,418
Unamortized purchased gas adjustments	17,533			40,674
Prepayments and other	11,255			9,011
Total Current Assets	343,835			233,593
Deferred Charges:
Regulatory assets	545,937			456,047
Other	13,520			4,855
Total Deferred Charges	559,457			460,902
Total Assets	$	2,981,016		$	1,760,152

Table of Contents

LACLEDE GAS COMPANY

STATEMENTS OF INCOME

(Thousands)
Years Ended September 30 2012 2011    2010

Operating Revenues:
  Utility $ 764,651 $ 913,190 $ 864,297
  Other 2,976 19,138 10,327
          Total Operating Revenues 767,627 932,328 874,624

Operating Expenses:
  Utility
    Natural and propane gas 414,846 549,947 519,905
    Other operation expenses 144,440 147,889 141,995
    Maintenance 22,911 25,049 27,244
    Depreciation and amortization 40,739 39,214 37,572
    Taxes, other than income taxes 53,672 60,752 61,407
          Total Utility Operating Expenses 676,608 822,851 788,123
  Other 209 7,985 4,343
          Total Operating Expenses 676,817 830,836 792,466
Operating Income 90,810 101,492 82,158
Other Income and (Income Deductions) - Net 2,705 825 2,569
Interest Charges:
  Interest on long-term debt 22,958 23,161 24,583
  Other interest charges 2,198 2,383 2,269
          Total Interest Charges 25,156 25,544 26,852
Income Before Income Taxes 68,359 76,773 57,875
Income Tax Expense 18,460 22,996 18,150
Net Income $ 49,899 $ 53,777 $ 39,725

See the accompanying Notes to Financial Statements.



LACLEDE GAS COMPANY
BALANCE SHEETS (continued)
(Thousands)
September 30	2013		2012
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity	$	973,930	$	491,328
Long-term debt (less current portion)	887,712		339,416
Total Capitalization	1,861,642		830,744
Current Liabilities:
Notes payable	74,000		40,100
Notes payable – associated companies	46,729		37,125
Accounts payable	66,582		38,391
Accounts payable – associated companies	6,081		2,576
Advance customer billings	23,736		25,146
Current portion of long-term debt	—		25,000
Wages and compensation accrued	20,807		13,908
Dividends payable	13,912		9,354
Customer deposits	15,062		8,565
Interest accrued	8,096		8,590
Taxes accrued	32,592		13,822
Deferred income taxes	1,692		10,146
Other	17,611		10,068
Total Current Liabilities	326,900		242,791
Deferred Credits and Other Liabilities:
Deferred income taxes	380,113		355,458
Unamortized investment tax credits	2,900		3,113
Pension and postretirement benefit costs	228,653		196,558
Asset retirement obligations	74,302		40,126
Regulatory liabilities	61,943		56,319
Other	44,563		35,043
Total Deferred Credits and Other Liabilities	792,474		686,617
Commitments and Contingencies (Note 13)
Total Capitalization and Liabilities	$	2,981,016	$	1,760,152

See the accompanying Notes to Financial Statements.

Table of Contents



LACLEDE GAS COMPANY
STATEMENTS OF CAPITALIZATION
(Thousands, Except for Shares and Per Share Amounts)
September 30	2013			2012
Common Stock Equity:
Common stock, par value $1 per share and Paid-in Capital:
Authorized – 2013 and 2012, 50,000,000 shares
Issued – 2013, 24,549 shares; and 2012, 12,804 shares	$	738,233		$	257,415
Retained earnings	237,803			236,014
Accumulated other comprehensive loss	(2,106		)	(2,101		)
Total Common Stock Equity	973,930			491,328
Long-Term Debt:
First Mortgage Bonds:
5-1/2% Series, due May 1, 2019	50,000			50,000
7% Series, due June 1, 2029	25,000			25,000
7.90% Series, due September 15, 2030	30,000			30,000
6% Series, due May 1, 2034	100,000			100,000
6.15% Series, due June 1, 2036	55,000			55,000
6.35% Series, due October 15, 2038	80,000			80,000
3% Series, due March 15, 2023	55,000			—
3.40% Series, due March 15, 2028	45,000			—
2% Series, due August 15, 2018	100,000			—
3.40% Series, due August 15, 2023	250,000			—
4.625% Series, due August 15, 2043	100,000			—
Total	890,000			340,000
Unamortized discount, net of premium, on long-term debt	(2,288		)	(584		)
Total Long-Term Debt	887,712			339,416
Total Capitalization	$	1,861,642		$	830,744

Long-term debt dollar amounts are exclusive of current portion.

See the accompanying Notes to Financial Statements.

Table of Contents



LACLEDE GAS COMPANY
STATEMENTS OF COMMON SHAREHOLDER’S EQUITY
	Common Stock Issued			Paid-in			Retained			Accum. Other Comp.
(Thousands, Except for Shares)	Shares	Amount		Capital			Earnings			Income (Loss)			Total
BALANCE OCTOBER 1, 2010	11,674	$	12	$	208,142		$	205,980		$	(2,875	)	$	411,259
Net income	—	—		—			53,777			—			53,777
Dividends declared:
Common stock	—	—		—			(36,297		)	—			(36,297		)
Stock-based compensation costs	—	—		2,946			—			—			2,946
Tax benefit – stock compensation	—	—		278			—			—			278
Other comprehensive loss, net of tax	—	—		—			—			402			402
Issuance of common stock to Laclede Group	43	—		1,592			—			—			1,592
BALANCE SEPTEMBER 30, 2011	11,717	12		212,958			223,460			(2,473		)	433,957
Net income	—	—		—			49,899			—			49,899
Dividends declared:
Common stock	—	—		—			(37,345		)	—			(37,345		)
Stock-based compensation costs	—	—		1,972			—			—			1,972
Tax benefit – stock compensation	—	—		(199		)	—			—			(199		)
Other comprehensive income, net of tax	—	—		—			—			372			372
Issuance of common stock to Laclede Group	1,087	1		42,671			—			—			42,672
BALANCE SEPTEMBER 30, 2012	12,804	13		257,402			236,014			(2,101		)	491,328
Net income	—	—		—			48,765			—			48,765
Dividends declared:
Common stock	—	—		—			(46,976		)	—			(46,976		)
Stock-based compensation costs	—	—		3,055			—			—			3,055
Tax benefit – stock compensation	—	—		549			—			—			549
Other comprehensive income, net of tax	—	—		—			—			(5		)	(5		)
Issuance of common stock to Laclede Group	11,745	12		477,202			—			—			477,214
BALANCE SEPTEMBER 30, 2013	24,549	$	25	$	738,208		$	237,803		$	(2,106	)	$	973,930

See the accompanying Notes to Financial Statements.

Table of Contents



LACLEDE GAS COMPANY
STATEMENTS OF CASH FLOWS
(Thousands)
Years Ended September 30	2013			2012			2011
Operating Activities:
Net Income	$	48,765		$	49,899		$	53,777
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization, and accretion	48,299			40,784			39,234
Deferred income taxes and investment tax credits	22,174			31,573			23,015
Other – net	(411		)	(582		)	1,992
Changes in assets and liabilities:
Accounts receivable – net	6,654			(9,444		)	(1,517		)
Unamortized purchased gas adjustments	23,141			(14,955		)	(2,001		)
Deferred purchased gas costs	13,300			11,090			44,565
Accounts payable	16,410			(8,130		)	4,182
Advance customer billings – net	(8,248		)	9,916			(1,579		)
Taxes accrued	999			3,286			1,347
Natural gas stored underground	(16,209		)	25,318			(1,594		)
Other assets and liabilities	(29,388		)	(19,788		)	(4,446		)
Net cash provided by operating activities	125,486			118,967			156,975
Investing Activities:
Capital expenditures	(128,496		)	(106,734		)	(67,304		)
Other investments	(1,328		)	3,607			742
Acquisition of MGE, net	(975,000		)	—			—
Net cash used in investing activities	(1,104,824		)	(103,127		)	(66,562		)
Financing Activities:
Issuance of first mortgage bonds	550,000			—			—
Maturity of first mortgage bonds	(25,000		)	—			(25,000		)
Issuance (Repayment) of short-term debt - net	33,900			(5,900		)	(83,650		)
Borrowings from Laclede Group	171,958			203,955			252,530
Repayment of borrowings from Laclede Group	(162,355		)	(219,709		)	(199,651		)
Changes in book overdrafts	(1,255		)	1,455			(545		)
Dividends paid	(42,420		)	(37,076		)	(36,018		)
Issuance of common stock to Laclede Group	477,225			42,672			1,592
Excess tax benefits from stock-based compensation	1,545			299			291
Other	(2,746		)	(57		)	(48		)
Net cash provided by (used in) financing activities	1,000,852			(14,361		)	(90,499		)
Net Increase (Decrease) in Cash and Cash Equivalents	21,514			1,479			(86		)
Cash and Cash Equivalents at Beginning of Year	2,402			923			1,009
Cash and Cash Equivalents at End of Year	$	23,916		$	2,402		$	923
Supplemental Disclosure of Cash Paid (Refunded) During the Year for:
Interest	$	25,743		$	24,768		$	25,460
Income taxes	(7,573		)	(6,588		)	(846		)

See the accompanying Notes to Financial Statements.

Table of Contents

LACLEDE GAS COMPANY
STATEMENTS OF COMPREHENSIVE INCOME

(Thousands)
Years Ended September 30 2012 2011 2010

Net Income $ 49,899 $ 53,777 $ 39,725

Other Comprehensive Income (Loss) Before Tax:
  Net gains (losses) on cash flow hedging derivative instruments:
    Net hedging gains arising during the period 297 355 160
    Reclassification adjustment for gains included in net income — (466 ) (264 )
        Net unrealized gains (losses) on cash flow hedging derivative
          instruments
297 (111 ) (104 )
  Defined benefit pension and other postretirement benefit plans:
    Net actuarial (loss) gain arising during the period (3,397 ) 339 (1,783 )
    Amortization of actuarial loss included in net periodic pension
      and other postretirement benefit cost
3,706 426 1,471
        Net defined benefit pension and other postretirement
          benefit plans
309 765 (312 )
  Other Comprehensive Income (Loss), Before Tax 606 654 (416 )
  Income Tax Expense (Benefit) Related to Items of Other
    Comprehensive Income (Loss)
234 252 (160 )
Other Comprehensive Income (Loss), Net of Tax 372 402 (256 )
Comprehensive Income $ 50,271 $ 54,179 $ 39,469

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

LACLEDE GAS COMPANY
BALANCE SHEETS

(Thousands)
September 30 2012 2011

ASSETS
Utility Plant $ 1,497,419 $ 1,386,590
  Less – Accumulated depreciation and amortization 478,120 457,907
          Net Utility Plant 1,019,299 928,683
Other Property and Investments 46,358 46,950

Current Assets:
  Cash and cash equivalents 2,402 923
  Accounts receivable:
    Utility 64,027 71,090
    Non-utility 1,244 1,347
    Associated companies 4,315 426
    Other 17,288 6,935
    Allowance for doubtful accounts (7,601 ) (9,969 )
  Inventories:
    Natural gas stored underground at LIFO cost 89,852 115,170
    Propane gas at FIFO cost 8,963 8,961
    Materials and supplies at average cost 3,418 4,104
  Derivative instrument assets — 4,746
  Unamortized purchased gas adjustments 40,674 25,719
  Prepayments and other 9,011 8,527
          Total Current Assets 233,593 237,979

Deferred Charges:
  Regulatory assets 456,047 423,492
  Other 4,855 5,942
          Total Deferred Charges 460,902 429,434

Total Assets $ 1,760,152 $ 1,643,046

~~Table of Contents~~

LACLEDE GAS COMPANY
BALANCE SHEETS (continued)

(Thousands)
September 30 2012 2011

CAPITALIZATION AND LIABILITIES
Capitalization:
  Common stock equity $ 491,328 $ 433,957
   Long-term debt (less current portion) 339,416 364,357
          Total Capitalization 830,744 798,314

Current Liabilities:
  Notes payable 40,100 46,000
  Notes payable – associated companies 37,125 52,879
  Accounts payable 38,391 45,635
  Accounts payable – associated companies 2,576 1,730
  Advance customer billings 25,146 15,230
  Current portion of long-term debt 25,000 —
  Wages and compensation accrued 13,908 13,650
  Dividends payable 9,354 9,084
  Customer deposits 8,565 10,048
  Interest accrued 8,590 8,812
  Taxes accrued 13,822 10,038
  Deferred income taxes 10,146 9,165
  Other 10,068 9,191
          Total Current Liabilities 242,791 231,462

Deferred Credits and Other Liabilities:
  Deferred income taxes 355,458 315,325
  Unamortized investment tax credits 3,113 3,326
  Pension and postretirement benefit costs 196,558 185,701
  Asset retirement obligations 40,126 27,486
  Regulatory liabilities 56,319 50,846
  Other 35,043 30,586
          Total Deferred Credits and Other Liabilities 686,617 613,270
Commitments and Contingencies (Note 12)

Total Capitalization and Liabilities $ 1,760,152 $ 1,643,046

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

LACLEDE GAS COMPANY
STATEMENTS OF CAPITALIZATION

(Thousands, Except for Shares and Per Share Amounts)
September 30 2012 2011

Common Stock Equity:
  Common stock, par value $1 per share and Paid-in Capital:
    Authorized – 2012 and 2011, 50,000,000 shares
    Issued – 2012, 12,804 shares; and 2011, 11,717 shares $ 257,415 $ 212,970
  Retained earnings 236,014 223,460
  Accumulated other comprehensive loss (2,101 ) (2,473 )
          Total Common Stock Equity 491,328 433,957

Long-Term Debt:
  First Mortgage Bonds:
    6-1/2% Series, due October 15, 2012 — 25,000
    5-1/2% Series, due May 1, 2019 50,000 50,000
    7% Series, due June 1, 2029 25,000 25,000
    7.90% Series, due September 15, 2030 30,000 30,000
    6% Series, due May 1, 2034 100,000 100,000
    6.15% Series, due June 1, 2036 55,000 55,000
    6.35% Series, due October 15, 2038 80,000 80,000
          Total 340,000 365,000
  Unamortized discount, net of premium, on long-term debt (584 ) (643 )
          Total Long-Term Debt 339,416 364,357
          Total Capitalization $ 830,744 $ 798,314

Long-term debt dollar amounts are exclusive of current portion.

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

LACLEDE GAS COMPANY
STATEMENTS OF COMMON SHAREHOLDER’S EQUITY

Common Stock Issued Paid-in Retained
Accum.
Other
Comp.

(Thousands, Except for Shares) Shares Amount Capital Earnings Income (Loss) Total

BALANCE OCTOBER 1, 2009 11,634 $ 12 $ 203,742 $ 201,450 $ (2,619 ) $ 402,585
  Net income — — — 39,725 — 39,725
  Dividends declared:
    Common stock — — — (35,195 ) — (35,195 )
  Stock-based compensation costs — — 2,956 — — 2,956
  Tax benefit – stock compensation — — 6 — — 6
  Other comprehensive loss, net of tax — — — — (256 ) (256 )
  Issuance of common stock to Laclede Group 40 — 1,438 — — 1,438
BALANCE SEPTEMBER 30, 2010 11,674 12 208,142 205,980 (2,875 ) 411,259
  Net income — — — 53,777 — 53,777
  Dividends declared:
    Common stock — — — (36,297 ) — (36,297 )
  Stock-based compensation costs — — 2,946 — — 2,946
  Tax benefit – stock compensation — — 278 — — 278
  Other comprehensive income, net of tax — — — — 402 402
  Issuance of common stock to Laclede Group 43 — 1,592 — — 1,592
BALANCE SEPTEMBER 30, 2011 11,717 12 212,958 223,460 (2,473 ) 433,957
  Net income — — — 49,899 — 49,899
  Dividends declared:
    Common stock — — — (37,345 ) — (37,345 )
  Stock-based compensation costs — — 1,972 — — 1,972
  Tax benefit – stock compensation — — (199 ) — — (199 )
  Other comprehensive income, net of tax — — — — 372 372
  Issuance of common stock to Laclede Group 1,087 1 42,671 — — 42,672
BALANCE SEPTEMBER 30, 2012 12,804 $ 13 $ 257,402 $ 236,014 $ (2,101 ) $ 491,328

See the accompanying Notes to Financial Statements.

~~Table of Contents~~

LACLEDE GAS COMPANY

STATEMENTS OF CASH FLOWS

(Thousands)
Years Ended September 30 2012 2011 2010

Operating Activities:
  Net Income $ 49,899 $ 53,777 $ 39,725
  Adjustments to reconcile net income to net cash provided by
      (used in) operating activities:

    Depreciation, amortization, and accretion 40,784 39,234 37,572
    Deferred income taxes and investment tax credits 31,573 23,015 31,454
    Other – net (582 ) 1,992 1,812
    Changes in assets and liabilities:
      Accounts receivable – net (9,444 ) (1,517 ) 8,899
      Unamortized purchased gas adjustments (14,955 ) (2,001 ) (26,848 )
      Deferred purchased gas costs 11,090 44,565 20,265
      Accounts payable (8,130 ) 4,182 6,764
      Advance customer billings – net 9,916 (1,579 ) (4,331 )
      Taxes accrued 3,286 1,347 (3,860 )
      Natural gas stored underground 25,318 (1,594 ) (20,263 )
      Other assets and liabilities (19,788 ) (4,446 ) 1,391
          Net cash provided by operating activities 118,967 156,975 92,580

Investing Activities:
  Capital expenditures (106,734 ) (67,304 ) (56,234 )
  Other investments 3,607 742 (3,535 )
          Net cash used in investing activities (103,127 ) (66,562 ) (59,769 )

Financing Activities:
  Maturity of first mortgage bonds — (25,000 ) —
  Repayment of short-term debt - net (5,900 ) (83,650 ) (150 )
  Borrowings from Laclede Group 203,955 252,530 2,200
  Repayment of borrowings from Laclede Group (219,709 ) (199,651 ) (2,200 )
  Changes in book overdrafts 1,455 (545 ) 358
  Dividends paid (37,076 ) (36,018 ) (34,925 )
  Issuance of common stock to Laclede Group 42,672 1,592 1,438
  Excess tax benefits from stock-based compensation 299 291 131
  Other (57 ) (48 ) (56 )
          Net cash used in financing activities (14,361 ) (90,499 ) (33,204 )

Net Increase (Decrease) in Cash and Cash Equivalents 1,479 (86 ) (393 )
Cash and Cash Equivalents at Beginning of Year 923 1,009 1,402
Cash and Cash Equivalents at End of Year $ 2,402 $ 923 $ 1,009

Supplemental Disclosure of Cash Paid (Refunded) During the Year for:
  Interest $ 24,768 $ 25,460 $ 26,393
  Income taxes (6,588 ) (846 ) (15,163 )

See the accompanying Notes to Financial Statements.

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LACLEDE GAS COMPANY

NOTES TO FINANCIAL STATEMENTS


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION - In compliance with generally accepted accounting principles (GAAP), transactions between ~~Laclede Gas~~the Utility and its affiliates as well as intercompany balances on ~~Laclede Gas’~~the Utility's Balance Sheets have not been eliminated from the ~~Laclede Gas~~Utility financial statements. Transactions with associated companies include sales of natural gas from ~~Laclede Gas~~the Utility to Laclede Energy Resources, Inc. (LER), sales of natural gas from LER to ~~Laclede Gas,~~the Utility, and transportation services provided by Laclede Pipeline Company to ~~Laclede Gas.~~the Utility. For fiscal years 2013, 2012, ~~2011,~~ and ~~2010,~~2011, sales of natural gas from ~~Laclede Gas~~the Utility to LER were ~~$1.2~~$10.5 million ~~$1.6~~, $1.2 million, and ~~$2.9~~$1.6 million, respectively. Sales of natural gas from LER to ~~Laclede Gas~~the Utility during fiscal years 2013, 2012, and 2011 were $24.2 million, $16.5 million, and ~~2010 were $16.5~~$24.3 million ~~$24.3 million, and $23.7 million,~~, respectively. ~~Transportation~~Other services provided by Laclede ~~Pipeline Company~~Group's other subsidiaries to ~~Laclede Gas~~the Utility during fiscal years 2013, 2012, and 2011 ~~and 2010 totaled~~were $1.6 million, $1.0 million, ~~in each year.~~$1.0 million, respectively.

~~Laclede Gas~~

The Utility provides administrative and general support to affiliates. All such costs, which are not material, are billed to the appropriate affiliates. Also, Laclede Group may charge or reimburse ~~Laclede Gas~~the Utility for certain tax-related amounts. Unpaid balances relating to these activities are reflected in the ~~Laclede Gas~~Utility Balance Sheets as Accounts receivable-Associated companies or as Accounts payable-associated companies. Additionally, ~~Laclede Gas~~the Utility may borrow funds from Laclede Group. Unpaid balances relating to this arrangement, if any, are reflected in Notes payable-associated companies. ~~Laclede Gas~~The Utility had outstanding borrowings from Laclede Group under a revolving credit note of ~~$37.1~~$46.7 million and ~~$52.9~~$37.1 million, at September 30, ~~2012~~2013 and ~~2011,~~2012, respectively. The interest rate on these borrowings was ~~0.2%~~0.3% and ~~0.3%~~0.2% at September 30, ~~2012~~2013 and ~~2011,~~2012, respectively. Advances under this note are due and payable on demand.

NATURE OF OPERATIONS - ~~Laclede Gas is a public utility engaged in the retail distribution of natural gas. Laclede Gas~~ The Utility serves ~~an area in eastern Missouri, with a population of approximately 2.2 million, including the City of~~ St. Louis and ~~parts of ten counties in~~ eastern ~~Missouri.~~Missouri through Laclede Gas and serves Kansas City and western Missouri through Missouri Gas Energy. Together they provide more than 1.13 million residential, commercial and industrial customers with safe and reliable natural gas service. As an adjunct to its gas distribution business, ~~Laclede Gas~~the Utility operates an underground natural gas storage field. The non-regulated activities of ~~Laclede Gas~~the Utility are described in Note 1112, Information by Operating Segment, and are included in the ~~Non-Regulated~~ Other column.

USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

SYSTEM OF ACCOUNTS - The accounts of ~~Laclede Gas~~the Utility are maintained in accordance with the Uniform System of Accounts prescribed by the Missouri Public Service Commission (MoPSC or Commission), which system substantially conforms to that prescribed by the Federal Energy Regulatory Commission (FERC).

UTILITY PLANT, DEPRECIATION AND AMORTIZATION - Utility plant is stated at original cost. The cost of additions to utility plant includes contracted work, direct labor and materials, allocable overheads, and an allowance for funds used during construction. The costs of units of property retired, replaced, or renewed are removed from utility plant and are charged to accumulated depreciation. Maintenance and repairs of property and replacement and renewal of items determined to be less than units of property are charged to maintenance expenses.

Utility plant is depreciated on a straight-line basis at rates based on estimated service lives of the various classes of property. In fiscal ~~years 2012, 2011, and 2010,~~year 2013, annual depreciation and amortization expense averaged ~~3.1%~~3.2% of the original cost of depreciable and amortizable ~~property.~~property, compared to 3.1% in both fiscal years 2012 and 2011.

The Utility’s capital expenditures were ~~$106.7~~$128.5 million ~~$67.3~~, $106.7 million, and ~~$56.2~~$67.3 million for fiscal years 2013, 2012, ~~2011,~~ and ~~2010,~~2011, respectively. Additionally, the Utility had recorded accruals for capital expenditures totaling ~~$9.7~~$4.7 million at September 30, 2013, $9.7 million at September 30, 2012, ~~$8.2~~and $8.2 million at September 30, ~~2011, and $2.2 million at September 30, 2010.~~2011. Accrued capital expenditures are excluded from the Statements of Cash Flows.

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ASSET RETIREMENT OBLIGATIONS - ~~Laclede Gas~~ The Utility records legal obligations associated with the retirement of long-lived assets inthe period in which the obligations are incurred, if sufficient information exists to reasonably estimate the fair value of the obligations. Obligations are recorded as both a cost of the related long-lived asset and as a corresponding liability. Subsequently, the asset retirement costs are depreciated over the life of the asset and the asset retirement obligations are accreted to the expected settlement amounts. The Utility has recorded asset retirement obligations associated with certain safety requirements to purge and seal gas distribution mains upon retirement, the plugging and abandonment of storage wells and other storage facilities, specific service line obligations, and certain removal and disposal obligations related to components of ~~Laclede Gas’~~the Utility's distribution system and general plant. As authorized by the MoPSC, ~~Laclede Gas~~the Utility accrues future asset removal costs associated with its property, plant and equipment even if a legal obligation does not exist. Such accruals are provided for through depreciation expense and are recorded with corresponding credits to regulatory liabilities. When ~~Laclede Gas~~the Utility retires depreciable utility plant and equipment, it charges the associated original costs to accumulated depreciation and amortization, and any related removal costs incurred are charged to regulatory liabilities. The difference between removal costs recognized in depreciation rates and the accretion expense and depreciation expense recognized for financial reporting purposes is a timing difference between recovery of these costs in rates and their recognition for financial reporting purposes. Accordingly, these differences are deferred as regulatory liabilities. In the rate setting process, the regulatory liability is deducted from the rate base upon which the Utility has the opportunity to earn its allowed rate of return.

As part of the MGE acquisition, the Utility has estimated the asset retirement obligation of MGE’s long-lived assets as of the acquisition date of September 1, 2013. This estimate is preliminary and will be finalized upon completion of a detailed fair value analysis that is being performed by the Company in the first quarter of fiscal 2014.

The following table presents a reconciliation of the beginning and ending balances of Asset retirement obligations at September 30 as reported in the Balance Sheets:

(Thousands) 2012 2011

Asset retirement obligations, beginning of year $ 27,486 $ 25,829
Liabilities incurred during the period 619 687
Liabilities settled during the period (601 ) (574 )
Accretion 1,636 1,544
Revisions in estimated cash flows 10,986 —
Asset retirement obligations, end of year $ 40,126 $ 27,486



(Thousands)	2013			2012
Asset retirement obligations, beginning of year	$	40,126		$	27,486
Liabilities incurred during the period	801			619
Liabilities settled during the period	(1,089		)	(601		)
Accretion	2,312			1,636
Revisions in estimated cash flows	—			10,986
MGE's asset retirement obligation	32,152			—
Asset retirement obligations, end of year	$	74,302		$	40,126

REGULATED OPERATIONS - ~~Laclede Gas~~ The Utility accounts for its regulated operations in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 980, “Regulated Operations.” This Topic sets forth the application of GAAP for those companies whose rates are established by or are subject to approval by an independent third-party regulator. The provisions of this accounting guidance require, among other things, that financial statements of a regulated enterprise reflect the actions of regulators, where appropriate. These actions may result in the recognition of revenues and expenses in time periods that are different than non-regulated enterprises. When this occurs, costs are deferred as assets in the balance sheet (regulatory assets) and recorded as expenses when those amounts are reflected in rates. Also, regulators can impose liabilities upon a regulated company for amounts previously collected from customers and for recovery of costs that are expected to be incurred in the future (regulatory liabilities).

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The following regulatory assets and regulatory liabilities were reflected in the Balance Sheets as of September 30:

(Thousands) 2012 2011

Regulatory Assets:
  Future income taxes due from customers $ 118,997 $ 106,460
  Pension and postretirement benefit costs 304,446 272,126
  Unamortized purchased gas adjustments 40,674 25,719
  Purchased gas costs 18,386 29,476
  Compensated absences 7,836 7,769
  Cold weather rule — 2,023
  Other 6,382 5,638
     Total Regulatory Assets $ 496,721 $ 449,211
Regulatory Liabilities:
  Unamortized investment tax credits $ 3,113 $ 3,326
  Accrued cost of removal 55,103 49,380
  Other 1,216 1,466
     Total Regulatory Liabilities $ 59,432 $ 54,172



(Thousands)	2013		2012
Regulatory Assets:
Future income taxes due from customers	$	112,902	$	118,997
Pension and postretirement benefit costs	381,395		304,446
Unamortized purchased gas adjustments	17,533		40,674
Purchased gas costs	18,249		18,386
Compensated absences	8,004		7,836
Cold weather rule	—		—
Other	25,387		6,382
Total Regulatory Assets	$	563,470	$	496,721
Regulatory Liabilities:
Unamortized investment tax credits	$	2,900	$	3,113
Accrued cost of removal	59,066		55,103
Other	2,877		1,216
Total Regulatory Liabilities	$	64,843	$	59,432

The regulatory assets are expected to be recovered in rates charged to customers. A portion of the Company's regulatory assets are not earning a return; however, these regulatory assets are expected to be recovered from customers in future rates. Excluding deferred income taxes and purchased gas adjustment items, as of September 30, 2013 and 2012, approximately $17.2 million and $7.8 million, respectively, of regulatory assets were not earning a rate of return. The Company expects these items to be recovered over a period not to exceed 15 years consistent with precedent set by the Commission. The portion of the regulatory asset related to pensions and other postemployment benefits that relates to unfunded differences between the projected benefit obligation and plan assets also does not earn a rate of return.

As authorized by the MoPSC, ~~Laclede Gas~~the Utility discontinued deferring certain costs for future recovery, as expenses associated with those specific areas were included in approved rates effective December 27, 1999. Previously deferred costs of ~~$10.5~~$10.5 million are being recovered and amortized on a straight-line basis over a fifteen-year period, without return on investment. Amortization of these costs totaled ~~$9.0~~$9.7 million from December 27, 1999 through September 30, ~~2012.~~2013.

NATURAL GAS STORED UNDERGROUND - ~~Inventory~~ For Laclede Gas, inventory of ~~Utility~~ natural gas in storage is priced on a last-in, first-out (LIFO) basis and inventory of propane gas in storage is priced on a first-in, first-out (FIFO) basis. For MGE, inventory of natural gas in storage is priced on a weighted average cost basis. The replacement cost of natural gas stored underground for current use at September 30, 2013 and September 30, 2012 ~~and September 30, 2011~~ was less than the LIFO cost by ~~$24.3~~$13.3 million and ~~$19.9~~$24.3 million, respectively. The ~~inventory~~ carrying value of the Utility inventory is not adjusted to the lower of cost or market prices because, pursuant to ~~the~~both Laclede ~~Gas~~Gas' and MGE's Purchased Gas Adjustment (PGA) ~~Clause,~~Clauses, actual gas costs are recovered in customer rates.

BUSINESS COMBINATIONS - The Company's acquisition of MGE was accounted for by the Company using business combination accounting. Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on their fair value. For additional information on the Company's acquisition of MGE, refer to Note 2, Acquisition of MGE.

GOODWILL - Goodwill is measured as the excess of the acquisition-date fair value of the consideration transferred over the amount of acquisition-date identifiable assets acquired net of assumed liabilities. Laclede Group recorded $247.1 million of goodwill as part of the MGE acquisition. which has been assigned to the Utility within the company’s Gas Utility segment.

REVENUE RECOGNITION - ~~Laclede Gas~~ The Utility reads meters and bills its customers on monthly cycles. The Utility records its utility operating revenues from gas sales and transportation services on an accrual basis that includes estimated amounts for gas delivered, but not yet billed. The accruals for unbilled revenues are reversed in the subsequent accounting period when meters are actually read and customers are billed. The amounts of accrued unbilled revenues at September 30, ~~2012~~2013 and ~~2011,~~2012, for the Utility, were ~~$11.6~~$25.2 million and ~~$11.8~~$11.6 million, respectively.

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PURCHASED GAS ADJUSTMENTS AND DEFERRED ACCOUNT – As authorized by the MoPSC, the PGA Clause allows ~~Laclede Gas~~the Utility to flow through to customers, subject to prudence review by the MoPSC, the cost of purchased gas supplies. To better match customer billings with market natural gas prices, the Utility is allowed to file to modify, on a periodic basis, the level of gas costs in its PGA. Certain provisions of the PGA Clause are included below:

	•	Laclede Gas has a risk management policy that allows for the purchase of natural gas derivative instruments with the goal of managing price risk associated with purchasing natural gas on behalf of its customers. The MoPSC clarified that costs, cost reductions, and carrying costs associated with the Utility’s use of natural gas derivative instruments are gas costs recoverable through the PGA mechanism.
	•	The tariffs allow the Utility flexibility to make up to three discretionary PGA changes during each year, in addition to its mandatory November PGA change, so long as such changes are separated by at least two months.
	•	The Utility is authorized to recover gas inventory carrying costs through its PGA rates to recover costs it incurs to finance its investment in gas supplies that are purchased during the storage injection season for sale during the heating season. The Utility is also authorized to apply carrying costs to all over- or under-recoveries of gas costs, including costs and cost reductions associated with the use of derivative instruments, including cash payments for margin deposits.
	•	The MoPSC approved a plan applicable to the Utility’s gas supply commodity costs under which it retains a portion of cost savings associated with the acquisition of natural gas below an established benchmark level. This gas supply cost management program allows the Utility to retain 10% of cost savings, up to a maximum of $3.0 million annually. Laclede Gas did not record any income under the plan during the three fiscal years reported. Income recorded under the plan, if any, is included in Utility Operating Revenues on the Statements of Income.

The Utility has a risk management policy that allows for the purchase of natural gas derivative instruments with the goal of managing price risk associated with purchasing natural gas on behalf of its customers. The MoPSC clarified that costs, cost reductions, and carrying costs associated with the Utility’s use of natural gas derivative instruments are gas costs recoverable through the PGA mechanism.

The tariffs allow the Utility flexibility to make up to three discretionary PGA changes during each year, in addition to its mandatory November PGA change, so long as such changes are separated by at least two months.

The Utility is authorized to recover gas inventory carrying costs through its PGA rates to recover costs it incurs to finance its investment in gas supplies that are purchased during the storage injection season for sale during the heating season. The Utility is also authorized to apply carrying costs to all over- or under-recoveries of gas costs, including costs and cost reductions associated with the use of derivative instruments, including cash payments for margin deposits.

The MoPSC approved a plan applicable to Laclede Gas’ gas supply commodity costs under which it retains a portion of cost savings associated with the acquisition of natural gas below an established benchmark level. This gas supply cost management program allows Laclede Gas to retain 10% of cost savings, up to a maximum of $3.0 million annually. Laclede Gas did not record any income under the plan during the three fiscal years reported. Income recorded under the plan, if any, is included in Utility Operating Revenues on the Statements of Income.

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Pursuant to the provisions of the PGA Clause, the difference between actual costs incurred and costs recovered through the application of the PGA are reflected as a deferred charge or credit at the end of the fiscal year. These costs include costs and cost reductions associated with the use of derivative instruments and gas inventory carrying costs, amounts due to or from customers related to operation of the gas supply cost management program, refunds received from the Utility’s suppliers in connection with gas supply, transportation, and storage services, and carrying costs on such over- or under-recoveries. At that time, the balance is classified as a current asset or current liability and recovered from, or credited to, customers over an annual period commencing in November. The balance in the current account is amortized as amounts are reflected in customer billings. The PGA Clause also provides for the treatment of income from off-system sales and capacity release revenues. Pre-tax income from off-system sales and capacity release revenues is shared with customers, with an estimated amount assumed in PGA rates. The ~~customer share of such income is determined in accordance with the table below. The~~ difference between the actual amount allocated to customers for each fiscal year and the estimated amount assumed in PGA rates is recovered from, or credited to, customers over an annual period commencing in the subsequent November. The customer share of such income is determined in accordance with the tables below, which is shown for each legacy company (the Utility and MGE) under which the PGA Clauses were approved by the MoPSC.

Pre-tax Income Customer Share Company Share
First $2 million 85% 15%
Next $2 million 80% 20%
Next $2 million 75% 25%
Amounts exceeding $6 million 70% 30%



Laclede Gas
Pre-tax Income	Customer Share	Company Share
First $2 million	100%	—%
Next $2 million	80%	20%
Next $2 million	75%	25%
Amounts exceeding $6 million	70%	30%

MGE
Pre-tax Income	Customer Share	Company Share
First $1.2 million	85%	15%
Next $1.2 million	80%	20%
Next $1.2 million	75%	25%
Amounts exceeding $3.6 million	70%	30%

See the Regulatory and Other Matters section on page 28 of this report for additional information on Laclede Gas' off-system sales.

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INCOME TAXES - ~~Laclede Gas~~ The Utility has elected, for tax purposes only, various accelerated depreciation provisions of the Internal Revenue Code. In addition, certain other costs are expensed currently for tax purposes while being deferred for book purposes. GAAP permits the benefit from a tax position to be recognized only if, and to the extent that, it is more likely than not that the tax position will be sustained upon examination by the taxing authority, based on the technical merits of the position. Unrecognized tax benefits and related interest and penalties, if any, are recorded as liabilities or as a reduction to deferred tax assets. ~~Laclede Gas~~The Utility records deferred tax liabilities and assets measured by enacted tax rates for the net tax effect of all temporary differences between the tax basis and the related carrying amounts of assets and liabilities in the financial statements. Changes in enacted tax rates, if any, and certain property basis differences are reflected by entries to regulatory asset or regulatory liability accounts.

~~Laclede Gas’~~

The Utility's investment tax credits utilized prior to 1986 have been deferred and are being amortized in accordance with regulatory treatment over the useful life of the related property.

Laclede Group files a consolidated federal income tax return and allocates income taxes to ~~Laclede Gas~~the Utility and its other subsidiaries as if each entity were a separate taxpayer.

CASH AND CASH EQUIVALENTS - All highly liquid debt instruments purchased with original maturities of three months or less are considered to be cash equivalents. Such instruments are carried at cost, which approximates market value. Outstanding checks on the Utility’s controlled disbursement bank accounts in excess of funds on deposit create book overdrafts (which are funded at the time checks are presented for payment) and are classified as Other in the Current Liabilities section of the Balance Sheets. Changes in book overdrafts between periods are reflected as Financing Activities in the Statements of Cash Flows.

GROSS RECEIPTS AND SALES TAXES - Gross receipts taxes associated with ~~Laclede Gas’~~the Utility's natural gas utility service are imposed on the Utility and billed to its customers. These amounts are recorded gross in the Statements of Income. Amounts recorded in Utility Operating Revenues were ~~$35.9~~$40.8 million ~~$43.5~~, $35.9 million, and ~~$44.1~~$43.5 million for fiscal years 2013, 2012, ~~2011,~~ and ~~2010,~~2011, respectively. Gross receipts taxes are expensed by the Utility and included in the Taxes, other than income taxes line.

Sales taxes imposed on applicable Utility sales are billed to customers. These amounts are not recorded in the Statements of Income, but are recorded as tax collections payable and included in the Other line of the Current Liabilities section of the Balance Sheets.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS – Trade accounts receivable are recorded at the amounts due from customers, including unbilled amounts. Estimates of the collectibility of trade accounts receivable are based on historical trends, age of receivables, economic conditions, credit risk of specific customers, and other factors. Accounts receivable are written off against the allowance for doubtful accounts when they are deemed to be uncollectible. The Utility’s provision for uncollectible accounts includes the amortization of previously deferred uncollectible expenses, as approved by the MoPSC.

GROUP MEDICAL AND WORKERS’ COMPENSATION RESERVES - ~~Laclede Gas~~ The Utility self-insures its group medical and workers’ compensation costs and carries stop-loss coverage in relation to medical claims and workers’ compensation claims. Reserves for amounts incurred but not reported are established based on historical cost levels and lags between occurrences and reporting.

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FAIR VALUE MEASUREMENTS – Certain assets and liabilities are recognized or disclosed at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The levels of the hierarchy are described below:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Pricing inputs other than quoted prices included within Level 1, which are either directly or indirectly observable for the asset or liability as of the reporting date. These inputs are derived principally from, or corroborated by, observable market data.

Level 3 – Pricing that is based upon inputs that are generally unobservable that are based on the best information available and reflect management’s assumptions about how market participants would price the asset or liability.

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Assessment of the significance of a particular input to the fair value measurements may require judgment and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. Additional information about fair value measurements is provided in Note 23, Pension Plans and Other Postretirement Benefits, Note 67, Fair Value of Financial Instruments, and Note 78, Fair Value Measurements.

STOCK-BASED COMPENSATION - Officers and employees of ~~Laclede Gas,~~the Utility, as determined by the Compensation Committee of Laclede Group’s Board of Directors, are eligible to be selected for awards under the Laclede Group 2006 Equity Incentive Plan (2006 Plan). Grants of awards may be earned by achieving performance objectives and/or other criteria as determined by the Compensation Committee. Awards may include restricted stock, restricted stock units, qualified and non-qualified stock options, stock appreciation rights, and performance shares payable in stock, cash, or a combination of both. The 2006 Plan generally provides a minimum vesting period of at least three years for each type of award.

For Laclede Group’s non-employee directors, shares were awarded under the Restricted Stock Plan for Non-Employee Directors (Plan) prior to February 1, 2012, but any future awards will be granted under the 2006 Plan, as a result of plan amendments approved by Laclede Group’s shareholders. Awards previously granted under the Plan vest depending upon the participant’s age upon entering the plan and years of service as a director. Shares of ~~Laclede Gas~~the Utility common stock, which are 100% owned by Laclede Group, are not transacted under the plans.

Laclede Group accounts for awards under these plans in accordance with GAAP, and allocates applicable compensation costs to its subsidiaries. For awards made to its employees, the Utility records its allocation of compensation cost from Laclede Group with a corresponding increase to additional paid-in capital.

The amounts of compensation cost allocated to the Utility for share-based compensation arrangements are presented below:

(Thousands) 2012 2011 2010

Total equity compensation cost $ 2,303 $ 3,383 $ 3,270
Compensation cost capitalized (808 ) (924 ) (798 )
Compensation cost recognized in net income 1,495 2,459 2,472
Income tax benefit recognized in net income (577 ) (948 ) (953 )
Compensation cost recognized in net income, net of income tax $ 918 $ 1,511 $ 1,519



(Thousands)	2013			2012			2011

Total equity compensation cost	$	3,843		$	2,303		$	3,383
Compensation cost capitalized	(1,366		)	(808		)	(924		)
Compensation cost recognized in net income	2,477			1,495			2,459
Income tax benefit recognized in net income	(948		)	(577		)	(948		)
Compensation cost recognized in net income, net of income tax	$	1,529		$	918		$	1,511

As of September 30, ~~2012,~~2013, there was ~~$3.4~~$4.2 million in unrecognized compensation cost related to nonvested share-based compensation arrangements that is expected to be allocated to the Utility over a weighted average period of ~~2.2~~2.0 years.

NEW ACCOUNTING STANDARDS– In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement Disclosure Requirements in U.S. GAAP and IFRSs.” This ASU amends Accounting Standards Codification (ASC) Topic 820, “Fair Value Measurements and Disclosures,” to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and International Financial Reporting Standards (IFRS). The ASU does not change what items are measured at fair value, but instead makes various changes to the guidance pertaining to how fair value is measured. Additionally, the ASU sets forth additional disclosure requirements, including additional information about Level 3 fair value measurements. Many of the amendments in this ASU are changes to align the wording in U.S. GAAP with IFRS and, as such, are not intended to result in a change in the application of the guidance. The Utility’s adoption of the guidance in this ASU on a prospective basis in the second quarter of fiscal year 2012 had no impact on its financial condition or results of operations, but certain additional disclosures have been presented as required.

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In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income,” to amend ASC Topic 220, “Comprehensive Income,” by changing certain financial statement presentation requirements. Under the amended guidance, entities may either present a single continuous statement of comprehensive income or, consistent with the Utility’s current presentation, provide separate but consecutive statements (a statement of income and a statement of comprehensive income). ASU No. 2011-05 would have required that, regardless of the method chosen, reclassification adjustments from other comprehensive income to net income be presented on the face of the financial statements, displaying the effect on both net income and other comprehensive income. However, in December 2011, the FASB issued ASU No. 2011-12 to defer the effective date of this particular requirement while it reconsiders this provision of the guidance. The amendments in these ASUs do not change the items that are required to be reported in other comprehensive income and, accordingly, will not impact total net income, comprehensive income, or earnings per share.

In December 2011, the FASB issued ASU No. 2011-11, “Disclosures about Offsetting Assets and Liabilities,” to amend ASC Topic 210, “Balance Sheet,” to require additional disclosures about financial instruments and derivative instruments that have been presented on a net basis (offset) in the balance sheet. Additionally, information about financial instruments and derivative instruments that are subject to enforceable master netting arrangements or similar agreements, irrespective of whether they are presented net in the balance sheet, is required to be disclosed. The ASU impacts disclosures only and will not require any changes to financial statement presentation. The ~~Utility~~Company will present the new disclosures retrospectively beginning in the first quarter of fiscal year 2014.

In February 2013, the FASB issued ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” This ASU amends Accounting Standards Codification (ASC) Topic 220, “Comprehensive Income,” by requiring entities to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to provide information on significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. The Company will present the new disclosures prospectively beginning in the first quarter of fiscal year 2014.

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2.	Acquisition of MGE

Effective September 1, 2013, Laclede Group completed the purchase of substantially all of the assets and liabilities of Missouri Gas Energy (MGE), a utility engaged in the distribution of natural gas on a regulated basis in western Missouri, from Southern Union Company (SUG), an affiliate of Energy Transfer Equity, L.P. and Energy Transfer Partners, L.P. The purchase was completed pursuant to the purchase agreement dated December 14, 2012. Under the terms of the purchase agreement, Laclede Group acquired MGE for a purchase price of $975 million. The acquisition was supported through a combination of the issuance of 10.0 million shares of Laclede Group common stock, completed on May 29, 2013, the issuance by Laclede Gas of $450.0 million of first mortgage bonds, completed on August 13, 2013, short-term borrowings, and available cash.

The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805 (“Topic 805”), “Business Combinations.” Accordingly, goodwill was measured as the excess of the acquisition-date fair value of the consideration transferred over the amount of acquisition-date identifiable assets acquired net of assumed liabilities. Laclede Group recorded $247.1 million of goodwill as an asset in the consolidated balance sheet, which has been assigned to the Utility within the Company’s Gas Utility segment.

As part of the MGE acquisition, the Utility has estimated the asset retirement obligation of MGE’s long-lived assets as of the acquisition date. This allocation of asset retirement obligations is preliminary and will be finalized upon completion of a detailed fair value analysis that is being performed by the Company in the first quarter of fiscal 2014.

Under Topic 805, merger-related transaction costs (such as advisory, legal, valuation and other professional fees) are not included as components of consideration transferred but are accounted for as expenses in the periods in which the costs are incurred. During the years ended September 30, 2013 and 2012, Laclede Group incurred $17.0 million and $0.2 million, respectively, of third party pre-tax expenses associated with the transaction. These expenses are included in the Statement of Consolidated Income, with $15.1 million included in Other Operating Expenses and $1.9 million included in Interest on Long-term Debt.

On November 13, 2013, in accordance with Section 3.2 of the purchase agreement for MGE, the Utility provided to SUG a reconciliation of certain balance sheet accounts as of August 31, 2013, the date immediately prior to the closing of the acquisition to the initial valuation date of September 30, 2012. The resulting difference adjusts for changes in the actual net assets transferred to the Utility at closing from the level at September 30, 2012. Section 3.2 also contains a process to resolve any disagreements among the parties, and the Utility plans to adjust cash and goodwill for any change as a result of this process upon final settlement, which is anticipated to be in the first quarter of fiscal 2014.

The amount of revenue and earnings of MGE included in our Statements of Consolidated Income subsequent to the September 1, 2013 acquisition date are as follows:



(Thousands)	September 1, 2013 - September 30, 2013
Total net revenues	$	21,985
Net Income	1,795

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The following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the date of the acquisition:



(Thousands)
Assets:
Utility plant	$	671,793
Non-utility property	238
Other investments	3,096
Goodwill	247,078
Other Property and Investments	922,205
Accounts receivable:
Utility	19,963
Other	6,119
Delayed customer billings	10,701
Inventories:
Natural gas stored underground	58,679
Materials and supplies at average cost	3,988
Prepayments and other	487
Total Current Assets	99,937
Deferred Charges:
Regulatory assets	84,014
Other	4,928
Total Deferred Charges	88,942
Total Assets Acquired	$	1,111,084

Liabilities:
Accounts payable	$	20,154
Wages and compensation accrued	5,088
Customer deposits	8,362
Interest accrued	183
Taxes accrued	17,197
Other	12,620
Total Current Liabilities	63,604
Pension and postretirement benefit costs	24,466
Asset retirement obligations	32,056
Regulatory liabilities	2,249
Other	13,709
Total Deferred Credits and Other Liabilities	72,480
Total Liabilities Assumed	$	136,084
Net Assets Acquired	$	975,000

The following unaudited pro forma financial information presents the combined results of operations as if the acquisition had occurred on October 1, 2011. The pro forma financial information does not reflect the costs of any integration activities. The pro forma results include estimates and assumptions, which management believes are reasonable. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had MGE been part of the Utility as of the beginning of fiscal year 2012.

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	Twelve Months Ended September 30,
(Thousands)	2013		2012
Total net revenues	$	1,518,201	$	1,581,425
Net Income	83,642		81,722


3.	PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

This footnote includes all pension plans of the Company whether historical plans or those acquired as part of the purchase of certain assets and liabilities of MGE on September 1, 2013. The net pension and postretirement obligations were remeasured at that time as well as at the fiscal year end.

Pension Plans

~~Laclede Gas~~The Utility has non-contributory, defined benefit, trusteed forms of pension plans covering substantially all employees. Plan assets consist primarily of corporate and U.S. government obligations and a growth segment consisting of exposure to equity markets, commodities, real estate and inflation-indexed securities, achieved through derivative instruments.

Pension costs in 2013, 2012 ~~2011,~~, and ~~2010~~2011 amounted to ~~$20.1~~$17.5 million ~~$14.3~~, $20.1 million, and ~~$7.4~~$14.3 million, respectively, including amounts charged to construction.

The net periodic pension costs include the following components:

(Thousands) 2012 2011 2010

Service cost – benefits earned during the period $ 9,203 $ 9,553 $ 8,841
Interest cost on projected benefit obligation 19,358 18,819 19,729
Expected return on plan assets (19,595 ) (18,849 ) (20,256 )
Amortization of prior service cost 592 642 756
Amortization of actuarial loss 9,040 10,228 8,107
Loss on lump-sum settlements 20,051 943 1,078
Sub-total 38,649 21,336 18,255
Regulatory adjustment (18,579 ) (7,066 ) (10,862 )
Net pension cost $ 20,070 $ 14,270 $ 7,393



(Thousands)	2013			2012			2011
Service cost – benefits earned during the period	$	9,209		$	9,203		$	9,553
Interest cost on projected benefit obligation	16,959			19,358			18,819
Expected return on plan assets	(19,358		)	(19,595		)	(18,849		)
Amortization of prior service cost	544			592			642
Amortization of actuarial loss	10,724			9,040			10,228
Loss on lump-sum settlements	26,996			20,051			943
Sub-total	45,074			38,649			21,336
Regulatory adjustment	(27,532		)	(18,579		)	(7,066		)
Net pension cost	$	17,542		$	20,070		$	14,270

Other changes in plan assets and pension benefit obligations recognized in other comprehensive income include the following:

(Thousands) 2012 2011 2010

Current year actuarial loss (gain) $ 32,884 $ (13,485 ) $ 3,822
Amortization of actuarial loss (29,091 ) (11,171 ) (9,185 )
Current year prior service credit — — (2,949 )
Amortization of prior service cost (592 ) (642 ) (756 )
Sub-total 3,201 (25,298 ) (9,068 )
Regulatory adjustment (3,510 ) 24,533 9,380
Total recognized in other comprehensive income $ (309 ) $ (765 ) $ 312



(Thousands)	2013			2012			2011
Current year actuarial loss (gain)	$	17,030		$	32,884		$	(13,485	)
Amortization of actuarial loss	(10,724		)	(29,091		)	(11,171		)
Acceleration of loss recognized due to settlement	(26,996		)	—			—
Amortization of prior service cost	(544		)	(592		)	(642		)
Sub-total	(21,234		)	3,201			(25,298		)
Regulatory adjustment	21,159			(3,510		)	24,533
Total recognized in other comprehensive income	$	(75	)	$	(309	)	$	(765	)

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Pursuant to the provisions of the ~~Laclede Gas~~Utility pension plans, pension obligations may be satisfied by lump-sum cash payments. Pursuant to a MoPSC Order, lump-sum payments are recognized as settlements (which can result in gains or losses) only if the total of such payments exceeds 100% of the sum of service and interest costs. Lump-sum payments recognized as settlements during fiscal year 2013, 2012 and 2011 were $79.5 million, $60.1 million, and ~~2010 were $60.1~~$2.3 million ~~$2.3 million, and $2.3 million,~~, respectively.

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Pursuant to a MoPSC Order, the return on plan assets is based on the market-related value of plan assets implemented prospectively over a ~~four-year~~four-year period. Gains or losses not yet includible in pension cost are amortized only to the extent that such gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets. Such excess is amortized over the average remaining service life of active participants.

The recovery in rates for ~~the Utility’s~~Laclede Gas' qualified pension ~~plans~~plan is based on an annual allowance of ~~$4.8~~$4.8 million effective August 1, 2007 and ~~$15.5~~$15.5 million effective January 1, 2011. The recovery in rates for MGE's qualified pension plan is based on an annual allowance of $10.0 million effective February 20, 2010. The difference between these amounts and pension expense as calculated pursuant to the above and that otherwise would be included in the Statements of Income and Statements of Comprehensive Income is deferred as a regulatory asset or regulatory liability.

The following table sets forth the reconciliation of the beginning and ending balances of the pension benefit obligation at September 30:

(Thousands) 2012 2011

Benefit obligation at beginning of year $ 384,163 $ 398,360
Service cost 9,203 9,553
Interest cost 19,358 18,819
Actuarial loss (gain) 52,161 (12,625 )
Settlement loss 14,348 746
Gross benefits paid * (67,062 ) (30,690 )

Benefit obligation at end of year $ 412,171 $ 384,163

Accumulated benefit obligation at end of year $ 353,061 $ 329,594

* Includes $(60,085) and $(2,333) lump-sum payments recognized as settlements in fiscal years 2012 and 2011, respectively.



(Thousands)	2013			2012
Benefit obligation at beginning of year	$	412,171		$	384,163
Service cost	9,209			9,203
Interest cost	16,959			19,358
Actuarial loss (gain)	(23,921		)	52,161
MGE acquisition	151,424			—
Settlement loss	24,999			14,348
Gross benefits paid *	(87,023		)	(67,062		)
Benefit obligation at end of year	$	503,818		$	412,171
Accumulated benefit obligation at end of year	$	444,129		$	353,061


*	Includes $79,484 and $60,085 lump-sum payments recognized as settlements in fiscal years 2013 and 2012, respectively.

The following table sets forth the reconciliation of the beginning and ending balances of the fair value of plan assets at September 30:

(Thousands) 2012 2011

Fair value of plan assets at beginning of year $ 247,959 $ 240,922
Actual return on plan assets 53,220 20,455
Employer contributions 40,013 17,272
Gross benefits paid * (67,062 ) (30,690 )
Fair value of plan assets at end of year $ 274,130 $ 247,959

Funded status of plans, end of year $ (138,041 ) $ (136,204 )

* Includes $(60,085) and $(2,333) lump-sum payments recognized as settlements in fiscal years 2012 and 2011, respectively.



(Thousands)	2013			2012
Fair value of plan assets at beginning of year	$	274,130		$	247,959
Actual return on plan assets	3,387			53,220
Employer contributions	27,991			40,013
MGE acquisition	126,958			—
Gross benefits paid *	(87,023		)	(67,062		)
Fair value of plan assets at end of year	$	345,443		$	274,130
Funded status of plans, end of year	$	(158,375	)	$	(138,041	)


*	Includes $79,484 and $60,085 lump-sum payments recognized as settlements in fiscal years 2013 and 2012, respectively.

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The following table sets forth the amounts recognized in the Balance Sheets at September 30:

(Thousands) 2012 2011

Current liabilities $ (468 ) $ (2,440 )
Noncurrent liabilities (137,573 ) (133,764 )
  Total $ (138,041 ) $ (136,204 )

Pre-tax amounts recognized in accumulated other comprehensive income not yet recognized as components of net periodic pension cost consist of:
Net actuarial loss $ 136,464 $ 132,671
Prior service costs 5,011 5,603
  Sub-total 141,475 138,274
Adjustments for amounts included in Regulatory Assets (137,845 ) (134,334 )
  Total $ 3,630 $ 3,940



(Thousands)	2013			2012
Current liabilities	$	(442	)	$	(468	)
Noncurrent liabilities	(157,933		)	(137,573		)
Total	$	(158,375	)	$	(138,041	)
Pre-tax amounts recognized in accumulated other comprehensive income not yet recognized as components of net periodic pension cost consist of:
Net actuarial loss	$	115,775		$	136,464
Prior service costs	4,467			5,011
Sub-total	120,242			141,475
Adjustments for amounts included in Regulatory Assets	(116,686		)	(137,845		)
Total	$	3,556		$	3,630

At September 30, ~~2012,~~2013, the following pre-tax amounts are expected to be amortized from accumulated other comprehensive income into net periodic pension cost during fiscal year ~~2013:~~2014:

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(Thousands)

Amortization of net actuarial loss $ 11,356
Amortization of prior service cost 544
Sub-total 11,900
Regulatory adjustment (11,538 )
Total $ 362



(Thousands)
Amortization of net actuarial loss	$	7,088
Amortization of prior service cost	497
Sub-total	7,585
Regulatory adjustment	(7,196		)
Total	$	389

The assumptions used to calculate net periodic pension costs are as follows:

2012 2011 2010

Weighted average discount rate 5.10% 4.75% 5.25%
Weighted average rate of future compensation increase 3.00% 3.00% 3.25%
Expected long-term rate of return on plan assets 7.75% 8.00% 8.25%



	2013	2012	2011
Weighted average discount rate *	3.95%	5.10%	4.75%
Weighted average rate of future compensation increase	3.00%	3.00%	3.00%
Expected long-term rate of return on plan assets	7.75%	7.75%	8.00%


*	Weighted average discount rate assumption for the MGE pension plan is 5.05%.

The weighted average discount rate is based on long-term, high quality bond indices at the measurement date. The expected long-term rate of return on plan assets is based on historical and projected rates of return for current and planned asset classes in the investment portfolio. Assumed projected rates of return for each asset class were selected after analyzing historical experience and future expectations of the returns. The overall expected rate of return for the portfolio was developed based on the target allocation for each class. The expected return is a long-term assumption that generally does not change annually. However, in 2012 and 2011, the expected return assumption was adjusted to reflect capital market volatility in recent years.

The assumptions used to calculate the benefit obligations are as follows:

2012 2011

Weighted average discount rate 3.95% 5.10%
Weighted average rate of future compensation increase 3.00% 3.00%



	2013	2012
Weighted average discount rate *	4.70%	3.95%
Weighted average rate of future compensation increase	3.00%	3.00%


*	Weighted average discount rate assumption for the MGE pension plan is 5.00%.

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Following are the projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for plans that have a projected benefit obligation and an accumulated benefit obligation in excess of plan assets:

(Thousands) 2012 2011

Projected benefit obligation $ 412,171 $ 384,163
Fair value of plan assets 274,130 247,959

Accumulated benefit obligation 353,061 329,594
Fair value of plan assets 274,130 247,959



(Thousands)	2013		2012
Projected benefit obligation	$	503,818	$	412,171
Accumulated benefit obligation	444,129		353,061
Fair value of plan assets	345,443		274,130

Following are the targeted and actual plan assets by category as of September 30 of each year:

2013 2012 2011
Target Actual Actual

Growth Strategy
     Equity Markets 42.5% 37.3% 44.6%
     Commodities 2.5% 2.2% 0.0%
     Real Estate 2.5% 2.2% 0.0%
     Inflation-Indexed Securities 2.5% 2.2% 0.0%
Debt Securities 50.0% 41.1% 55.3%
Other* 0.0% 15.0% 0.1%
  Total 100.0% 100.0% 100.0%



	2014		2013		2012
	Target		Actual		Actual
Growth Strategy
Equity Markets	42.5	%	45.9	%	37.3	%
Commodities	2.5	%	1.6	%	2.2	%
Real Estate	2.5	%	3.0	%	2.2	%
Inflation-Indexed Securities	2.5	%	1.4	%	2.2	%
Debt Securities	50.0	%	43.3	%	41.1	%
Other*	—	%	4.8	%	15.0	%
Total	100.0	%	100.0	%	100.0	%

*Other investments in ~~2011 and 2012~~2013 consist of cash equivalents. The relatively large cash position at September 30, 2012 was

due to a transition taking place between investment managers and was invested in debt securities in a matter of days.

~~Laclede Gas’~~

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The Utility's investment policy is designed to maximize, to the extent possible, the funded status of the plan over time, and minimize volatility of funding and costs. The policy seeks to maximize investment returns consistent with these objectives and ~~Laclede Gas’~~the Utility's tolerance for risk. The duration of plan liabilities and the impact of potential changes in asset values on the funded status are fundamental considerations in the selection of plan assets. Outside investment management specialists are utilized in each asset class. Such specialists are provided with guidelines, where appropriate, designed to ensure that the investment portfolio is managed in accordance with the policy. The policy seeks to avoid significant concentrations of risk by investing in a diversified portfolio of assets. Investments in corporate, U. S. government and agencies, and, to a lesser extent, international debt securities seek to provide duration matching with plan liabilities, and typically have investment grade ratings and reflect allocations across various entities and industries. During 2012, exposures to additional asset types were added to the target portfolio: commodities, real estate and inflation-indexed securities. The investment policy permits the use of derivative instruments, which may be used to achieve the desired market exposure of an index, adjust portfolio duration, or rebalance the total portfolio to the target asset allocation. The Growth Strategy utilizes a combination of derivative instruments and debt securities to achieve diversified exposure to equity and other markets while generating returns from the fixed-income investments and providing further duration matching with the liabilities. Performance and compliance with the guidelines is regularly monitored. The policy calls for increased allocations to debt securities as the funded status improves.

Following are expected pension benefit payments for the succeeding five fiscal years, and in aggregate for the five years thereafter:



(Millions)	Pensions from Qualified Trust	Pensions from Laclede Gas Funds
2014	22.9	0.4
2015	25.3	0.5
2016	27.2	0.5
2017	30.8	0.6
2018	34.2	0.6
2019 – 2023	227.2	4.5

(Millions)

Pensions from
Qualified Trust

Pensions from
Laclede Gas
Funds

2013 $ 19.0 $ 0.5
2014 19.1 0.5
2015 22.1 0.5
2016 24.5 0.6
2017 27.9 0.7
2018 – 2022 187.2 4.4

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The funding policy of ~~Laclede Gas~~the Utility is to contribute an amount not less than the minimum required by government funding standards, nor more than the maximum deductible amount for federal income tax purposes. Contributions to the pension plans in fiscal year ~~2013~~2014 are anticipated to be ~~$23.3~~$24.0 million into the qualified trusts, and ~~$0.5~~$0.4 million into the non-qualified plans.

Postretirement Benefits

~~Laclede Gas~~The Utility provides certain life insurance benefits at retirement. Medical insurance is available after early retirement until age ~~65.~~65. The transition obligation not yet includible in postretirement benefit cost is being amortized over 20 ~~years.~~years. Postretirement benefit costs in 2013, 2012 ~~2011,~~, and ~~2010~~2011 amounted to ~~$9.5~~$9.5 million ~~$9.1~~, $9.5 million, and ~~$7.6~~$9.1 million, respectively, including amounts charged to construction.

Net periodic postretirement benefit costs consisted of the following components:

(Thousands) 2012 2011 2010

Service cost – benefits earned during the period $ 8,060 $ 7,676 $ 6,442
Interest cost on accumulated postretirement
benefit obligation 5,521 4,843 4,515
Expected return on plan assets (3,965 ) (3,646 ) (3,032 )
Amortization of transition obligation 136 136 136
Amortization of prior service credit (2,072 ) (2,328 ) (2,328 )
Amortization of actuarial loss 4,261 4,443 3,980
Sub-total 11,941 11,124 9,713
Regulatory adjustment (2,417 ) (2,071 ) (2,071 )
Net postretirement benefit cost $ 9,524 $ 9,053 $ 7,642



(Thousands)	2013			2012			2011
Service cost – benefits earned during the period	$	10,162		$	8,060		$	7,676
Interest cost on accumulated postretirement benefit obligation	5,234			5,521			4,843
Expected return on plan assets	(4,447		)	(3,965		)	(3,646		)
Amortization of transition obligation	93			136			136
Amortization of prior service credit	3			(2,072		)	(2,328		)
Amortization of actuarial loss	5,300			4,261			4,443
Sub-total	16,345			11,941			11,124
Regulatory adjustment	(6,821		)	(2,417		)	(2,071		)
Net postretirement benefit cost	$	9,524		$	9,524		$	9,053

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Other changes in plan assets and postretirement benefit obligations recognized in other comprehensive income include the following:

(Thousands) 2012 2011 2010

Current year actuarial loss $ 10,138 $ 1,696 $ 6,713
Amortization of actuarial loss (4,261 ) (4,443 ) (3,980 )
Amortization of prior service credit 2,072 2,328 2,328
Amortization of transition obligation (136 ) (136 ) (136 )
Sub-total 7,813 (555 ) 4,925
Regulatory adjustment (7,813 ) 555 (4,925 )
Total recognized in other comprehensive income $ — $ — $ —



(Thousands)	2013			2012			2011
Current year actuarial loss	$	16,300		$	10,138		$	1,696
Amortization of actuarial loss	(5,300		)	(4,261		)	(4,443		)
Amortization of prior service credit	(3		)	2,072			2,328
Amortization of transition obligation	(93		)	(136		)	(136		)
Sub-total	10,904			7,813			(555		)
Regulatory adjustment	(10,904		)	(7,813		)	555
Total recognized in other comprehensive income	$	—		$	—		$	—

Pursuant to a MoPSC Order, the return on plan assets is based on the market-related value of plan assets implemented prospectively over a four-year period. Gains and losses not yet includible in postretirement benefit cost are amortized only to the extent that such gain or loss exceeds 10% of the greater of the accumulated postretirement benefit obligation or the market-related value of plan assets. Such excess is amortized over the average remaining service life of active participants. The recovery in rates for the Utility’s postretirement benefit plans is based on an annual allowance of ~~$7.6~~$7.6 million effective August 1, 2007 and ~~$9.5~~$9.5 million effective January 1, 2011. The difference between these amounts and postretirement benefit cost based on the above and that otherwise would be included in the Statements of Income and Statements of Comprehensive Income is deferred as a regulatory asset or regulatory liability.

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The following table sets forth the reconciliation of the beginning and ending balances of the postretirement benefit obligation at September 30:

(Thousands) 2012 2011

Benefit obligation at beginning of year $ 103,991 $ 97,979
Service cost 8,060 7,676
Interest cost 5,521 4,843
Actuarial loss (gain) 15,895 (1,159 )
Gross benefits paid (6,250 ) (5,348 )
Benefit obligation at end of year $ 127,217 $ 103,991



(Thousands)	2013			2012
Benefit obligation at beginning of year	$	127,217		$	103,991
Service cost	10,162			8,060
Interest cost	5,234			5,521
Actuarial loss (gain)	17,514			15,895
MGE acquisition	28,444			—
Gross benefits paid	(8,449		)	(6,250		)
Benefit obligation at end of year	$	180,122		$	127,217

The following table sets forth the reconciliation of the beginning and ending balances of the fair value of plan assets at September 30:

(Thousands) 2012 2011

Fair value of plan assets at beginning of year $ 51,744 $ 45,090
Actual return on plan assets 9,722 791
Employer contributions 12,226 11,211
Gross benefits paid (6,250 ) (5,348 )
Fair value of plan assets at end of year $ 67,442 $ 51,744

Funded status of plans, end of year $ (59,775 ) $ (52,247 )



(Thousands)	2013			2012
Fair value of plan assets at beginning of year	$	67,442		$	51,744
Actual return on plan assets	5,660			9,722
Employer contributions	16,596			12,226
MGE acquisition	30,396			—
Gross benefits paid	(8,449		)	(6,250		)
Fair value of plan assets at end of year	$	111,645		$	67,442
Funded status of plans, end of year	$	(68,477	)	$	(59,775	)

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The following table sets forth the amounts recognized in the Balance Sheets at September 30:

(Thousands) 2012 2011

Current liabilities $ (790 ) $ (310 )
Noncurrent liabilities (58,985 ) (51,937 )
  Total $ (59,775 ) $ (52,247 )

Pre-tax amounts recognized in accumulated other comprehensive income not yet recognized as components of net periodic postretirement benefit cost consist of:
Net actuarial loss $ 52,573 $ 46,696
Prior service credit (24 ) (2,096 )
Transition obligation 93 229
  Sub-total 52,642 44,829
Adjustments for amounts included in Regulatory Assets (52,642 ) (44,829 )
  Total $ — $ —



(Thousands)	2013			2012
Noncurrent assets	$	2,543		$	—
Current liabilities	(300		)	(790		)
Noncurrent liabilities	(70,720		)	(58,985		)
Total	$	(68,477	)	$	(59,775	)
Pre-tax amounts recognized in accumulated other comprehensive income not yet recognized as components of net periodic postretirement benefit cost consist of:
Net actuarial loss	$	63,573		$	52,573
Prior service credit	(27		)	(24		)
Transition obligation	—			93
Sub-total	63,546			52,642
Adjustments for amounts included in Regulatory Assets	(63,546		)	(52,642		)
Total	$	—		$	—

At September 30, ~~2012,~~2013, the following pre-tax amounts are expected to be amortized from accumulated other comprehensive income into net periodic postretirement benefit cost during fiscal year ~~2013:~~2014:



(Thousands)
Amortization of net actuarial loss	$	6,021
Amortization of prior service cost	(4		)
Sub-total	6,017
Regulatory adjustment	(6,017		)
Total	$	—

(Thousands)
Amortization of net actuarial loss $ 5,300
Amortization of prior service cost 3
Amortization of transition obligation 93
Sub-total 5,396
Regulatory adjustment (5,396 )
Total $ —

~~Table of Contents~~

The assumptions used to calculate net periodic postretirement benefit costs are as follows:

2012 2011 2010

Weighted average discount rate 5.05% 4.70% 5.15%
Weighted average rate of future compensation increase 3.00% 3.00% 3.25%
Expected long-term rate of return on plan assets 7.75% 8.00% 8.25%



	2013		2012		2011
Weighted average discount rate *	3.80	%	5.05	%	4.70	%
Weighted average rate of future compensation increase	3.00	%	3.00	%	3.00	%
Expected long-term rate of return on plan assets **	7.75	%	7.75	%	8.00	%


*	Weighted average discount rate assumption for the MGE postretirement plan is 5.05%.


**	Expected long-term rate of return on plan assets assumption for the MGE postretirement plan is 5.75%.

The assumptions used to calculate the accumulated postretirement benefit obligations are as follows:

2012 2011

Weighted average discount rate 3.80% 5.05%
Weighted average rate of future compensation increase 3.00% 3.00%



	2013	2012
Weighted average discount rate *	4.60%	3.80%
Weighted average rate of future compensation increase	3.00%	3.00%


*	Weighted average discount rate assumption for the MGE postretirement plan is 4.95%.

Table of Contents

The assumed medical cost trend rates at September 30 for the Utility's postretirement plans are as follows:

2012 2011
Medical cost trend assumed for next year 7.00% 7.50%
Rate to which the medical cost trend rate is assumed to decline
(the ultimate medical cost trend rate) 5.00% 5.00%
Year that the rate reaches the ultimate trend 2017 2017



	2013	2012
Medical cost trend assumed for next year	7.50%	7.00%
Rate to which the medical cost trend rate is assumed to decline (the ultimate medical cost trend rate)	5.00%	5.00%
Year the rate reaches the ultimate trend	2020	2017

The following table presents the effect of an assumed 1% change in the assumed medical cost trend rate:

(Thousands) 1% Increase 1% Decrease

Effect on net periodic postretirement benefit cost $ 1,580 $ (1,440 )
Effect on accumulated postretirement benefit obligation 8,240 (7,670 )



(Thousands)	1% Increase		1% Decrease
Effect on net periodic postretirement benefit cost	$	1,520	$	(1,390	)
Effect on accumulated postretirement benefit obligation	7,060		(6,580		)

Following are the targeted and actual plan assets by category as of September 30 of each year:

2013 2012 2011
Target Actual Actual

Equity Securities 60.0% 59.0% 59.0%
Debt Securities 40.0% 39.0% 41.0%
Other 0.0% 2.0% 0.0%
Total 100.0% 100.0% 100.0%



	2014 Target		2013 Actual		2012 Actual
Equity Securities	60.0	%	59.0	%	59.0	%
Debt Securities	40.0	%	39.0	%	39.0	%
Other	—	%	2.0	%	2.0	%
Total	100.0	%	100.0	%	100.0	%

Missouri state law provides for the recovery in rates of costs accrued pursuant to GAAP provided that such costs are funded through an independent, external funding mechanism. ~~Laclede Gas~~The Utility established Voluntary Employees’ Beneficiary Association and Rabbi trusts as its external funding mechanisms. ~~Laclede Gas’~~The Utility's investment policy seeks to maximize investment returns consistent with ~~Laclede Gas’~~the Utility's tolerance for risk. Outside investment management specialists are utilized in each asset class. Such specialists are provided with guidelines, where appropriate, designed to ensure that the investment portfolio is managed in accordance with policy. Performance and compliance with the guidelines is regularly monitored. ~~Laclede Gas’~~The Utility's current investment policy targets an asset allocation of 60% to equity securities and 40% to debt securities, excluding cash held in short-term debt securities for the purpose of making benefit payments. ~~Laclede Gas~~The Utility currently invests in a mutual fund which is rebalanced on an ongoing basis to the target allocation. The mutual fund is diversified across U.S. stock and bond markets.

~~Table of Contents~~

Following are expected postretirement benefit payments for the succeeding five fiscal years, and in aggregate for the five years thereafter:

(Millions)

Benefits Paid
from
Qualified Trust

Benefits Paid
from Laclede Gas
Funds

2013 $ 4.7 $ 0.8
2014 5.3 0.3
2015 5.8 0.3
2016 6.4 0.3
2017 7.4 0.4
2018 – 2022 56.5 2.1



(Millions)	Benefits Paid from Qualified Trust		Benefits Paid from Laclede Gas Funds
2014	$	9.5	$	0.3
2015	9.9		0.3
2016	10.7		0.3
2017	11.7		0.4
2018	12.8		0.4
2019 – 2023	84.1		2.2

~~Laclede Gas’~~The Utility's funding policy is to contribute amounts to the trusts equal to the periodic benefit cost calculated pursuant to GAAP as recovered in rates. Contributions to the postretirement plans in fiscal year 2013 are anticipated to be ~~$15.7~~$19.2 million to the qualified trusts, and ~~$0.8~~$0.3 million paid directly to participants from ~~Laclede Gas~~the Utility funds.

Table of Contents

Other Plans

~~Laclede Gas~~The Utility sponsors 401(k) plans that cover substantially all employees. The plans allow employees to contribute a portion of their base pay in accordance with specific guidelines. ~~Laclede Gas~~The Utility provides a match of such contributions within specific limits. The cost of the defined contribution plans of ~~Laclede Gas~~the Utility amounted to ~~$3.8~~$5.0 million ~~$3.6~~, $3.8 million, and ~~$3.6~~$3.6 million for fiscal years 2013, 2012 ~~2011,~~, and ~~2010,~~2011, respectively.

Fair Value Measurements of Pension and Other Postretirement Plan Assets

The table below categorizes the fair value measurements of ~~Laclede Gas’~~the Utility's pension plan assets:

(Thousands)
Quoted
Prices in
Active
Markets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Total
As of September 30, 2012
Cash and cash equivalents $ 57,614 $ — $ — $ 57,614
Debt Securities
  U.S. bond mutual funds 36,767 — — 36,767
  U.S. government — 57,925 — 57,925
  U.S. corporate — 93,169 — 93,169
  U.S. municipal — 9,493 — 9,493
  International — 18,885 — 18,885
Derivative instruments (a) — 277 — 277
          Total $ 94,381 $ 179,749 $ — $ 274,130

As of September 30, 2011
Cash and cash equivalents $ 2,123 $ — $ — $ 2,123
Debt Securities
  U.S. bond mutual funds 36,542 — — 36,542

  U.S. government
— 80,185 — 80,185
  U.S. corporate — 103,352 — 103,352
  U.S. municipal — 9,019 — 9,019
  International — 18,578 — 18,578
Derivative instruments (b) — (1,840 ) — (1,840 )
          Total $ 38,665 $ 209,294 $ — $ 247,959

(a)   Derivative assets of $3,027 net of cash margin payable of $2,750.

(b)   Derivative liabilities of $10,661 net of cash margin receivable of $8,821.



(Thousands)	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
As of September 30, 2013
Cash and cash equivalents	$	18,177	$	—		$	—	$	18,177
Stock/Bond mutual fund	—		115,817			—		115,817
Debt Securities
U.S. bond mutual funds	17,682		—			—		17,682
U.S. government	—		55,743			—		55,743
U.S. corporate	—		110,925			—		110,925
U.S. municipal	—		6,799			—		6,799
International	—		21,594			—		21,594
Derivative instruments (a)	—		(1,294		)	—		(1,294		)
Total	$	35,859	$	309,584		$	—	$	345,443

As of September 30, 2012
Cash and cash equivalents	$	57,614	$	—		$	—	$	57,614
Debt Securities
U.S. bond mutual funds	36,767		—			—		36,767
U.S. government	—		57,925			—		57,925
U.S. corporate	—		93,169			—		93,169
U.S. municipal	—		9,493			—		9,493
International	—		18,885			—		18,885
Derivative instruments (b)	—		277			—		277
Total	$	94,381	$	179,749		$	—	$	274,130

(a) Derivative assets of $4,186 net of cash margin payable of $5,480.

~~Table~~(b) Derivative assets of ~~Contents~~$3,027 net of cash margin receivable of $2,750.

The table below categorizes the fair value measurements of ~~Laclede Gas’~~the Utility's postretirement plan assets:

(Thousands)
Quoted
Prices in
Active
Markets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Total
As of September 30, 2012
Cash and cash equivalents $ 1,106 $ — $ — $ 1,106
U.S. stock/bond mutual fund 66,336 — — 66,336
Total $ 67,442 $ — $ — $ 67,442

As of September 30, 2011
Cash and cash equivalents $ 1,109 $ — $ — $ 1,109
U.S. stock/bond mutual fund 50,635 — — 50,635
Total $ 51,744 $ — $ — $ 51,744



(Thousands)	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of September 30, 2013
Cash and cash equivalents	$	1,411	$	—	$	—	$	1,411
U.S. stock/bond mutual fund	110,234		—		—		110,234
Total	$	111,645	$	—	$	—	$	111,645
As of September 30, 2012
Cash and cash equivalents	$	1,106	$	—	$	—	$	1,106
U.S. stock/bond mutual fund	66,336		—		—		66,336
Total	$	67,442	$	—	$	—	$	67,442

Table of Contents

Cash and cash equivalents include money market mutual funds valued based on quoted market prices. Fair values of derivative instruments are calculated by investment managers who use valuation models that incorporate observable market inputs. Debt securities are valued based on broker/dealer quotations or by using observable market inputs. The stock and bond mutual funds are valued at the quoted market price of the identical securities.

3.
4.	STOCKHOLDER’S EQUITY

Total shares of common stock outstanding were ~~12,804~~24,549 and ~~11,717~~12,804 at September 30, 2013 and 2012, ~~and 2011,~~ respectively.

Common stock and paid-in capital increased ~~$44.4~~$480.8 million and ~~$4.8~~$44.4 million in ~~2012~~2013 and ~~2011,~~2012, respectively. These increases were primarily due to the issuance of common stock to Laclede Group and stock-based compensation costs allocated to ~~Laclede Gas~~the Utility from Laclede Group in both periods.

~~Laclede Gas~~

The Utility periodically sold shares of its stock to Laclede Group at prices per share equal to book value on the last day of the quarter preceding each sale. ~~Laclede Gas~~The Utility sold ~~1,087~~11,745 shares to Laclede Group for ~~$42.7~~$476.5 million during fiscal ~~2012~~2013 and 431,087 shares to Laclede Group for ~~$1.6~~$42.7 million during fiscal ~~2011, which also represents~~2012. During fiscal 2013, $475 million of the ~~total number~~stock sale proceeds were used to fund a portion of ~~shares issued in each year.~~the MGE acquisition. The proceeds from ~~all the~~other sales were used to reduce short-term borrowings. Exemption from registration for all of the sales was claimed under Section 4(2) of the Securities Act of 1933.

Substantially all of the utility plant of ~~Laclede Gas~~the Utility is subject to the liens of its first mortgage bonds. The mortgage contains several restrictions on ~~Laclede Gas’~~the Utility's ability to pay cash dividends on its common stock. These provisions are applicable regardless of whether the stock is publicly held or, as has been the case since the formation of Laclede Group, held solely by the Utility’s parent company. Under the most restrictive of these provisions, no cash dividend may be declared or paid if, after the dividend, the aggregate net amount spent for all dividends after September 30, 1953, would exceed a maximum amount determined by a formula set out in the mortgage. Under that formula, the maximum amount is the sum of $8$8 million plus earnings applicable to common stock (adjusted for stock repurchases and issuances) for the period from September 30, 1953, to the last day of the quarter before the declaration or payment date for the dividends. As of September 30, ~~2012~~2013 and ~~2011,~~2012, the amount under the mortgage’s formula that was available to pay dividends was ~~$355~~$833 million and ~~$299~~$355 million, respectively. Thus, all of the Utility’s retained earnings were free from such restrictions as of those dates.

~~Laclede Gas has on file with~~ The substantial increase in 2013 was primarily due to the ~~SEC an effective shelf registration on Form S-3 for~~ issuance of ~~$350 million of first mortgage bonds, unsecured debt, and preferred~~ stock ~~all of which remains available~~ to Laclede ~~Gas at this time. The Utility has authority from~~Group to fund a portion of the MoPSC to issue up to $518 million in debt securities and preferred stock, including on a private placement basis, as well as to enter into capital leases, issue common stock and receive paid-in capital. This authorization was originally effective through June 30, 2013. In August 2012, Laclede Gas filed a request with the MoPSC to extend this authority for an additional two years, to June 30, 2015. This extension was approved October 24, 2012, to be effective on November 23, 2012. At September 30, 2012, $473.1 million remained under this authorization. The amount, timing, and type of additional financing to be issued will depend on cash requirements and market conditions.MGE acquisition.

~~Table of Contents~~

The components of accumulated other comprehensive income (loss), net of income taxes, recognized in the Balance Sheets at September 30 were as follows:

(Thousands)

Net Unrealized Gains (Losses) on Cash Flow Hedges
Defined Benefit Pension and Other
Postretirement
Benefit Plans
Total
Balance, September 30, 2010 $ 15 $ (2,890 ) $ (2,875 )
Current-period change (68 ) 470 402
Balance, September 30, 2011 (53 ) (2,420 ) (2,473 )
Current-period change 182 190 372
Balance, September 30, 2012 $ 129 $ (2,230 ) $ (2,101 )



(Thousands)	Net Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Pension and Other Postretirement Benefit Plans			Total
Balance, September 30, 2011	$	(53	)	$	(2,420	)	$	(2,473	)
Current-period change	182			190			372
Balance, September 30, 2012	129			(2,230		)	(2,101		)
Current-period change	(53		)	48			(5		)
Balance, September 30, 2013	$	76		$	(2,182	)	$	(2,106	)

Income tax expense (benefit) recorded for items of other comprehensive income reported in the Statements of Comprehensive Income is calculated by applying statutory federal, state, and local income tax rates applicable to ordinary income. The tax rates applied to individual items of other comprehensive income are similar within each reporting period.

4.	61 Table of Contents 5. LONG-TERM DEBT

Maturities on long-term debt for the five fiscal years subsequent to September 30, ~~2012~~2013 are as follows:



2014	—
2015	—
2016	—
2017	—
2018	$	100	million

~~2013~~	~~$25 million~~	~~(Paid at maturity on October 15, 2012)~~
~~2014~~	—
~~2015~~	—
~~2016~~	—
~~2017~~	—

~~Laclede Gas~~On October 15, 2012, the Utility paid at maturity ~~two debt obligations, each for $25~~$25 million principal amount of 6 1/2% first mortgage ~~bonds, on November 15, 2010 and on October 15, 2012. These maturities were both~~bonds. This maturity was funded through short-term borrowings. The Utility issued $100 million of first mortgage bonds in a private placement on March 15, 2013, that had been committed to in August 2012. Of this $100 million, $55 million were issued at 3.00% for a 10-year term, maturing in March 2023, and $45 million were issued at 3.40% for a 15-year term, maturing in March 2028. The proceeds were used for the repayment of short-term debt and general corporate purposes. The Utility issued $450 million of first mortgage bonds on August 13, 2013. Of this $450 million, $100 million was issued at 2.00% maturing in August 2018, $250 million was issued at 3.40% maturing in August 2023, and $100 million was issued at 4.625% maturing in August 2043. The proceeds were used to fund a portion of the MGE acquisition.

At September 30, ~~2012, Laclede Gas~~2013, the Utility had fixed-rate long-term debt, including the current portion, totaling ~~$365 million.~~$890 million. While these long-term debt issues are fixed-rate, they are subject to changes in fair value as market interest rates change. Of the Utility’s ~~$365~~$890 million in long-term debt, ~~$50~~$50 million have no call options, ~~$235~~$410 million have make-whole call options, ~~and $80~~$350 million are callable at par three to six months prior to maturity, and $80 million are callable at par beginning in October 2013. None of the debt has any put options.

On August 6, 2013, Laclede ~~Gas has on file~~Group and the Utility filed with the SEC ~~an effective~~a joint shelf registration statement on Form S-3 for issuance ~~of up to $350 million~~ of first mortgage bonds, unsecured debt, and preferred stock, ~~all~~which expires August 5, 2016. Bonds totaling $450 million were issued by the Utility from this registration statement on August 13, 2013. The amount, timing, and type of ~~which remains available~~additional financing to ~~Laclede Gas at~~be issued under this ~~time.~~ shelf registration will depend on cash requirements and market conditions.

The Utility has authority from the MoPSC to issue up to ~~$518~~$518 million in debt securities and preferred stock, including on a private placement basis, as well as to enter into capital leases, issue common stock and receive paid-in capital. This authorization was originally effective through June 30, 2013. In August 2012, ~~Laclede Gas~~the Utility filed a request with the MoPSC to extend this authority for an additional two years, to June 30, 2015. This extension was approved October 24, 2012, to be effective on November 23, 2012. At ~~September 30, 2012, $473.1~~November 26, 2013, $370.8 million remained under this authorization. The amount, timing, and type of additional financing to be issued will depend on cash requirements and market conditions.

Substantially all of the ~~utility~~Utility plant ~~of Laclede Gas~~ is subject to the liens of its first mortgage bonds. The mortgage contains several restrictions on ~~Laclede Gas’~~the Utility's ability to pay cash dividends on its common stock, which are described more fully in Note 34, Stockholders’ Equity.

At September 30, 2013 and 2012, ~~and 2011, Laclede Gas~~the Utility had authorized 1,480,000 shares of preferred stock ~~shares authorized totaling 1,480,000,~~ but none were issued and outstanding.

For information on additional financing commitments, refer to Note 1213, Commitments and Contingencies.

5.
6.	NOTES PAYABLE AND CREDIT AGREEMENTS

The ~~Utility’s~~Company’s short-term borrowing requirements typically peak during the colder months. These short-term cash requirements can be met through the sale of commercial paper supported by lines of credit with banks or through direct use of the lines of credit. ~~Laclede Gas has~~On September 3, 2013, the Utility entered into a new syndicated line of credit ~~in place of $300~~for $450 million ~~from seven~~ with nine banks, ~~$257.1 million of~~ which ~~is scheduled to~~will expire in ~~July 2017 and $42.9 million of which is scheduled to expire in July 2016.~~September 2018. The largest portion provided by a single bank is ~~17.9%~~15.6%. The previous syndicated line of credit agreement was terminated at that time.

~~Laclede Gas’~~

The Utility's line of credit includes a covenant limiting total debt, including short-term debt, to no more than 70% of total capitalization. On September 30, ~~2012,~~2013, total debt was ~~47%~~51% of total capitalization.

Table of Contents

Due to lower yields available to Laclede Group on its short-term investments, Laclede Group elected to provide a portion of ~~Laclede Gas’~~the Utility's short-term funding through intercompany lending during the fiscal year. Information about the Utility’s internal and external short-term borrowings during the 12 months ended September 30, and as of September 30, is presented below for ~~2012~~2013 and ~~2011:~~2012:



	Commercial Paper Borrowings	Borrowings from Laclede Group	Total Short-Term Borrowings

Twelve Months Ended September 30, 2013
Weighted average borrowings outstanding	$34.2 million	$29.2 million	$63.4 million
Weighted average interest rate	0.3%	0.3%	0.3%
Range of borrowings outstanding	$0 – $99.4 million	$0 – $91.7 million	$0 – $160.5 million

As of September 30, 2013
Borrowings outstanding at end of period	$74.0 million	$46.7 million	$120.7 million
Weighted average interest rate	0.3%	0.3%	0.3%

Twelve Months Ended September 30, 2012
Weighted average borrowings outstanding	$43.8 million	$78.2 million	$122.0 million
Weighted average interest rate	0.3%	0.3%	0.3%
Range of borrowings outstanding	$0 – $133.5 million	$13.0 - $107.5 million	$59.6 - $200.1 million

As of September 30, 2012
Borrowings outstanding at end of period	$40.1 million	$37.1 million	$77.2 million
Weighted average interest rate	0.2%	0.2%	0.2%

Commercial Paper Borrowings Borrowings from Laclede Group
Total
Short-Term
Borrowings

12 Months Ended September 30, 2012
   Weighted average borrowings outstanding $43.8 million $78.2 million $122.0 million
   Weighted average interest rate 0.3% 0.3% 0.3%
   Range of borrowings outstanding $0 – $133.5 million $13.0 – $107.5 million $59.6 – $200.1 million

As of September 30, 2012
   Borrowings outstanding at end of period $40.1 million $37.1 million $77.2 million
   Weighted average interest rate 0.2% 0.2% 0.2%

12 Months Ended September 30, 2011
   Weighted average borrowings outstanding $54.6 million $44.6 million $99.2 million
   Weighted average interest rate 0.3% 0.3% 0.3%
   Range of borrowings outstanding $0 – $172.1 million $0 - $79.9 million $11.5 - $193.0 million

As of September 30, 2011
   Borrowings outstanding at end of period $46.0 million $52.9 million $98.9 million
   Weighted average interest rate 0.3% 0.3% 0.3%

6.
7.	FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of financial instruments not measured at fair value on a recurring basis at September 30, ~~2012~~2013 and ~~2011~~2012 are as follows:



					Classification of Estimated Fair Value (a)
(Thousands)	Carrying Amount		Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2013
Cash and cash equivalents	$	23,916	$	23,916	$	23,892	$	24	$	—
Short-term debt	120,729		120,729		—		120,729		—
Long-term debt, including current portion	887,712		930,369		—		930,369		—

As of September 30, 2012
Cash and cash equivalents	$	2,402	$	2,402	$	2,378	$	24	$	—
Short-term debt	77,225		77,225		—		77,225		—
Long-term debt	364,416		452,768		—		452,768		—

Classification of Estimated Fair Value (a)
(Thousands)
Carrying
Amount

Fair
Value

Quoted
Prices in Active Markets
(Level 1)

Significant Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

As of September 30, 2012
Cash and cash equivalents $ 2,402 $ 2,402 $ 2,378 $ 24 $ —
Short-term debt 77,225 77,225 — 77,225 —
Long-term debt, including current portion 364,416 452,768 — 452,768 —

As of September 30, 2011
Cash and cash equivalents $ 923 $ 923
Short-term debt 98,879 98,879
Long-term debt 364,357 443,739

(a) The Utility adopted the provisions of ASU 2011-04 (ASC Topic 820) in the second quarter of fiscal year 2012 on a prospective basis. Accordingly, disclosures for prior periods are not required to be presented.
(a) The Utility adopted the provisions of ASU 2011-04 (ASC Topic 820) in the second quarter of fiscal year 2012 on a prospective basis. Accordingly, disclosures for prior periods are not required to be presented.

The carrying amounts for cash and cash equivalents and short-term debt approximate fair value due to the short maturity of these instruments. The fair values of long-term debt are estimated based on market prices for similar issues. Refer to Note 78, Fair Value Measurements, for information on financial instruments measured at fair value on a recurring basis.

Table of Contents

7.
8.	FAIR VALUE MEASUREMENTS

The following table categorizes the assets and liabilities in the Balance Sheets that are accounted for at fair value on a recurring basis in periods subsequent to initial recognition.

(Thousands)
Quoted
Prices in
Active
Markets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Effects of Netting and Cash Margin Receivables
/Payables
Total
As of September 30, 2012
Assets
  U. S. Stock/Bond Mutual Funds $ 13,187 $ — $ — $ — $ 13,187
  NYMEX natural gas contracts 7,338 — — (7,338 ) —

  NYMEX gasoline and heating
    oil contracts
344 — — (344 ) —
        Total $ 20,869 $ — $ — $ (7,682 ) $ 13,187

Liabilities
  NYMEX natural gas contracts $ 9,563 $ — $ — $ (9,563 ) $ —

As of September 30, 2011
Assets
  U. S. Stock/Bond Mutual Funds $ 14,833 $ — $ — $ — $ 14,833
  NYMEX natural gas contracts 457 — — 5,064 5,521

  NYMEX gasoline and heating
    oil contracts
19 — — 162 181
        Total $ 15,309 $ — $ — $ 5,226 $ 20,535

Liabilities
  NYMEX natural gas contracts $ 16,738 $ — $ — $ (16,738 ) $ —

  NYMEX gasoline and heating
    oil contracts
124 — — (124 ) —
        Total $ 16,862 $ — $ — $ (16,862 ) $ —



(Thousands)	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Effects of Netting and Cash Margin Receivables /Payables			Total
As of September 30, 2013
Assets
U. S. Stock/Bond Mutual Funds	$	14,500	$	—	$	—	$	—		$	14,500
NYMEX natural gas contracts	1,466		—		—		(1,466		)	—
OTCBB natural gas contracts	—		232		—		(232		)	—
NYMEX gasoline and heating oil contracts	105		—		—		(105		)	—
Total	$	16,071	$	232	$	—	$	(1,803	)	$	14,500
Liabilities
NYMEX natural gas contracts	$	3,455	$	—	$	—	$	(3,455	)	$	—
OTCBB natural gas contracts	$	—	$	5,443	$	—	$	(232	)	$	5,211

As of September 30, 2012
U. S. Stock/Bond Mutual Funds	$	13,187	$	—	$	—	$	—		$	13,187
NYMEX natural gas contracts	7,338		—		—		(7,338		)	—
NYMEX gasoline and heating oil contracts	344		—		—		(344		)	—
Total	$	20,869	$	—	$	—	$	(7,682	)	$	13,187
Liabilities
NYMEX natural gas contracts	$	9,563	$	—	$	—	$	(9,563	)	$	—

The mutual funds included in Level 1 are valued based on exchange-quoted market prices of identical securities. Derivative instruments included in Level 1 are valued using quoted market prices on the New York Mercantile Exchange (NYMEX). Derivative instruments classified in Level 2 include physical commodity derivatives that are valued using Over The Counter Bulletin Board (OTCBB), broker, or dealer quotation services whose prices are derived principally from, or are corroborated by, observable market inputs. The Utility’s policy is to recognize transfers between the levels of the fair value hierarchy, if any, as of the beginning of the interim reporting period in which circumstances change or events occur to cause the transfer. The mutual funds are included in the Other Property and Investments line of the Balance Sheets. Derivative assets and liabilities, including receivables and payables associated with cash margin requirements, are presented net in the Balance Sheets when a legally enforceable netting agreement exists between ~~Laclede Gas~~the Utility and the counterparty to a derivative contract. For additional information on derivative instruments, see Note 89, Derivative Instruments and Hedging Activities.

~~Table of Contents~~

8.
9.	DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

~~Laclede Gas~~The Utility has a risk management policy that allows for the purchase of natural gas derivative instruments with the goal of managing price risk associated with purchasing natural gas on behalf of its customers. This policy prohibits speculation and permits the Utility to hedge up to 70% of its normal volumes purchased for up to a ~~36-month~~36-month period. Costs and cost reductions, including carrying costs, associated with the Utility’s use of natural gas derivative instruments are allowed to be passed on to the Utility’s customers through the operation of its PGA Clause, through which the MoPSC allows the Utility to recover gas supply costs, subject to prudence review by the MoPSC. Accordingly, ~~Laclede Gas~~the Utility does not expect any adverse earnings impact as a result of the use of these derivative instruments. The Utility does not designate these instruments as hedging instruments for financial reporting purposes because gains or losses associated with the use of these derivative instruments are deferred and recorded as regulatory assets or regulatory liabilities pursuant to ASC Topic 980, “Regulated Operations,” and, as a result, have no direct impact on the Statements of Income.

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The timing of the operation of the PGA Clause may cause interim variations in short-term cash flows, because the Utility is subject to cash margin requirements associated with changes in the values of these instruments. Nevertheless, carrying costs associated with such requirements are recovered through the PGA Clause.

From time to time, ~~Laclede Gas~~the Utility purchases NYMEX futures and options contracts to help stabilize operating costs associated with forecasted purchases of gasoline and diesel fuels used to power vehicles and equipment used in the course of its business. At September 30, ~~2012, Laclede Gas~~2013, the Utility held ~~0.8~~0.3 million gallons of gasoline futures contracts at an average price of ~~$2.29~~$2.23 per ~~gallon and 0.3 million gallons of gasoline options contracts.~~gallon. Most of these contracts, the longest of which extends to April 2014, are designated as cash flow hedges of forecasted transactions pursuant to ASC Topic 815, “Derivatives and Hedging.” The gains or losses on these derivative instruments are not subject to the Utility’s PGA Clause.

Derivative instruments designated as cash flow hedges of forecasted transactions are recognized on the Balance Sheets at fair value and the change in the fair value of the effective portion of these hedge instruments is recorded, net of tax, in other comprehensive income (OCI). Accumulated other comprehensive income (AOCI) is a component of Total Common Stock Equity. Amounts are reclassified from AOCI into earnings when the hedged items affect net income, using the same revenue or expense category that the hedged item impacts. Based on market prices at September 30, ~~2012,~~2013, it is expected that approximately ~~$0.2~~$0.1 million in pre-tax gains will be reclassified into the Statements of Income during fiscal year ~~2013.~~2014. Cash flows from hedging transactions are classified in the same category as the cash flows from the items that are being hedged in the Statements of Cash Flows.

The Utility’s derivative instruments consist primarily of NYMEX and OTCBB positions. The NYMEX is the primary national commodities exchange on which natural gas derivatives are traded. Open NYMEX and OTCBB natural gas futures positions at September 30, ~~2012~~2013 were as follows:

MMBtu
(millions)

Avg. Price
Per
MMBtu
Open long futures positions
Fiscal 2013 23.53 $ 4.01
Fiscal 2014 1.87 3.45



	MMBtu (millions)	Avg. Price Per MMBtu
NYMEX open long futures positions
Fiscal 2014	7.26	$	3.99
Fiscal 2015	0.94	3.84
OTCBB open long futures positions
Fiscal 2014	16.81	3.97
Fiscal 2015	7.58	4.22

At September 30, ~~2012, Laclede Gas~~2013, the Utility also had ~~11.4~~23.6 million MMBtu of other price mitigation in place through the use of NYMEX and OTCBB natural gas option-based strategies.



The Effect of Derivative Instruments on the Statements of Income and Statements of Comprehensive Income
	Location of Gain (Loss)
(Thousands)	Recorded in Income	2013			2012		2011
Derivatives in Cash Flow Hedging Relationships
NYMEX gasoline and heating oil contracts:
Effective portion of gain recognized in OCI on derivatives		$	123		$	297	$	355
Effective portion of gain reclassified from AOCI to income	Utility – Other Operation Expenses	211			—		466
Ineffective portion of gain (loss) on derivatives recognized in income	Utility – Other Operation Expenses	(127		)	175		12
Derivatives Not Designated as Hedging Instruments *
NYMEX gasoline and heating oil contracts:
Gain (loss) recognized in income on derivative	Other Income and (Income Deductions) - Net	$	41		$	19	$	37

~~Table of Contents~~

The Effect of Derivative Instruments on the Statements of Income and Statements of Comprehensive Income

Location of Gain (Loss)
(Thousands) Recorded in Income 2012 2011 2010
Derivatives in Cash Flow Hedging Relationships

  NYMEX gasoline and heating oil contracts:
    Effective portion of gain recognized in
      OCI on derivatives
$ 297 $ 355 $ 160

    Effective portion of gain reclassified from
    AOCI to income
Utility – Other Operation Expenses — 466 264

  Ineffective portion of gain (loss) on derivatives
    recognized in income
Utility – Other Operation Expenses 175 12 (57 )

Derivatives Not Designated as Hedging Instruments *

  NYMEX gasoline and heating oil contracts:

    Gain (loss) recognized in income on derivative Other Income and (Income Deductions) - Net $ 19 $ 37 $ (1 )

Gains and losses on ~~Laclede Gas’~~the Utility's natural gas derivative instruments, which are not designated as hedging instruments for financial reporting purposes, are deferred pursuant to the Utility’s PGA Clause and initially recorded as regulatory assets or regulatory liabilities. These gains and losses are excluded from the table above because they have no direct impact on the Statements of Income. Such amounts are recognized in the Statements of Income as a component of Utility Natural and Propane Gas operating expenses when they are recovered through the PGA Clause and reflected in customer billings.

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Fair Value of Derivative Instruments in the Balance Sheet at September 30, 2012

Fair Value of Derivative Instruments in the Balance Sheet at September 30, 2013

Asset Derivatives

Liability Derivatives

Asset Derivatives

Liability Derivatives

(Thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value*

Balance Sheet Location

Fair Value*

Derivatives designated as hedging instruments

NYMEX gasoline and heating oil contracts

Accounts Receivable - Other

105

Accounts Receivable - Other

—

Derivatives not designated as hedging instruments

NYMEX natural gas contracts

Accounts Receivable – Other

1,434

Accounts Receivable – Other

3,455

Other Deferred Charges

—

OTCBB natural gas contracts

Other Current Liabilities

228

Current Liabilities - Other

4,045

Other Deferred Credits

Deferred Credits - Other

1,398

Sub-total

1,698

8,898

Total derivatives

1,803

8,898

Fair Value of Derivative Instruments in the Balance Sheet at September 30, 2012

Asset Derivatives

Liability Derivatives

(Thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments

NYMEX gasoline and heating oil contracts

Accounts Receivable - Other

334

Accounts Receivable - Other

—

Accounts Receivable - Other

334

Accounts Receivable - Other

—

Derivatives not designated as hedging instruments

NYMEX natural gas contracts

Accounts Receivable – Other

7,338

Accounts Receivable – Other

9,563

Accounts Receivable - Other

7,338

Accounts Receivable - Other

9,563

NYMEX gasoline and heating oil contracts

Accounts Receivable – Other

Accounts Receivable - Other

—

Accounts Receivable - Other

—

Sub-total

7,348

9,563

7,348

9,563

Total derivatives

7,682

9,563

7,682

9,563

Fair Value of Derivative Instruments in the Balance Sheet at September 30, 2011

Asset Derivatives

Liability Derivatives

(Thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments

NYMEX gasoline and heating oil contracts

Derivative Instrument Assets

117

Derivatives not designated as hedging instruments

NYMEX natural gas contracts

Derivative Instrument Assets

457

Derivative Instrument Assets

16,330

Other Deferred Charges

—

Other Deferred Charges

408

NYMEX gasoline and heating oil contracts

Derivative Instrument Assets

Sub-total

461

16,745

Total derivatives

476

16,862

The fair values of Asset Derivatives and Liability Derivatives exclude the fair value of cash margin receivables or payables with counterparties subject to netting arrangements. Fair value amounts of derivative contracts (including the fair value amounts of cash margin receivables and payables) for which there is a legal right to set off are presented net on the Balance Sheets. As such, the gross balances presented in the table above are not indicative of the Utility’s net economic exposure. Refer to Note 78, Fair Value Measurements, for information on the valuation of derivative instruments.

Following is a reconciliation of the amounts in the tables above to the amounts presented in the Balance Sheets:

(Thousands) 2012 2011

Fair value of asset derivatives presented above $ 7,682 $ 476
Fair value of cash margin receivables offset with derivatives 1,964 22,088
Netting of assets and liabilities with the same counterparty (9,646 ) (16,862 )
  Total $ — $ 5,702

Derivative Instrument Assets, per Balance Sheets:
  Derivative instrument assets $ — $ 4,746
  Other deferred charges — 956
    Total $ — $ 5,702

Fair value of liability derivatives presented above $ 9,563 $ 16,862
Fair Value of cash margin payables offset with derivatives 83 —
Netting of assets and liabilities with the same counterparty (9,646 ) (16,862 )
  Derivative instrument liabilities, per Balance Sheets* $ — $ —

* Included in the Other line of the Current Liabilities section, if any



(Thousands)	2013			2012
Fair value of asset derivatives presented above	1,803			7,682
Fair value of cash margin receivables offset with derivatives	1,890			1,964
Netting of assets and liabilities with the same counterparty	(3,693		)	(9,646		)
Total	$	—		$	—
Derivative Instrument Assets, per Balance Sheets:
Derivative instrument assets	—			—
Other deferred charges	—			—
Total	$	—		$	—
Fair value of liability derivatives presented above	8,898			9,563
Fair Value of cash margin payables offset with derivatives	6			83
Netting of assets and liabilities with the same counterparty	(3,693		)	(9,646		)
Derivative instrument liabilities, per Balance Sheets*	$	5,211		$	—
Derivative Instrument Assets, per Balance Sheets:
Other current liabilities	3,817			—
Other deferred credits	1,394			—
Total	$	5,211		$	—

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Additionally, at September 30, 2013 and September 30, 2012, the Utility had ~~$8.0~~$2.9 million and $8.0 million, respectively, in cash margin receivables not offset with derivatives, that are presented in Accounts Receivable – Other. There was no such amount at September 30, 2011.

9.	10. INCOME TAXES

The net provisions for income taxes charged during the fiscal years ended September 30, 2013, 2012, ~~2011,~~ and ~~2010~~2011 are as follows:

(Thousands) 2012 2011 2010

Included in Statements of Income:
  Federal
    Current $ (11,288 ) $ 133 $ (11,412 )
    Deferred 27,186 19,848 27,222
    Investment tax credits (213 ) (213 ) (216 )
  State and local
    Current (1,825 ) (152 ) (1,892 )
    Deferred 4,600 3,380 4,448
Total Income Tax Expense $ 18,460 $ 22,996 $ 18,150



(Thousands)	2013			2012			2011
Included in Statements of Income:
Federal
Current	$	(6,539	)	$	(11,288	)	$	133
Deferred	20,103			27,186			19,848
Investment tax credits	(213		)	(213		)	(213		)
State and local
Current	(984		)	(1,825		)	(152		)
Deferred	2,284			4,600			3,380
Total Income Tax Expense	$	14,651		$	18,460		$	22,996

The effective income tax rate varied from the federal statutory income tax rate for each year due to the following:

2012 2011 2010

Federal income tax statutory rate 35.0 % 35.0 % 35.0 %
State and local income taxes, net of federal
income tax benefits 2.6 2.7 2.9
Certain expenses capitalized on books and
deducted on tax return (8.9 ) (6.1 ) (5.6 )
Taxes related to prior years (0.6 ) (0.8 ) (0.4 )
Other items – net (1.1 ) (0.8 ) (0.5 )
Effective income tax rate 27.0 % 30.0 % 31.4 %



	2013		2012		2011
Federal income tax statutory rate	35.0	%	35.0	%	35.0	%
State and local income taxes, net of federal
income tax benefits	3.3		2.6		2.7
Certain expenses capitalized on books and
deducted on tax return	(10.8	)	(8.9	)	(6.1	)
Taxes related to prior years	(1.6	)	(0.6	)	(0.8	)
Other items – net	(2.8	)	(1.1	)	(0.8	)
Effective income tax rate	23.1	%	27.0	%	30.0	%

The significant items comprising the net deferred tax liability recognized in the Balance Sheets as of September 30 are as follows:



(Thousands)	2013			2012
Deferred tax assets:
Reserves not currently deductible	$	13,933		$	16,400
Pension and other postretirement benefits	71,367			73,480
Unamortized investment tax credits	1,799			1,955
Other*	10,450			14,513
Total deferred tax assets	97,549			106,348
Deferred tax liabilities:
Relating to utility property	341,975			303,332
Regulatory pension and other postretirement benefits	124,871			121,554
Deferred gas costs	7,112			20,652
Other	5,396			26,414
Total deferred tax liabilities	479,354			471,952
Net deferred tax liability	381,805			365,604
Net deferred tax liability – current*	(1,692		)	(10,146		)
Net deferred tax liability – non-current*	$	380,113		$	355,458

(Thousands) 2012 2011

Deferred tax assets:
  Reserves not currently deductible $ 16,400 $ 18,146
  Pension and other postretirement benefits 73,480 69,112
  Unamortized investment tax credits 1,955 2,088
  Other 14,513 9,529
      Total deferred tax assets 106,348 98,875

Deferred tax liabilities:
  Relating to property 303,332 278,422
  Regulatory pension and other postretirement benefits 121,554 111,327
  Deferred gas costs 20,652 14,674
  Other 26,414 18,942
      Total deferred tax liabilities 471,952 423,365

Net deferred tax liability 365,604 324,490
Net deferred tax liability – current (10,146 ) (9,165 )
Net deferred tax liability – non-current $ 355,458 $ 315,325
* The Utility periodically invests in tax credits. As of September 30, 2013, $6.6 million of state tax credits are included in Other and Net deferred tax liability. $4.3 million of state tax credits were classified as current. $2.3 million of state tax credits were classified as non-current.

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At September 30, 2012, the Utility had an allocated federal net operating loss of approximately $1.8 million which may be carried forward 20 years to offset taxable income and investments in state tax credits totaling $5.9 million that may be carried forward 20 years. No valuation allowances have been recorded because the Utility believes these items will more likely than not be realized during the carryover periods.

Laclede Group files a consolidated federal and state income tax return and allocates income taxes to ~~Laclede Gas~~the Utility and its other subsidiaries as if each entity were a separate taxpayer. Pursuant to GAAP, the Utility may recognize the tax benefit from a tax position only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Utility records potential interest and penalties related to its uncertain tax positions as interest expense and other income deductions, respectively. Unrecognized tax benefits, accrued interest payable, and accrued penalties payable are included in the Other line of the Deferred Credits and Other Liabilities section of the Balance Sheets.

The following table presents a reconciliation of the beginning and ending balances of unrecognized tax benefits at September 30 as reported in the Balance Sheets:

(Thousands) 2012 2011

Unrecognized tax benefits, beginning of year $ 5,536 $ 6,383
Increases (decreases) related to tax positions taken in current year 490 (233 )
Reductions due to lapse of applicable statute of limitations (411 ) (614 )
Unrecognized tax benefits, end of year $ 5,615 $ 5,536



(Thousands)	2013			2012
Unrecognized tax benefits, beginning of year	$	5,615		$	5,536
Increases related to tax positions taken in current year	1,420			490
Reductions due to lapse of applicable statute of limitations	(5,018		)	(411		)
Unrecognized tax benefits, end of year	$	2,017		$	5,615

The amount of unrecognized tax benefits, which, if recognized, would affect the Utility’s effective tax rate were ~~$1.2~~$1.5 million and ~~$1.3~~$1.2 million as of September 30, ~~2012~~2013 and ~~2011,~~2012, respectively. It is reasonably possible that events will occur in the next 12 months that could increase or decrease the amount of the Utility’s unrecognized tax benefits. The Utility does not expect that any such change will be significant to the Utility's Balance Sheets.

Interest accrued associated with the Utility’s uncertain tax positions as of September 30, ~~2012~~2013 and ~~2011~~2012 were ~~$0.5~~$0.1 million and ~~$0.4~~$0.5 million, respectively, and no penalties were accrued as of those dates. Interest expense accrued during fiscal ~~years~~ year 2013 was $0.1 million, $0.2 million for fiscal year 2012 ~~2011,~~, and ~~2010 was~~ $0.2 million for ~~each year.~~fiscal year 2011. During fiscal ~~years 2012 and 2011,~~year 2013, the Utility reversed ~~an immaterial amount~~$0.6 million of accrued interest expense in the Statements of Income.

Laclede Group and/or ~~Laclede Gas~~the Utility are subject to U.S. federal income tax as well as income tax of state and local jurisdictions. These companies are no longer subject to examination for fiscal years prior to ~~2009.~~2010.

In September 2013, the Internal Revenue Service and U.S. Treasury Department released final regulations on the deduction and capitalization of expenditures related to tangible property. The regulations do not address the tax treatment for network assets such as natural gas pipelines. These regulations apply to tax years beginning on or after January 1, 2014. Laclede is evaluating the effects of the regulations, but does not believe that they will have a significant impact on its consolidated financial statements.

~~10.~~
11.	OTHER INCOME AND (INCOME DEDUCTIONS) – NET

(Thousands) 2012 2011 2010

Interest income $ 1,230 $ 1,057 $ 1,493
Net investment gain (loss) 2,626 (73 ) 890
Other income 804 53 161
Other income deductions (1,955 ) (212 ) 25
Other Income and (Income Deductions) – Net $ 2,705 $ 825 $ 2,569



(Thousands)	2013			2012			2011
Interest income	$	947		$	1,230		$	1,057
Net investment gain (loss)	2,544			2,626			(73		)
Other income	377			804			53
Other income deductions	(1,859		)	(1,955		)	(212		)
Other Income and (Income Deductions) – Net	$	2,009		$	2,705		$	825

~~Table of Contents~~

~~11.~~
12.	INFORMATION BY OPERATING SEGMENT

The ~~Regulated~~ Gas ~~Distribution~~Utility segment consists of the regulated operations of ~~Laclede Gas. Laclede Gas~~the Utility. The Utility is a public utility engaged in the retail distribution and sale of natural gas serving an area ofin eastern Missouri, ~~with a population of approximately 2.2 million,~~ including the City of St. Louis, through Laclede Gas and ~~parts~~an area in western Missouri, including Kansas City, through MGE.

Table of ~~ten counties in eastern Missouri.~~ Contents

The ~~Non-Regulated~~ Other segment includes ~~Laclede Gas’~~the Utility's non-regulated business activities, which are comprised of its non-regulated propane sales transactions and its propane storage and related services. Accounting policies are described in Note 1. There are no material intersegment revenues.

Management evaluates the performance of the operating segments based on the computation of net economic earnings. Net economic earnings exclude from reported net income the after-tax impacts of net unrealized gains and losses and other timing differences associated with energy-related transactions. Net economic earnings will also exclude, if applicable, the after-tax impact of costs related to acquisition, divestiture, and restructuring activities.



						Adjustments &
(Thousands)	Gas Utility		Other			Eliminations		Total
FISCAL 2013
Operating revenues	$	857,762	$	1,603		$	—	$	859,365
Depreciation and amortization	48,283		—			—		48,283
Interest income	947		—			—		947
Interest charges	26,137		—			—		26,137
Income tax expense	19,243		(4,592		)	—		14,651
Net economic earnings	56,635		574			—		57,209
Total assets	2,981,016		—			—		2,981,016
Capital expenditures	128,496		—			—		128,496

FISCAL 2012
Operating revenues	$	764,651	$	2,976		$	—	$	767,627
Depreciation and amortization	40,739		—			—		40,739
Interest income	1,230		—			—		1,230
Interest charges	25,156		—			—		25,156
Income tax expense	17,393		1,067			—		18,460
Net economic earnings	48,089		1,700			—		49,789
Total assets	1,758,952		1,200			—		1,760,152
Capital expenditures	106,734		—			—		106,734

FISCAL 2011
Operating revenues	$	913,190	$	19,138		$	—	$	932,328
Depreciation and amortization	39,214		—			—		39,214
Interest income	1,057		—			—		1,057
Interest charges	25,544		—			—		25,544
Income tax expense	18,694		4,302			—		22,996
Net economic earnings	46,952		6,851		*	—		53,803
Total assets	1,641,386		1,660			—		1,643,046
Capital expenditures	67,304		—			—		67,304


*	Net economic earnings include income realized by the Utility from separate non-regulated sales of propane inventory no longer needed to serve utility customers, of which occurred in fiscal year 2011. These transactions resulted in after-tax earnings totaling $6.1 million.

Regulated Gas Non-Regulated Adjustments &
(Thousands) Distribution Other Eliminations Total

FISCAL 2012
Operating revenues $ 764,651 $ 2,976 $ — $ 767,627
Depreciation and amortization 40,739 — — 40,739
Interest income 1,230 — — 1,230
Interest charges 25,156 — — 25,156
Income tax expense 17,393 1,067 — 18,460
Net economic earnings 48,089 1,700 — 49,789
Total assets 1,758,952 1,200 — 1,760,152
Capital expenditures 106,734 — — 106,734

FISCAL 2011
Operating revenues $ 913,190 $ 19,138 $ — $ 932,328
Depreciation and amortization 39,214 — — 39,214
Interest income 1,057 — — 1,057
Interest charges 25,544 — — 25,544
Income tax expense 18,694 4,302 — 22,996
Net economic earnings 46,952 6,851 * — 53,803
Total assets 1,641,386 1,660 — 1,643,046
Capital expenditures 67,304 — — 67,304

FISCAL 2010
Operating revenues $ 864,297 $ 10,327 $ — $ 874,624
Depreciation and amortization 37,572 — — 37,572
Interest income 1,493 — — 1,493
Interest charges 26,852 — — 26,852
Income tax expense 15,842 2,308 — 18,150
Net economic earnings 36,141 3,675 * — 39,816
Total assets 1,657,530 922 — 1,658,452
Capital expenditures 56,234 — — 56,234

* Net economic earnings include income realized by Laclede Gas from two separate non-regulated sales of propane inventory no longer needed to serve utility customers, one of which occurred in fiscal year 2011 and the other occurring in fiscal year 2010. These transactions resulted in after-tax earnings totaling $6.1 million in fiscal year 2011 and $3.7 million in fiscal year 2010.



Reconciliation of Net Income to Net Economic Earnings
(Thousands)	2013		2012			2011
Net Income (GAAP)	$	48,765	$	49,899		$	53,777
Unrealized loss (gain) on energy-related derivative contracts, net of tax	100		(110		)	26
Acquisition, divestiture and restructuring activities	8,344		—			—
Net Economic Earnings (Non-GAAP)	$	57,209	$	49,789		$	53,803

Table of Contents

Reconciliation of Net Economic Earnings to Net Income
(Thousands) 2012 2011 2010

Total Net Economic Earnings above $ 49,789 $ 53,803 $ 39,816

Add: Unrealized gain (loss) on energy-related
derivative contracts, net of tax
110 (26 ) (91 )
Net Income $ 49,899 $ 53,777 $ 39,725

~~12.~~

13. COMMITMENTS AND CONTINGENCIES

Commitments

~~Laclede Gas~~The Utility estimates total Utility capital expenditures for fiscal ~~2013~~2014 at approximately ~~$113 million.~~$175 million. In ~~the latter half of~~ fiscal 2011, the Utility initiated a multi-year project to replace its existing customer relationship and work management, financial, and supply chain software applications to enhance its technology, customer service, and business processes. At September 30, ~~2012,~~2013, the Utility was contractually committed to costs of approximately $2$1.5 million related to this project, with additional expenditures to be incurred throughout the project’s life.

~~Laclede Gas~~

The Utility has entered into various contracts, expiring on dates through ~~2017,~~2019, for the storage, transportation, and supply of natural gas. Minimum payments required under the contracts in place at September 30, ~~2012~~2013 are estimated at approximately ~~$299 million. Additional contracts are generally entered into prior to or during the heating season. Laclede Gas estimates that it will pay approximately $82~~$793 million annually, at present rate levels, for fixed charges related to these or other contracts that are expected to be in place for the upcoming year for the reservation of gas supplies and pipeline transmission and storage capacity.. The Utility recovers its costs from customers in accordance with the PGA Clause.

Laclede Pipeline Company (Pipeline), a wholly owned subsidiary of Laclede Group, is providing liquid propane transportation service to ~~Laclede Gas~~the Utility pursuant to an approved FERC tariff and a contractual arrangement between Pipeline and ~~Laclede Gas.~~the Utility. In accordance with the terms of that agreement, ~~Laclede Gas~~the Utility is obligated to pay Pipeline approximately ~~$1.0~~$1.0 million annually, at current rates. The agreement renews at the end of each contract year, unless terminated by either party upon provision of at least six months’ notice.

In August 2012, Laclede Gas committed to the issuance of $100 million first mortgage bonds in a private placement, with settlement scheduled for March 2013. Of this $100 million, $55 million will be issued at an interest rate of 3.00% for a 10-year term, maturing in March 2023, and $45 million will be issued at an interest rate of 3.40% for a 15-year term, maturing in March 2028.

Leases

The lease agreement covering the ~~headquarters~~main office space of ~~Laclede Gas~~the Utility extends through February 2015 with the option to renew for ~~up to~~ five additional years. The aggregate rental expense for fiscal years 2013, 2012, and 2011 was approximately $1.0 million, $0.9 million, and ~~2010 was $927,000, $918,000, and $909,000,~~$0.9 million, respectively. The annual minimum rental payment for fiscal year ~~2013~~2014 is anticipated to be approximately ~~$936,000 with a maximum annual rental payment escalation of $8,800 per year for each year~~$1.0 million through fiscal year 2015. ~~Laclede Gas~~The annual rental amount for the lease agreement covering MGE's main office space is approximately $0.6 million, and the lease term extends through November 30, 2015.

The Utility has entered into various operating lease agreements for the rental of vehicles and power operated equipment. The rental costs will be approximately ~~$2.3~~$2.7 million ~~in fiscal year 2013, $1.6 million~~ in fiscal year 2014, ~~$0.6~~$1.8 million in fiscal year 2015, ~~and $0.1~~$1.0 million in fiscal year ~~2016. Laclede Gas~~2016, $0.4 million in fiscal year 2017, and $0.1 million in fiscal year 2018. The Utility has other relatively minor rental arrangements that provide for minimum rental payments.

Contingencies

~~Table of Contents~~

Similar to other natural gas utility companies, Laclede Gas Company faces the risk of incurring environmental liabilities. In the natural gas industry, these are typically associated with sites formerly owned or operated by gas distribution companies like Laclede Gas ~~and/~~and MGE or its predecessor companies at which manufactured gas operations took place. At this time, Laclede Gas has identified three former manufactured gas plant (MGP) sites where costs have been incurred and claims have been asserted: one in Shrewsbury, Missouri and two in the City of St. Louis, Missouri. Laclede Gas has enrolled the two sites in the City of St. Louis in the Missouri Department of Natural Resources Brownfields/Voluntary Cleanup Program (BVCP). MGE has enrolled all of its former manufactured gas plant sites in the BVCP.

With regard to the former MGP site located in Shrewsbury, Missouri, ~~Laclede Gas~~the Utility and state and federal environmental regulators agreed upon certain remedial actions to a portion of the site in a 1999 Administrative Order on Consent (AOC), which actions have been completed. On September 22, 2008, EPA Region VII issued a letter of Termination and Satisfaction terminating the AOC. However, if after this termination of the AOC, regulators require additional remedial actions, or additional claims are asserted, ~~Laclede Gas~~the Utility may incur additional ~~costs.~~

~~One~~costs.One of the sites located in the City of St. Louis is currently owned by a development agency of the City, which, together with other City development agencies, has selected a developer to redevelop the site.

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In conjunction with this redevelopment effort, ~~Laclede Gas~~the Utility and another former owner of the site entered into an agreement (Remediation Agreement) with the City development agencies, the developer, and an environmental consultant that obligates one of the City agencies and the environmental consultant to remediate the site and obtain a No Further Action letter from the Missouri Department of Natural Resources. The Remediation Agreement also provides for a release of ~~Laclede Gas~~the Utility and the other former site owner from certain liabilities related to the past and current environmental condition of the site and requires the developer and the environmental consultant to maintain certain insurance coverages, including remediation cost containment, premises pollution liability, and professional liability. The operative provisions of the Remediation Agreement were triggered on December 20, 2010, on which date ~~Laclede Gas~~the Utility and the other former site owner, as full consideration under the Remediation Agreement, paid a small percentage of the cost of remediation of the site. The amount paid by ~~Laclede Gas~~the Utility did not materially impact its financial condition, results of operations, or cash flows.

~~Laclede Gas~~

The Utility has not owned the other site located in the City of St. Louis for many years. In a letter dated June 29, 2011, the Attorney General for the State of Missouri informed ~~Laclede Gas~~the Utility that the Missouri Department of Natural Resources had completed an investigation of the site. The Attorney General requested that ~~Laclede Gas~~the Utility participate in the follow up investigations of the site. In a letter dated January 10, 2012, the Utility stated that it would participate in future environmental response activities at the site in conjunction with other potentially responsible parties that are willing to contribute to such efforts in a meaningful and equitable fashion.

To date, amounts required for remediation at these sites have not been material. However, the amount of costs relative to future remedial actions at these and other sites is unknown and may be material. Laclede Gas has notified its insurers that it seeks reimbursement for costs incurred in the past and future potential liabilities associated with the MGP sites. While some of the insurers have denied coverage and reserved their rights, Laclede Gas continues to discuss potential reimbursements with them. In 2005, the Utility’s outside consultant completed an analysis of the MGP sites to determine cost estimates for a one-time contractual transfer of risk from each of the Utility’s insurers of environmental coverage for the MGP sites. That analysis demonstrated a range of possible future expenditures to investigate, monitor, and remediate these MGP sites from ~~$5.8~~$5.8 million to ~~$36.3~~$36.3 million based upon then currently available facts, technology, and laws and regulations. The actual costs that Laclede Gas may incur could be materially higher or lower depending upon several factors, including whether remedial actions will be required, final selection and regulatory approval of any remedial actions, changing technologies and governmental regulations, the ultimate ability of other potentially responsible parties to pay, the successful completion of remediation efforts required by the Remediation Agreement described above, and any insurance recoveries.

MGE has seven owned MGP sites enrolled in the BVCP, including Joplin MGP #1, St. Joseph MGP #1, Kansas City Coal Gas Station B, Kansas City Station A Railroad, Kansas City Coal Gas Station A North, Kansas City Coal Gas Station A South, and Independence MGP #2. The Missouri Department of Natural Resources awarded a Certificate of Completion to Missouri Gas Energy in 2001 for a site located at 20th and Indiana in Kansas City after an initial site analysis and the property was subsequently sold. Source removal has been conducted at all of the owned sites since 2003 with the exception of Joplin, which is in the early stages of site analysis and characterization. Remediation efforts at these sites are at various stages of completion, ranging from groundwater monitoring and sampling following source removal activities to early site characterization in Joplin. As part of its participation in the BVCP, MGE communicates regularly with the Missouri Department of Natural Resources with respect to its remediation efforts and monitoring activities at these sites.

Costs associated with environmental remediation activities are accrued when such costs are probable and reasonably estimable.

~~Laclede Gas~~ The Utility anticipates that any costs it may incur in the future to remediate these sites, less any amounts received as insurance proceeds or as contributions from other potentially responsible parties, would be deferred and recovered in rates through periodic adjustments approved by the MoPSC. Accordingly, any potential liabilities that may arise associated with remediating these sites are not expected to have a material impact on the future financial position and results of operations of ~~Laclede Gas.~~the Utility.

~~On December 28, 2006, the~~

The MoPSC Staff proposed ~~a disallowance of $7.2 million~~disallowances related to Laclede ~~Gas’~~Gas' recovery of its ~~purchased~~ gas costs ~~applicable to fiscal year 2005, which the Staff later reduced to a $1.7~~totaling $6.0 million ~~disallowance~~ pertaining to Laclede ~~Gas’~~Gas' purchase of gas from a marketing affiliate, ~~LER.~~LER, applicable to fiscal years 2005 through 2007. The MoPSC ~~Staff has~~staff also ~~proposed disallowances of $2.8 million and $1.5 million of gas costs relating to Laclede Gas purchases of gas supply from LER for fiscal years 2006 and 2007, respectively. The MoPSC Staff~~ proposed a number of non-monetary recommendations, based on its review of gas costs for fiscal years 2008 ~~2009, and 2010.~~through 2011. In a related matter, on October 6, 2010, the MoPSC Staff filed a complaint against Laclede Gas ~~believes~~alleging that Laclede Gas' affiliate transactions and its Cost Allocation Manual (CAM) violated the MoPSC's affiliate transaction rules. Laclede Gas responded with a counterclaim that the ~~proposed disallowances lack merit~~MoPSC Staff had failed to adhere to the affiliate transaction rules and ~~is vigorously opposing these adjustments in proceedings before~~ the ~~MoPSC. As such, no amount has been recorded in the financial statements for these proposed disallowances.~~Company's CAM.

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~~In connection with~~On July 16, 2013, Laclede Gas, the MoPSC Staff and the Office of the Public Counsel requested MoPSC approval of a unanimous stipulation and agreement resolving the affiliate ~~transactions mentioned above,~~transaction matters for fiscal years 2005 through 2011, resolving the October 6, 2010 complaint, resolving Laclede Gas' counterclaim, presenting a revised CAM for MoPSC approval, and establishing standards of conduct for gas purchase and sales. While the PSC Staff's disallowances were withdrawn as part of the stipulation, Laclede Gas agreed to a minor adjustment to the off-system sales and capacity release sharing mechanism. For a three-year period ending September 30, 2016, Laclede Gas' share of the first $2 million in net margin is reduced from 15% to 0%. None of the other sharing percentages are affected, and beginning October 1, 2016, Laclede's sharing percentage of the first $2 million in net margins returns to 15%. The Stipulation and agreement was approved by the MoPSC in an order issued on August 14, 2013.

On July 7, 2010, the MoPSC Staff filed a complaint against Laclede Gas alleging that, by stating that it was not in possession of proprietary LER documents, Laclede Gas violated the MoPSC Order authorizing the holding company structure (2001 Order). Laclede Gas counterclaimed ~~that~~stating the Staff failed to adhere to ~~the~~ pricing provisions of the ~~MoPSC’s~~MoPSC's affiliate transaction rules and Laclede ~~Gas’~~Gas' Cost Allocation Manual. By orders dated November 3, 2010 and February4,2011, respectively, the MoPSC dismissed ~~Laclede’s~~Laclede's counterclaim and granted summary judgment to Staff, finding that Laclede Gas violated the terms of the 2001 Order and authorizing its General Counsel to seek penalties in court against Laclede Gas. On ~~March 30, 2011, Laclede Gas sought review of the February 4 Order with the Missouri Cole County Circuit Court. On~~ May 19, 2011, the ~~Commission’s~~MoPSC's General Counsel filed a petition ~~with~~seeking penalties against Laclede Gas for violation of the 2001 Order. The MoPSC and Laclede Gas agreed to hold the penalty case in abeyance pending the outcome of Laclede's appeal of the November 3, 2010 and February 4, 2011 orders. These Orders were reversed by the Cole County Circuit Court, seeking penalties in connection with the Commission’s February 4 Order. On July 7, 2011, the Circuit Court Judge signed an agreed Order holding the penalty case in abeyance while the February 4 Order is appealed. On December 21, 2011, the Circuit Court reversed both the MoPSC’s November 3, 2010 Order and its February 4, 2011 Order. The MoPSC appealed and the matter is currently beforebut later upheld by the Western District Court of Appeals.

~~Subsequent~~ On March 19, 2013, the Missouri Supreme Court declined Laclede Gas' request to review the ~~July 7, 2010 complaint,~~opinion of the Western District Court of Appeals. As a result, Laclede Gas produced certain LER documentation that had been requested by the MoPSC Staff ~~filed a related complaint on October 6, 2010 against~~and, pursuant to agreement between the MoPSC and Laclede Gas, ~~LER, and Laclede Group, alleging that~~ the Utility has failed to comply with the MoPSC’s affiliate transaction rules. LER and Laclede Group both filed motions to be dismissed from the proceeding, which were granted by the Commission on December 22, 2010. On January 26,MoPSC’s May 2011 the Commission also dismissed certain counts of the complaint against Laclede Gas. The remaining counts and a counterclaim against the Staff, filed by Laclede Gas, are still pending before the Commission. Laclede Gas believes that the complaint lacks merit and is vigorously opposing it.penalty case was dismissed.

On June 29, 2010, the Office of Federal Contract Compliance Programs (OFCCP) issued a Notice of Violations to Laclede Gas alleging lapses in certain employment selection procedures during a two-year period ending in February 2006. On July 2, 2013, Laclede Gas executed a Conciliation Agreement with the OFCCP in which the Company did not admit to liability, but agreed to provide make whole relief of back pay and interest to the impacted individuals from 2004-2006. The ~~Utility believes that the allegations lack merit and is vigorously defending its position. Management, after discussion with counsel, believes that the final outcome of these matters~~Company's agreement to provide make whole relief will not have a material effect on the consolidated financial position and results of operations, or cash flows of the ~~Utility.~~Company.

As discussed in Note 89, Derivative Instruments and Hedging Activities, ~~Laclede Gas~~the Utility enters into NYMEX exchange-traded derivative instruments. Previously, these instruments were held in accounts at MF Global, Inc. On October 31, 2011, affiliated entities of MF Global filed a Chapter 11 petition at the U.S. Bankruptcy Court in the Southern District of New York. Subsequently, the court-appointed bankruptcy trustee transferred all of the open positions and a significant portion of the margin deposits of ~~Laclede Gas~~the Utility to a new brokerage firm. On June 27, 2013, the bankruptcy Trustee issued a statement projecting that MF Global customers would receive a full payout of their claims. As of November ~~16, 2012,~~26, 2013, the Utility had ~~$1.5~~$0.2 million on deposit with MF Global that remains unavailable to the Utility pending final resolution by the bankruptcy trustee. As the Company has recovered 98% of the amount at issue in the MF Global bankruptcy, the total remaining exposure is not considered material.

On February 19, 2013, Heartland Midwest, LLC, a contractor for Time Warner Cable, hit a MGE natural gas line causing a gas leak while directionally boring during underground cable installation. The natural gas leak resulted in an explosion and fire which killed one person, injured approximately seventeen (including three MGE employees who were at the scene), caused major damage to JJ's restaurant, and caused property damage to adjacent buildings. Several lawsuits have been filed in state court in Jackson County, Missouri, alleging wrongful death, personal injury, property damage, and business interruption. The lawsuits are in the early stages of discovery. While the ~~Utility’s~~Company's total exposure ~~at this time~~ is not considered material at this time, management ~~is unable~~plans to ~~predict when,~~vigorously defend the matter and will continue to evaluate its exposure as discovery proceeds. Management believes, after discussion with counsel, that the final outcome of this matter will not have a material effect on the consolidated financial position, results of operations, or ~~to what extent, these remaining funds will be returned.~~cash flows of the Company.

~~Laclede Gas~~

The Utility is involved in other litigation, claims, and investigations arising in the normal course of business. Management, after discussion with counsel, believes that the final outcome will not have a material effect on the financial position, results of operations, or cash flows of the Utility.

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~~13.~~
14.	INTERIM FINANCIAL INFORMATION (UNAUDITED)

In the opinion of ~~Laclede Gas,~~the Utility, the quarterly information presented below for fiscal years ~~2012~~2013 and ~~2011~~2012 includes all adjustments (consisting of only normal recurring accruals) necessary for a fair statement of the results of operations for such periods. Variations in operations reported on a quarterly basis primarily reflect the seasonal nature of the business of ~~Laclede Gas.~~the Utility.

(Thousands)
Three Months Ended Dec. 31 March 31 June 30 Sept. 30

Fiscal Year 2012
Total Operating Revenues $ 251,983 $ 298,897 $ 117,771 $ 98,976
Operating Income (Loss) 37,522 44,553 9,708 (973 )
Net Income (Loss) 21,697 25,925 4,630 (2,353 )

Three Months Ended Dec. 31 March 31 June 30 Sept. 30

Fiscal Year 2011
Total Operating Revenues $ 277,443 $ 388,375 $ 169,479 $ 97,031
Operating Income (Loss) 37,685 47,308 19,857 (3,358 )
Net Income (Loss) 21,455 26,232 11,533 (5,443 )



(Thousands)
Three Months Ended	Dec. 31		March 31		June 30		Sept. 30

Fiscal Year 2013
Total Operating Revenues	$	251,934	$	364,145	$	131,757	$	111,529
Operating Income (Loss)	42,052		50,691		7,154		(12,353		)
Net Income (Loss)	25,743		29,775		3,765		(10,518		)

Three Months Ended	Dec. 31		March 31		June 30		Sept. 30
Fiscal Year 2012
Total Operating Revenues	$	251,983	$	298,897	$	117,771	$	98,976
Operating Income (Loss)	37,522		44,553		9,708		(973		)
Net Income (Loss)	21,697		25,925		4,630		(2,353		)

All quarters of 2013 reflect transaction costs incurred associated with the acquisition of MGE. The fourth quarter of 2013 includes one month of activity of the operations of MGE, significant transaction costs incurred in the quarter and the interest impact of the debt issued in the quarter. Total impact of all of these during the quarter was a decrease in net income of $5.5 million.

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Item 9.9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There have been no changes in and disagreements on accounting and financial disclosure with Laclede’s outside auditors that are required to be disclosed.

Item 9A.9A. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Rule 13a-15e and Rule 15d-15e under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

~~There~~

(b) Change in Internal Controls

During our fourth fiscal quarter we implemented a new customer care and billing application. The new system and related changes to processes have changed and enhanced our internal control over customer billing and financial reporting. We have taken the necessary steps to test the operating effectiveness of all key controls in the new system and maintain appropriate internal control over financial reporting during fiscal year 2013. Other than the system implementation discussed above, there have been no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Management Report on Internal Control Over Financial Reporting and the Reports of Independent Registered Public Accounting Firm are included under Item 8, pages 3436 through 3638.

Item 9B.9B. Other Information

None.

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Part III

Item 14.14. Principal Accounting Fees and Services

The following table displays the aggregate fees for professional audit services for the audit of the financial statements of The Laclede Group, Inc. and ~~Laclede Gas Company~~the Utility for the fiscal years ended September 30, 2012 and 2011 and fees billed for other services during those periods by the Company’s independent registered public accounting firm, Deloitte & Touche LLP. Approximately ~~85% and~~ 82% of the fees listed below were allocated to the Utility in both fiscal years ~~2012~~2013 and ~~2011,~~2012, respectively.

2012 2011

Audit fees $ 650,000 $ 602,000
Audit related fees (1) 27,000 14,532
Tax fees (2) 26,800 47,409
All other fees (3) 2,200 2,200
Total $ 706,000 $ 666,141



	2013		2012
Audit fees	$	1,163,000	$	650,000
Audit related fees (1)	943,372		27,000
Tax fees (2)	27,200		26,800
All other fees (3)	2,200		2,200
Total	$	2,135,772	$	706,000


(1)	Audit related fees consisted of comfort letters, consents for registration statements and work paper reviews.


(2)	Tax fees consisted primarily of assistance with tax planning, compliance and reporting.


(3)	All other fees consisted of an annual subscription for the accounting technical library.

The Laclede Group, Inc.’s Audit Committee (Committee) pre-approved all of the fees disclosed for fiscal years ~~2011~~2013 and 2012. Consistent with Securities and Exchange Commission requirements regarding accountant independence, Laclede Group’s Audit Committee recognizes the importance of maintaining the independence, in fact and appearance, of our independent registered public accountant. To this end, the Audit Committee adopted a policy to pre-approve all audit and permissible non-audit services provided by the independent accountant. Under the policy, the Committee or its designated member must pre-approve services prior to commencement of the specified service, provided that all fees relative to compliance with Section 404 of the Sarbanes-Oxley Act may only be pre-approved by the Committee. Any pre-approvals by the designated member between meetings will be reported to the Audit Committee at its next meeting. The requests for pre-approval are submitted to the Audit Committee or its designated member, as applicable, by both the independent accountant and Laclede Group’s Chief Financial Officer with a joint statement as to whether in their view the request is consistent with the Securities and Exchange Commission’s rules on accountant independence. At each Committee meeting, the Audit Committee reviews a report summarizing the services, including fees, provided by the independent accountant, a listing of pre-approved services provided since its last meeting, and a current projection of the estimated annual fees to be paid to the independent accountant.

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Part IV



Item 15.15. Exhibits, Financial Statement Schedule
				2012 10-K Page
(a)	1.	Financial Statements:


		See Item 8. Financial Statements and Supplementary Data, filed herewith, for a list of financial statements.

	2.	Supplemental Schedule

		II – Reserves		7478

		Schedules not included have been omitted because they are not applicable or the
		required data has been included in the financial statements or notes to financial statements.
		~~statements.~~

	3.	Exhibits

		Incorporated herein by reference to Index to Exhibits, page ~~75.~~80.

Item 15(a)(3) See the marked exhibits in the Index to Exhibits, page ~~75.~~80.

~~(b)~~			~~Incorporated herein by reference to~~ ~~Index to Exhibits, page 75.~~

(b)Incorporated herein by reference to Index to Exhibits, page 80.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



			LACLEDE GAS COMPANY


Dated:	November ~~19, 2012~~26, 2013	By /s/	Steven P. Rasche
			Steven P. Rasche
			Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



Date	Signature		Title

~~11/19/12~~November 26, 2013	/s/	Suzanne Sitherwood	Chairman of the Board and
		Suzanne Sitherwood	Chief Executive Officer
			(Principal Executive Officer)

~~11/19/12~~November 26, 2013	/s/	Steven P. Rasche	Director and Chief Financial Officer
		Steven P. Rasche	(Principal Financial and Accounting Officer)

~~11/19/12~~November 26, 2013	/s/	~~Mark D. Waltermire~~Steven L. Lindsey	Director ~~Executive Vice~~and President
		~~Mark D. Waltermire~~Steven L. Lindsey

~~11/19/12~~November 26, 2013	/s/	~~Michael R. Spotanski~~Mary C. Kullman	Director and Senior Vice President and
		~~Michael R. Spotanski~~Mary C. Kullman

~~11/19/12~~	~~/s/~~	~~Richard A. Skau~~	~~Director~~
		~~Richard A. Skau~~
			Assistant Corporate Secretary

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SCHEDULE II

LACLEDE GAS COMPANY

RESERVES

FOR THE YEARS ENDED SEPTEMBER 30, 2013, 2012, ~~2011,~~ AND ~~2010~~2011

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT ADDITIONS CHARGED DEDUCTIONS BALANCE
BEGINNING TO TO OTHER FROM AT CLOSE
DESCRIPTION OF PERIOD INCOME ACCOUNTS RESERVES OF PERIOD
(Thousands of Dollars)
YEAR ENDED
SEPTEMBER 30, 2012:
DOUBTFUL ACCOUNTS $ 9,969 $ 6,011 $ 10,145 (a) $ 18,524 (b) $ 7,601
MISCELLANEOUS:
Injuries and
property damage $ 3,603 $ 3,150 $ — $ 2,213 (c) $ 4,540
Deferred compensation 13,474 1,756 — 1,025 14,205
Group medical claims
  incurred but not reported 1,300 15,381 — 15,121 (c) 1,560
TOTAL $ 18,377 $ 20,287 $ — $ 18,359 $ 20,305

YEAR ENDED
SEPTEMBER 30, 2011:
DOUBTFUL ACCOUNTS $ 10,176 $ 7,257 $ 11,340 (a) $ 18,804 (b) $ 9,969
MISCELLANEOUS:
Injuries and
property damage $ 3,228 $ 2,416 $ — $ 2,041 (c) $ 3,603
Deferred compensation 12,571 1,893 — 990 13,474
Group medical claims
  incurred but not reported 1,450 14,171 — 14,321 (c) 1,300
TOTAL $ 17,249 $ 18,480 $ — $ 17,352 $ 18,377

YEAR ENDED
SEPTEMBER 30, 2010:
DOUBTFUL ACCOUNTS $ 10,791 $ 8,609 $ 12,018 (a) $ 21,242 (b) $ 10,176
MISCELLANEOUS:
Injuries and
property damage $ 3,653 $ 2,313 $ — $ 2,738 (c) $ 3,228
Deferred compensation 11,905 1,702 — 1,036 12,571
Group medical claims
  incurred but not reported 1,450 12,833 — 12,833 (c) 1,450
TOTAL $ 17,008 $ 16,848 $ — $ 16,607 $ 17,249



COLUMN A	COLUMN B		COLUMN C						COLUMN D			COLUMN E
	BALANCE AT		ADDITIONS			CHARGED			DEDUCTIONS			BALANCE
	BEGINNING		TO			TO OTHER			FROM			AT CLOSE
DESCRIPTION	OF PERIOD		INCOME			ACCOUNTS			RESERVES			OF PERIOD
(Thousands of Dollars)
YEAR ENDED SEPTEMBER 30, 2013:
DOUBTFUL ACCOUNTS	$	7,601	$	5,584		$	8,234	(b)	$	13,477	(c)	$	7,942
MISCELLANEOUS:
Injuries and property damage	$	4,540	$	1,934		$	—		$	2,135	(d)	$	4,339
Deferred compensation	14,205		1,781			—			1,306			14,680
Group medical claims incurred but not reported	1,560		17,205			—			16,116		(d)	2,649
TOTAL	$	20,305	$	20,920	(a)	$	—	(a)	$	19,557	(a)	$	21,668

YEAR ENDED SEPTEMBER 30, 2012:
DOUBTFUL ACCOUNTS	$	9,969	$	6,011		$	10,145	(b)	$	18,524	(c)	$	7,601
MISCELLANEOUS:
Injuries and property damage	$	3,603	$	3,150		$	—		$	2,213	(d)	$	4,540
Deferred compensation	13,474		1,756			—			1,025			14,205
Group medical claims incurred but not reported	1,300		15,381			—			15,121		(d)	1,560
TOTAL	$	18,377	$	20,287		$	—		$	18,359		$	20,305

YEAR ENDED SEPTEMBER 30, 2011:
DOUBTFUL ACCOUNTS	$	10,176	$	7,257		$	11,340	(b)	$	18,804	(c)	$	9,969
MISCELLANEOUS:
Injuries and property damage	$	3,228	$	2,416		$	—		$	2,041	(d)	$	3,603
Deferred compensation	12,571		1,893			—			990			13,474
Group medical claims incurred but not reported	1,450		14,171			—			14,321		(d)	1,300
TOTAL	$	17,249	$	18,480		$	—		$	17,352		$	18,377


(a)	Totals for the year ended September 30, 2013 includes one month of MGE activity.


(b)	Accounts reinstated, cash recoveries, etc.

~~(b)~~
(c)	Accounts written off.

~~(c)~~
(d)	Claims settled, less reimbursements from insurance companies.

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INDEX TO EXHIBITS

Exhibit
No.

3.01(i)*	-	Laclede’s Restated Articles of Incorporation as amended March ~~1, 2010;~~8, 2013; filed as Exhibit 3.1 to Form ~~10-Q~~10-Q/A for the quarter ended ~~December~~March 31, ~~2010.~~2013.
3.01(ii)*	-	Bylaws of Laclede effective January 18, 2002; filed as Exhibit 3.4 to Laclede’s Form 8-K filed May 29, 2002.
4.01*	-	Mortgage and Deed of Trust, dated as of February 1, 1945; filed as Exhibit 7-A to registration statement No. 2-5586.
4.02*	-	Fourteenth Supplemental Indenture, dated as of October 26, 1976; filed on June 26, 1979 as Exhibit b-4 to registration statement No. 2-64857.
4.03*	-	~~Twenty-Third Supplemental Indenture dated as of October 15, 1997; filed on November 6, 1997 as Exhibit 4.01 to Laclede’s Form 8-K.~~
4.04*	-	Twenty-Fourth Supplemental Indenture dated as of June 1, 1999; filed on June 4, 1999 as Exhibit 4.01 to Laclede’s Form 8-K.
4.05*	-	Twenty-Fifth Supplemental Indenture dated as of September 15, 2000; filed on September 27, 2000 as Exhibit 4.01 to Laclede’s Form 8-K.
4.06*	-	Twenty-Seventh Supplemental Indenture dated as of April 15, 2004; filed on April 28, 2004 as Exhibit 4.01 to Laclede’s Form 8-K.
4.07*	-	Twenty-Eighth Supplemental Indenture dated as of April 15, 2004; filed on April 28, 2004 as Exhibit 4.02 to Laclede’s Form 8-K.
4.08*	-	Twenty-Ninth Supplemental Indenture dated as of June 1, 2006; filed on June 9, 2006, as Exhibit 4.1 to Laclede’s Form ~~8-K~~8-K.
4.09*	-	Thirtieth Supplemental Indenture dated as of September 15, 2008; filed on September 23, 2008 as Exhibit 4.1 to Laclede’s Form 8-K.
4.10*	-	Thirty-First Supplemental Indenture dated as of March 15, 2013; filed as Exhibit 4.1 to the Company's Form 10-Q for the quarter ended March 31, 2013.
4.11*	-	Thirty-Second Supplemental Indenture dated as of August 13, 2013; filed as Exhibit 4.1 to the Company's Form 8-K filed August 13, 2013.
4.12*	-	Laclede Gas Company Board of Directors’ Resolution dated August 28, 1986 which generally provides that the Board may delegate its authority in the adoption of certain employee benefit plan amendments to certain designated Executive Officers; filed as Exhibit 4.12 to the Company’s 1991 10-K.
4.10a4.13	-	Company Board of Directors’ Resolutions dated March 27, 2003, updating authority delegated pursuant to August 28, 1986 Laclede Gas Company resolutions; filed as Exhibit 4.19(a) to the Company’s Form 10-K for the year ended September 30, 2003.
10.01*	-	~~Laclede Incentive Compensation Plan, amended and restated effective as of January 1, 2005; filed as Exhibit 10.3 to the Company’s 10-Q for the fiscal quarter ended December 31, 2008.~~
10.02*	-	~~Laclede Incentive Compensation Plan II, effective as of January 1, 2005; filed as Exhibit 10.4 to the Company’s 10-Q for the fiscal quarter ended December 31, 2008.~~
10.03*	-	~~Senior Officers’ Life Insurance Program of Laclede, as amended; filed as Exhibit 10.03 to the Company’s 1990 10-K.~~
10.03a*	-	Certified copy of resolutions of Laclede’s Board of Directors adopted on June 27, 1991 amending the Senior Officers’ Life Insurance Program; filed as Exhibit 10.01 to the Company’s 10-Q for the fiscal quarter ended June 30, 1991.
10.03b*	-	Certified copy of resolutions of Laclede’s Board of Directors adopted on January 28, 1993 amending the Senior Officers’ Life Insurance Program; filed as Exhibit 10.03 to the Company’s 10-Q for the fiscal quarter ended March 31, 1993.

*Incorporated herein by reference and made a part hereof. Laclede’s File No. 1-1822.

~~Bold items reflect management, contract or compensatory plan or arrangement.~~

~~Table of Contents~~

~~INDEX TO EXHIBITS~~

~~Exhibit~~
~~No.~~

10.04*	-	Restated Laclede Gas Company Supplemental Retirement Benefit Plan, as amended and restated effective as of November 1, 2005; filed as Exhibit 10.06 to the Company’s 10-Q for the fiscal quarter ended December 31, 2008.
10.05*	-	Amended and Restated Storage Service Agreement For Rate Schedule FSS, Contract #3147 between Centerpoint Energy-Mississippi River Transmission Corporation (MRT) and Laclede dated ~~March 18, 2008;~~July 30, 2013; filed as Exhibit ~~10.5~~10.1 to the ~~Company’s 10-Q for the fiscal quarter ended March 31, 2008.~~Company's Form 8-K filed August 2, 2013.
10.05a*	-	Amended and Restated Transportation Service Agreement for Rate Schedule FTS, Contract #3310 between Laclede and MRT dated ~~March 18, 2008;~~July 30, 2013; filed August 2, 2013 as Exhibit ~~10.6~~10.2 to the ~~Company’s 10-Q for the fiscal quarter ended March 31, 2008.~~Company's Form 8-K filed August 2, 2013.
10.05b*	-	Amended and Restated Transportation Service Agreement for Rate Schedule FTS, Contract #3311, between Laclede and MRT dated ~~March 18, 2008;~~July 30, 2013; filed August 2, 2013 as Exhibit ~~10.7~~10.3 to the ~~Company’s 10-Q for the fiscal quarter ended March 31, 2008.~~Company's Form 8-K filed August 2, 2013.
10.06*	-	Laclede Supplemental Retirement Benefit Plan II, effective as of January 1, 2005; filed as Exhibit 10.7 to the Company’s 10-Q for the fiscal quarter ended December 31, 2008.
10.07*	-	Salient Features of the Laclede Gas Company Deferred Income Plan for Directors and Selected Executives, including amendments adopted by the Board of Directors on July 26, 1990; filed as Exhibit 10.12 to the Company’s 1991 10-K.
10.07a*	-	Amendment to Laclede’s Deferred Income Plan for Directors and Selected Executives, adopted by the Board of Directors on August 27, 1992; filed as Exhibit 10.12a to the Company’s 1992 10-K.
10.08*	-	Form of Indemnification Agreement between Laclede and its Directors and Officers; filed as Exhibit 10.13 to the Company’s 1990 10-K.
10.09*	-	The Laclede Group Management Continuity Protection Plan, effective as of January 1, 2005; filed as Exhibit 10.5 to the Company’s 10-Q for the fiscal quarter ended December 31, 2008.

Table of Contents

INDEX TO EXHIBITS

Exhibit
No.
10.09a*	-	Form of Management Continuity Protection Agreement; ~~Filed~~filed as Exhibit 10.05a to the Company’s 10-Q for the fiscal quarter ended December 31, 2008.
10.10*	-	Salient Features of the Laclede Gas Company Deferred Income Plan II for Directors and Selected Executives (as amended and restated effective as of January 1, 2005); filed as Exhibit 10.1 to the Company’s 10-Q for the fiscal quarter ended December 31, 2008.
10.11*	-	Salient Features of the Company’s Deferred Income Plan for Directors and Selected Executives (effective as of January 1, 2005); filed as Exhibit 10.2 to the Company’s 10-Q for the fiscal quarter ended December 31, 2008.
10.12*10.12	-	Loan agreement with Laclede Gas Company dated ~~July 18, 2011~~September 3, 2013 with several banks, including Wells Fargo Bank, National Association, as ~~administrative agent,~~Administrative Agent, U. S. Bank National Association ~~as lead arranger,~~ and JPMorgan Chase Bank, N. A. as ~~documentation agent; filed~~Co-Syndication Agents; Bank of America, N.A., Fifth Third Bank and Morgan Stanley Bank, N.A., as ~~Exhibit 10.4 to~~Co-Documentation Agents; and Wells Fargo Securities LLC, U.S. Bank National Assocation and J.P. Morgan Securities LLC as Joint Lead Arrangers and Joint Bookrunners; and Commerce Bank, UMB Bank, N.A., and Stifel Bank & Trust as the ~~Utility’s Form 10-Q for the fiscal quarter ended June 30, 2011.~~

*Incorporated herein by reference and made a part hereof. Laclede’s File No. 1-1822.

~~Bold items reflect management, contract or compensatory plan or arrangement.~~

~~Table of Contents~~

~~INDEX TO EXHIBITS~~

~~Exhibit~~
~~No.~~
		other participating banks.
10.13*	-	The Laclede Group, Inc. 2002 Equity Incentive Plan; filed as Exhibit 10.22 to the Company’s Form 10-K for the year ended September 30, 2002.
10.13a*	-	Form of Non-Qualified Stock Option Award Agreement with Mandatory Retirement Provisions; filed as Exhibit 10.1 to the Company’s Form 8-K filed November 5, 2004.
10.13b*	-	Form of Non-Qualified Stock Option Award Agreement without Mandatory Retirement Provisions; filed as Exhibit 10.2 to the Company’s Form 8-K filed November 5, 2004.
10.14*	-	Lease between Laclede Gas Company, as Lessee and First National Bank in St. Louis, Trustee, as Lessor; filed as Exhibit 10.23 to the Company’s Form 10-K for the fiscal year ended September 30, 2002.
10.15*	-	Automated Meter Reading Services Agreement executed March 11, 2005; filed as Exhibit 10.1 to the Company’s Form 10-Q for the fiscal quarter ended March 31, 2005. Confidential portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
10.15a*	-	The Laclede Group, Inc. Annual Incentive Plan; filed as Appendix 1 to the Company’s proxy statement filed December 17, 2010.
10.15b*	-	The Laclede Group, Inc. 2006 Equity Incentive Plan; filed as Exhibit 10.1 to the Company’s 10-Q for the fiscal quarter ended March 31, 2012.
10.16*	-	Form of Restricted Stock Award Agreement filed as Exhibit 10.8 to the Company’s 10-Q for the fiscal quarter ended December 31, 2008.
10.16a*	-	Form of Performance Contingent Restricted Stock Award Agreement; filed as Exhibit 10.2 to the Company’s 10-Q for the fiscal quarter ended December 31, 2009.
10.16b*	-	Form of Performance Contingent Restricted Stock Unit Award Agreement; filed as Exhibit 10.1 to the Company’s 10-Q for the fiscal quarter ended December 31, 2011.
10.16c*	-	Form of Performance Contingent Restricted Stock Unit Award Agreement; filed as Exhibit 10.1 to the Company's Form 10-Q for the fiscal quarter ended December 31, 2012.
10.17*	-	The Laclede Group 2011 Management Continuity Protection Plan; filed as Exhibit 10.25 to the Company’s Form 10-K for the fiscal year ended September 30, 2010.
10.17a*	-	Form of Agreement Under The Laclede Group 2011 Management Continuity Protection Plan; filed as Exhibit 10.25a to the Company’s Form 10-K for the fiscal year ended September 30, 2010.
~~10.18~~	-	~~Bond Purchase Agreement between Laclede Gas Company and certain institutional purchasers effective August 3, 2012.~~
~~10.19~~ 10.19*	-	Laclede Gas Company Cash Balance Supplemental Retirement Benefit Plan, effective as of January 1, ~~2009.~~2009; filed as Exhibit 10.19 to the Company's Form 10-K for the fiscal year ended September 30, 2012.
10.20*	-	Purchase and Sale Agreement between Southern Union Company, Plaza Missouri Acquisition, Inc. and The Laclede Group, Inc. (Solely for purposes of Section 13.19 of the Agreement) dated as of December 14, 2012; filed December 14, 2013 as Exhibit 2.1 to Form 8-K.
10.21*	-	Employee Agreement between Southern Union Company, Plaza Missouri Acquisition, Inc. and, for purposes of Section 13.19 of the Purchase and Sale Agreement, dated of even date herewith, to the extent incorporated herein, The Laclede Group, Inc. dated as of December 14, 2012; filed December 14, 2013 as Exhibit 2.3 to Form 8-K.
10.22*	-	Assignment and Assumption Agreement by and between Plaza Missouri Acquisition, Inc. and Laclede Gas Company dated as of January 11, 2013; filed January 11, 2013 as Exhibit 99.1 to the Company's Form 8-K.

Table of Contents

INDEX TO EXHIBITS

Exhibit
No.
10.23*	-	Consent to Assignment executed by Southern Union Company dated as of January 11, 2013; filed January 11, 2013 as Exhibit 99.2 to the Company's Form 8-K.
12	-	Ratio of Earnings to Fixed Charges.
23	-	Consent of Independent Registered Public Accounting Firm.
31	-	Certificates under Rule 13a-14(a) of the CEO and CFO of Laclede Gas Company.
32	-	Section 1350 Certifications under Rule 13a-14(b) of the CEO and CFO of Laclede Gas Company.

*Incorporated herein by reference and made a part hereof. Laclede’s File No. 1-1822.

Bold items reflect management, contract or compensatory plan or arrangement.

~~Table of Contents~~



INDEX TO EXHIBITS

Exhibit
No.

101.INS	-	XBRL Instance Document. (1)
101.SCH	-	XBRL Taxonomy Extension Schema. (1)
101.CAL	-	XBRL Taxonomy Extension Calculation Linkbase. (1)
101.DEF	-	XBRL Taxonomy Definition Linkbase. (1)
101.LAB	-	XBRL Taxonomy Extension Labels Linkbase. (1)
101.PRE	-	XBRL Taxonomy Extension Presentation Linkbase. (1)


(1)	Furnished, not filed

Attached as Exhibit 101 to this Annual Report are the following documents formatted in extensible business reporting language (XBRL): (i) Document and Entity Information; (ii) Statements of Income for the years ended September 30, 2012, 2011, and 2010; (iii) Statements of Comprehensive Income for the years ended September 30, 2012, 2011, and 2010; (iv) Statements of Common Shareholder’s Equity for the years ended September 30, 2012, 2011, and 2010; (v) Statements of Cash Flows for the years ended September 30, 2012, 2011, and 2010; (vi) Balance Sheets at September 30, 2012 and 2011; (vii) Statements of Capitalization at September 30, 2013, 2012, and 2011; (iii) Statements of Comprehensive Income for the years ended September 30, 2013, 2012, and 2011; (iv) Statements of Common Shareholder’s Equity for the years ended September 30, 2013, 2012, and 2011; (v) Statements of Cash Flows for the years ended September 30, 2013, 2012, and 2011; (vi) Balance Sheets at September 30, 2013 and 2012; (vii) Statements of Capitalization at September 30, 2013 and 2012; (viii) Notes to the Financial Statements.

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. We also make available on our website the Interactive Data Files submitted as Exhibit 101 to this Annual Report.



Large accelerated filer	[ ]		Accelerated filer	[ ]
	Non-accelerated filer	[ X ]		Smaller reporting company	[ ]

Utility Operating Revenues

(Thousands)	2012		2011		2010
Residential	$	487,529	$	584,788	$	589,350
Commercial & Industrial		161,866		202,017		208,953
Interruptible		2,105		3,659		4,246
Transportation		14,094		14,426		13,378
Off-System and Capacity Release		92,477		100,225		38,988
Other		6,580		8,075		9,382
Total	$	764,651	$	913,190	$	864,297

Utility Therms Sold and Transported

(Thousands)	2012		2011		2010
Residential		385,317		497,171		506,576
Commercial & Industrial		183,536		228,080		231,292
Interruptible		3,013		5,098		6,267
Transportation		146,117		155,067		150,386
System Therms Sold and Transported		717,983		885,416		894,521
Off-System		314,473		223,000		70,966
Total Therms Sold and Transported		1,032,456		1,108,416		965,487

Utility Customers (End of Period)

		2012		2011		2010
Residential		588,061		584,926		586,974
Commercial & Industrial		39,741		39,995		40,264
Interruptible		15		15		18
Transportation		140		141		137
Total Customers		627,957		625,077		627,393



Utility Operating Revenues
(Thousands)	2013*		2012		2011
Residential	$	556,818	$	487,529	$	584,788
Commercial & Industrial	184,101		161,866		202,017
Interruptible	3,524		2,105		3,659
Transportation	15,293		14,094		14,426
Off-System and Capacity Release	90,188		92,477		100,225
Other	7,838		6,580		8,075
Total	$	857,762	$	764,651	$	913,190
Utility Therms Sold and Transported
(Thousands)	2013*		2012		2011
Residential	496,623		385,317		497,171
Commercial & Industrial	229,562		183,536		228,080
Interruptible	3,149		3,013		5,098
Transportation	160,411		146,117		155,067
System Therms Sold and Transported	889,745		717,983		885,416
Off-System	229,358		314,473		223,000
Total Therms Sold and Transported	1,119,103		1,032,456		1,108,416
Utility Customers (End of Period)
(Thousands)	2013*		2012		2011
Residential	1,027,556		588,061		584,926
Commercial & Industrial	99,960		39,741		39,995
Interruptible	17		15		15
Transportation	1,003		140		141
Total Customers	1,128,536		627,957		625,077

Pension Plan Benefits:

			Estimated				Estimated
			Increase/				Increase/
			(Decrease) to				(Decrease) to
			Projected				Annual
			Benefit				Net Pension
	Increase/		Obligation				Cost*
Actuarial Assumptions	(Decrease)		(Thousands)				(Thousands)

Discount Rate	0.25	%	$	(10,610	)	$	260
	(0.25	)		10,910			(280	)

Rate of Future Compensation Increase	0.25	%		6,000			300
	(0.25	)		(5,900	)		(300	)

Expected Return on Plan Assets	0.25	%		—			(640	)
	(0.25	)		—			640



[ X ]	ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended September 30, ~~2012~~2013



[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from __________ to __________



Missouri (State of Incorporation)	43-0368139 (I.R.S. Employer Identification number)
720 Olive Street St. Louis, MO 63101 (Address and zip code of principal executive offices) 314-342-0500 (Registrant’s telephone number, including area code)



TABLE OF CONTENTS		Page No.

PART I

Forward-Looking Statements		54

Item 1	Business	65
Item 1A	Risk Factors	98
Item 1B	Unresolved Staff Comments	1415
Item 2	Properties	1415
Item 3	Legal Proceedings	1415

Executive Officers of the Registrant (Item 401(b) of Regulation S-K)		1516

PART II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters ~~and Issuer Purchases of Equity Securities~~	1617
Item 6	Selected Financial Data	1718
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	3233
Item 8	Financial Statements and Supplementary Data	3334
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	7074
Item 9A	Controls and Procedures	7074
Item 9B	Other Information	7074

PART III

Item 10	Directors, Executive Officers and Corporate Governance	*
Item 11	Executive Compensation	*
Item 12	Security Ownership of Certain Beneficial Owners and Management
	and Related Stockholder Matters	*
Item 13	Certain Relationships and Related Transactions, and Director Independence	*
Item 14	Principal Accounting Fees and Services	7175

PART IV

Item 15	Exhibits, Financial Statement Schedule	7276

SIGNATURES		7377

FINANCIAL STATEMENT SCHEDULE		7478

INDEX TO EXHIBITS		7579



•	weather conditions and catastrophic events, particularly severe weather in the natural gas producing areas of the country;
•	volatility in gas prices, particularly sudden and sustained changes in natural gas prices, including the related impact on margin deposits associated with the use of natural gas derivative instruments;
•	the impact of changes and volatility in natural gas prices on our competitive position in relation to suppliers of alternative heating sources, such as electricity;
•	changes in gas supply and pipeline availability, including decisions by natural gas producers to reduce production or shut in producing natural gas wells as well as other changes that impact supply for and access to our service area;
•	legislative, regulatory and judicial mandates and decisions, some of which may be retroactive, including those affecting
	•	allowed rates of return
	•	incentive regulation
	•	industry structure
	•	purchased gas adjustment provisions
	•	rate design structure and implementation
	•	regulatory assets
	•	non-regulated and affiliate transactions
	•	franchise renewals
	•	environmental or safety matters, including the potential impact of legislative and regulatory actions related to climate change and pipeline safety
	•	taxes
	•	pension and other postretirement benefit liabilities and funding obligations
	•	accounting ~~standards, including the effect of potential changes relative to adoption of or convergence with international accounting~~ standards;
•	the results of litigation;
•	retention of, ability to attract, ability to collect from, and conservation efforts of, customers;
•	capital and energy commodity market conditions, including the ability to obtain funds with reasonable terms for necessary capital expenditures and general operations and the terms and conditions imposed for obtaining sufficient gas supply;
•	discovery of material weakness in internal controls; and
•	employee workforce issues.

(Millions)
Higher off-system sales volumes (reflecting more favorable market conditions as described in greater detail in the Results of Operations - Overview)	$	67.9
General rate increase, effective September 1, 2010		28.0
Lower wholesale gas costs passed on to Utility customers		(20.5	)
Lower system sales volumes and other variations		(15.3	)
Lower ISRS revenues		(6.2	)
Lower prices charged for off-system sales		(5.0	)
Total Variation	$	48.9

Postretirement Benefits:

				Estimated			Estimated
				Increase/			Increase/
				(Decrease) to			(Decrease) to
				Projected			Annual Net
				Postretirement			Postretirement
				Benefit			Benefit
	Increase/			Obligation			Cost*
Actuarial Assumptions	(Decrease)			(Thousands)			(Thousands)

Discount Rate	0.25	%	$	(3,180	)	$	(133	)
	(0.25	)		3,270			133

Expected Return on Plan Assets	0.25	%		—			(140	)
	(0.25	)		—			140

Annual Medical Cost Trend	1.00	%		8,240			1,580
	(1.00	)		(7,670	)		(1,440	)

* Excludes the impact of regulatory deferral mechanism. See Note 2, Pension Plans and Other Postretirement Benefits, of the Notes to Financial Statements for information regarding the regulatory treatment of these costs.

		The Utility’s PGA Clause allows Laclede Gas to flow through to customers, subject to prudence review by the MoPSC, the cost of purchased gas supplies, including the costs, cost reductions, and related carrying costs associated with the Utility’s use of natural gas derivative instruments to hedge the purchase price of natural gas. The difference between actual costs incurred and costs recovered through the application of the PGA are recorded as regulatory assets and regulatory liabilities that are recovered or refunded in a subsequent period. The PGA Clause also authorizes the Utility to recover costs it incurs to finance its investment in gas supplies that are purchased during the storage injection season for sale during the heating season. The PGA Clause also permits the application of carrying costs to all over- or under-recoveries of gas costs, including costs and cost reductions associated with the use of derivative instruments. The PGA Clause also provides for a portion of income from off-system sales and capacity release revenues to be flowed through to customers.

		Laclede Gas records deferred tax liabilities and assets measured by enacted tax rates for the net tax effect of all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for income tax purposes. Changes in enacted tax rates, if any, and certain property basis differences will be reflected by entries to regulatory asset or regulatory liability accounts for regulated activities. Pursuant to the direction of the MoPSC, Laclede Gas’ provision for income tax expense reflects the regulatory method of excess asset depreciation followed for financial reporting purposes. Laclede Gas’ provision for income tax expense also records the income tax effect associated with the difference between overheads capitalized to construction for financial reporting purposes and those recognized for tax purposes without recording an offsetting deferred income tax expense. These two methods are consistent with the regulatory treatment prescribed by the MoPSC.

		Asset retirement obligations are recorded in accordance with GAAP using various assumptions related to the timing, method of settlement, inflation, and profit margins that third parties would demand to settle the future obligations. These assumptions require the use of judgment and estimates and may change in future periods as circumstances dictate. As authorized by the MoPSC, Laclede Gas accrues future removal costs associated with its property, plant and equipment through its depreciation rates, even if a legal obligation does not exist as defined by GAAP. The difference between removal costs recognized in depreciation rates and the accretion expense and depreciation expense recognizable pursuant to GAAP is a timing difference between the recovery of these costs in rates and their recognition for financial reporting purposes. Accordingly, these differences are deferred as regulatory liabilities.


		The amount of net periodic pension and other postretirement benefit cost recognized in the financial statements related to the Utility’s qualified pension plans and other postretirement benefit plans is based upon allowances, as approved by the MoPSC, which have been established in the rate-making process for the recovery of these costs from customers. The differences between these amounts and actual pension and other postretirement benefit costs incurred for financial reporting purposes are deferred as regulatory assets or regulatory liabilities. GAAP also requires that changes that affect the funded status of pension and other postretirement benefit plans, but that are not yet required to be recognized as components of pension and other postretirement benefit cost, be reflected in other comprehensive income. For the Utility’s qualified pension plans and other postretirement benefit plans, amounts that would otherwise be reflected in other comprehensive income are deferred with entries to regulatory assets or regulatory liabilities.

	Commercial Paper Borrowings	Borrowings from Laclede Group	Total Short-Term Borrowings

12 Months Ended September 30, 2012
Weighted average borrowings outstanding	$43.8 million	$78.2 million	$122.0 million
Weighted average interest rate	0.3%	0.3%	0.3%
Range of borrowings outstanding	$0 – $133.5 million	$13.0 - $107.5 million	$59.6 - $200.1 million

As of September 30, 2012
Borrowings outstanding at end of period	$40.1 million	$37.1 million	$77.2 million
Weighted average interest rate	0.2%	0.2%	0.2%

12 Months Ended September 30, 2011
Weighted average borrowings outstanding	$54.6 million	$44.6 million	$99.2 million
Weighted average interest rate	0.3%	0.3%	0.3%
Range of borrowings outstanding	$0 – $172.1 million	$0 - $79.9 million	$11.5 - $193.0 million

As of September 30, 2011
Borrowings outstanding at end of period	$46.0 million	$52.9 million	$98.9 million
Weighted average interest rate	0.3%	0.3%	0.3%

(Thousands)

Amortization of net actuarial loss	$	11,356
Amortization of prior service cost		544
Sub-total		11,900
Regulatory adjustment		(11,538	)
Total	$	362

	2012	2011

Weighted average discount rate	3.95%	5.10%
Weighted average rate of future compensation increase	3.00%	3.00%

	MMBtu (millions)	Avg. Price Per MMBtu
Open long futures positions
Fiscal 2013	23.53	$	4.01
Fiscal 2014	1.87		3.45

			Regulated Gas		Non-Regulated			Adjustments &
(Thousands)			Distribution		Other			Eliminations		Total

FISCAL 2012
Operating revenues			$	764,651	$	2,976		$	—	$	767,627
Depreciation and amortization				40,739		—			—		40,739
Interest income				1,230		—			—		1,230
Interest charges				25,156		—			—		25,156
Income tax expense				17,393		1,067			—		18,460
Net economic earnings				48,089		1,700			—		49,789
Total assets				1,758,952		1,200			—		1,760,152
Capital expenditures				106,734		—			—		106,734

FISCAL 2011
Operating revenues			$	913,190	$	19,138		$	—	$	932,328
Depreciation and amortization				39,214		—			—		39,214
Interest income				1,057		—			—		1,057
Interest charges				25,544		—			—		25,544
Income tax expense				18,694		4,302			—		22,996
Net economic earnings				46,952		6,851	*		—		53,803
Total assets				1,641,386		1,660			—		1,643,046
Capital expenditures				67,304		—			—		67,304

FISCAL 2010
Operating revenues			$	864,297	$	10,327		$	—	$	874,624
Depreciation and amortization				37,572		—			—		37,572
Interest income				1,493		—			—		1,493
Interest charges				26,852		—			—		26,852
Income tax expense				15,842		2,308			—		18,150
Net economic earnings				36,141		3,675	*		—		39,816
Total assets				1,657,530		922			—		1,658,452
Capital expenditures				56,234		—			—		56,234

	*	Net economic earnings include income realized by Laclede Gas from two separate non-regulated sales of propane inventory no longer needed to serve utility customers, one of which occurred in fiscal year 2011 and the other occurring in fiscal year 2010. These transactions resulted in after-tax earnings totaling $6.1 million in fiscal year 2011 and $3.7 million in fiscal year 2010.