As a result of our work to investigate and remediate the environmental impacts of our MGP sites in 2020, we estimated the potential costs associated with additional investigation and remediation to be in the range of $9.1 million to $23.3 million. A single reliable estimate of the remediation costs for these sites was not feasible due to the amount of uncertainty in the ultimate remediation approach that will be utilized. Accordingly, in 2020, we recorded an adjustment to our reserve of $9.1 million, which also increased our regulatory asset pursuant to our AAO in Kansas, as we believe recovery of these costs is probable through our existing AAO or future regulatory filings. At December 31, 2020 and 2019, the reserve for remediation of our MGP sites was $14.5 million and $5.8 million, respectively.

We also own or retain legal responsibility for certain environmental conditions at a former MGP site in Texas. At the request of the ~~Texas Commission on Environmental Quality,~~TCEQ, we began investigating the level and extent of contamination associated with the site under their Texas Risk Reduction Program. A preliminary site investigation revealed that this site contains contaminants generally associated with MGP sites and is subject to control or remediation under various environmental laws and regulations. ~~Until~~Impacts have been identified in the ~~investigation is complete,~~soil and groundwater at the site with limited impacts observed in surrounding areas. In April 2022, we ~~are unable~~submitted a remediation work plan to ~~determine what, if any, active remediation will be required. A reliable estimate of potential remediation costs is not feasible at this point due~~address the areas impacted to the ~~amount of uncertainty as~~TCEQ. In August 2023, remediation activities were conducted to address the ~~levels and extent of contamination.~~impacted area in accordance with the remediation work plan.During the third quarter 2023, the TCEQ requested acceptable financial assurance for the projected costs on post-response action care activities at the site. At December 31, 2023, estimated costs associated with expected remediation activities for this site are not material.

Our expenditures for environmental evaluation, mitigation, remediation and compliance to date have not been significant in relation to our financial position, results of operations or cash flows, and our expenditures related to environmental matters had no material effects on earnings or cash flows during ~~2020, 2019 or 2018.~~the years ended December 31, 2023 and 2022. The reserve for remediation of our MGP sites was $14.3 million and $12.7 million at December 31, 2023 and 2022, respectively.

We are subject to environmental regulation by federal, state and local authorities. Due to the inherent uncertainties surrounding the development of federal and state environmental laws and regulations, we cannot determine with specificity the impact such laws and regulations may have on our existing and future facilities. With the trend toward stricter standards, greater regulation and more extensive permit requirements for the types of assets operated by us, our environmental expenditures could increase in the future, and such expenditures may not be fully recovered by insurance or recoverable in rates from our customers, and those costs may adversely affect our financial condition, results of operations and cash flows. We do not expect expenditures for these matters to have a material adverse effect on our financial condition, results of operations or cash flows.

~~Pipeline Safety~~ - We are subject to PHMSA regulations, including integrity-management regulations. PHMSA regulations require pipeline companies operating high-pressure transmission pipelines to perform integrity assessments on pipeline segments that pass through densely populated areas or near specifically designated HCAs. In January 2012, the Pipeline Safety, Regulatory Certainty and Job Creation Act was signed into law. The law increased maximum penalties for violating federal pipeline safety regulations and directs the DOT and the Secretary of Transportation to conduct further review or studies on issues that may or may not be material to us. These issues include, but are not limited to, the following:

•~~an evaluation of whether natural gas pipeline integrity-management requirements should be expanded beyond current HCAs;~~

•~~a verification of records for pipelines in class 3 and 4 locations and HCAs to confirm MAOPs; and~~

•~~a requirement to test previously untested pipelines operating above 30 percent yield strength in HCAs.~~

In April 2016, PHMSA published a NPRM, the Safety of Gas Transmission & Gathering Lines Rule, in the Federal Register to revise pipeline safety regulations applicable to the safety of onshore natural gas transmission and gathering pipelines. Proposals included changes to pipeline integrity management requirements and other safety-related requirements. The NPRM comment period ended July 7, 2016, and comments were reviewed by PHMSA. As part of the comment review process, PHMSA was advised by the Technical Pipeline Safety Standards Committee, informally known by PHMSA as the GPAC, a statutorily mandated advisory committee that advises PHMSA on proposed safety policies for natural gas pipelines. The GPAC reviews PHMSA's proposed regulatory initiatives to assure the technical feasibility, reasonableness, cost-effectiveness and practicality of each proposal. The GPAC met six times since January 2017 to review public comments and make recommendations to PHMSA. The GPAC completed their review of the NPRM on March 28, 2018, except for gas gathering pipelines. The GPAC met in June 2019 on gas gathering pipelines. In addition to reviewing public and committee comments, PHMSA announced they would split this NPRM into three separate final rulemakings:

•the first final rule addresses the legislative mandates from the Pipeline Safety, Regulatory Certainty and Jobs Creation Act and is called the Safety of Gas Transmission Pipelines: MAOP Reconfirmation, Expansion of Assessment Requirements, and Other Related Amendments;

•the second final rule will be called the Safety of Gas Transmission Pipelines: Repair Criteria, Integrity Management Improvements, Cathodic Protection, Management of Change, and Other Related Amendments and will cover all remaining elements of the NPRM (except for gas gathering pipelines); and

•~~the third final rule will be called the Safety of Gas Gathering Pipelines and will address gas gathering pipelines.~~

A significant number of recommendations have been made to PHMSA to improve the NPRM. The industry trade associations filed joint comments to the “legislative mandates” rulemaking to amend the federal safety regulations applicable to gas transmission and gathering pipelines.

On October 1, 2019, PHMSA published the first of the three final rules referenced above, which addressed the 2011 congressional mandates. This final rule expands integrity management principles beyond HCAs and requires operators to collect traceable, verifiable and complete records moving forward, retain existing and new records for the life of the pipeline, and reconfirm pipeline MAOP in populated areas. The final rule also outlines methods for reconfirming a pipeline’s MAOP within 15 years. The first final rule became effective July 1, 2020. The estimated capital and operating expenditures associated with compliance with the first final rule were not material.

PHMSA has not yet issued the second final rule. The potential capital and operating expenditures associated with compliance with this rule are currently being evaluated and could be significant depending on the final regulations. We do not expect to be impacted by the third final rule, as we do not own gas gathering pipelines.

~~Air and Water Emissions -~~ The Clean Air Act, the Clean Water Act, analogous state laws and/or regulations promulgated thereunder, impose restrictions and controls regarding the discharge of pollutants into the air and water in the United States. Under the Clean Air Act, a federally enforceable operating permit is required for sources of significant air emissions. We may be required to incur certain capital expenditures for air-pollution-control equipment in connection with obtaining or maintaining permits and approvals for sources of air emissions. We do not expect that these expenditures will have a material impact on our respective results of operations, financial position or cash flows. The Clean Water Act imposes substantial potential liability for the removal of pollutants discharged to waters of the United States and remediation of waters affected by such discharge.

International, federal, regional and/or state legislative and/or regulatory initiatives may attempt to regulate greenhouse gas emissions. We monitor relevant legislation and regulatory initiatives to assess the potential impact on our operations. The EPA’s Mandatory Greenhouse Gas Reporting Rule requires annual greenhouse gas emissions reporting as carbon dioxide equivalents from affected facilities and for the natural gas delivered by us to our natural gas distribution customers who are not otherwise required to report their own emissions. The additional cost to gather and report this emission data did not have, and we do not expect it to have, a material impact on our results of operations, financial position or cash flows. In addition, Congress has considered, and may consider in the future, legislation to reduce greenhouse gas emissions, including carbon dioxide and methane. Likewise, the EPA may institute additional regulatory rulemaking associated with greenhouse gas emissions. At this time, no rule or legislation has been enacted for natural gas distribution that assesses any costs, fees or expenses on any of these emissions.

~~CERCLA -~~ CERCLA, also commonly known as Superfund, imposes strict, joint and several liability, without regard to fault or the legality of the original act, on certain classes of “persons” (defined under CERCLA) that caused and/or contributed to the release of a hazardous substance into the environment. These persons include, but are not limited to, the owner or operator of a facility where the release occurred and/or companies that disposed or arranged for the disposal of the hazardous substances found at the facility. Under CERCLA, these persons may be liable for the costs of cleaning up the hazardous substances released into the environment, damages to natural resources and the costs of certain health studies. We do not expect that our responsibilities under CERCLA will have a material impact on our respective results of operations, financial position or cash flows.

~~Pipeline Security -~~ The U.S. Department of Homeland Security’s Transportation Security Administration issued updated pipeline security guidelines in March 2018. Our pipeline facilities have been reviewed according to the current guidelines and no material changes have been required to date.

Environmental Footprint - Our environmental and climate change strategy focuses on taking steps to minimize the impact of our operations on the environment. These strategies include: (1) developing and maintaining an accurate greenhouse gas emissions inventory according to current rules issued by the EPA; (2) improving the integrity of our pipelines; (3) following developing technologies for emission control; (4) promoting end-use conservation through programs that incentivize the use of high-efficiency equipment; and (5) reducing the loss of methane from our facilities. In addition, RNG and hydrogen technologies offer potential opportunities to secure new natural gas supply sources that could be transported on our pipeline system and reduce greenhouse gas emissions.

We participate in the EPA’s Natural Gas STAR Program to voluntarily reduce methane emissions. We continue to focus on maintaining low rates of lost-and-unaccounted-for natural gas through expanded implementation of best practices to limit the release of natural gas during pipeline and facility maintenance and operations. Additionally, in March 2016, we were one of 40 founding partners to launch the EPA’s Natural Gas STAR Methane Challenge Program, whereby oil and natural gas companies agree to promote and track commitments to reduce methane emissions beyond what is federally required. Our Methane Challenge Program commitment to annually replace or rehabilitate at least two percent of our combined inventory of cast iron and noncathodically-protected steel pipe aligns with our planned system integrity expenditures for infrastructure replacements. We exceeded our goal by achieving an overall replacement rate greater than two percent annually in 2016, 2017, 2018, and 2019 and anticipate reporting on our 2020 progress in 2021.

In September 2020, we announced membership in Our Nation’s Energy Future (ONE Future), a group of natural gas companies working together to voluntarily reduce methane emissions across the natural gas value chain to one percent or less by 2025. In its most recent report, ONE Future reported that its members registered a 2019 methane intensity of 0.334%.

~~Additional information about our environmental matters is included in the section entitled Environmental Matters in Note 17 of the Notes to Consolidated Financial Statements in this Annual Report.~~ We cannot assure that existing environmental statutes and regulations will not be revised or that new regulations will not be adopted or become applicable to us. Revised or additional regulations that result in increased compliance costs or additional operating restrictions could have a material adverse effect on our business, financial condition and results of operations. Our expenditures for environmental investigation, and remediation

compliance to-date have not been significant in relation to our financial position, results of operations or cash flows, and our expenditures related to environmental matters had no material effects on earnings or cash flows during ~~2020, 2019,~~2023, 2022 or ~~2018.~~2021.

Pipeline Safety - We are subject to regulation under federal pipeline safety statutes and any analogous state regulations. These include safety requirements for the design, construction, operation, and maintenance of pipelines, including transmission and distribution pipelines. At the federal level, we are regulated by PHMSA. PHMSA regulations require the following for certain pipelines: inspection and maintenance plans; integrity management programs, including the determination of pipeline integrity risks and periodic assessments on certain pipeline segments; an operator qualification program, which includes certain trainings; a public awareness program that provides certain information; and a control room management plan.

As part of the Consolidated Appropriations Act, 2021, the PIPES Act reauthorized PHMSA through 2023 and directed the agency to move forward with several regulatory actions, including the “Pipeline Safety: Class Location Change Requirements” and the “Pipeline Safety: Safety of Gas Transmission and Gathering Pipelines” proposed rulemakings. Congress has also instructed PHMSA to issue final regulations that will require operators of non-rural gas gathering lines and new and existing transmission and distribution pipeline facilities to conduct certain leak detection and repair programs and to require facility inspection and maintenance plans to align with those regulations. To the extent such rulemakings impose more stringent requirements on our facilities, we may be required to incur expenditures that may be material.

Regulatory - Several regulatory initiatives impacted the earnings and future earnings potential of our business. See additional information regarding our regulatory initiatives in the “Regulatory Activities” insection of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

IMPACT OF NEW ACCOUNTING STANDARDS

Information about the impact of new accounting standards, if any, is included in Note 1 of the Notes to Consolidated Financial Statements in this Annual Report.

CRITICAL ESTIMATES AND ~~CRITICAL~~ ACCOUNTING POLICIES

The preparation of our consolidated financial statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. These estimates and assumptions also affect the reported amounts of ~~revenue~~revenues and expenses during the reporting period. Although we believe these estimates and assumptions are reasonable, actual results could differ from our estimates. ~~See our Risk Factors and/or Forward-Looking Statements for factors which could impact our estimates.~~

The following summary sets forth what we consider to be our most critical estimates and accounting policies. Our critical accounting policies are defined as those estimates and policies most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgment, particularly because of the need to make estimates concerning the impact of inherently uncertain matters.

Regulation - Our operations are subject to regulation with respect to rates, service, maintenance of pipeline and accounting records and various other matters by the respective regulatory authorities in the states in which we operate. We account for the financial effects of the ratemaking and accounting practices and policies of the various regulatory ~~commissions~~authorities in our consolidated financial statements. We record regulatory assets for costs that have been deferred for which future recovery through customer rates is considered probable and regulatory liabilities when it is probable that revenues will be reduced for amounts that will be returned to customers through the ratemaking process. As a result, certain costs that would normally be expensed under GAAP are capitalized or deferred on the balance sheet because it is probable they can be recovered through rates. Discontinuing the application of this method of accounting for regulatory assets and liabilities could significantly increase our operating expenses, as fewer costs would likely be capitalized or deferred on the balance sheet, which could reduce our net income. Further, regulation may impact the period in which revenues or expenses are recognized. The amounts to be recovered or recognized are based upon historical experience and our understanding of the regulations. The impact of regulation on our operations may be affected by decisions of the regulatory authorities or the issuance of new regulations.

For further discussion of regulatory assets and liabilities, see Note 113 of the Notes to Consolidated Financial Statements in this Annual Report.

Revenue Recognition - For regulated deliveries of natural gas, we read meters and bill customers on a monthly cycle. We recognize revenues upon the delivery of natural gas ~~commodity~~ or services rendered to customers. The billing cycles for customers do not necessarily coincide with the accounting periods used for financial reporting purposes. We accrue unbilled revenues for natural gas that has been delivered but not yet billed at the end of an accounting period. Accrued unbilled revenue is based on a percentage estimate of amounts unbilled each month, which is dependent upon a number of factors, some of which require management’s judgment. These factors include customer consumption patterns and the impact of weather on usage. The accrued unbilled natural gas sales revenue at December 31, ~~2020~~2023 and ~~2019~~2022 was ~~$144.9~~$191.4 million and ~~$109.7~~$269.5 million, respectively, and is included in accounts receivable on our ~~Consolidated Balance Sheets.~~consolidated balance sheets.

We adopted ASC 606 which clarifies the revenue recognition principles under GAAP for our interim and annual reports beginning in the first quarter 2018, using the modified retrospective method. We evaluated all of our sources of revenue to determine the potential effect of the new standard on our financial position, results of operations, cash flows and the related accounting policies and business processes. Upon adoption, there was no cumulative adjustment to our opening retained earnings. The only impact of adopting ASC 606 is that we reclassified certain revenues that do not meet the requirements under ASC 606 as revenues from contracts with customers, but will continue to be reflected as other revenues in determining total revenue. The items we reclassified relate primarily to the WNA mechanism in Kansas, where the KCC determines how we reflect variations in weather in our rates billed to customers.

We have determined the majority of our natural gas sales and transportation tariffs to be implied contracts with customers, which are settled over time, where our performance obligation is settled with our customer when natural gas is delivered and simultaneously consumed by the customer. In addition, we ~~used~~use the invoice method practical expedient, where we ~~recognized~~recognize revenue for volumes delivered for which we have a right to invoice. For our other utility revenue, which are primarily one-time service fees that meet the requirements under ASC 606, the performance obligation is satisfied at a point in time when services are rendered to the customer. Certain revenues that do not meet the requirements under ASC 606 as revenues from contracts with customers are reflected as other revenues in determining total revenue. See Note 32 of the Notes to Consolidated Financial Statements in this Annual Report for additional information regarding our revenues.

Pension and Other Postemployment Benefits - We have defined benefit pension plans covering eligible retirees and ~~full-time~~eligible employees. We also sponsor welfare plans that provide other postemployment medical and life insurance benefits to eligible retirees and employees who retire with at least five years of service.

To calculate the expense and liabilities related to our plans, we utilize an outside actuarial consultant, which uses statistical and other factors to anticipate future events. These factors include assumptions about the discount rate, expected return on plan assets, rate of future compensation increases, age and mortality and employment periods. We use tables issued by the Society of Actuaries to estimate mortality rates. In determining the projected benefit costs, assumptions can change from period to period and may result in material changes in the costs and liabilities we recognize.

~~We did not make any material contributions~~For the year ended December 31, 2023, we contributed $1.3 million to our defined benefit pension ~~plan or~~plans and $2.5 million to our other postemployment benefit plans. For the year ended December 31, 2022, we contributed $1.5 million to our defined benefit pension plans ~~in 2020.~~and $1.9 million to our other postemployment benefit plans. In ~~2021,~~2024, our contributions are expected to be ~~$1.1~~$1.4 million to our defined benefit pension plans, and no contributions are expected to be made to our other postemployment benefit plans. In 2020, we paid $12.5 million of lump-sum settlements to certain terminated-vested participants in our defined benefit pension plan. In 2019, we purchased a group annuity contract and transferred approximately $49.2 million of liabilities related to certain participants in our defined benefit pension plan to a third-party insurance company.

We recorded net periodic benefit ~~costs~~credits for our defined benefit pension plans, prior to regulatory deferrals, of ~~$28.2~~$7.5 million in ~~2020,~~2023, and estimate that in ~~2021,~~2024, we will record ~~expenses~~a credit of approximately ~~$26.4~~$5.5 million. Net periodic benefits costs for our postemployment benefit plans, prior to regulatory deferrals, were $0.3 million in 2023, and we estimate that in 2024, we will record a credit of ~~$6.2 million in 2020, and estimate that in 2021, we will record credits of~~ approximately ~~$8.9~~$0.4 million, prior to regulatory deferrals.

The following table sets forth the significant assumptions used to determine our estimated ~~2021~~2024 net periodic benefit cost related to our defined benefit pension and other postemployment benefit plans and sensitivity to changes with respect to these assumptions:

Rate Used Cost
Sensitivity (a) Obligation
Sensitivity (b)
(Millions of dollars)
Discount rate for pension 2.80% $ 3.6 $ 37.1
Discount rate for other postemployment benefits 2.70% $ (0.2) $ 6.5
Expected long-term return on plan assets (c) 7.15%/7.50% $ 2.8 $ —


	Rate Used		Cost Sensitivity (a)		Obligation Sensitivity (b)
			(Millions of dollars)
Discount rate for pension	5.30	%	$	2.3	$	21.3
Discount rate for other postemployment benefits	5.40	%	(0.2)		3.4
Expected long-term return on plan assets for pension	6.70	%	2.2		—
Expected long-term return on plan assets for other postemployment benefits	5.20	%	0.4		—

(a) Approximate impact a quarter percentage point decrease in the assumed rate would have on net periodic pension costs.

(b) Approximate impact a quarter percentage point decrease in the assumed rate would have on defined benefit pension obligation.

~~(c) Expected long-term return on plan assets for pension and other postemployment benefits are 7.15 percent and 7.50 percent, respectively.~~

~~Impairment of Goodwill~~-We assess our goodwill for impairment at least annually as of July 1, unless events of change in circumstances indicate an impairment may have occurred before that time. Goodwill impairment reviews are performed at a reporting unit level, which for ONE Gas equates to our single business segment. Our goodwill impairment analysis, performed in 2020 and 2018, utilized a qualitative assessment and did not result in any impairment indicators, nor did our analysis reflect our reporting unit at risk. Additionally, we performed a quantitative analysis in 2019 which did not result in any impairment indicators. Subsequent to July 1, 2020, no event has occurred indicating that our fair value is less than the carrying value of our net assets.

As part of our goodwill impairment test, we first assess qualitative factors (including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance) to determine whether it is more likely than not that our fair value is less than the carrying amount of our net assets. If further testing is necessary or a quantitative test is elected to refresh our recurring qualitative assessment, we perform an impairment test for goodwill. Our impairment test is made by comparing our fair value with our book value, including goodwill. If the fair value is less than the book value, an impairment is measured by the amount of our carrying value that exceeds our fair value, not to exceed the carrying amount of our goodwill.

To estimate our fair value, we use two generally accepted valuation approaches, an income approach and a market approach, using assumptions consistent with a market participant’s perspective. Under the income approach, we use anticipated cash flows over a period of years plus a terminal value and discount these amounts to their present value using appropriate discount rates. Under the market approach, we apply acquisition multiples to forecasted cash flows. The acquisition multiples used are consistent with historical market transactions. The forecasted cash flows are based on average forecasted cash flows over a period of years.

Our impairment tests require the use of assumptions and estimates, such as industry economic factors and the profitability of future business strategies. If actual results are not consistent with our assumptions and estimates or our assumptions and estimates change due to new information, we may be exposed to future impairment charges.

See Note 111 of the Notes to Consolidated Financial Statements in this Annual Report for ~~further discussion of goodwill.~~additional information regarding our pension and other postretirement benefit plans.

Contingencies - Our accounting for contingencies covers a variety of business activities, including contingencies for legal and environmental exposures. We accrue these contingencies when our assessments indicate that it is probable that a liability has been incurred or an asset will not be recovered and an amount can be reasonably estimated. We expense legal fees as incurred and base our legal liability estimates on currently available facts and our assessments of the ultimate outcome or resolution. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than the completion of a remediation feasibility study. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable. In 2020, we submitted a remediation plan to the KDHE for one of our sites and the KDHE has provided comments that we are addressing. We are also working on a remediation plan that will be submitted to the KDHE in 2021 for an additional site. As a result of our work to investigate and remediate the environmental impacts of our MGP sites in 2020, we estimated the potential costs associated with additional investigation and remediation to be in the range of $9.1 million to $23.3 million. A single reliable estimate of the remediation costs for these sites was not feasible due to the amount of uncertainty in the ultimate remediation approach that will be utilized. Accordingly, in 2020, we recorded an adjustment to our reserve of $9.1 million, which also increased our regulatory asset pursuant to our AAO in Kansas, as we believe recovery of these costs is probable through our existing AAO or future regulatory filings. At December 31, 2020 and 2019, the reserve for remediation of our MGP sites was $14.5 million and $5.8 million, respectively.

We have an AAO that allows Kansas Gas Service to defer and seek recovery of costs necessary for investigation and remediation at, and nearby, these 12 former MGP sites that are incurred after January 1, 2017, up to a cap of $15.0 million, net of any related insurance recoveries. Costs approved for recovery in a future rate proceeding would then be amortized over a 15-year period. The unamortized amounts will not be included in rate base or accumulate carrying charges. Following a determination that future investigation and remediation work approved by the KDHE is expected to exceed $15.0 million, net of any related insurance recoveries, Kansas Gas Service will be required to file an application with the KCC for approval to increase the $15.0 million cap. At December 31, 2020 and 2019, we have deferred $18.8 million and $9.8 million, respectively, for accrued investigation and remediation costs pursuant to our AAO.

Our expenditures for environmental evaluation, mitigation, remediation and compliance to date have not been significant in relation to our financial position, or results of operations or cash flows, and our expenditures related to environmental matters had no material effect on earnings or cash flows for ~~2020, 2019 or 2018.~~the years ended December 31, 2023, 2022 and 2021. Environmental issues may exist with respect to these MGP sites that are unknown to us. Accordingly, future costs are dependent on the final determination and regulatory approval of any remedial actions, the complexity of the site, level of remediation required, changing technology and governmental regulations, and to the extent not recovered by insurance or recoverable in rates from our customers, could be material to our financial condition, results of operations or cash flows.

See “Environmental Matters” and Note 1715 of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of contingencies.

~~CONTRACTUAL OBLIGATIONS~~

~~The following table sets forth our contractual obligations at December 31, 2020:~~

Contractual Obligations
(Millions of dollars)
2021 2022 2023 2024 2025 Thereafter Total
Long-term debt, including current maturities $ — $ — $ — $ 300.0 $ — $ 1,301.3 $ 1,601.3
Commercial paper 418.2 — — — — — 418.2
Interest payments on long-term debt 62.9 62.9 62.9 52.9 52.0 946.0 1,239.6
Firm transportation and storage capacity contracts 175.6 135.0 98.9 49.5 36.8 35.5 531.3
Natural gas purchase commitments 141.3 — — — — — 141.3
Operating leases 7.9 7.4 6.2 4.7 4.1 11.0 41.3
Total $ 805.9 $ 205.3 $ 168.0 $ 407.1 $ 92.9 $ 2,293.8 $ 3,973.0

~~Long-term debt, commercial paper borrowings and interest payments on debt~~ ~~- Long-term debt includes our four debt issuances at their due dates. Interest payments on debt are calculated by multiplying our long-term debt by the respective coupon rates.~~

On February 22, 2021, we entered into the ONE Gas 2021 Term Loan Facility to enhance our liquidity position as part of the financing of our natural gas purchases in order to provide sufficient liquidity to satisfy our obligations as a result of the 2021 winter weather event and the repayment of indebtedness.

~~Firm transportation and storage contracts~~ - We are party to fixed-price contracts providing us with firm transportation and storage capacity. The commitments associated with these contracts are recoverable through our purchased-gas cost mechanisms as allowed by the applicable regulatory authority.

~~Natural gas purchase commitments~~ - We are party to fixed-price and variable-price contracts for the purchase of natural gas. Future variable-price natural gas purchase commitments are estimated based on market price information as of December 31, 2020. Actual future variable-price purchase commitments may vary depending on market prices at the time of delivery. As market information changes daily and is potentially volatile, these values may change significantly. The commitments associated with these contracts are recoverable through our purchased-gas cost mechanisms as allowed by the applicable regulatory authority.

Due to the historic winter weather event in February 2021, we experienced unforeseeable and unprecedented market pricing for gas costs in our Kansas, Oklahoma, and Texas jurisdictions, which resulted in aggregated natural gas purchases for the month of February of approximately $2.2 billion. These purchases are generally payable at the end of March 2021.

~~Operating leases~~ ~~- Our operating leases consist primarily of office facilities and IT leases. See Note 6 of the Notes to Consolidated Financial Statements in this Annual Report for discussion of leases.~~

FORWARD-LOOKING STATEMENTS

Some of the statements contained and incorporated in this Annual Report are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The forward-looking statements relate to our anticipated financial performance, liquidity, management’s plans and objectives for our future operations, our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.

Forward-looking and other statements in this Annual Report regarding our environmental, social and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this Annual Report identified by words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “should,” “goal,” “forecast,” “guidance,” “could,” “may,” “continue,” “might,” “potential,” “scheduled,” “likely,” and other words and terms of similar meaning.

One should not place undue reliance on forward-looking statements, which are applicable only as of the date of this Annual Report. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements

to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, costs, liquidity, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following:

•our ability to recover costs, ~~(including operating costs and increased commodity costs related to the recent winter weather storm),~~ income taxes and amounts equivalent to the cost of property, plant and equipment, regulatory assets and our allowed rate of return in our regulated ~~rates;~~rates or other recovery mechanisms;

•cyber-attacks, which, according to experts, continue to increase in volume and sophistication, or breaches of technology systems that could disrupt our operations or result in the loss or exposure of confidential or sensitive customer, employee, vendor, counterparty or Company information; further, increased remote working arrangements have required enhancements and modifications to our IT infrastructure (e.g. Internet, Virtual Private Network, remote collaboration systems, etc.), and any failures of the technologies, including third-party service providers, that facilitate working remotely could limit our ability to conduct ordinary operations or expose us to increased risk or effect of an attack;

•our ability to manage our operations and maintenance costs;

•~~the concentration of our operations in Kansas, Oklahoma, and Texas;~~

•changes in regulation of natural gas distribution services, particularly those in Oklahoma, Kansas and Texas;

•regulations in local jurisdictions in which we operate authorizing utilities to record in a regulatory asset account or comparable account the expenses associated with the recent winter weather event, including but not limited to gas costs, other costs related to the procurement and transportation of gas supply and the associated financing costs;

•the economic climate and, particularly, its effect on the natural gas requirements of our residential and

commercial customers;

•the length and severity of a pandemic or other health crisis such as the outbreak of COVID-19, including the impact to our operations, customers, contractors, vendors and employees, and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which ~~may (as with COVID-19) precipitate or exacerbate one or more of the above-mentioned and/or other risks, and~~could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period;

•competition from alternative forms of energy, including, but not limited to, electricity, solar power, wind power, geothermal energy and biofuels;

•~~conservation and energy efficiency efforts of our customers;~~

•adverse weather conditions and variations in weather, including seasonal effects on demand and/or supply, the occurrence of severe storms ~~including the most recent unprecedented winter weather storm~~ in the territories in which we operate, and climate change, and the related effects on supply, demand, and ~~costs and disasters, and climate change;~~costs;

•indebtedness could make us more vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds and/or place us at competitive disadvantage compared with competitors;

•our ability to secure reliable, competitively priced and flexible natural gas transportation and supply, including decisions by natural gas producers to reduce production or shut-in producing natural gas wells and expiration of existing supply and transportation and storage arrangements that are not replaced with contracts with similar terms and pricing;

•our ability to complete necessary or desirable expansion or infrastructure development projects, which may delay or prevent us from serving our customers or expanding our business;

•~~operation~~operational and mechanical hazards or interruptions;

•adverse labor relations;

•the effectiveness of our strategies to reduce earnings lag, ~~margin~~revenue protection strategies and risk mitigation strategies, which may be affected by risks beyond our control such as commodity price volatility, counterparty performance or creditworthiness and interest rate risk;

•the capital-intensive nature of our business, and the availability of and access to, in general, funds to meet our debt obligations prior to or when they become due and to fund our operations and capital expenditures, either through (i) cash on hand, (ii) operating cash flow, or (iii) access to the capital markets and other sources of liquidity;

•our ability to ~~raise~~obtain capital ~~to reduce the draw under the ONE Gas 2021 Term Loan Facility and/or repay a portion of the proceeds under the ONE Gas 2021 Term Loan Facility to reduce the costs of indebtedness;~~

•~~in light of ONE Gas recently entering into the ONE Gas 2021 Term Loan Facility, our ability to borrow additional funds, if needed, including raising the funds~~ on commercially reasonable terms, or on terms acceptable to us, or at all;

•limitations on our operating flexibility, earnings and cash flows due to restrictions in our financing arrangements;

•cross-default provisions in our borrowing arrangements, which may lead to our inability to satisfy all of our outstanding obligations in the event of a default on our part;

•changes in the financial markets during the periods covered by the forward-looking statements, particularly those affecting the availability of capital and our ability to refinance existing debt and fund investments and acquisitions to execute our business strategy;

•actions of rating agencies, including the ratings of debt, general corporate ratings and changes in the rating agencies’ ratings criteria;

•changes in inflation and interest rates;

•our ability to recover the costs of natural gas purchased for our customers ~~including related to the recent winter weather storms~~ and any ~~financings~~related financing required to support our purchase of natural gas supply;

•impact of potential impairment charges;

•volatility and changes in markets for natural gas and our ability to secure additional and sufficient liquidity on reasonable commercial terms to cover costs associated with such volatility;

•possible loss of LDC franchises or other adverse effects caused by the actions of municipalities;

•payment and performance by counterparties and customers as contracted and when due, including our counterparties maintaining ordinary course terms of supply and payments;

•changes in existing or the addition of new environmental, safety, tax, cybersecurity and other laws or regulations to which we and our subsidiaries are subject, including those that may require significant expenditures, significant increases in operating costs or, in the case of noncompliance, substantial fines or penalties;

•the effectiveness of our risk-management policies and procedures, and employees violating our risk-management policies;

•the uncertainty of estimates, including accruals and costs of environmental remediation;

•advances in technology, including technologies that increase efficiency or that improve electricity’s competitive position relative to natural gas;

•population growth rates and changes in the demographic patterns of the markets we serve in Oklahoma, Kansas and Texas, and economic conditions in these ~~areas’ housing markets;~~areas;

•acts of nature and the potential effects of threatened or actual terrorism and ~~war;~~

•~~cyber-attacks, which, according to experts, have increased~~war, including recent events in ~~volume~~Europe and ~~sophistication since~~ the beginning of the COVID-19 pandemic, or breaches of technology systems that could disrupt our operations or result in the loss or exposure of confidential or sensitive customer, employee or Company information; further, increased remote working arrangements as a result of the pandemic have required enhancements and modifications to our IT infrastructure (e.g. Internet, Virtual Private Network, remote collaboration systems, etc.), and any failures of the technologies, including third-party service providers, that facilitate working remotely could limit our ability to conduct ordinary operations or expose us to increased risk or effect of an attack;Middle East;

•the sufficiency of insurance coverage to cover losses;

•the effects of our strategies to reduce tax payments;

•~~the effects of litigation and regulatory investigations, proceedings, including our rate cases, or inquiries and the requirements of our regulators as a result of the Tax Cuts and Jobs Act of 2017;~~

•changes in accounting standards;

•changes in corporate governance standards;

•~~discovery~~existence of material weaknesses in our internal controls;

•our ability to comply with all covenants in our indentures and the ONE Gas Credit Agreement, ~~the ONE Gas 364-day Credit Agreement and the ONE Gas 2021 Term Loan Facility,~~ a violation of which, if not cured in a timely manner, could trigger a default of our obligations;

•our ability to attract and retain talented employees, management and directors, and shortage of skilled-labor;

•unexpected increases in the costs of providing health care benefits, along with pension and postemployment health care benefits, as well as declines in the discount rates on, declines in the market value of the debt and equity securities of, and increases in funding requirements for, our defined benefit plans; and

•~~the~~our ability to successfully complete merger, acquisition or divestiture plans, regulatory or other limitations imposed as a result of a merger, acquisition or divestiture, and the success of the business following a merger, acquisition or divestiture.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also have material adverse effects on our future results. These and other risks are described in greater detail in Part 1, Item 1A, Risk Factors, in this Annual Report. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk discussed below includes forward-looking statements. Our views on market risk are not necessarily indicative of actual results that may occur and do not represent the maximum possible gains and losses that may occur since actual gains and losses will differ from those estimated based on actual fluctuations in commodity prices or interest rates and the timing of transactions.

Commodity Price Risk

Our commodity price risk, driven primarily by fluctuations in the price of natural gas, is mitigated by our purchased-gas cost adjustment ~~mechanisms.~~mechanisms through which we pass-through natural gas costs to our customers without profit. We may use fixed-price natural gas contracts or derivative instruments to ~~economically~~ hedge the cost of a portion of our anticipated natural gas purchases during the winter heating months to reduce the impact on our customers of upward market price volatility of natural gas. Additionally, we inject natural gas into storage during the ~~summer~~warmer months, when natural gas prices are typically lower, and withdraw the natural gas during the ~~winter heating season.~~colder months of the year. Gains or losses associated with these derivative instruments and the costs of our fixed-price natural gas contracts and storage activities are included in, and recoverable through our purchased-gas cost adjustment mechanisms, which are subject to review by regulatory authorities.

Interest-Rate Risk

We are exposed to interest-rate risk primarily associated with commercial paper borrowings, borrowings under our credit agreement, and new debt financing needed to fund capital requirements, including future contractual obligations and maturities

of long-term and short-term debt. We ~~expect to~~may manage interest-rate risk on future borrowings through the use of fixed-rate debt, floating-rate debt and, at times, interest-rate swaps. Fixed-rate swaps may be used to reduce our risk of increased interest costs during periods of rising interest rates. Floating-rate swaps may be used to convert the fixed rates of long-term borrowings into short-term variable rates.

Counterparty Credit Risk

We assess the creditworthiness of our customers. Those customers who do not meet minimum standards are required to provide security, including deposits ~~and~~or other forms of collateral, when appropriate and allowed by tariff. With approximately ~~2.2~~2.3 million customers across three states, we are not exposed materially to a concentration of credit risk. As ordered by our regulators, customer disconnects for nonpayment were suspended from mid-March through May 20, 2020, in Oklahoma, through May 31, 2020, in Kansas, and through December 31, 2020, in some areas of Texas. As of December 31, 2020, we have temporarily suspended disconnects for safety reasons in all of our jurisdictions due to the level of COVID-19 infection. Since the onset of the pandemic in the first quarter of 2020, we have experienced impacts on our results of operations including, but not limited to: lower late payment, reconnect and collection fees and incremental expenses for bad debts related to the suspensions of disconnects for nonpayment; incremental expenses for PPE, cleaning supplies, outside services and other expenses; and lower expenses for travel and employee training that have been impacted by the pandemic. We have received accounting orders in each of our jurisdictions authorizing us to accumulate and defer for regulatory purposes certain incremental costs incurred, including bad debt expenses, and certain lost revenues, net of offsetting expense reductions associated with COVID-19. Pursuant to these orders, the recovery of any net incremental costs and lost revenues will be determined in future rate cases or alternative rate recovery filings in each jurisdiction. For financial reporting purposes, any amounts deferred as a regulatory asset for future recovery under these accounting orders must be probable of recovery. At December 31, 2020, no regulatory assets have been recorded. We continue to evaluate the impacts of COVID-19 on our business and will record regulatory assets for financial reporting purposes at such time as recovery is deemed probable. We maintain a provision for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends, consideration of the current credit environment and other information. We are able to recover the fuel-related portion of bad debts through our purchased-gas cost adjustment mechanisms.

5138

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of ONE Gas, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of ONE Gas, Inc. and its subsidiaries (the “Company”) as of December 31, ~~2020~~2023 and ~~2019,~~2022, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, ~~2020,~~2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, ~~2020,~~2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2020~~2023 and ~~2019,~~2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2020~~2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2020,~~2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in ~~Management's~~Management’s Report on Internal Control ~~Over~~over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A 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 generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 (iii) 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for the Effects of ~~New, or Changes in Existing, Rate Regulation~~Regulatory Matters

As described in ~~Notes~~Note 1 and 113 to the consolidated financial statements, ~~total regulatory assets and total regulatory liabilities are approximately $424 million and $563 million, respectively, as of December 31, 2020. The~~the Company is subject to rate regulation and accounting requirements of regulatory authorities in the states in which it operates, and it follows the accounting and reporting guidance for regulated ~~operations.~~operations, including evaluating regulatory decisions to determine appropriate revenue recognition, cost deferrals, recoverability for regulatory assets and refund requirements for regulatory liabilities. As disclosed by management, regulatory assets are recorded for costs that have been deferred for which future recovery through customer rates is considered probable and regulatory liabilities are recorded when it is probable that revenues will be reduced for amounts that will be credited to customers through the ratemaking process. As a result, certain costs that would normally be expensed under accounting principles generally accepted in the United States of America for non-regulated entities are capitalized or deferred on the balance sheet because it is probable they can be recovered through rates. The amounts to be recovered or recognized are based upon historical experience and management’s understanding of regulations and may be affected by decisions of the regulatory authorities or the issuance of new regulations. Should recovery cease due to regulatory actions, certain regulatory assets may no longer meet the criteria for recognition, and accordingly, the Company may be required to write off the regulatory assets at that time. As described in Note 3, as of December 31, 2023, there were $363 million of deferred costs included in regulatory assets and $567 million of regulatory liabilities awaiting cash outflow or potential refund.

The principal considerations for our determination that performing procedures relating to the Company’s accounting for the effects of ~~rate regulation~~regulatory matters is a critical audit matter are (i) the significant judgment by management ~~when assessing~~in evaluating the impact of ~~regulation~~regulatory orders and accounting guidance on ~~accounting for new~~relevant transactions and ~~existing regulatory assets and liabilities, which in turn led to significant~~(ii) a high degree of auditor judgment, subjectivity, and ~~subjectivity~~effort in performing procedures and evaluating audit evidence related to ~~the accounting for the impact~~management’s evaluation of revenue recognition, cost deferrals, and recoverability of regulatory ~~proceedings on new~~assets, including the securitization of the costs related to the winter weather event and ~~existing~~the recovery of the related regulatory assets, and refund requirements for regulatory liabilities.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the ~~assessment~~impact of ~~new rate regulation or changes to existing regulation,~~regulatory orders and accounting guidance on relevant transactions, including controls over management’s process for evaluating and recording (i) deferred costs, including the amounts to be deferred and the future recovery, resulting in regulatory assets or (ii) a reduction to revenues for amounts that will be credited to customers, resulting in regulatory liabilities. These procedures also included, among others, (i) ~~obtaining and~~ evaluating management’s process for identifying relevant transactions which require application of regulatory ~~rate orders, including correspondence between the Company and regulators,~~accounting guidance; (ii) ~~assessing~~evaluating the reasonableness of management’s ~~judgments~~assessment regarding ~~new or updated~~revenue recognition, probability of recovery and establishment of regulatory ~~guidance and proceedings~~assets, including the securitization of the costs related to the winter weather event and the recovery of the related ~~accounting implications,~~regulatory assets, and the establishment of regulatory liabilities; and (iii) testing the regulatory assets and regulatory liabilities ~~based on~~considering the provisions and formulas outlined in ~~regulatory~~rate orders and other regulatory correspondence.

/s/ PricewaterhouseCoopers LLP

Tulsa, Oklahoma

February ~~26, 2021~~22, 2024

We have served as the Company’s auditor since 2013.

5340

ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
2020 2019 2018
(Thousands of dollars, except per share amounts)
Total revenues $ 1,530,268 $ 1,652,730 $ 1,633,731
Cost of natural gas 537,445 687,974 714,636
Operating expenses
Operations and maintenance 431,115 429,126 411,702
Depreciation and amortization 194,881 180,395 160,086
General taxes 63,311 59,977 58,878
Total operating expenses 689,307 669,498 630,666
Operating income 303,516 295,258 288,429
Other expense, net (3,020) (2,976) (11,359)
Interest expense, net (62,505) (62,681) (51,305)
Income before income taxes 237,991 229,601 225,765
Income taxes (41,579) (42,852) (53,531)
Net income $ 196,412 $ 186,749 $ 172,234
Earnings per share
Basic $ 3.70 $ 3.53 $ 3.27
Diluted $ 3.68 $ 3.51 $ 3.25
Average shares (thousands)
Basic 53,133 52,895 52,693
Diluted 53,370 53,240 53,029
Dividends declared per share of stock $ 2.16 $ 2.00 $ 1.84

~~See accompanying Notes to Consolidated Financial Statements.~~

ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31,
2020 2019 2018

(Thousands of dollars)
Net income $ 196,412 $ 186,749 $ 172,234
Other comprehensive income (loss), net of tax
Change in pension and other postemployment benefit plans liability, net of tax of $289, $479, and $(848), respectively (1,038) (1,435) 1,407
Total other comprehensive income (loss), net of tax (1,038) (1,435) 1,407
Comprehensive income $ 195,374 $ 185,314 $ 173,641

~~See accompanying Notes to Consolidated Financial Statements.~~

ONE Gas, Inc.
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2020 2019
Assets
(Thousands of dollars)
Property, plant and equipment
Property, plant and equipment $ 6,838,603 $ 6,433,119
Accumulated depreciation and amortization 1,971,546 1,867,893
Net property, plant and equipment 4,867,057 4,565,226
Current assets
Cash and cash equivalents 7,993 17,853
Accounts receivable, net 292,985 250,012
Materials and supplies 52,766 55,732
Natural gas in storage 93,946 104,259
Regulatory assets 56,773 47,440
Other current assets 35,406 30,906
Total current assets 539,869 506,202
Goodwill and other assets
Regulatory assets 366,956 391,036
Goodwill 157,953 157,953
Other assets 96,877 87,883
Total goodwill and other assets 621,786 636,872
Total assets $ 6,028,712 $ 5,708,300

~~See accompanying Notes to Consolidated Financial Statements.~~

ONE Gas, Inc.
CONSOLIDATED BALANCE SHEETS
(Continued)
December 31, December 31,
2020 2019
Equity and Liabilities
(Thousands of dollars)
Equity and long-term debt
Common stock, $0.01 par value:
authorized 250,000,000 shares; issued and outstanding 53,166,733 shares at
December 31, 2020; issued and outstanding 52,771,749 shares at December 31, 2019
$ 532 $ 528
Paid-in capital 1,756,921 1,733,092
Retained earnings 483,635 402,509
Accumulated other comprehensive loss (7,777) (6,739)
Total equity 2,233,311 2,129,390
Long-term debt, excluding current maturities, and net of issuance costs of $13,159 and $10,936, respectively 1,582,428 1,286,064
Total equity and long-term debt 3,815,739 3,415,454
Current liabilities
Notes payable 418,225 516,500
Accounts payable 152,313 120,490
Accrued taxes other than income 63,800 47,956
Regulatory liabilities 15,761 45,201
Customer deposits 68,028 57,987
Other current liabilities 78,952 84,603
Total current liabilities 797,079 872,737
Deferred credits and other liabilities
Deferred income taxes 656,806 682,632
Regulatory liabilities 547,563 503,518
Employee benefit obligations 97,637 115,657
Other deferred credits 113,888 118,302
Total deferred credits and other liabilities 1,415,894 1,420,109
Commitments and contingencies 0 0
Total liabilities and equity $ 6,028,712 $ 5,708,300

~~See accompanying Notes to Consolidated Financial Statements.~~

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ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF INCOME

	Years Ended December 31,
		2023		2022		2021
		(Thousands of dollars, except per share amounts)

Total revenues		$	2,371,990	$	2,578,005	$	1,808,597

Cost of natural gas		1,134,510		1,459,087		775,006

Operating expenses
Operations and maintenance		508,399		472,265		449,676
Depreciation and amortization		279,830		228,479		207,233
General taxes		71,661		68,217		66,424
Total operating expenses		859,890		768,961		723,333
Operating income		377,590		349,957		310,258
Other income (expense), net		9,476		(4,183)		(3,207)
Interest expense, net		(115,339)		(77,506)		(60,301)
Income before income taxes		271,727		268,268		246,750
Income taxes		(40,495)		(46,526)		(40,316)
Net income		$	231,232	$	221,742	$	206,434

Earnings per share
Basic		$	4.16	$	4.09	$	3.85
Diluted		$	4.14	$	4.08	$	3.85

Average shares (thousands)
Basic		55,600		54,207		53,575
Diluted		55,860		54,338		53,674

Dividends declared per share of stock		$	2.60	$	2.48	$	2.32

See accompanying Notes to Consolidated Financial Statements.

ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
2020 2019 2018

(Thousands of dollars)
Operating activities
Net income $ 196,412 $ 186,749 $ 172,234
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 194,881 180,395 160,086
Deferred income taxes 18,485 13,307 53,242
Share-based compensation expense 9,803 9,314 8,195
Provision for doubtful accounts 15,450 8,994 8,506
Changes in assets and liabilities:
Accounts receivable (58,423) 30,415 841
Materials and supplies 2,966 (11,399) (4,661)
Natural gas in storage 10,313 3,036 22,859
Asset removal costs (40,833) (47,784) (52,855)
Accounts payable 28,376 (59,293) 36,885
Accrued taxes other than income 15,844 316 6,316
Customer deposits 10,041 (3,196) 372
Regulatory assets and liabilities - current (38,773) 3,787 72,716
Regulatory assets and liabilities - non-current 23,648 24,416 36,721
Employee benefit obligation (3,109) (35,401) (50,100)
Other assets and liabilities - current (12,877) 7,173 (1,885)
Other assets and liabilities - non-current (7,704) (484) (1,778)
Cash provided by operating activities 364,500 310,345 467,694
Investing activities
Capital expenditures (471,345) (417,322) (394,450)
Other investing expenditures (2,804) (7,009) 0
Other investing receipts 3,777 1,399 0
Cash used in investing activities (470,372) (422,932) (394,450)
Financing activities
Borrowings (repayment) on notes payable, net (98,275) 217,000 (57,715)
Issuance of debt, net of discounts 298,428 0 395,648
Long-term debt financing costs (2,885) 0 (4,324)
Issuance of common stock 19,383 5,116 4,803
Repayment of long-term debt 0 0 (300,000)
Dividends paid (114,372) (105,424) (96,594)
Tax withholdings related to net share settlements of stock compensation (6,267) (7,575) (8,152)
Cash provided by (used in) financing activities 96,012 109,117 (66,334)
Change in cash and cash equivalents (9,860) (3,470) 6,910
Cash and cash equivalents at beginning of period 17,853 21,323 14,413
Cash and cash equivalents at end of period $ 7,993 $ 17,853 $ 21,323
Supplemental cash flow information:
Cash paid for interest, net of amounts capitalized $ 60,126 $ 61,160 $ 49,371
Cash paid (received) for income taxes, net $ 30,361 $ 30,152 $ 800


ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Years Ended December 31,

			2023		2022		2021
		(Thousands of dollars)
Net income			$	231,232	$	221,742	$	206,434
Other comprehensive income, net of tax
Change in pension and other postemployment benefit plan liability, net of tax of $140, $(1,705), and $(379), respectively			(478)		5,823		1,250
Total other comprehensive income (loss), net of tax			(478)		5,823		1,250
Comprehensive income			$	230,754	$	227,565	$	207,684

See accompanying Notes to Consolidated Financial Statements.

5943

ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF EQUITY
Common Stock Issued Common Stock Paid-in Capital
(Shares)
(Thousands of dollars)
January 1, 2018 52,598,005 $ 526 $ 1,737,551
Net income — 0 0
Other comprehensive income — 0 0
Common stock issued and other 0 0 (10,951)
Common stock dividends - $1.84 per share — 0 892
December 31, 2018 52,598,005 526 1,727,492
Net income — 0 0
Other comprehensive loss — 0 0
Reclassification of stranded tax effects — — —
Common stock issued and other 173,744 2 4,697
Common stock dividends - $2.00 per share — 0 903
December 31, 2019 52,771,749 528 1,733,092
Net income — 0 0
Other comprehensive loss — 0 0
Common stock issued and other 394,984 4 22,915
Common stock dividends - $2.16 per share — 0 914
December 31, 2020 53,166,733 $ 532 $ 1,756,921


ONE Gas, Inc.
CONSOLIDATED BALANCE SHEETS

	December 31,		December 31,
	2023		2022
Assets	(Thousands of dollars)
Property, plant and equipment
Property, plant and equipment	$	8,468,967	$	7,834,557
Accumulated depreciation and amortization	2,333,755		2,205,717
Net property, plant and equipment	6,135,212		5,628,840
Current assets
Cash and cash equivalents	18,835		9,681
Restricted cash and cash equivalents	20,552		8,446
Total cash, cash equivalents and restricted cash and cash equivalents	39,387		18,127
Accounts receivable, net	347,864		553,834
Materials and supplies	77,649		70,873

Natural gas in storage	187,097		269,205
Regulatory assets	75,308		275,572

Other current assets	37,899		29,997
Total current assets	765,204		1,217,608
Goodwill and other assets
Regulatory assets	287,906		330,831
Securitized intangible asset, net	293,619		323,838
Goodwill	157,953		157,953

Other assets	131,100		117,326
Total goodwill and other assets	870,578		929,948
Total assets	$	7,770,994	$	7,776,396

See accompanying Notes to Consolidated Financial Statements.


ONE Gas, Inc.
CONSOLIDATED BALANCE SHEETS
(Continued)
	December 31,		December 31,
	2023		2022
Equity and Liabilities	(Thousands of dollars)
Equity and long-term debt
Common stock, $0.01 par value: authorized 250,000,000 shares; issued and outstanding 56,545,924 shares at December 31, 2023; issued and outstanding 55,349,954 shares at December 31, 2022	$	565	$	553
Paid-in capital	2,028,755		1,932,714
Retained earnings	737,739		651,863
Accumulated other comprehensive loss	(1,182)		(704)

Total equity	2,765,877		2,584,426
Other long-term debt, excluding current maturities, net of issuance costs	1,877,895		2,352,400
Securitized utility tariff bonds, excluding current maturities, net of issuance costs	282,506		309,343
Total long-term debt, excluding current maturities, net of issuance costs	2,160,401		2,661,743
Total equity and long-term debt	4,926,278		5,246,169
Current liabilities
Current maturities of other long-term debt	772,984		12
Current maturities of securitized utility tariff bonds	27,430		20,716
Notes payable	88,500		552,000
Accounts payable	278,056		360,493

Accrued taxes other than income	68,793		78,352

Regulatory liabilities	66,901		47,867
Customer deposits	62,187		57,854
Other current liabilities	112,370		72,125
Total current liabilities	1,477,221		1,189,419
Deferred credits and other liabilities
Deferred income taxes	752,068		698,456
Regulatory liabilities	500,478		529,441
Employee benefit obligations	20,265		19,587
Other deferred credits	94,684		93,324
Total deferred credits and other liabilities	1,367,495		1,340,808
Commitments and contingencies
Total liabilities and equity	$	7,770,994	$	7,776,396

See accompanying Notes to Consolidated Financial Statements.

6045

ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF EQUITY
(Continued)
Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Equity

(Thousands of dollars)
January 1, 2018 $ 246,121 $ (18,496) $ (5,493) $ 1,960,209
Net income 172,234 0 0 172,234
Other comprehensive income 0 0 1,407 1,407
Common stock issued and other 0 16,351 0 5,400
Common stock dividends - $1.84 per share (97,486) 0 0 (96,594)
December 31, 2018 320,869 (2,145) (4,086) 2,042,656
Net income 186,749 0 0 186,749
Other comprehensive loss 0 0 (1,435) (1,435)
Reclassification of stranded tax effects 1,218 0 (1,218) 0
Common stock issued and other 0 2,145 0 6,844
Common stock dividends - $2.00 per share (106,327) 0 0 (105,424)
December 31, 2019 402,509 0 (6,739) 2,129,390
Net income 196,412 0 0 196,412
Other comprehensive loss 0 0 (1,038) (1,038)
Common stock issued and other 0 0 0 22,919
Common stock dividends - $2.16 per share (115,286) 0 0 (114,372)
December 31, 2020 $ 483,635 $ 0 $ (7,777) $ 2,233,311


ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
	Year Ended December 31,

	2023		2022		2021
	(Thousands of dollars)
Operating activities
Net income	$	231,232	$	221,742	$	206,434
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	279,830		228,479		207,233
Deferred income taxes	24,773		(22,034)		43,449
Share-based compensation expense	12,184		10,741		10,498
Provision for doubtful accounts	9,698		6,003		9,131
Proceeds from government securitization of winter weather event costs	197,366		1,330,582		—
Changes in assets and liabilities:
Accounts receivable	196,272		(213,656)		(57,902)
Materials and supplies	(6,776)		(15,981)		(2,126)
Natural gas in storage	82,108		(89,559)		(85,700)

Asset removal costs	(62,023)		(47,032)		(49,029)
Accounts payable	(90,046)		85,915		107,207

Accrued taxes other than income	(9,559)		11,317		3,235

Customer deposits	4,333		(4,600)		(5,574)
Regulatory assets and liabilities - current	7,249		52,417		(1,562,574)
Regulatory assets and liabilities - noncurrent	38,869		53,992		(367,210)

Other assets and liabilities - current	26,070		(23,377)		18,461
Other assets and liabilities - noncurrent	(2,048)		(14,107)		(11,190)
Cash provided by (used in) operating activities	939,532		1,570,842		(1,535,657)
Investing activities
Capital expenditures	(666,634)		(609,486)		(495,246)
Other investing expenditures	(8,508)		(8,632)		(7,554)
Other investing receipts	5,499		4,008		1,717
Cash used in investing activities	(669,643)		(614,110)		(501,083)
Financing activities
Borrowings (repayments) of notes payable, net	(463,500)		58,000		75,775
Issuance of other long-term debt, net of discounts	299,583		297,591		2,498,895
Issuance of securitized utility tariff bonds, net of discounts	—		335,931		—
Long-term debt financing costs	(2,508)		(8,567)		(35,110)
Issuance of common stock	85,259		133,711		26,662
Repayment of other long-term debt	—		(1,627,000)		(400,000)
Repayment of securitized utility tariff bonds	(20,716)		—
Dividends paid	(144,094)		(133,954)		(123,912)
Tax withholdings related to net share settlements of stock compensation	(2,653)		(3,169)		(4,711)
Cash provided by (used in) financing activities	(248,629)		(947,457)		2,037,599
Change in cash, cash equivalents, restricted cash and restricted cash equivalents	21,260		9,275		859
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	18,127		8,852		7,993
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	39,387	$	18,127	$	8,852
Supplemental cash flow information:
Cash paid for interest, net of amounts capitalized	$	80,726	$	84,871	$	70,066
Cash paid (received) for income taxes, net	$	20,844	$	67,421	$	(10,809)

See accompanying Notes to Consolidated Financial Statements.

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ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF EQUITY

	Common Stock Issued	Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Total Equity
	(Shares)	(Thousands of dollars)

January 1, 2021	53,166,733	$	532	$	1,756,921	$	483,635	$	(7,777)	$	2,233,311
Net income	—	—		—		206,434		—		206,434
Other comprehensive income	—	—		—		—		1,250		1,250
Common stock issued and other	466,477	4		32,445		—		—		32,449
Common stock dividends - $2.32 per share	—	—		996		(124,908)		—		(123,912)
December 31, 2021	53,633,210	536		1,790,362		565,161		(6,527)		2,349,532
Net income	—	—		—		221,742		—		221,742
Other comprehensive income	—	—		—		—		5,823		5,823
Common stock issued and other	1,716,744	17		141,266		—		—		141,283
Common stock dividends - $2.48 per share	—	—		1,086		(135,040)		—		(133,954)
December 31, 2022	55,349,954	553		1,932,714		651,863		(704)		2,584,426
Net income	—	—		—		231,232		—		231,232
Other comprehensive income	—	—		—		—		(478)		(478)
Common stock issued and other	1,195,970	12		94,779		—		—		94,791
Common stock dividends - $2.60 per share	—	—		1,262		(145,356)		—		(144,094)
December 31, 2023	56,545,924	$	565	$	2,028,755	$	737,739	$	(1,182)	$	2,765,877

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

ONE Gas, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The consolidated financial statements include the accounts of our natural gas distribution business as set forth in “Organization and Nature of Operations” below. All significant balances and transactions between our subsidiaries have been eliminated.

Organization and Nature of Operations - We provide natural gas distribution services to ~~our~~ approximately ~~2.2~~2.3 million customers ~~through our divisions~~ in Oklahoma, Kansas and Texas through our three divisions, Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, respectively. We primarily serve residential, commercial and transportation customers in all three states. We are a corporation incorporated under the laws of the state of Oklahoma, and our common stock is listed on the NYSE under the trading symbol “OGS.”

~~Basis~~Segments - We operate in one reportable business segment: regulated public utilities that deliver natural gas primarily to residential, commercial and transportation customers. We define reportable business segments as components of ~~Presentation -~~ ~~The consolidated~~an organization for which discrete financial ~~statements~~information is available and operating results are evaluated on a regular basis by the chief operating decision maker (“CODM”) in order to assess performance and allocate resources. Our CODM is our Chief Executive Officer. Characteristics of our organization that were relied upon in making this determination include the ~~accounts~~similar nature of services we provide, the functional alignment of our ~~natural gas~~organizational structure, and the reports that are regularly reviewed by the CODM for the purpose of assessing performance and allocating resources. Our management is functionally aligned and centralized, with performance evaluated based upon results of the entire distribution ~~business as set forth in “Organization~~business. Capital allocation decisions are driven by asset integrity management, operating efficiency, growth opportunities and ~~Nature of Operations” above. All significant balances and transactions between our subsidiaries have been eliminated.~~government-requested pipeline relocations, not geographic location or regulatory jurisdiction.

In 2023, 2022 and 2021, we had no single external customer from which we received 10 percent or more of our gross revenues.

Revenues - We recognize revenue from contracts with customers to depict the transfers of goods and services to customers at an amount that we expect to be entitled to receive in exchange for these goods and services. Our sources of revenue are disaggregated by natural gas sales, transportation revenues, and miscellaneous revenues, which are primarily one-time service fees, that meet the requirements of ASC 606. Certain revenues that do not meet the requirements of ASC 606 are classified as other revenues in our Notes to Consolidated Financial Statements in this Annual Report.

Our natural gas sales to customers and transportation revenues represent revenues from contracts with customers through implied contracts established by our tariffs approved by regulatory authorities. Our customers receive the benefits of our performance when the commodity is delivered to the customer. The performance obligation is satisfied over time as the customer receives the natural gas.

For deliveries of natural gas, customers are billed on a monthly cycle. We recognize revenues upon the delivery of natural gas or services rendered to customers. The billing cycles for customers do not necessarily coincide with the accounting periods used for financial reporting purposes. We accrue unbilled revenues for natural gas that has been delivered but not yet billed at the end of an accounting period. We use the invoice method practical expedient, where we recognize revenue for volumes delivered for which we have a right to invoice. Our estimate of accrued unbilled revenue is based on a percentage estimate of amounts unbilled each month, which is dependent upon a number of factors, some of which require management’s judgment. These factors include customer consumption patterns and the impact of weather on usage. The accrued unbilled natural gas sales revenue is included in accounts receivable on our consolidated balance sheets.

Our miscellaneous revenues from contracts with customers represent implied contracts established by our tariff rates approved by the regulatory authorities and include miscellaneous utility services with the performance obligation satisfied at a point in time when services are rendered to the customer.

Total other revenues consist of revenues associated with regulatory mechanisms that do not meet the requirements of ASC 606 as revenue from contracts with customers, but authorize us to accrue revenues earned based on tariffs approved by regulatory authorities. Other revenues - natural gas sales primarily relate to the WNA mechanism in Kansas. This mechanism adjusts our revenues earned for the variance between actual and normal HDDs. This mechanism can have either positive

(warmer than normal) or negative (colder than normal) effects on revenues.

We collect and remit other taxes on behalf of governmental authorities, and we record these amounts in accrued taxes other than income in our consolidated balance sheets. See Note 2 for additional discussion of revenues.

Use of Estimates - The preparation of our consolidated financial statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amount of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. These estimates and assumptions also affect the reported amounts of revenue and expenses during the reporting period. Items that may be estimated include, but are not limited to, the economic useful life of assets, fair value of assets and liabilities, provisions for doubtful accounts receivable, unbilled revenues for natural gas delivered but for which meters have not been read, natural gas purchased but for which no invoice has been received, provision for income taxes, including any deferred income tax valuation allowances, the results of litigation and various other recorded or disclosed amounts.

We evaluate these estimates on an ongoing basis using historical experience and other methods we consider reasonable based on the particular circumstances. Nevertheless, actual results may differ significantly from the estimates. Any effects on our financial position or results of operations from revisions to these estimates are recorded in the period when the facts that give rise to the revision become known.

~~Revenues~~ - We recognize revenue from contracts with customers to depict the transfers of goods and services to customers at an amount that we expect to be entitled to receive in exchange for these goods and services. Our sources of revenue are disaggregated by natural gas sales, transportation revenues, and miscellaneous revenues, which are primarily one-time service fees, that meet the requirements of ASC 606. Certain revenues that do not meet the requirements of ASC 606 are classified as other revenues in our Notes to Consolidated Financial Statements in this Annual Report.

Our natural gas sales to customers and transportation revenues represent revenues from contracts with customers through implied contracts established by our tariffs approved by the regulatory authorities. Our customers receive the benefits of our performance when the commodity is delivered to the customer. The performance obligation is satisfied over time as the customer receives the natural gas.

For deliveries of natural gas, we read meters and bill customers on a monthly cycle. We recognize revenues upon the delivery of natural gas commodity or services rendered to customers. The billing cycles for customers do not necessarily coincide with the accounting periods used for financial reporting purposes. We accrue unbilled revenues for natural gas that has been delivered but not yet billed at the end of an accounting period. We use the invoice method practical expedient, where we recognize revenue for volumes delivered for which we have a right to invoice. Our estimate of accrued unbilled revenue is based on a percentage estimate of amounts unbilled each month, which is dependent upon a number of factors, some of which require management’s judgment. These factors include customer consumption patterns and the impact of weather on usage. The accrued unbilled natural gas sales revenue at December 31, 2020 and 2019 was $144.9 million and $109.7 million, respectively, and is included in accounts receivable on our consolidated balance sheets.

Total other revenues consist of revenues associated with regulatory mechanisms that do not meet the requirements of ASC 606 as revenue from contracts with customers, but authorize us to accrue revenues earned based on tariffs approved by the regulatory authorities. Other revenues - natural gas sales primarily relate to the WNA mechanism in Kansas. This mechanism adjusts our revenues earned for the variance between actual and normal HDDs. This mechanism can have either positive

~~(warmer than normal) or negative (colder than normal) effects on revenues.~~

Cost of Natural Gas - Cost of natural gas includes commodity purchases, fuel, storage, transportation, financial derivatives, and other gas purchase costs recovered through our cost of natural gas regulatory mechanisms and does not include an allocation of general operating costs or depreciation and amortization. ~~In addition, our~~These cost of natural gas regulatory mechanisms provide a method of recovering natural gas costs on an ongoing basis without a profit. See Note 113 for additional discussion of purchased gas cost recoveries.

Cash, Cash Equivalents and Restricted Cash and Restricted Cash Equivalents - Cash equivalents and restricted cash equivalents consist of highly liquid investments, which are readily convertible into cash and have original maturities of three months or less. Restricted cash consists of funds that are contractually or legally restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents on our consolidated balance sheets. Restricted cash and restricted cash equivalents accounts were established for payment of Securitized Utility Tariff Bond issuance costs and payment of debt service on those bonds.

Property, Plant and Equipment - Our properties are stated at cost, which includes direct construction costs such as direct labor, materials, burden and AFUDC. Generally, the cost of our property retired or sold, plus removal costs, less salvage, is charged to accumulated depreciation. Gains and losses from sales or retirement of an entire operating unit or system of our properties are recognized in income. Maintenance and repairs are charged directly to expense.

AFUDC represents the cost of borrowed funds used to finance construction activities. We capitalize interest costs during the construction or upgrade of qualifying assets. Capitalized interest is recorded as a reduction to interest expense.

Our properties are depreciated using the straight-line method over their estimated useful lives. Generally, we apply composite depreciation rates to functional groups of property having similar economic circumstances. We periodically conduct depreciation studies to assess the economic lives of our assets. These depreciation studies are completed as a part of our regulatory proceedings, and the changes in economic lives, if applicable, are implemented prospectively when the new rates are approved by our regulators and become effective. Changes in the estimated economic lives of our property, plant and equipment could have a material effect on our financial position, results of operations or cash flows.

Property, plant and equipment on our consolidated balance sheets includes construction work in process for capital projects that have not yet been placed in service and therefore are not being depreciated. Assets are transferred out of construction work in process when they are substantially complete and ready for their intended use.

See Note 14 for additional information regarding our property, plant and equipment.

Accounts Receivable, Net - Accounts receivable represent valid claims against nonaffiliated customers for natural gas sold or services ~~rendered, net of an allowance for doubtful accounts.~~rendered. We assess the creditworthiness of our customers. Those customers who do not meet minimum standards may be required to provide security, including deposits and other forms of collateral, when appropriate and allowed by our tariffs. With approximately ~~2.2~~2.3 million customers across three states, we are not exposed materially to a concentration of credit risk. We maintain an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends, consideration of the current ~~credit~~ environment and other information. We ~~are able to~~ recover natural gas costs related to ~~doubtful~~ accounts written off

when they are deemed uncollectible through the purchased-gas cost adjustment ~~mechanisms.~~mechanisms in each of our jurisdictions. At December 31, ~~2020~~2023 and ~~2019,~~2022, our allowance for doubtful accounts was ~~$16.6~~$16.1 million and ~~$6.6~~$16.7 million, respectively.

Inventories - Natural gas in storage is accounted for on the basis of weighted-average cost. Natural gas inventories that are injected into storage are recorded in inventory based on actual purchase costs, including storage and transportation costs. Natural gas inventories that are withdrawn from storage are accounted for in our purchased-gas cost adjustment mechanisms at the weighted-average inventory cost.

Materials and supplies inventories are stated at the lower of weighted-average cost or net realizable value.

Leases - We determine if an arrangement is a lease at inception if the contract conveys the right to control the use and obtain substantially all the economic benefits from the use of an identified asset for a period of time in exchange for consideration. We identify a lease as a finance lease if the agreement includes any of the following criteria: transfer of ownership by the end of the lease term; an option to purchase the underlying asset that the lessee is reasonably certain to exercise; a lease term that represents 75 percent or more of the remaining economic life of the underlying asset; a present value of lease payments and any residual value guaranteed by the lessee that equals or exceeds 90 percent of the fair value of the underlying asset; or an underlying asset that is so specialized in nature that there is no expected alternative use to the lessor at the end of the lease term. A lease that does not meet any of these criteria is considered an operating lease.

Lease right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the commencement date of a lease based on the present value of lease payments over the lease term. Our lease terms may include options to extend or terminate the lease. We include these extension or termination options in the determination of the lease term when it is reasonably certain that we will exercise that option. We have lease agreements with lease and non-lease components, which are accounted for separately. Additionally, for certain office equipment leases, we apply a portfolio approach to effectively account for the operating lease right-of-use assets and liabilities. We do not recognize leases having a term of less than one year in our consolidated balance sheets.

For purposes of determining the present value of the lease payments, we use a lease’s implicit interest rate when readily determinable. As most of our leases do not provide an implicit interest rate, we use an incremental borrowing rate based on available information at the commencement of the lease. Lease cost for operating leases is recognized on a straight-line basis over the lease term. See Note 6 for additional information regarding our leases.

Derivatives and Risk Management Activities - We record all derivative instruments at fair value, with the exception of certain commodity purchase contracts for which we have chosen the normal ~~purchases and~~purchase normal ~~sales that~~sale election as they are expected to result in physical delivery. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it, or if regulatory ~~rulings require~~requirements impose a different accounting treatment.

If certain conditions are met, we may elect to designate a derivative instrument as a hedge of exposure to changes in fair values or cash flows. We have not elected to designate any of our derivative instruments as hedges.

The table below summarizes the various ways in which we account for our derivative instruments and the impact on our consolidated financial statements:

Recognition and Measurement

Accounting Treatment

Balance Sheet

Income Statement

Normal purchases and
normal sales

Fair value not recorded

Change in fair value not recognized in earnings

Mark-to-market

Recorded at fair value

Change in fair value recognized in, and
recoverable through, the purchased-gas cost adjustment mechanisms

See Note 1016 for additional information regarding our economic hedging activities using derivatives.

Fair Value Measurements - We define fair value as the price that would be received from the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date. We use the market and income approaches to determine the fair value of our assets and liabilities and consider the markets in which the transactions are executed. We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date.

Fair Value Hierarchy - At each balance sheet date, we utilize a fair value hierarchy to classify fair value amounts recognized or disclosed in our consolidated financial statements based on the observability of inputs used to estimate such fair value. The levels of the hierarchy are described below:

•Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2 - Significant observable pricing inputs other than quoted prices included within Level 1 that are, either directly or indirectly, observable as of the reporting date. Essentially, this represents inputs that are derived principally from or corroborated by observable market data; and

•Level 3 - May include one or more unobservable inputs that are significant in establishing a fair value estimate. These unobservable inputs are developed based on the best information available and may include our own internal data.

We recognize transfers into and out of the levels as of the end of each reporting period.

Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. We categorize derivatives for which fair value is determined using multiple inputs within a single level, based on the lowest level input that is significant to the fair value measurement in its entirety. See Note 1016 for additional information regarding our fair value measurements.

~~Property, Plant and Equipment~~ - Our properties are stated at cost, which includes direct construction costs such as direct labor, materials, burden and AFUDC. Generally, the cost of our property retired or sold, plus removal costs, less salvage, is charged to accumulated depreciation. Gains and losses from sales or retirement of an entire operating unit or system of our properties are recognized in income. Maintenance and repairs are charged directly to expense.

Property, plant and equipment on our Consolidated Balance Sheets includes construction work in process for capital projects that have not yet been placed in service and therefore are not being depreciated. Assets are transferred out of construction work in process when they are substantially complete and ready for their intended use.

~~See Note 12 for additional information regarding our property, plant and equipment.~~

Impairment of Goodwill and Long-Lived Assets - We assess our goodwill for impairment at least annually as of July 1, unless events or a change in circumstances indicate an impairment may have occurred before that time. As part of our goodwill impairment test, we first assess qualitative factors (including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance) to determine whether it is more likely than not that our fair value is less than the carrying amount of our net assets. If further testing is necessary or a quantitative test is elected to refresh our recurring qualitative assessment, we perform a quantitative impairment test for goodwill.

Our impairment ~~test~~assessment is ~~made~~performed by comparing our fair value with our book value, including goodwill. If the fair value is less than the book value, an impairment is measured by the amount of our carrying value that exceeds ~~our~~ fair value, not to exceed the carrying amount of our goodwill.

To estimate ~~our~~ fair value, we use two generally accepted valuation approaches, an income approach and a market approach, using assumptions consistent with a market participant’s perspective. Under the income approach, we use anticipated cash flows over a period of years plus a terminal value and discount these amounts to their present value using appropriate discount rates. Under the market approach, we apply acquisition multiples to forecasted cash flows. The acquisition multiples used are consistent with historical market transactions. The forecasted cash flows are based on average forecasted cash flows over a period of years.

~~We performed a quantitative analysis in 2019, which did not result in any impairment indicators, nor did our analysis reflect our reporting unit at risk.~~ Our goodwill impairment analysis performed in ~~2020~~2023 and ~~2018~~2022 utilized a qualitative assessment and did not result in any impairment indicators, nor did our analysis reflect our reporting unit at risk. Subsequent to July 1, ~~2020,~~2023, no event has occurred indicating that it is more likely than not that our fair value is less than the carrying value of our net assets.

We assess our long-lived assets for impairment whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. An impairment is indicated if the carrying amount of a long-lived asset exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If an impairment is indicated, we record an impairment loss equal to the difference between the carrying value and the fair value of the long-lived asset. We determined that there were 0no material asset impairments in ~~2020, 2019~~2023, 2022 or ~~2018.~~2021.

Securitized Intangible Asset - On November 18, 2022, KGSS-I acquired the Securitized Utility Tariff Property from Kansas Gas Service for $327.4 million. The Securitized Utility Tariff Property is classified as a securitized intangible asset on our consolidated balance sheets. This securitized intangible asset will be amortized over 10 years, the estimated period needed to collect the required amounts from Kansas Gas Service’s customers to service the Securitized Utility Tariff Bonds. The amortization expense related to the securitized intangible asset will be included in depreciation and amortization expense in our consolidated statements of income. For the years ended December 31, 2023 and 2022, we recorded $30.2 million and $3.5 million, respectively, of amortization expense related to the securitized intangible asset. At the end of its life, this securitized intangible asset will have no residual value. See Note 5 for additional information about the Securitized Utility Tariff Bonds and Notes 3 and 7 for additional information about the securitization transactions.

Finite-lived intangible assets are stated at cost, net of accumulated amortization, which is recorded on a straight-line or accelerated basis over the life of the asset. We review amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If such a review should indicate that

the carrying amount of amortizable intangible assets is not recoverable, we reduce the carrying amount of such assets to fair value.

Regulation - We are subject to the rate regulation and accounting requirements of the OCC, KCC, RRC and various municipalities in Texas. We follow the accounting and reporting guidance for regulated ~~operations.~~operations, including evaluating regulatory decisions to determine appropriate revenue recognition, cost deferrals and recoverability for regulatory assets and refund requirements for regulatory liabilities. During the ratemaking process, regulatory authorities set the framework for what we can charge customers for our services and establish the manner that our costs are accounted for, including allowing us to defer recognition of certain costs and permitting recovery of the amounts through rates over time, as opposed to expensing such costs as incurred. Examples include weather normalization, unrecovered purchased-gas costs, extraordinary costs associated with Winter Storm Uri, pension and postemployment benefit costs and ad-valorem taxes. This allows us to stabilize rates over time rather than passing such costs on to the customer for immediate recovery. Actions by regulatory authorities could have an effect on the amount recovered from customers. Any difference in the amount recoverable and the amount deferred is recorded as income or expense at the time of the regulatory action. A write-off of regulatory assets and costs not recovered may be required if all or a portion of the regulated operations have rates that are no longer:

•established by independent regulators;

•designed to recover our costs of providing regulated services; and

•set at levels that will recover our costs when considering the demand and competition for our services.

Should recovery cease due to regulatory actions, certain of these assets may no longer meet the criteria for recognition and accordingly, a write-off of regulatory assets and stranded costs may be required. There were no write-offs of regulatory assets resulting from the failure to meet the criteria for capitalization during 2023, 2022 and 2021.

See Note 113 for additional information regarding our regulatory assets and ~~liabilities disclosures.~~liabilities.

Pension and Other Postemployment Employee Benefits - We have defined benefit pension plans covering eligible ~~employees.~~employees, all of which are closed to new participants. We also sponsor welfare plans that provide other postemployment medical and life insurance benefits to eligible employees who retire with at least five years of service. To calculate the costs and liabilities related to our plans, we utilize an outside actuarial consultant, which uses statistical and other factors to anticipate future events. These factors include assumptions about the discount rate, expected return on plan assets, rate of future compensation increases, age and mortality and employment periods. We use tables issued by the Society of Actuaries to estimate mortality rates. In determining the projected benefit obligations and costs, assumptions can change from period to period and may result in material changes in the cost and liabilities we recognize.

Income Taxes - Deferred income taxes are recorded for the difference between the financial statement and income tax basis of assets and liabilities and carryforward items, based on income tax laws and rates existing at the time the temporary differences are expected to reverse. The effect on deferred income taxes of a change in tax rates is deferred and amortized for operations regulated by the OCC, KCC, RRC and various municipalities in Texas, if, as a result of an action by a regulator, it is probable that the effect of the change in tax rates will be recovered from or returned to customers through future rates. We continue to amortize previously deferred investment tax credits for ratemaking purposes over the periods prescribed by our regulators.

A valuation allowance for deferred income tax assets is recognized when it is more likely than not that some or all of the benefit from the deferred income tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our future taxable income, as well as the jurisdiction in which such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include our current financial position, our results of operations, both actual and forecasted, the reversal of deferred income tax liabilities, as well as the current and forecasted business economics of our industry. We had 0no valuation allowance at December 31, ~~2020~~2023 and ~~2019.~~2022.

We utilize a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position that is taken or expected to be taken in a tax return. We reflect penalties and interest as part of income tax expense as they become applicable for tax provisions that do not meet the more-likely-than-not recognition threshold and measurement attribute. There were 0no material uncertain tax positions at December 31, ~~2020~~2023 and ~~2019.~~2022.

Changes in tax laws or tax rates are recognized in the financial reporting period that includes the enactment date.

See Note 1512 for additional information regarding income taxes.

Asset Retirement Obligations - Asset retirement obligations represent legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of the asset. Certain long-lived assets that comprise our natural gas distribution systems, primarily our pipeline assets, are subject to agreements or regulations that give rise to an asset retirement obligation for removal or other disposition costs associated with retiring the assets in place upon the discontinued use of the natural gas distribution system. We recognize the fair value of a liability for an asset retirement obligation in the period when it is incurred if a reasonable estimate of the fair value can be made. We are not able to estimate reasonably the fair value of the asset retirement obligations for portions of our assets because the settlement dates are indeterminable given our expected continued use of the assets with proper maintenance. We expect our natural gas distribution systems will continue in operation for the foreseeable future. Based on our proximity to significant natural gas reserves and infrastructure and the widespread use of natural gas for heating and cooking activities by residential and commercial customers in our service areas, we expect supply and demand to exist for the foreseeable future.

In accordance with long-standing regulatory treatment, we collect through rates the estimated costs of removal on certain regulated properties through depreciation expense as a portion of the net salvage value component of our composite deprecation rates, with a corresponding credit to accumulated depreciation and amortization. These removal costs collected through our rates include costs attributable to legal and nonlegal removal obligations. The amounts collected for non-legal asset removal costs that are in excess of costs incurred, if any, are accounted for as a regulatory liability for financial reporting purposes. Historically, with the exception of the regulatory authority in Kansas, the regulatory authorities that have jurisdiction over our regulated operations have not required us to quantify or disclose this amount. These costs are addressed prospectively in depreciation rates, rather than as a regulatory liability, in each general rate order.

For financial reporting purposes, if the removal costs collected have exceeded our removal ~~cost~~costs incurred, we estimate ~~our~~a regulatory liability using current rates since the last general rate order in each of our jurisdictions. At December 31, 2023 and 2022, we have not recorded a regulatory liability, as our removal costs incurred have exceeded amounts collected through our depreciation rates. Significant uncertainty exists regarding the ~~future disposition~~recording of ~~this~~these regulatory ~~liability,~~liabilities, pending, among other issues, clarification of regulatory intent. We continue to monitor the regulatory requirements, and ~~the liability~~any future regulatory liabilities incurred may be adjusted as more information is obtained. To the extent ~~this~~these estimated ~~liability is~~liabilities are adjusted, such amounts will be reclassified between accumulated depreciation and amortization and ~~other deferred credits~~regulatory liabilities on our balance sheet and therefore will not have an impact on earnings.

See Note 1715 for additional information regarding contingencies.

Share-Based Payments - We expense the fair value of share-based payments net of estimated forfeitures. We estimate forfeiture rates based on historical forfeitures under our share-based payment plans.

Earnings per share - Basic EPS is ~~based on~~calculated by dividing net income ~~and is calculated based upon~~by the daily weighted-average number of common shares outstanding during the periods ~~presented. Also, this calculation~~presented, which includes fully vested stock awards that have not yet been issued as common stock. Diluted EPS ~~includes~~is based on shares outstanding for the ~~above,~~calculation of basic EPS, plus unvested stock awards granted under our compensation plans and equity forward sale agreements, but only to the extent these instruments dilute earnings per share.

~~Segments~~ - We operate in one reportable business segment: regulated public utilities that deliver natural gas primarily to residential, commercial and transportation customers. We define reportable business segments as components of an organization for which discrete financial information is available and operating results are evaluated on a regular basis by the chief operating decision maker (“CODM”) in order to assess performance and allocate resources. Our CODM is our Chief Executive Officer. Characteristics of our organization that were relied upon in making this determination include the similar nature of services we provide, the functional alignment of our organizational structure, and the reports that are regularly reviewed by the CODM for the purpose of assessing performance and allocating resources. Our management is functionally aligned and centralized, with performance evaluated based upon results of the entire distribution business. Capital allocation decisions are driven by asset integrity management, operating efficiency, growth opportunities and government-requested pipeline relocations, not geographic location or regulatory jurisdiction.

~~In 2020, 2019 and 2018, we had 0 single external customer from which we received 10 percent or more of our gross revenues.~~

~~Treasury Stock~~ - We record treasury stock purchases at cost, which includes incremental direct transaction costs. Amounts are recorded as reductions in equity in our consolidated balance sheets. We record the reissuance of treasury stock at our weighted average cost of treasury shares recorded in equity in our consolidated balance sheets.

Reclassifications - ~~Certain reclassifications have~~A reclassification has been made in the prior-year financial statements to conform to the current-year presentation. For the year ended December 31, 2019, an accrued amount totaling $10 million that was previously presented within “accounts receivable, net” on our balance sheets was reclassified to “other current assets.” Additionally, weWe have updated our ~~2019 and 2018 Statements of Cash Flows~~consolidated balance sheet at December 31, 2022, to disaggregate ~~regulatory assets and~~“current maturities of other long-term debt,” which had previously been included in “other current liabilities, ~~and other assets and liabilities into current and non-current components that are presented on our balance sheet~~” to conform to our ~~current year~~current-year presentation.

Recently Issued Accounting Standards Update - In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which will enhance annual income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s operations. The amendments require disclosure of additional information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate (the rate reconciliation) for federal, state, and foreign income taxes. They also require greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a specified threshold. In addition to new disclosures associated with the rate reconciliation, the amendments in this update require information pertaining to taxes paid (net of refunds received) to be disaggregated for federal, state, and foreign taxes and further disaggregated for

specific jurisdictions to the extent the related amounts exceed a quantitative threshold. The amendments in this update are effective for annual periods beginning after December 15, 2023, and early adoption is permitted. We are currently assessing the timing and impacts of adopting this standard.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which will improve annual and interim reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendment enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The amendments in this update are effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently assessing the timing and impacts of adopting this standard.

In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance,” which will require disclosure about government assistance in the notes to the financial statements. The amendment requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy, including information about the nature of the transactions and the related accounting policy used to account for the transactions, the line items on the balance sheet and income statement that are affected by the transactions and the significant terms and conditions of the transactions, including commitments and contingencies. The amendment became effective for us beginning January 1, 2022. As the guidance is related only to disclosures in the notes to the financial statements, it did not impact our financial position, results of operations or cash flows. See Note 3 for additional discussion regarding our securitization transactions with the Oklahoma and Texas governments that are accounted for by applying a grant accounting model by analogy.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. In the first quarter 2020, we adopted this new guidance effective for contracts modified between March 12, 2020 and December 31, 2022. ~~Our revolving lines of credit under~~In March 2022, we amended the ONE Gas Credit Agreement to change the defined benchmark rate to SOFR from LIBOR. Our adoption and subsequent amendment of the ONE Gas ~~364-day~~ Credit Agreement utilize LIBOR as the reference rate. If modified, we may elect the optional practical expedients to account for the modifications prospectively. Our adoption did not result in a material impact to our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. ASU 2019-12 also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This standard is effective for interim and annual periods in fiscal years beginning after December 15, 2020. We adopted this new guidance in the first quarter of 2021 and our adoption did not result in a material impact to our financial position or results of operations or to our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force).” Under this guidance, a company should defer implementation costs that it incurs if a company would capitalize those same costs under the internal-use software guidance for an arrangement that is a software license. The deferred implementation costs should be amortized over the term of the hosting arrangement, including any probable renewals. We are party to hosting arrangements identified as service contracts for various information systems used in our operations. We adopted this new guidance using the prospective transition approach for implementation costs

incurred in hosting arrangement service contracts beginning January 1, 2020. In certain jurisdictions, we have orders from our regulators allowing us to amortize deferred implementation costs for hosting arrangements entered into after January 1, 2020, over the life approved by our regulators for our internal-use software systems rather than the term of the hosting arrangement. The difference in amortization calculated between the term of the hosting arrangement and internal-use software life approved by our regulators is deferred as a regulatory asset and amortized over the remaining internal-use software life that exceeds the term of the hosting arrangement. Our adoption did not result in a material impact to our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-14, an amendment to ASC 715, “Compensation - Retirement Benefits.” This guidance eliminates requirements for certain disclosures such as the amount and timing of plan assets expected to be returned to the employer and the amount of future annual benefits covered by insurance contracts. The standard is effective for periods ending after December 15, 2020, and we adopted this guidance in the first quarter 2020. The guidance added new disclosure requirements for sponsors of the defined benefit plans to provide information relating to the weighted-average interest crediting rate for cash balance plans and other plans with promised interest crediting rates and an explanation for significant gains or losses related to changes in the benefit obligations for the period. We have reflected these changes as presented in Note 14 to our consolidated financial statements.

2. REVENUE

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”, which removes, modifies and adds to certain disclosure requirements of fair value measurements. The ~~guidance was effective~~following table sets forth our revenues disaggregated by source for the Company beginning January 1, 2020, and we adopted this guidance in the first quarter 2020. Disclosure requirements removed include the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements. Modifications include considerations around the requirement to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse. The additions include the requirement to disclose changes in unrealized gains and losses for the period in other comprehensive income for recurring Level 3 fair value measurements held and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The guidance did not have a material impact on the Company’s fair value disclosure, and we have reflected these changes as presented in Note 14 to our consolidated financial statements.periods indicated:


	Years Ended December 31,
		2023		2022		2021
		(Thousands of dollars)
Natural gas sales to customers		$	2,141,908	$	2,410,048	$	1,652,566
Transportation revenues		132,945		125,951		118,492
Securitization customer charges (Note 17)		48,677		5,769		—
Miscellaneous revenues		22,791		19,850		16,757
Total revenues from contracts with customers		2,346,321		2,561,618		1,787,815
Other revenues - natural gas sales related		12,764		3,403		9,650
Other revenues		12,905		12,984		11,132
Total other revenues		25,669		16,387		20,782
Total revenues		$	2,371,990	$	2,578,005	$	1,808,597

In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax CutsAccrued unbilled natural gas sales revenues at December 31, 2023 and ~~Jobs Act of 2017. We adopted this new guidance~~December 31, 2022, were $191.4 million and $269.5 million, respectively, and are included in ~~the first quarter 2019 and our adoption did not result in a material impact to~~accounts receivable on our consolidated ~~financial statements. This change is reflected in our consolidated statements of equity.~~balance sheets.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments,” which introduces new guidance to the accounting for credit losses on instruments within its scope, including trade receivables. We adopted this new guidance in the first quarter 2020 using the modified retrospective method. Our financial assets within scope of this guidance primarily include our trade receivables from customers. Our policy for measuring our allowance for doubtful accounts is disclosed in the aforementioned policy for accounts receivable. We did not create any new accounting policies, nor did we modify any of our existing policies, as a result of adopting this guidance. Our adoption did not result in a cumulative adjustment to our opening retained earnings or have a material impact to our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” as amended, (“Topic 842”) which prescribes recognizing lease assets and liabilities on the balance sheet and includes disclosure of key information about leasing arrangements. We adopted this new guidance effective January 1, 2019, and applied the modified retrospective approach to all existing leases. Upon adoption, we recognized lease liabilities of approximately $32 million, with corresponding right-of-use assets of the same amount based on the present value of the remaining minimum rental payments for existing operating leases. Our adoption did not result in a material impact to our results of operations or cash flows. We utilized the practical expedients that allow us to: (1) not reassess expired or existing contracts to determine whether they are subject to lease accounting guidance, (2) not reconsider lease classification at transition, and (3) not evaluate previously capitalized initial direct costs under the revised requirements. We also utilized the practical expedients that allowed us to: (1) not evaluate under Topic 842 existing or expired land easements that were not previously accounted for as leases under the current lease guidance in ASC Topic 840 (“Topic 840”) and (2) use an additional transition method in which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We adopted an accounting policy that exempts leases with terms of less than one year from the recognition requirements of Topic 842, and we disclose such leases in our interim and annual disclosures upon adoption. Our adoption did not result in a cumulative adjustment to our opening retained earnings or a material impact to our consolidated financial statements. See Note 6 for additional information regarding our leases.

3. REGULATORY ASSETS AND LIABILITIES

~~2. SUBSEQUENT EVENTS~~The tables below present a summary of regulatory assets and liabilities, net of amortization, for the periods indicated:


		December 31, 2023
	Remaining Recovery Period	Current		Noncurrent		Total
		(Thousands of dollars)
Winter weather event costs	(a)	$	22,633	$	21,495	$	44,128
Under-recovered purchased-gas costs	1 year	10,391		—		10,391
Pension and postemployment benefit costs	See Note 11	6,379		228,092		234,471
Reacquired debt costs	6 years	723		2,712		3,435
MGP remediation costs	15 years	98		31,893		31,991
Ad-valorem tax	1 year	14,533		—		14,533
WNA	1 year	11,404		—		11,404
Customer credit deferrals	1 year	6,184		—		6,184
Other	1 to 18 years	2,963		3,714		6,677
Total regulatory assets, net of amortization		75,308		287,906		363,214
Income tax rate changes	(a)	—		(500,478)		(500,478)
Over-recovered purchased-gas costs	1 year	(66,901)		—		(66,901)
Total regulatory liabilities		(66,901)		(500,478)		(567,379)
Net regulatory assets and liabilities		$	8,407	$	(212,572)	$	(204,165)
(a) Recovery period varies by jurisdiction. See discussion below for additional information regarding our regulatory assets related to winter weather event costs and regulatory liabilities related to federal income tax rate changes.


		December 31, 2022
	Remaining Recovery Period	Current		Noncurrent		Total
		(Thousands of dollars)
Winter weather event costs	(a)	$	221,926	$	36,291	$	258,217
Under-recovered purchased-gas costs	1 year	19,755		—		19,755
Pension and postemployment benefit costs	See Note 11	—		258,257		258,257
Reacquired debt costs	6 years	812		3,347		4,159
MGP remediation costs	15 years	98		29,743		29,841
Ad-valorem tax	1 year	13,359		—		13,359
WNA	1 year	8,474		—		8,474
Customer credit deferrals	1 year	9,504		—		9,504
Other	1 to 18 years	1,644		3,193		4,837
Total regulatory assets, net of amortization		275,572		330,831		606,403
Pension and other postemployment benefit costs	See Note 11	(8,228)		—		(8,228)
Income tax rate changes	(a)	—		(529,441)		(529,441)
Over-recovered purchased-gas costs	1 year	(39,639)		—		(39,639)
Total regulatory liabilities		(47,867)		(529,441)		(577,308)
Net regulatory assets and liabilities		$	227,705	$	(198,610)	$	29,095
(a) Recovery period varies by jurisdiction. See discussion below for additional information regarding our regulatory assets related to winter weather event costs and regulatory liabilities related to federal income tax rate changes.

Regulatory assets in our consolidated balance sheets, as authorized by various regulatory authorities, are probable of recovery. Base rates and certain riders are designed to provide a recovery of costs during the period such rates are in effect, but do not generally provide for a return on investment for amounts we have deferred as regulatory assets. All of our regulatory assets are subject to review by the respective regulatory authorities during future regulatory proceedings.

Winter weather event costs - In February 2021, the U.S. experienced Winter Storm Uri, a historic winter weather event ~~in February 2021 impacted~~impacting supply, market pricing and demand for natural gas in a number of states, including our service territories of Oklahoma, Kansas, ~~Oklahoma,~~ and Texas. During this time, the governors of Oklahoma, Kansas, ~~Oklahoma,~~ and Texas each declared a state of

emergency, and certain regulatory agencies issued emergency orders that impacted the utility and natural gas industries, including statewide ~~utilities~~utility curtailment programs and orders requiring jurisdictional natural gas and electric utilities to do all things possible and necessary to ensure that natural gas and electricity utility services ~~continue~~continued to be provided to their customers. Due to the historic nature of this winter weather event, we experienced unforeseeable and unprecedented market pricing for natural gas ~~costs~~ in our Oklahoma, Kansas, ~~Oklahoma,~~ and Texas jurisdictions, which resulted in aggregated natural gas purchases for the month of February 2021 of approximately ~~$2.2~~$2.1 billion. ~~These purchases are generally payable at the end of March 2021.~~

~~On February 22, 2021, we entered into~~

Oklahoma - In August 2022, the ~~ONE Gas 2021 Term Loan Facility to enhance our liquidity position as part~~ODFA completed the issuance of $1.4 billion in ratepayer-backed bonds with varying scheduled final maturities over 30 years, consistent with the OCC financing order. The bonds are limited and special revenue obligations of the ~~financing~~ODFA, payable solely from the securitization bond collateral and are not an obligation of ~~our natural gas purchases in order to provide sufficient liquidity to satisfy our obligations as a result~~Oklahoma Natural Gas or any of ~~the 2021 winter weather event and the repayment of indebtedness. See Note 5 for additional discussion of the ONE Gas 2021 Term Loan Facility.~~its affiliates.

~~Our purchased gas costs are recoverable through our tariffs in each state where we operate. Due to~~The proceeds received by Oklahoma Natural Gas were approximately $1.3 billion, which represents the ~~higher level~~amount of ~~gas purchase costs during~~ the ~~2021 winter event, we are working with regulators to extend~~securitization bonds issued by the ODFA less issuance costs. The receipt of these proceeds represents Oklahoma Natural Gas’ recovery ~~periods~~ of ~~such costs in order to lessen~~ the ~~immediate customer impact. In that regard, the Kansas Corporation Commission and the Railroad Commission~~approximately $1.3 billion of ~~Texas each~~ authorized ~~certain utilities, including local~~extraordinary natural ~~gas distribution companies, to record a regulatory asset to account for the extraordinary costs associated with this winter weather event, including but not limited to~~ gas purchase costs and other operational costs ~~related~~incurred during Winter Storm Uri, as well as carrying costs. Beginning September 1, 2022, Oklahoma Natural Gas acts as a servicer, with responsibility for collecting the securitization charges from Oklahoma customers that are then submitted to the ~~procurement~~ODFA to repay the securitization bonds. The collection and ~~transportation~~remittance of these funds on behalf of the ODFA are recorded in other current liabilities in our consolidated balance sheets.

Kansas - In November 2022, KGSS-I issued $336 million of 5.486 percent Securitized Utility Tariff Bonds. KGSS-I used the proceeds from the issuance to purchase the Securitized Utility Tariff Property from Kansas Gas Service, pay for debt issuance costs, and reimburse Kansas Gas Service for upfront securitization costs paid by Kansas Gas Service on behalf of KGSS-I. See Notes 1 and 5 for additional information about the Securitized Utility Tariff Bonds and Note 17 for additional information about the securitization transaction in Kansas.

Texas - Pursuant to securitization legislation enacted in Texas as a result of Winter Storm Uri and a June 2021 RRC Notice to Gas Utilities, Texas Gas Service submitted an application to the RRC in July 2021, for an order authorizing the amount of extraordinary costs for recovery and other such specifications necessary for the issuance of securitized bonds.

In February 2022, the RRC issued a single financing order for Texas Gas Service and other natural gas ~~supply. We~~utilities in Texas participating in the securitization process, which included a determination that the approved costs will be collected from customers over a period of not more than 30 years. The TPFA formed the TNG Corporation, a new independent public authority, to issue the securitized bonds.

In March 2023, the TNG Corporation completed the issuance of the Customer Rate Relief (Winter Storm Uri), Taxable Series 2023 Bonds and we received our portion of the net proceeds, which was approximately $197 million. The proceeds were used to repay certain indebtedness and for general corporate purposes. Interest costs that exceeded the amount securitized have ~~filed a motion~~been deferred and will be addressed in the next general rate proceeding in each applicable jurisdiction in Texas.

At December 31, 2023, Texas Gas Service had deferred approximately $26.6 million in extraordinary costs associated with Winter Storm Uri attributable to its former West Texas service area. Pursuant to the ~~Oklahoma Corporation Commission to seek comparable authority in Oklahoma to record a regulatory asset to account for~~approved settlement order, Texas Gas Service began collecting the extraordinary costs, including carrying costs, ~~associated with this winter weather event. An administrative law judge has recommended approval of our motion by the Oklahoma Corporation Commission. The recommendation~~ from ~~the administrative law judge will next be considered by the Oklahoma Corporation Commission.~~those customers in January 2022.

GAAP does not provide comprehensive recognition and measurement guidance for many forms of government assistance received by business entities. Accordingly, we have accounted for the proceeds received from the ODFA and TNG Corporation by analogy to International Accounting Standards No. 20, “Accounting for Government Grants and Disclosure of Government Assistance” consistent with a grant related to income. The proceeds received and the corresponding recognition of the deferred regulatory asset have been reflected in cost of natural gas in our consolidated statements of income. As the proceeds reflect the recovery of our winter weather event regulatory asset, there was no material impact to earnings.

The deferred winter weather event costs also include invoiced costs for natural gas purchases during Winter Storm Uri that have not been paid as we work with our suppliers for Kansas and Texas to resolve discrepancies in invoiced amounts. These amounts may be adjusted as the differences with suppliers are resolved. Settlements of these amounts are recoverable through the purchased gas cost mechanisms in the respective state. Future adjustments to the amounts are not expected to have a material impact on earnings.

Other regulatory assets and liabilities~~REVENUE~~ - Purchased-gas costs represent the natural gas costs that have been over- or under-recovered from customers through the purchased-gas cost adjustment mechanisms, and includes natural gas utilized in our operations and premiums paid and any cash settlements received from our purchased natural gas call options.

The ~~following table sets forth~~OCC, KCC and regulatory authorities in Texas have approved the recovery of pension costs and other postemployment benefits costs through rates for Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, respectively. The costs recovered through rates are based on the net periodic benefit cost for defined benefit pension and other postemployment costs. Differences, if any, between the net periodic benefit cost, net of deferrals, and the amount recovered through rates are reflected in earnings. We historically have recovered defined benefit pension and other postemployment benefit costs through rates. We believe it is probable that regulators will continue to include the net periodic pension and other postemployment benefit costs in our ~~revenues disaggregated by source for the periods indicated:~~cost of service.

Year Ended December 31,
2020 2019 2018
(Thousands of dollars)
Natural gas sales to customers $ 1,381,141 $ 1,512,886 $ 1,495,250
Transportation revenues 113,855 114,014 109,658
Miscellaneous revenues 15,505 20,579 21,710
Total revenues from contracts with customers 1,510,501 1,647,479 1,626,618
Other revenues - natural gas sales related 8,299 (4,699) (2,806)
Other revenues 11,468 9,950 9,919
Total other revenues 19,767 5,251 7,113
Total revenues $ 1,530,268 $ 1,652,730 $ 1,633,731
We amortize reacquired debt costs in accordance with the accounting guidelines prescribed by the OCC and the KCC.

See Note 15 for additional information regarding our regulatory assets for MGP remediation costs.

Ad-valorem tax represents the difference in Kansas Gas Service’s taxes incurred each year above or below the amount approved in base rates. This difference is deferred as a regulatory asset or liability for a 12-month period. Kansas Gas Service then applies an adjustment to customers’ bills to refund the over-collected revenue or bill the under-collected revenue over the subsequent 12 months.

Weather normalization represents revenue over- or under-recovered through the WNA rider in Kansas. This amount is deferred as a regulatory asset or liability for a 12-month period. Kansas Gas Service then applies an adjustment to customers’ bills for 12 months to refund the over-collected revenue or bill the under-collected revenue.

The customer credit deferrals and the noncurrent regulatory liability for income tax rate changes represents deferral of the effects of enacted federal and state income tax rate changes on our ADIT and the effects of these changes on our rates. See Note 12 for additional information regarding the impact of income tax rate changes.

Recovery through rates resulted in amortization of regulatory assets of approximately $14.7 million, $9.4 million and $5.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

4.CREDIT FACILITY AND SHORT-TERM ~~NOTES PAYABLE~~DEBT

In October ~~2019,~~2023, we ~~exercised a one-year extension~~entered into an agreement that increased the capacity of the ONE Gas Credit Agreement ~~and amended~~to $1.2 billion from $1.0 billion.

In March 2023, we entered into an extension agreement related to the ~~agreement to provide~~ONE Gas Credit Agreement that ~~we may extend~~extended the maturity date ~~by one year, subject~~ to March 16, 2028, from March 16, 2027.

Other than the ~~lenders’ consent, two additional times.~~ increased commitments and term extension, all other terms and conditions of the ONE Gas Credit Agreement remain in full force and effect.

The ONE Gas Credit Agreement ~~remains~~provides for a ~~$700 million~~$1.2 billion revolving unsecured credit facility and includes a $20 million letter of credit subfacility and a $60 million swingline subfacility. We ~~are able to~~can request an increase in commitments of up to an additional ~~$500~~$300 million upon satisfaction of customary conditions, including receipt of commitments from either new lenders or increased commitments from existing lenders. The ONE Gas Credit Agreement ~~expires in October 2024, and~~ is available to provide liquidity for working capital, capital expenditures, acquisitions and mergers, the issuance of letters of credit and for other general corporate purposes.

The ONE Gas Credit Agreement contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining ONE Gas’ total debt-to-capital ratio of no more than 70 percent at the end of any calendar quarter. At December 31, 2023, our total debt-to-capital ratio was 52 percent and we were in compliance with all covenants under the ONE Gas Credit Agreement. We may reduce the unutilized portion of the ONE Gas Credit Agreement in whole or in part without premium or penalty. The ONE Gas Credit Agreement contains customary events of default. Upon the occurrence of certain events of default, the obligations under the ONE Gas Credit Agreement may be accelerated and the commitments may be terminated. The ONE Gas Credit Agreement also contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining ONE Gas’ total debt-to-capital ratio of no more than 70 percent at the end of any calendar quarter. The ONE Gas Credit Agreement also contains customary affirmative and negative covenants, including covenants relating to liens, indebtedness of subsidiaries, investments, changes in the nature of business, fundamental changes, transactions with affiliates, burdensome agreements, and use of proceeds. In the event of a breach of certain covenants by ONE Gas, amounts outstanding under the ONE Gas Credit Agreement may become due and payable immediately. At December 31, 2020, our total debt-to-capital ratio was 47 percent and we were in compliance with all covenants under the ONE Gas Credit Agreement.

The ONE Gas Credit Agreement contains provisions for an applicable margin rate and an annual facility fee, both of which adjust with changes in our credit rating. Based on our current credit ratings, borrowings, if any, will accrue interest at LIBOR plus 79.5 basis points, and the annual facility fee is 8 basis points.

In April 2020, we entered into the ONE Gas 364-day Credit Agreement. The ONE Gas 364-day Credit Agreement is a $250 million revolving unsecured credit facility containing various customary conditions to borrowing and affirmative, negative and financial ratio maintenance covenants, all of which are substantially the same as those of the ONE Gas Credit Agreement. The ONE Gas 364-day Credit Agreement also contains provisions for an applicable margin rate and a quarterly facility fee, both of which adjust with changes in our credit rating. Based on our current credit ratings, borrowings, if any, will accrue interest at LIBOR plus 115 basis points, and the quarterly facility fee is 10 basis points.

Both the ONE Gas Credit Agreement and the ONE Gas 364-day Credit Agreement utilize LIBOR as the reference rate for determining interest to accrue on borrowings under the respective agreements. In the event LIBOR is not available, and such circumstances are unlikely to be temporary, our lenders for each respective agreement may establish an alternative interest rate for the impacted loans by replacing LIBOR with one or more secured overnight financing-based rates or another alternate benchmark rate.

At December 31, ~~2020,~~2023, we had ~~$1.2~~$1.4 million in letters of credit issued and 0no borrowings under the ONE Gas Credit Agreement, ~~or the ONE Gas 364-day Credit Agreement,~~ with ~~$948.8 million~~approximately $1.2 billion of ~~combined~~ remaining credit, which is available to repay our commercial paper borrowings.

~~We have a~~In November 2023, we increased the capacity of our commercial paper program ~~under which~~to $1.2 billion from $1.0 billion.

Under our commercial paper program, we may issue unsecured commercial paper up to a maximum amount of ~~$700 million~~$1.2 billion to fund short-term borrowing needs. The maturities of the commercial paper ~~notes may~~ vary but may not exceed 270 days from the date of issue. ~~The commercial~~Commercial paper ~~notes are~~is generally sold ~~generally~~ at par less a discount representing an interest factor. At December 31, ~~2020,~~2023 and December 31, 2022, we had ~~$418.2~~$88.5 million and $552.0 million of commercial paper ~~outstanding. The~~outstanding with a weighted-average interest rate ~~on our commercial paper was 0.18~~of 5.60 percent and ~~1.83~~4.75 percent, ~~at December 31, 2020 and 2019,~~ respectively.

5.LONG-TERM DEBT

The table below presents a summary of our long-term debt outstanding for the periods indicated:


	Interest rate at December 31, 2023	December 31, 2023		December 31, 2022
		(Thousands of dollars)
Senior Notes due:
February 2024	3.610%	$	300,000	$	300,000
March 2024	1.100%	473,000		473,000
April 2029	5.100%	300,000		—
May 2030	2.000%	300,000		300,000
September 2032	4.250%	300,000		300,000
February 2044	4.658%	600,000		600,000
November 2048	4.500%	400,000		400,000
Total Senior Notes		2,673,000		2,373,000
KGSS-I Securitized Utility Tariff Bonds	5.486%	315,284		336,000
Other	8.000%	1,238		1,250
Unamortized discounts on long-term debt		(7,615)		(7,636)
Debt issuance costs (a)		(21,092)		(20,143)
Total long-term debt, net		2,960,815		2,682,471
Less: current maturities of securitized utility tariff bonds, net		27,430		20,716
Less: current maturities of other long-term debt, net		772,984		12
Noncurrent portion of long-term debt, net		$	2,160,401	$	2,661,743

(a) Includes issuance costs for the KGSS-I Securitized Utility Tariff Bonds of $5.3 million and $5.9 million, respectively.

Senior Notes - In ~~April 2020, ONE Gas~~December 2023, we issued $300 million of ~~2.00~~5.10 percent senior notes due ~~2030.~~April 2029. The proceeds from the issuance were used to ~~reduce the amount of~~repay amounts outstanding under our commercial paper program and for general corporate purposes.

~~Our long-term debt includes~~In August 2022, we issued $300 million of ~~3.61~~4.25 percent senior notes due ~~in 2024, $300~~September 2032. The proceeds from the issuance were used to repay amounts outstanding under our commercial paper program and for general corporate purposes.

In August 2022, we called $750 million of ~~2.00~~the $1.0 billion of 0.85 percent senior notes due ~~2030, $600~~March 2023, $150 million of ~~4.658~~the $700 million of 1.10 percent senior notes due ~~2044,~~March 2024 and the remaining $400 million of ~~4.50~~outstanding floating-rate senior notes due March 2023, using the proceeds received from the Oklahoma government in our securitization transaction for Oklahoma Natural Gas.

In November 2022, we called the remaining $250 million of the $1.0 billion of 0.85 percent senior notes due ~~2048.~~ March 2023 and $77 million of the $700 million of 1.10 percent senior notes due March 2024, using the proceeds from the securitization transaction for Kansas Gas Service.

The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in ~~the~~ aggregate principal amount of the outstanding Senior Notes to declare those Senior Notes immediately due and payable in full.

Depending on the series, we may redeem our Senior Notes at par, plus accrued and unpaid interest to the redemption date, starting three months or six months before their maturity dates. Prior to these dates, we may redeem these Senior Notes, in whole or in part, at a redemption price equal to the principal amount, plus accrued and unpaid interest and a make-whole

premium. The redemption price will never be less than 100 percent of the principal amount of the respective ~~note~~Senior Note plus accrued and unpaid interest to the redemption date. ~~Our~~The remaining $473 million of outstanding principal of our 1.10 percent senior notes due March 2024 can be called at par with a 30-day notice. Senior Notes are senior unsecured obligations, ranking equally in right of payment with all of our existing and future unsecured senior indebtedness.

~~ONE Gas 2021 Term Loan Facility~~Securitized Utility Tariff Bonds - On ~~February 22, 2021, we entered into~~November 18, 2022, KGSS-I issued $336 million of 5.486 percent Securitized Utility Tariff Bonds. The Securitized Utility Tariff Bonds have a term of 10 years with semi-annual principal repayments that began on August 1, 2023, and an expected weighted average life of 5.5 years. The bonds are governed by an indenture between KGSS-I and the ~~ONE Gas 2021 Term Loan Facility~~indenture trustee. The indenture contains certain covenants that restrict KGSS-I’s ability to ~~enhance our liquidity position as part~~sell, transfer, convey, exchange, or otherwise dispose of its assets. See Notes 3 and 17 for additional discussion of the ~~financing of our natural gas purchases in order to provide sufficient liquidity to satisfy our obligations as a result of the 2021 winter weather event and the repayment of indebtedness.~~securitization transactions.

The ~~ONE Gas 2021 Term Loan Facility provides~~KGSS-I Securitized Utility Tariff Bonds are governed by an indenture between KGSS-I and the indenture trustee. The indenture contains certain covenants that restrict KGSS-I’s ability to sell, transfer, convey, exchange, or otherwise dispose of its assets. See Note 17 for ~~a $2.5 billion unsecured term loan facility. Proceeds~~additional discussion of the loans under the ONE Gas 2021 Term Loan Facility will be available for natural gas purchases as a result of the 2021 winter weather event and the repayment of indebtedness. The ONE Gas 2021 Term Loan Facility matures two years after the loans are funded under the ONE Gas 2021 Term Loan Facility. The loans under the ONE Gas 2021 Term Loan Facility will bear interest at a “Eurodollar Rate” or a “Base Rate” as specified in the ONE Gas 2021 Term Loan Facility, plus a margin specified in the ONE Gas 2021 Term Loan Facility which adjusts based on our debt ratings and the outstanding amount of loans remaining under the ONE Gas 2021 Term Loan Facility. Outstanding loans or commitments under the ONE Gas 2021 Term Loan Facility are required to be prepaid or reduced, as applicable, with the net cash proceeds received by us or any of our subsidiaries from certain debt and equity issuances.

The ONE Gas 2021 Term Loan Facility contains customary conditions to borrowing, and customary affirmative and negative covenants, including a financial ratio maintenance covenant requiring us to maintain a total debt-to-capital ratio of no more than 72.5 percent at the end of any calendar quarter through December 31, 2021, and 70 percent at the end of any calendar quarter thereafter. The ONE Gas 2021 Term Loan Facility also contains various customary events of default, the occurrence of which could result in a termination of the lenders’ commitments and the acceleration of all of our obligations thereunder.Kansas securitization transaction.

6.LEASES

We have operating leases for office facilities, gas storage facilities, IT equipment and right-of-way contracts. Our leases have remaining lease terms of ~~one year~~1 to ~~nine~~6 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within specified time frames. We have not entered into any finance leases.

Our right-of-use asset is ~~$37.2~~$21.0 million and ~~$34.2~~$23.3 million as of December 31, ~~2020~~2023 and ~~2019,~~2022, respectively, and is reported within other assets in our ~~Consolidated Balance Sheets.~~consolidated balance sheets. Operating lease liabilities are reported within our other current liabilities and other liabilities in our consolidated balance sheets. Total operating lease cost including immaterial amounts attributable to short-term operating leases was ~~$8.4~~$7.7 million, ~~$8.5~~$7.8 million, and $8.2 million in ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively.

In ~~2020,~~2023, we reassessed certain operating leases for office facilities and IT equipment which were extended or modified, resulting in an increase of $3.9 million in our right-of-use asset and operating lease ~~liability of $9.8 million and $10.2 million, respectively.~~liability.

Years Ended

December 31,

Year Ended

December 31,

Other information related to operating leases

2020

2019

(Millions of dollars)

Weighted-average remaining lease term

7 years

Weighted-average discount rate

2.81%

3.62%

Weighted-average discount rate

Supplemental cash flows information

Lease payments

(8.0)

(8.4)

Lease payments

Right-of-use assets obtained in exchange for lease obligations

9.8

9.5

Right-of-use assets obtained in exchange for lease obligations


Oklahoma		46-3561936
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

15 East Fifth Street
Tulsa,	OK	74103
(Address of principal executive offices)		(Zip Code)


~~AAO~~			~~Accounting Authority Order~~
~~ADIT~~			~~Accumulated deferred income tax~~
~~AFUDC~~			~~Allowance for funds used during construction~~
~~Annual Report~~			~~Annual Report on Form 10-K for the year ended December 31, 2020~~
~~ASC~~			~~Accounting Standards Codification~~
~~ASU~~			~~Accounting Standards Update~~
~~Bcf~~			~~Billion cubic feet~~
~~CDC~~			~~Centers for Disease Control and Prevention~~
~~CERCLA~~			~~Federal Comprehensive Environmental Response, Compensation and Liability Act~~ ~~of 1980, as amended~~
~~CFTC~~			~~Commodities Futures Trading Commission~~
~~Clean Air Act~~			~~Federal Clean Air Act, as amended~~
~~Clean Water Act~~			~~Federal Water Pollution Control Amendments of 1972, as amended~~
~~CNG~~			~~Compressed natural gas~~
~~Code~~			~~Internal Revenue Code of 1986, as amended~~
~~COSA~~			~~Cost-of-Service Adjustment~~
~~COVID-19~~			~~Coronavirus Disease 2019~~
~~DOT~~			~~United States Department of Transportation~~
~~Dth~~			~~Dekatherm~~
~~ECP~~			~~The ONE Gas, Inc. Amended and Restated Equity Compensation Plan (2018)~~
~~EDIT~~			~~Excess accumulated deferred income taxes resulting from a change in enacted tax rates~~
~~EPA~~			~~United States Environmental Protection Agency~~
~~EPS~~			~~Earnings per share~~
~~ESG~~			~~Environmental, social and governance~~
~~ESPP~~			~~The ONE Gas, Inc. Amended and Restated Employee Stock Purchase Plan~~
~~Exchange Act~~			~~Securities Exchange Act of 1934, as amended~~
~~FASB~~			~~Financial Accounting Standards Board~~
~~FERC~~			~~Federal Energy Regulatory Commission~~
~~GAAP~~			~~Accounting principles generally accepted in the United States of America~~
~~GPAC~~			~~Gas Pipeline Advisory Committee~~
~~GRIP~~			~~Texas Gas Reliability Infrastructure Program~~
~~GSRS~~			~~Gas System Reliability Surcharge~~
~~Heating Degree Day or HDD~~			A measure designed to reflect the demand for energy needed for heating based on the extent to which the daily average temperature falls below a reference temperature for which no heating is required, usually 65 degrees Fahrenheit
~~HCA(s)~~			~~High consequence area(s)~~
IT			~~Information technology~~
~~KCC~~			~~Kansas Corporation Commission~~
~~KDHE~~			~~Kansas Department of Health and Environment~~
~~kWh~~			~~Kilowatt hour~~
~~LDC~~			~~Local distribution company~~
~~LIBOR~~			~~London Interbank Offered Rate~~
~~MAOP(s)~~			~~Maximum allowable operating pressure(s)~~
~~MGP~~			~~Manufactured gas plant~~
~~MMcf~~			~~Million cubic feet~~
~~Moody’s~~			~~Moody’s Investors Service, Inc.~~
~~Net margin~~			~~Non-GAAP measure defined as total revenues less cost of natural gas~~
~~NOL~~			~~Net operating loss~~
~~NPRM~~			~~Notice of proposed rulemaking~~
~~NYMEX~~			~~New York Mercantile Exchange~~
~~NYSE~~			~~New York Stock Exchange~~


~~OCC~~			~~Oklahoma Corporation Commission~~
~~ONE Gas~~			~~ONE Gas, Inc.~~
~~ONE Gas 2021 Term Loan Facility~~			~~ONE Gas’ $2.5 billion two-year unsecured term loan facility~~
~~ONE Gas 364-day Credit Agreement~~			~~ONE Gas’ $250 million 364-day revolving credit agreement, which expires on April 6, 2021~~
~~ONE Gas Credit Agreement~~			~~ONE Gas’ $700 million amended and restated revolving credit agreement, which expires on October 4, 2024~~
~~OSHA~~			~~Occupational Safety and Health Administration~~
~~PBRC~~			~~Performance-Based Rate Change~~
~~PHMSA~~			~~United States Department of Transportation Pipeline and Hazardous Materials~~ ~~Safety Administration~~
~~Pipeline Safety Improvement Act~~			~~Pipeline Safety Improvement Act of 2002, as amended~~
~~Pipeline Safety, Regulatory Certainty and~~ ~~Job Creation Act~~			~~Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, as amended~~
~~PPE~~			~~Personal protective equipment~~
~~RNG~~			~~Renewable natural gas~~
~~ROE~~			~~Return on equity calculated consistent with utility ratemaking principles in each~~ ~~jurisdiction in which we operate~~
~~RRC~~			~~Railroad Commission of Texas~~
~~S&P~~			~~Standard and Poor’s Rating Services~~
~~SEC~~			~~Securities and Exchange Commission~~
~~Securities Act~~			~~Securities Act of 1933, as amended~~
~~Senior Notes~~			ONE Gas’ registered notes consisting of $300 million of 3.61 percent senior notes due 2024, $300 million of 2.00 percent senior notes due 2030, $600 million of 4.658 percent notes due 2044, and $400 million of 4.50 percent senior notes due 2048
~~WNA~~			~~Weather normalization adjustment(s)~~
~~XBRL~~			~~eXtensible Business Reporting Language~~


The abbreviations, acronyms and industry terminology used in this Annual Report are defined as follows:

AAO			Accounting Authority Order
ADIT			Accumulated deferred income taxes
AFUDC			Allowance for funds used during construction
Annual Report			Annual Report on Form 10-K for the year ended December 31, 2023
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
Bcf			Billion cubic feet
CAA			Federal Clean Air Act, as amended
CERCLA			Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
CFTC			Commodities Futures Trading Commission
CISA			Cybersecurity and Infrastructure Security Agency
Clean Water Act			Federal Water Pollution Control Amendments of 1972, as amended
CNG			Compressed natural gas
Code			Internal Revenue Code of 1986, as amended
COSA			Cost-of-Service Adjustment
DART			Days Away, Restricted or Transferred Incident Rate; calculated by multiplying the total number of recordable injuries and illnesses, or one or more restricted days that resulted in an employee transferring to a different job within the company by 200,000, and then dividing that number by the total number of hours worked by all employees
DHS			United States Department of Homeland Security
DOT			United States Department of Transportation
Dth			Dekatherm
ECP			The ONE Gas, Inc. Amended and Restated Equity Compensation Plan (2018)
EDIT			Excess deferred income taxes resulting from a change in enacted tax rates
EPA			United States Environmental Protection Agency
EPS			Earnings per share
ER			Emissions Reduction; measured by the reduction of MTCO2e emissions through planned vintage main replacements and service line replacements.
ERT			Emergency Response Time; calculated as the time between the creation of an emergency order and the arrival of a first company responder to the scene expressed as the percentage of emergency orders with a response time of 30 minutes or less
ESG			Environmental, social and governance
ESPP			The ONE Gas, Inc. Amended and Restated Employee Stock Purchase Plan
Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
FERC			Federal Energy Regulatory Commission
GAAP			Accounting principles generally accepted in the United States of America
GRIP			Gas Reliability Infrastructure Program
GSRS			Gas System Reliability Surcharge

HDD			Heating degree day is a measure designed to reflect the demand for energy needed for heating based on the extent to which the daily average temperature falls below a reference temperature for which no heating is required, usually 65 degrees Fahrenheit
IRS			United States Internal Revenue Service
IT			Information Technology
KCC			Kansas Corporation Commission
KDHE			Kansas Department of Health and Environment
KGSS-I			Kansas Gas Service Securitization I, L.L.C.
LDC			Local distribution company
LIBOR			London Interbank Offered Rate

MGP			Manufactured gas plant
MMcf			Million cubic feet
Moody’s			Moody’s Investors Service, Inc.


MTCO2e			Metric ton of carbon dioxide equivalent
NPRM			Notice of proposed rulemaking
NYSE			New York Stock Exchange
OCC			Oklahoma Corporation Commission
ODFA			Oklahoma Development Finance Authority
ONE Gas			ONE Gas, Inc.
ONE Gas Credit Agreement			ONE Gas’ $1.2 billion revolving credit agreement, as amended
OSHA			Occupational Safety and Health Administration
PBRC			Performance-Based Rate Change
PHMSA			United States Department of Transportation Pipeline and Hazardous Materials Safety Administration

PIPES Act			Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2020
PVIR			Preventable Vehicle Incident Rate; calculated by multiplying the number of total preventable vehicle incidents by 1,000,000 and then dividing that number by the total number of business use miles driven
Quarterly Report(s)			Quarterly Report(s) on Form 10-Q
RNG			Renewable natural gas
ROE			Return on equity calculated consistent with utility ratemaking principles in each jurisdiction in which we operate
RRC			Railroad Commission of Texas
S&P			Standard & Poor’s Ratings Services
SEC			Securities and Exchange Commission
Securities Act			Securities Act of 1933, as amended
Securitized Utility Tariff Bonds			Series 2022-A Senior Secured Securitized Utility Tariff Bonds, Tranche A
Securitized Utility Tariff Property			Securitized Utility Tariff Property as defined in the financing order issued by the KCC in August 2022
Senior Notes			ONE Gas’ registered unsecured notes consisting of $300 million of 3.61 percent senior notes due February 2024, $473 million of 1.10 percent senior notes due March 2024, $300 million of 5.10 percent senior notes due April 2029, $300 million of 2.00 percent senior notes due May 2030, $300 million of 4.25 percent senior notes due September 2032, $600 million of 4.66 percent senior notes due February 2044 and $400 million of 4.50 percent senior notes due November 2048
SOFR			Secured Overnight Financing Rate administered by the Federal Reserve Bank of New York
TCEQ			Texas Commission on Environmental Quality
TNG Corporation			Texas Natural Gas Securitization Finance Corporation
TPFA			Texas Public Finance Authority
TRIR			Total Recordable Incident Rate; calculated by multiplying the number of recordable cases by 200,000, and then dividing that number by the number of hours worked by all employees
TSA			United States Department of Homeland Security’s Transportation Security Administration
WNA			Weather normalization adjustment(s)
XBRL			eXtensible Business Reporting Language


Division	Division	Jurisdiction	Effective Date of Last Action(1)	Rate Base (millions)(2)	Rate of Return(2)	Equity Ratio(2)	Return on Equity(2)	Division	Jurisdiction	Effective Date of Last Action(1)		Rate Base (millions)		Pre-Tax Rate of Return		Equity Ratio		ROE
Oklahoma Natural Gas		OK	June 2020	$1,616	7.06%	56%	9.50%
Oklahoma Natural Gas (2)								Oklahoma Natural Gas (2)	Oklahoma	June 2023		$2,066		8.95%		59%		9.40%
Kansas Gas Service (3)	Kansas Gas Service (3)	KS	December 2020	$1,133	8.60%	N/A	9.30%	Kansas Gas Service (3)	Kansas	November 2023		$1,330		8.60%		N/A		9.30%
Texas Gas Service		Central-Gulf	August 2020	$458	7.46%	59%	9.50%
		West Texas	June 2020	$397	7.28%	60%	9.50%
		Rio Grande Valley	November 2020	$128	7.35%	61%	9.50%
		North Texas	November 2020	$54	7.55%	62%	9.75%
		Borger / Skellytown	December 2020	$10	7.55%	62%	9.75%
Texas Gas Service (2)								Texas Gas Service (2)	Central-Gulf	June 2023		$617		8.95%		59%		9.50%
	West-North										West-North		June 2023		$589		8.91%		60%	9.60%
	Rio Grande Valley										Rio Grande Valley		January 2024		$160		8.95%		59%	9.70%


(1)			Effective date of last approved rate case or interim filing.
(2)			The rate base, authorized ~~rate of return,~~ROE, authorized debt/equity ratio and authorized return on equity presented in this table are those from the most recent approved regulatory filing for ~~each jurisdiction. These rate bases, rates of return, debt/equity ratios~~Oklahoma Natural Gas and ~~returns on equity are not necessarily indicative of current or future rate bases, rates of return, debt/equity ratios or returns on equity.~~Texas Gas Service.
(3)			Kansas Gas Service’s most recent rate case, approved in February 2019, settled without a determination of rate base, ~~rate of return,~~ROE, authorized debt/equity ratio and authorized return on ~~equity within the settlement.~~equity. This reflects Kansas Gas Service’s estimate of rate base from that rate case adjusted for approved GSRS filings and ~~the return on equity~~ROE embedded in the pre-tax carrying charge utilized in its GSRS filing.
(4)			Our purchased gas adjustment mechanisms allow recovery of expenses the Company incurs to purchase, transport, and store natural gas for our customers. These costs are passed on to customers without markup.
(5)			We recover the gas cost portion of bad debts through our various purchased gas ~~cost~~ adjustment mechanisms.
(6)			~~These~~Expense trackers represent cost adjustment mechanisms for costs that are subject to significant fluctuations compared to other costs, represent a large component of our cost of service and are generally outside our control. Examples include pension and other postemployment benefits costs for Kansas Gas Service and Texas Gas Service, ad-valorem taxes in Kansas and pipeline integrity testing expenses in Texas.


	Years Ended December 31,
Operational measure	2023	2022	2021
ER	3,076	—	—
TRIR	—	1.37	0.96
DART	0.16	0.22	0.22
PVIR	1.82	1.84	2.10
ERT	64.8%	62.7%	62.7%


Properties (miles)	Properties (miles)	OK	KS	TX	Total	Properties (miles)	OK	KS	TX	Total
Distribution	Distribution	19,000	11,600	10,600	41,200
Transmission	Transmission	700	1,500	300	2,500
Total properties	Total properties	19,700	13,100	10,900	43,700


	Cumulative Total Return As of Each Year Ending
	Cumulative Total Return As of Each Year Ending
	December 31,
	2016		2017		2018		2019		2020
ONE Gas, Inc.	$	130.46	$	153.03	$	170.47	$	205.04	$	172.79
S&P MidCap 400 Utilities Index	$	127.35	$	141.47	$	151.11	$	172.76	$	148.81
S&P MidCap 400 Index	$	120.74	$	140.35	$	124.80	$	157.49	$	179.00
Dow Jones Industrial Average	$	116.50	$	149.24	$	144.05	$	180.56	$	198.11
ONE Gas Peer Group*	$	123.38	$	141.21	$	144.43	$	169.20	$	146.47
* The ONE Gas peer group used in this graph is the same peer group that will be used in determining our level of performance under our 2020 performance units at the end of the three-year performance period and is comprised of the following companies: Alliant Energy Corporation; Atmos Energy Corporation; Avista Corporation; CenterPoint Energy, Inc.; Chesapeake Utilities Corporation; CMS Energy Corporation; New Jersey Resources Corporation; NiSource Inc.; Northwest Natural Holding Company; NorthWestern Corporation; South Jersey Industries Inc.; Southwest Gas Holdings, Inc.; and Spire Inc.


~~Workforce~~ In September 2023, we entered into an underwriting agreement and two forward sale agreements for 1.2 million and 180,000 shares of our common stock, respectively. The forward sale agreements provide for settlement on a date, or dates, to be specified at our discretion, but which will occur no later than December 31, 2024. In June 2023, we executed forward sale agreements under our current at-the-market equity program for 926,465 shares of our common stock. In March 2023, we entered into an underwriting agreement and a forward sale agreement for 2.0 million shares of our common stock. The forward sale agreement provided for settlement on a date, or dates, to be specified at our discretion, but which will occur no later than December 29, 2023, for 1.4 million shares of common stock and by December 31, 2024, for the remaining balance. In February 2023, we entered into an at-the-market equity distribution agreement under which we may issue and sell shares of our common stock with an aggregate offering price up to $300 million. This at-the-market equity program replaced our previous at-the-market equity program, which began in February 2020, and expired in February 2023. Sales of common stock are made by means of ordinary brokers’ transactions on the NYSE, in block transactions or as otherwise agreed to between us and the sales agent. We are under no obligation to offer and sell common stock under the program. At December 31, 2023, we had $225.5 million of equity available for issuance under the program. ONE Gas Credit Agreement - In October 2023, we entered into an agreement that increased the capacity of the ONE Gas Credit Agreement to $1.2 billion from $1.0 billion. In March 2023, we entered into an extension agreement related to the ONE Gas Credit Agreement that extended the maturity date to March 16, 2028, from March 16, 2027. Other than the increased commitments and term extension, all other terms and conditions of the ONE Gas Credit Agreement remain in full force and effect. Commercial paper program - In November 2023, we increased the capacity of our commercial paper program to $1.2 billion from $1.0 billion. Other than the increased capacity, all other terms and conditions of the commercial paper program remain in full force and effect.			Following the guidance of the CDC, OSHA and third-party subject matter experts we have engaged, we have established a number of protocols to protect our employees. For all employees, we are encouraging social distancing and proper hygiene, and are requiring the use of masks in our facilities. Employees who may be exhibiting symptoms or who may have been exposed to COVID-19 are required to contact a third-party medical consultant engaged by the Company who follows protocols specifically developed for COVID-19 to determine whether the employee should seek medical attention, self-isolate or can safely return to work. Our business continuity planning and investments in IT enabled an orderly transition to remote work for approximately 50 percent of our employees. For those employees who continue to report to our offices and service centers, the reduced number of employees working in these locations provides space for social distancing. We have implemented health screenings at all of our employee work locations, which include a self-assessment health screening application using mobile devices and automated thermal temperature checks at our larger facilities. We routinely disinfect employee work locations, placing emphasis on high-touch surfaces in common areas. For employees who continue to interact with customers, we are providing additional PPE in accordance with CDC and OSHA guidelines. In addition, we have implemented a Paid Pandemic Leave Policy, increased medical benefits for COVID-19 testing and vaccination and are reminding employees of our benefit plans and programs for their financial, physical and mental health and well-being.
~~Customers~~			For customers requesting service orders, we have implemented protocols to determine whether someone in the home has been exposed to COVID-19. Employees entering customers’ homes are provided appropriate PPE in accordance with CDC and OSHA guidelines to protect themselves and our customers. Customers are also asked to provide for social distancing while our employees are in the customer’s home. As ordered by our regulators, customer disconnects for nonpayment were suspended from mid-March through May 20, 2020, in Oklahoma, through May 31, 2020, in Kansas, and through December 31, 2020, in some areas of Texas. As of December 31, 2020, we have temporarily suspended disconnects for safety reasons across all of our jurisdictions due to the level of COVID-19 infection. Customers who are finding it difficult to pay their bills are being encouraged to contact us so we can work with them to establish alternative payment arrangements and advise them of public-assistance programs that may be available.
~~Operations~~			Although we have experienced employee absences due to our protocols for self-isolation of employees who may be exhibiting symptoms or who may have been exposed to or contracted the COVID-19 virus, we have continued, and expect to continue, to execute our work in the field, including our capital work for system integrity, pipeline replacements and extending service to new customers. Our work going forward could be impacted if we do not have access to the PPE needed to keep our employees and customers safe or experience a significant increase in employee and contractor absences.


~~Supply Chain~~			We are actively managing the materials, supplies and contract services necessary for our operations. We utilize a diverse group of suppliers and contractors and are in frequent contact with our vendors to understand their ability to continue to provide the materials, supplies and services we require. To date, we have not experienced significant disruption to our supply chain and have no indication of significant disruptions in the future. Our suppliers and contractors could be impacted if they, or the businesses they rely on, experience a significant increase in employee absences. Our natural gas supply portfolio consists of contracts with varying terms from a diverse group of suppliers. We acquire our natural gas supply from natural gas processors, marketers and producers from multiple production areas and lease capacity from third-party natural gas storage providers. This strategy is designed to mitigate the impact on our supply from physical interruption, financial difficulties of a single supplier, natural disasters and other unforeseen force majeure events, as well as to ensure these resources are reliable and flexible to meet the variations of customer demands. To date, we have not experienced disruption to our natural gas supply and we do not anticipate significant disruption in the future.
~~Regulatory~~			We are in regular communication with our regulators to keep them apprised of the effects COVID-19 is having on the service we provide. We have received accounting orders in each of our jurisdictions authorizing us to accumulate and defer for regulatory purposes certain incremental costs incurred, including bad debt expenses, and certain lost revenues, net of offsetting expense reductions, associated with COVID-19.
~~Liquidity~~			In April 2020, we entered into the ONE Gas 364-day Credit Agreement in the amount of $250 million, which provides us an additional source of liquidity. At December 31, 2020, we had short-term liquidity available through our commercial paper program, credit facilities and cash on hand totaling $538.6 million. In April 2020, we issued $300 million of 2.00 percent senior notes due 2030. The proceeds from the issuance were used to reduce the amount of our outstanding commercial paper and for general corporate purposes. We believe our investment-grade credit ratings and strong balance sheet will enable us to access sources of liquidity that are adequate to support our current and planned level of operations.


								Variances				Variances						Years Ended								Variances										Variances
		Years Ended December 31,						2020 vs. 2019				2019 vs. 2018						December 31,								2023 vs. 2022										2022 vs. 2021
Financial Results	Financial Results	2020		2019		2018		Increase (Decrease)				Increase (Decrease)				Financial Results		2023			2022						2021			Increase (Decrease)											Increase (Decrease)
		(Millions of dollars, except percentages)															(Millions of dollars, except percentages)
Natural gas sales	Natural gas sales	$	1,389.2	$	1,508.1	$	1,492.4	$	(118.9)	(8)	%	$	15.7	1	%	Natural gas sales		$	2,154.0	$	$	2,412.9		$			$	1,661.7		$	(258.9)			(11)			(11)		%				$	751.2		45			45	%
Transportation revenues	Transportation revenues	114.1		114.1		109.7		—		—	%	4.4		4	%	Transportation revenues		133.6		126.5		126.5			119.0				119.0			7.1	7.1		6				6	%					7.5		6			6	%
Securitization customer charges																Securitization customer charges		48.7			5.8						—			42.9						740		%				5.8						100	%
Other revenues	Other revenues	27.0		30.5		31.6		(3.5)		(11)	%	(1.1)		(3)	%	Other revenues		35.7		32.8		32.8			27.9				27.9			2.9	2.9		9				9	%					4.9		18			18	%
Total revenues	Total revenues	1,530.3		1,652.7		1,633.7		(122.4)		(7)	%	19.0		1	%	Total revenues		2,372.0		2,578.0			2,578.0						1,808.6			(206.0)			(8)				(8)	%					769.4		43			43	%
Cost of natural gas	Cost of natural gas	537.4		687.9		714.6		(150.5)		(22)	%	(26.7)		(4)	%	Cost of natural gas		1,134.5		1,459.1		1,459.1			775.0				775.0			(324.6)	(324.6)		(22)				(22)	%					684.1		88			88	%
Net margin		992.9		964.8		919.1		28.1		3	%	45.7		5	%
Operating costs	Operating costs	494.5		489.1		470.6		5.4		1	%	18.5		4	%	Operating costs		580.1		540.4		540.4			516.1				516.1			39.7	39.7		7				7	%					24.3		5			5	%
Depreciation and amortization	Depreciation and amortization	194.9		180.4		160.1		14.5		8	%	20.3		13	%	Depreciation and amortization		279.8		228.5		228.5			207.2				207.2			51.3	51.3		22				22	%					21.3		10			10	%
Operating income	Operating income	$	303.5	$	295.3	$	288.4	$	8.2	3	%	$	6.9	2	%	Operating income		$	377.6	$	$	350.0		$			$	310.3		$	27.6			8			8		%				$	39.7		13			13	%
Net income		$	196.4	$	186.7	$	172.2	$	9.7	5	%	$	14.5	8	%
Net Income																Net Income		$	231.2		221.7						206.4			$	9.5					4		%				$	15.3					7	%
Capital expenditures and asset removal costs	Capital expenditures and asset removal costs	$	512.2	$	465.1	$	447.4	$	47.1	10	%	$	17.7	4	%	Capital expenditures and asset removal costs		$	728.7	$	$	656.5		$			$	544.3		$	72.2			11			11		%				$	112.2		21			21	%


~~Rating Agency~~	~~Rating~~	~~Outlook~~
~~Moody’s~~	A2	~~Stable~~
~~S&P~~	A	~~Stable~~


Rating Agency	Rating	Outlook
Moody’s	A3	~~Negative~~Stable
S&P	~~BBB+~~A-	~~Negative~~Stable


Maturity	Original Shares	Remaining Shares	Net Proceeds Available (in thousands)		Forward Price
December 31, 2024	926,465	926,465	$	74,396	$	80.30
December 31, 2024	2,000,000	1,257,000	96,709		76.94
December 31, 2024	1,200,000	1,200,000	88,823		74.02
December 31, 2024	180,000	180,000	13,315		73.97
Total forward sale agreements	4,306,465	3,563,465	$	273,243	$	76.68


	Contractual Obligations
		(Millions of dollars)
		2021		2022		2023		2024		2025		Thereafter		Total
Long-term debt, including current maturities		$	—	$	—	$	—	$	300.0	$	—	$	1,301.3	$	1,601.3
Commercial paper		418.2		—		—		—		—		—		418.2
Interest payments on long-term debt		62.9		62.9		62.9		52.9		52.0		946.0		1,239.6
Firm transportation and storage capacity contracts		175.6		135.0		98.9		49.5		36.8		35.5		531.3
Natural gas purchase commitments		141.3		—		—		—		—		—		141.3
Operating leases		7.9		7.4		6.2		4.7		4.1		11.0		41.3
Total		$	805.9	$	205.3	$	168.0	$	407.1	$	92.9	$	2,293.8	$	3,973.0



	December 31,
Future minimum lease payments under non-cancellable operating leases	2023
	(Millions of dollars)
2024	$	6.7
2025	4.9
2026	3.3
2027	3.1
2028	2.8
Thereafter	1.4
Total future minimum lease payments	$	22.2
Imputed interest	(1.9)
Total operating lease liability	$	20.3

Consolidated balance sheets as of December 31, 2023
Current operating lease liability	$	6.0
Long-term operating lease liability	14.3
Total operating lease liability	$	20.3


	Accumulated Other Comprehensive ~~Loss~~Income (Loss)
	(Thousands of dollars)
January 1, ~~2019~~2022	$	~~(4,086)~~(6,527)
Pension and other postemployment benefit plans obligations
Other comprehensive income before reclassification, net of tax of $(1,669)	5,701
Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $(36)	122
Other comprehensive income	5,823
December 31, 2022	(704)
Pension and other postemployment benefit plans obligations
~~Other comprehensive income before reclassification, net of tax of $692~~	~~(2,074)~~
~~Amounts reclassified from accumulated other comprehensive loss, net of tax of $(213)~~	~~639~~
~~Other comprehensive loss~~	~~(1,435)~~
~~Reclassification of stranded tax effects (a)~~	~~(1,218)~~
~~December 31, 2019~~	~~(6,739)~~
~~Pension and other postemployment benefit plans obligations~~
Other comprehensive loss before reclassification, net of tax of ~~$587~~$140	(479)		~~(1,932)~~
Amounts reclassified from accumulated other comprehensive ~~loss,~~income, net of tax of ~~$(298)~~$—	~~894~~1
Other comprehensive loss	~~(1,038)~~(478)
December 31, ~~2020~~2023	$	~~(7,777)~~(1,182)


							Affected Line Item in the
Details about Accumulated Other Comprehensive	Years Ended December 31,						Consolidated Statements of
Loss Components	2020		2019		2018		Income
	(Thousands of dollars)
Pension and other postemployment benefit plan obligations (a)
Amortization of net loss	$	42,492	$	35,283	$	43,800
Amortization of unrecognized prior service cost	(117)		(673)		(4,567)
	42,375		34,610		39,233
Regulatory adjustments (b)	(41,183)		(33,758)		(38,151)
	1,192		852		1,082		Income before income taxes
	(298)		(213)		(271)		Income tax expense
Total reclassifications for the period	$	894	$	639	$	811	Net income


	Years Ended							Affected Line Item in the
Details About Accumulated Other	December 31,							Consolidated Statements
Comprehensive Loss Components		2023		2022		2021			of Income
		(Thousands of dollars)
Pension and other postemployment benefit plan obligations (a)
Amortization of net loss		$	1,960	$	17,010	$	45,896
Amortization of unrecognized prior service cost		525		289		(279)
		2,485		17,299		45,617
Regulatory adjustments (b)		(2,484)		(17,141)		(44,055)
		1		158		1,562			Income before income taxes
		—		(36)		(390)			Income tax expense
Total reclassifications for the period		$	1	$	122	$	1,172		Net income


	Year Ended December 31, 2020
	Income		Shares	Per Share Amount
	(Thousands, except per share amounts)
Basic EPS Calculation
Net income available for common stock	$	196,412	53,133	$	3.70
Diluted EPS Calculation
Effect of dilutive securities	0		237
Net income available for common stock and common stock equivalents	$	196,412	53,370	$	3.68


	Year Ended December 31, 2019
	Income		Shares	Per Share Amount
	(Thousands, except per share amounts)
Basic EPS Calculation
Net income available for common stock	$	186,749	52,895	$	3.53
Diluted EPS Calculation
Effect of dilutive securities	0		345
Net income available for common stock and common stock equivalents	$	186,749	53,240	$	3.51


	Year Ended December 31, 2018
	Income		Shares	Per Share Amount
	(Thousands, except per share amounts)
Basic EPS Calculation
Net income available for common stock	$	172,234	52,693	$	3.27
Diluted EPS Calculation
Effect of dilutive securities	0		336
Net income available for common stock and common stock equivalents	$	172,234	53,029	$	3.25




















	Year Ended December, 31, 2023
	Income		Shares	Per Share Amount
	(Thousands, except per share amounts)
Basic EPS Calculation
Net income available for common stock	$	231,232	55,600	$	4.16
Diluted EPS Calculation
Effect of dilutive securities	—		260
Net income available for common stock and common stock equivalents	$	231,232	55,860	$	4.14

	Year Ended December, 31, 2022
	Income		Shares	Per Share Amount
	(Thousands, except per share amounts)
Basic EPS Calculation
Net income available for common stock	$	221,742	54,207	$	4.09
Diluted EPS Calculation
Effect of dilutive securities	—		131
Net income available for common stock and common stock equivalents	$	221,742	54,338	$	4.08

	Year Ended December, 31, 2021
	Income		Shares	Per Share Amount
	(Thousands, except per share amounts)
Basic EPS Calculation
Net income available for common stock	$	206,434	53,575	$	3.85
Diluted EPS Calculation
Effect of dilutive securities	—		99
Net income available for common stock and common stock equivalents	$	206,434	53,674	$	3.85


		December 31, 2020
	Remaining Recovery Period	Current		Noncurrent		Total
		(Thousands of dollars)
Under-recovered purchased-gas costs	1 year	$	16,502	$	0	$	16,502
Pension and other postemployment benefit costs	See Note 14	16,541		341,266		357,807
Reacquired debt costs	7 years	812		4,866		5,678
MGP remediation costs	15 years	98		18,711		18,809
Ad-valorem tax	1 year	5,558		0		5,558
WNA	1 year	4,806		0		4,806
Customer credit deferrals	1 year	10,267		0		10,267
Other	1 to 18 years	2,189		2,113		4,302
Total regulatory assets, net of amortization		56,773		366,956		423,729
Income tax rate changes (a)	(a)	0		(547,563)		(547,563)
Over-recovered purchased-gas costs	1 year	(15,761)		0		(15,761)
Total regulatory liabilities		(15,761)		(547,563)		(563,324)
Net regulatory assets and liabilities		$	41,012	$	(180,607)	$	(139,595)


		December 31, 2019
	Remaining Recovery Period	Current		Noncurrent		Total
		(Thousands of dollars)
Under-recovered purchased-gas costs	1 year	$	17,172	$	0	$	17,172
Pension and other postemployment benefit costs	See Note 14	21,213		373,266		394,479
Reacquired debt costs	8 years	812		5,677		6,489
MGP remediation costs	15 years	98		9,709		9,807
Ad-valorem tax	1 year	2,921		0		2,921
Other	1 to 19 years	5,224		2,384		7,608
Total regulatory assets, net of amortization		47,440		391,036		438,476
Income tax rate changes (a)	(a)	(10,297)		(503,518)		(513,815)
Over-recovered purchased-gas costs	1 year	(27,623)		0		(27,623)
WNA	1 year	(7,281)		0		(7,281)
Total regulatory liabilities		(45,201)		(503,518)		(548,719)
Net regulatory assets and liabilities		$	2,239	$	(112,482)	$	(110,243)


			Number of Units	Weighted- Average Grant Date Fair Value
Nonvested at December 31, 2019			104,398	$	72.21
		Number of Units				Number of Units	Weighted- Average Grant Date Fair Value
Nonvested at December 31, 2022
Granted	Granted		31,233	$	96.21
Vested	Vested		(34,066)	$	64.32
Forfeited	Forfeited		(1,765)	$	78.89
Nonvested at December 31, 2020			99,800	$	82.29
Nonvested at December 31, 2023


	Pension Benefits				Other Postemployment Benefits
	December 31,				December 31,
	2020		2019		2020		2019
Changes in Benefit Obligation	(Thousands of dollars)
Benefit obligation, beginning of period	$	1,001,368	$	950,510	$	230,490	$	220,144
Service cost	12,869		12,030		1,692		1,734
Interest cost	34,179		40,670		7,557		9,318
Plan participants’ contributions	0		0		3,500		3,697
Actuarial loss (gain)	91,566		98,231		14,013		13,945
Benefits paid	(62,341)		(50,915)		(17,722)		(18,348)


Settlements	0		(49,158)		0		0
Benefit obligation, end of period	1,077,641		1,001,368		239,530		230,490

Change in Plan Assets
Fair value of plan assets, beginning of period	907,974		814,112		207,182		176,859
Actual return (loss) on plan assets	140,939		162,785		35,837		38,772
Employer contributions	1,011		29,199		2,098		6,202
Plan participants’ contributions	0		0		3,500		3,697
Benefits paid	(62,341)		(50,915)		(17,722)		(18,348)
Settlements	0		(47,207)		0		0
Fair value of assets, end of period	987,583		907,974		230,895		207,182
Benefit Obligation, net at December 31	$	(90,058)	$	(93,394)	$	(8,635)	$	(23,308)

Current liabilities	$	(1,056)	$	(1,045)	$	0	$	0
Noncurrent liabilities	(89,002)		(92,349)		(8,635)		(23,308)
Benefit Obligation, net at December 31	$	(90,058)	$	(93,394)	$	(8,635)	$	(23,308)



Investment-grade bonds	~~40.0~~70.0	%
U.S. large-cap equities	~~18.0~~13.0	%
Alternative investments	~~14.0~~7.0	%
Developed foreign large-cap equities	~~10.0~~5.0	%
Mid-cap equities	~~7.0~~3.0	%
Emerging markets equities	~~6.0~~1.0	%
Small-cap equities	~~5.0~~1.0	%
Total	~~100~~100.0	%


		December 31, 2020
		Fair Value		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
		(in thousands)					(in days)
	December 31, 2023																		December 31, 2023
	Fair Value												Fair Value			Unfunded Commitments		Redemption Frequency	Redemption Notice Period
	(in thousands)															(in thousands)				(in days)
Grosvenor Registered Multi Limited Partnership	Grosvenor Registered Multi Limited Partnership	$	42,632	$	0	quarterly	65	Grosvenor Registered Multi Limited Partnership	$	40,872	$	—		quarterly	quarterly		65
K2 Institutional Investors II Limited Partnership	K2 Institutional Investors II Limited Partnership	$	45,002	$	0	quarterly	91	K2 Institutional Investors II Limited Partnership	$	48,254	$	—		quarterly	quarterly		91


		Pension Benefits
		Insurance Contracts		Other Investments		Total
		(Thousands of dollars)
January 1, 2019		$	30,445	$	79,205	$	109,650
	Pension Benefits									Pension Benefits
	Insurance Contracts							Insurance Contracts	Other Investments		Total
	(Thousands of dollars)									(Thousands of dollars)
January 1, 2022
Unrealized gains	Unrealized gains	—		2,588		2,588
Unrealized (losses)		(860)		—		(860)

Settlements		(3,597)		—		(3,597)
December 31, 2019		$	25,988	$	81,793	$	107,781
Unrealized gains		1,764		4,849		6,613
Unrealized losses
Purchases	Purchases	—		992		992
Settlements	Settlements	(3,149)		—		(3,149)
December 31, 2020		$	24,603	$	87,634	$	112,237
December 31, 2022
Unrealized gains
Unrealized losses
Purchases
Settlements
December 31, 2023


	Pension Benefits		Other Postemployment Benefits
Benefits to be paid in:	(Thousands of dollars)
2021	$	51,127	$	16,032
2022	$	51,945	$	15,987
2023	$	52,810	$	15,853
2024	$	53,633	$	15,487
2025	$	54,498	$	15,262
2026 through 2030	$	279,689	$	70,385


	December 31, 2023
	Level 1		Level 2		Total
	(Thousands of dollars)
Assets:


United States treasury notes (b)	$	6,496	$	—	$	6,496
Corporate bonds (b)	—		11,080		11,080
Total assets	$	6,496	$	11,080	$	17,576
Liabilities:
Derivative instruments - swaps (a)	$	—	$	13,920	$	13,920


For the year ending:	(Thousands of dollars)
2024	$	27,843
2025	$	29,391
2026	$	31,025
2027	$	32,751
2028	$	34,572


	Number of Securities Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights			Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities in Column (a))
Plan Category	(a)	(b)			(c)
Equity compensation plans approved by security holders (1)	—	$	—	(3)	2,942,946
Equity compensation plans not approved by security holders (2)	—	$	—		1,812
Total	—	$	—		2,944,758