Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 25, 2017 | |
Document Information [Line Items] | ||
Entity Registrant Name | ONE Gas, Inc. | |
Entity Central Index Key | 1,587,732 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 52,435,350 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 |
STATEMENTS OF INCOME
STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Gross Margin | ||
Revenues | $ 550,408 | $ 508,364 |
Cost of natural gas | 263,154 | 235,729 |
Net margin | 287,254 | 272,635 |
Operating expenses | ||
Operations and maintenance | 109,357 | 106,131 |
Depreciation and amortization | 37,019 | 34,684 |
General taxes | 15,746 | 15,747 |
Total operating expenses | 162,122 | 156,562 |
Operating income | 125,132 | 116,073 |
Other income | 1,246 | 18 |
Other expense | (340) | (455) |
Interest expense, net | (11,481) | (10,847) |
Income before income taxes | 114,557 | 104,789 |
Income taxes | (38,101) | (40,046) |
Net income | $ 76,456 | $ 64,743 |
Earnings per share | ||
Basic | $ 1.45 | $ 1.23 |
Diluted | $ 1.44 | $ 1.22 |
Average shares (thousands) | ||
Basic | 52,576 | 52,519 |
Diluted | 53,056 | 53,107 |
Dividends declared per share of stock | $ 0.42 | $ 0.35 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF COMPREHENSIVE INCOME Parenthetical - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
STATEMENTS OF COMPREHENSIVE INCOME Parenthetical [Abstract] | ||
Pension and other postemployment benefit plans, tax | $ (80) | $ (72) |
STATEMENTS OF COMPREHENSIVE IN4
STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Net income | $ 76,456 | $ 64,743 |
Other comprehensive income (loss), net of tax | ||
Change in pension and postemployment benefit plan liability, net of tax of $(80) and $(72), respectively | 129 | 116 |
Other comprehensive income (loss), net of tax | 129 | 116 |
Comprehensive income | $ 76,585 | $ 64,859 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Property, plant and equipment | ||
Property, plant and equipment | $ 5,468,277 | $ 5,404,168 |
Accumulated depreciation and amortization | 1,694,389 | 1,672,548 |
Net property, plant and equipment | 3,773,888 | 3,731,620 |
Current assets | ||
Cash and cash equivalents | 13,206 | 14,663 |
Accounts receivable, net | 249,155 | 290,944 |
Materials and supplies | 34,288 | 34,084 |
Natural gas in storage | 91,231 | 125,432 |
Regulatory assets | 74,636 | 83,146 |
Other current assets | 18,616 | 20,654 |
Total current assets | 481,132 | 568,923 |
Goodwill and other assets | ||
Regulatory assets | 430,338 | 440,522 |
Goodwill | 157,953 | 157,953 |
Other assets | 46,563 | 43,773 |
Total goodwill and other assets | 634,854 | 642,248 |
Total assets | 4,889,874 | 4,942,791 |
Equity and long-term debt | ||
Common stock, $0.01 par value: authorized 250,000,000 shares; issued 52,598,005 shares and outstanding 52,431,914 shares at March 31, 2017; issued 52,598,005 and outstanding 52,283,260 at December 31, 2016 | 526 | 526 |
Paid-in Capital | 1,732,335 | 1,749,574 |
Retained earnings | 226,195 | 161,021 |
Accumulated other comprehensive income (loss) | (4,586) | (4,715) |
Treasury stock, at cost: 166,091 shares at March 31, 2017 and 314,745 shares at December 31, 2016 | 9,892 | 18,126 |
Total equity | 1,944,578 | 1,888,280 |
Long-term debt, excluding current maturities and net issuance costs of $8,648 and $8,851, respectively | 1,192,647 | 1,192,446 |
Total equity and long-term debt | 3,137,225 | 3,080,726 |
Current liabilities | ||
Notes payable | 85,400 | 145,000 |
Accounts payable | 76,142 | 131,988 |
Accrued interest | 7,667 | 18,854 |
Accrued taxes other than income | 37,431 | 42,571 |
Accrued liabilities | 12,474 | 22,931 |
Customer deposits | 61,945 | 61,209 |
Other current liabilities | 26,884 | 21,380 |
Total current liabilities | 307,943 | 443,933 |
Deferred credits and other liabilities [Abstract] | ||
Deferred income taxes | 1,065,096 | 1,038,568 |
Employee benefit obligations | 300,535 | 303,507 |
Other deferred credits | 79,075 | 76,057 |
Total deferred credits and other liabilities | 1,444,706 | 1,418,132 |
Commitments and contingencies | ||
Total liabilities and equity | $ 4,889,874 | $ 4,942,791 |
BALANCE SHEETS BALANCE SHEETS P
BALANCE SHEETS BALANCE SHEETS Parenthetical - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 52,598,005 | 52,598,005 |
Common stock, shares outstanding | 52,431,914 | 52,283,260 |
Treasury stock, shares | 166,091 | 314,745 |
Debt issuance costs | $ 8,648 | $ 8,851 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating activities | ||
Net income | $ 76,456 | $ 64,743 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 37,019 | 34,684 |
Deferred income taxes | 37,461 | 16,113 |
Share-based compensation expense | 2,421 | 4,101 |
Provision for doubtful accounts | 2,281 | 1,384 |
Changes in assets and liabilities: | ||
Accounts receivable | 39,508 | 19,801 |
Materials and supplies | (204) | 3,617 |
Income tax receivable | 1,397 | 38,877 |
Natural gas in storage | 34,201 | 61,600 |
Asset removal costs | (10,387) | (14,171) |
Accounts payable | (53,957) | (40,060) |
Accrued interest | (11,187) | (11,219) |
Accrued taxes other than income | (5,140) | 535 |
Accrued liabilities | (10,457) | (16,470) |
Customer deposits | 736 | 2,098 |
Regulatory assets and liabilities | 18,641 | (593) |
Other assets and liabilities | 3,447 | 23,848 |
Cash provided by operating activities | 162,236 | 188,888 |
Investing activities | ||
Capital expenditures | (70,471) | (75,261) |
Other | 61 | 392 |
Cash used in investing activities | (70,410) | (74,869) |
Financing activities | ||
Repayments of notes payable, net | (59,600) | (12,500) |
Repurchase of common stock | (2,469) | (24,066) |
Dividends paid | (22,034) | (18,380) |
Tax withholdings related to net share settlements of stock compensation | (9,180) | (8,849) |
Cash used in financing activities | (93,283) | (63,795) |
Change in cash and cash equivalents | (1,457) | 50,224 |
Cash and cash equivalents at beginning of period | 14,663 | 2,433 |
Cash and cash equivalents at end of period | $ 13,206 | $ 52,657 |
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CHANGES IN EQUITY - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands | Total | Common Stock [Member] | Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Shares issued, beginning balance at Dec. 31, 2016 | 52,598,005 | 52,598,005 | ||||
Equity, beginning balance at Dec. 31, 2016 | $ 1,888,280 | $ 526 | $ 1,749,574 | $ 161,021 | $ (18,126) | $ (4,715) |
Cumulative effect of accounting change | 10,982 | 10,982 | 0 | 0 | ||
Net income | 76,456 | 0 | 0 | 76,456 | 0 | 0 |
Other comprehensive income | 129 | 0 | 0 | 0 | 129 | |
Repurchase of common stock | (2,469) | $ 0 | 0 | 0 | (2,469) | 0 |
Common stock issued, shares | 0 | |||||
Common stock issued, value | (6,766) | $ 0 | (17,469) | 0 | 10,703 | 0 |
Common stock dividends - $0.42 per share | $ (22,034) | $ 0 | 230 | (22,264) | 0 | 0 |
Shares issued, ending balance at Mar. 31, 2017 | 52,598,005 | 52,598,005 | ||||
Equity, ending balance at Mar. 31, 2017 | $ 1,944,578 | $ 526 | $ 1,732,335 | $ 226,195 | $ (9,892) | $ (4,586) |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Notes) | 3 Months Ended |
Mar. 31, 2017 | |
Significant Accounting Policies [Line Items] | |
SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Our accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the SEC. These statements also have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The 2016 year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. These unaudited financial statements should be read in conjunction with the audited financial statements and footnotes in our Annual Report. Due to the seasonal nature of our business, the results of operations for the three months ended March 31, 2017 , are not necessarily indicative of the results that may be expected for a 12-month period. We provide natural gas distribution services to more than 2 million customers through our divisions in Oklahoma, Kansas and Texas through Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, respectively. We serve residential, commercial, industrial and transportation customers in all three states. In addition, we also provide natural gas distribution services to wholesale and public authority customers. Use of Estimates - The preparation of our 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 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, provision for doubtful accounts, 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 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. Segments - We operate in one reportable and operating business segment: regulated public utilities that deliver natural gas to residential, commercial, industrial, wholesale, public authority and transportation customers. The accounting policies for our segment are the same as described in Note 1 of our Notes to the Financial Statements in our Annual Report. We evaluate our financial performance principally on operating income. For the three months ended March 31, 2017 , and 2016 , we had no single external customer from which we received 10 percent or more of our gross revenues. Recently Issued Accounting Standards Update - In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires (1) separation of net periodic service costs for pension and other postemployment benefits into service cost and other components, (2) presentation of the service cost component in the same line as other compensation costs rendered by pertinent employees during the period, which will be the only portion of benefit cost eligible for capitalization and (3) reporting the other components of net periodic benefit costs separately from the service cost component and outside a subtotal of income from operations. We are evaluating the impact of this guidance, which is required to be adopted for our interim and annual reports for periods beginning after December 15, 2017, and early adoption is permitted. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 of the goodwill test, where the measurement of a goodwill impairment loss was determined by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Upon adoption, a goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This new guidance is required for our interim and annual reports for periods beginning after December 15, 2019, and early adoption is permitted. We do not expect this guidance to have a material impact on our financial statements and will adjust our goodwill testing procedures accordingly upon adoption. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which includes various new aspects to simplify how share-based payments are accounted for and presented in the financial statements. The new standard modifies several aspects of the accounting and reporting for employee share-based payments and related tax accounting impacts, including the presentation in the statements of operations and cash flows. We adopted this new guidance in the current quarter, and in accordance with the transition requirements, we recorded $5.2 million of excess tax benefits in income tax expense and will transition all provisions of this new guidance prospectively, other than our presentation of our withholding shares for tax-withholding purposes, which will be accounted for retrospectively in the financing activities section of the statement of cash flows. We recorded a noncash cumulative-effect increase of $11.0 million to retained earnings, with an offset to a deferred tax asset, as of the beginning of the reporting period in 2017, for excess tax benefits earned prior to January 1, 2017, that had not been recognized. We continue our use of the estimation method to account for share unit awards forfeitures rather than actual forfeitures. The retrospective impact of our withholding shares for tax-withholding purposes to our Statement of Cash Flows for the three months ended March 31, 2016, was a $8.8 million increase to net cash provided by operating activities and a $8.8 million decrease to net cash used in financing activities. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which prescribes recognizing lease assets and liabilities on the balance sheet and includes disclosure of key information about leasing arrangements. A modified retrospective transition approach is required for leases existing at the time of adoption. We are evaluating our population of leases, analyzing lease agreements, and holding meetings with cross-functional teams to determine the potential impact of this accounting standard on our financial position and results of operations and the transition approach we will utilize. This new guidance is required for our interim and annual reports for periods beginning after December 15, 2018, and early adoption is permitted. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which clarifies and converges the revenue recognition principles under GAAP and International Financial Reporting Standards. In July 2015, FASB delayed the effective date for one year. We have substantially completed evaluating all of our sources of revenue to determine the potential effect on our financial position, results of operations, cash flows and the related accounting policies and business processes. We continue to monitor accounting task forces and the FASB for additional implementation guidance related to: (1) the accounting for funds received from third parties to partially or fully reimburse the cost of construction of an asset; (2) the evaluation of collectability from customers if a utility has regulatory mechanisms to help assure recovery of uncollected accounts from ratepayers; and (3) the accounting for alternative revenue programs, such as performance-based ratemaking and weather normalization, that may impact the final conclusions of our evaluation. Until these items are resolved, we cannot complete our evaluation of the potential effect the new guidance will have on our financial position, results of operations, cash flows, business processes or the transition method we will utilize to adopt the new guidance. We will adopt this new guidance for our interim and annual reports beginning with the first quarter 2018. |
REGULATORY ASSETS AND LIABILITI
REGULATORY ASSETS AND LIABILITIES (Notes) | 3 Months Ended |
Mar. 31, 2017 | |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | |
Schedule of Regulatory Assets and Liabilities | 2. REGULATORY ASSETS AND LIABILITIES The tables below present a summary of regulatory assets, net of amortization, and liabilities for the periods indicated: March 31, 2017 Current Noncurrent Total ( Thousands of dollars ) Under-recovered purchased-gas costs $ 17,914 $ — $ 17,914 Pension and postemployment benefit costs 32,110 417,402 449,512 Weather normalization 19,781 — 19,781 Reacquired debt costs 812 7,906 8,718 Other 4,019 5,030 9,049 Total regulatory assets, net of amortization 74,636 430,338 504,974 Over-recovered purchased-gas costs (a) (12,838 ) — (12,838 ) Ad valorem tax (a) (1,142 ) — (1,142 ) Total regulatory liabilities (13,980 ) — (13,980 ) Net regulatory assets (liabilities) $ 60,656 $ 430,338 $ 490,994 (a) Included in other current liabilities in our Balance Sheets. December 31, 2016 Current Noncurrent Total ( Thousands of dollars ) Under-recovered purchased-gas costs $ 29,901 $ — $ 29,901 Pension and postemployment benefit costs 31,498 427,448 458,946 Weather normalization 17,661 — 17,661 Reacquired debt costs 812 8,108 8,920 Other 3,274 4,966 8,240 Total regulatory assets, net of amortization 83,146 440,522 523,668 Over-recovered purchased-gas costs (a) (10,154 ) — (10,154 ) Ad valorem tax (a) (1,768 ) — (1,768 ) Total regulatory liabilities (11,922 ) — (11,922 ) Net regulatory assets (liabilities) $ 71,224 $ 440,522 $ 511,746 (a) Included in other current liabilities in our Balance Sheets. Regulatory assets on our Balance Sheets, as authorized by various regulatory authorities, are probable of recovery. Base rates are designed to provide a recovery of costs during the period 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. We are not aware of any evidence that these costs will not be recoverable through either riders or base rates, and we believe that we will be able to recover such costs, consistent with our historical recoveries. |
CREDIT FACILITIES (Notes)
CREDIT FACILITIES (Notes) | 3 Months Ended |
Mar. 31, 2017 | |
Short-term Debt [Line Items] | |
Short-term Debt [Text Block] | 3. CREDIT FACILITY AND SHORT-TERM NOTES PAYABLE The ONE Gas Credit Agreement contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining ONE Gas’ debt-to-capital ratio of no more than 70 percent at the end of any calendar quarter. At March 31, 2017 , our debt-to-capital ratio was 40 percent and we were in compliance with all covenants under the ONE Gas Credit Agreement. We have a commercial paper program under which we may issue unsecured commercial paper up to a maximum amount of $700 million 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 paper notes are generally sold at par less a discount representing an interest factor. The ONE Gas Credit Agreement is available to repay the commercial paper notes, if necessary. Amounts outstanding under the commercial paper program reduce the borrowing capacity under the ONE Gas Credit Agreement. At March 31, 2017 , we had $85.4 million in short-term borrowings, $1.8 million in letters of credit issued under the ONE Gas Credit Agreement and $612.8 million of remaining credit available under the ONE Gas Credit Agreement. |
LONG-TERM DEBT (Notes)
LONG-TERM DEBT (Notes) | 3 Months Ended |
Mar. 31, 2017 | |
Long-term Debt, Unclassified [Abstract] | |
Long-term Debt [Text Block] | 4. LONG-TERM DEBT We have senior notes consisting of $300 million of 2.07 percent senior notes due in 2019 , $300 million of 3.61 percent senior notes due in 2024 and $600 million of 4.658 percent senior notes due in 2044 . 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 aggregate principal amount of the outstanding Senior Notes to declare those Senior Notes immediately due and payable in full. |
EQUITY (Notes)
EQUITY (Notes) | 3 Months Ended |
Mar. 31, 2017 | |
Class of Stock [Line Items] | |
Stockholders' Equity Note Disclosure [Text Block] | 5. EQUITY Treasury Shares - In the first quarter of 2017, we repurchased approximately 37 thousand shares of our common stock for approximately $2.5 million . Dividends Declared - In May 2017, we declared a dividend of $0.42 per share ( $1.68 per share on an annualized basis) for shareholders of record as of May 15, 2017, payable June 1, 2017. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Notes) | 3 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Comprehensive Income (Loss) Note [Text Block] | 6. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table sets forth the effect of reclassifications from accumulated other comprehensive income (loss) in our Statements of Income for the periods indicated: Three Months Ended Details about Accumulated Other Comprehensive March 31, Affected Line Item in the Income (Loss) Components 2017 2016 Statements of Income ( Thousands of dollars ) Pension and other postemployment benefit plan obligations (a) Amortization of net loss $ 10,648 $ 10,037 Amortization of unrecognized prior service cost (1,149 ) (908 ) 9,499 9,129 Regulatory adjustments (b) (9,290 ) (8,941 ) 209 188 Income before income taxes (80 ) (72 ) Income tax expense Total reclassifications for the period $ 129 $ 116 Net income (a) These components of accumulated other comprehensive income (loss) are included in the computation of net periodic benefit cost. See Note 8 for additional detail of our net periodic benefit cost . (b) Regulatory adjustments represent pension and other postemployment benefit costs expected to be recovered through rates and are deferred as part of our regulatory assets. See Note 2 for additional disclosures of regulatory assets and liabilities. |
EARNINGS PER SHARE (Notes)
EARNINGS PER SHARE (Notes) | 3 Months Ended |
Mar. 31, 2017 | |
EARNINGS PER SHARE [Line Items] | |
Earnings Per Share [Text Block] | 7. EARNINGS PER SHARE Basic EPS is based on net income and is calculated based upon the daily weighted-average number of common shares outstanding during the periods presented. Also, this calculation includes fully vested stock awards that have not yet been issued as common stock. Diluted EPS includes basic EPS, plus unvested stock awards granted under our compensation plans, but only to the extent these instruments dilute earnings per share. The following tables set forth the computation of basic and diluted EPS from continuing operations for the periods indicated: Three Months Ended March 31, 2017 Income Shares Per Share Amount ( Thousands, except per share amounts ) Basic EPS Calculation Net income available for common stock $ 76,456 52,576 $ 1.45 Diluted EPS Calculation Effect of dilutive securities — 480 Net income available for common stock and common stock equivalents $ 76,456 53,056 $ 1.44 Three Months Ended March 31, 2016 Income Shares Per Share Amount ( Thousands, except per share amounts ) Basic EPS Calculation Net income available for common stock $ 64,743 52,519 $ 1.23 Diluted EPS Calculation Effect of dilutive securities — 588 Net income available for common stock and common stock equivalents $ 64,743 53,107 $ 1.22 |
EMPLOYEE BENEFIT PLANS (Notes)
EMPLOYEE BENEFIT PLANS (Notes) | 3 Months Ended |
Mar. 31, 2017 | |
Employee Benefit Plans [Line Items] | |
EMPLOYEE BENEFIT PLANS | 8. EMPLOYEE BENEFIT PLANS The following tables set forth the components of net periodic benefit cost for our pension and other postemployment benefit plans for the periods indicated: Pension Benefits Three Months Ended March 31, 2017 2016 ( Thousands of dollars ) Components of net periodic benefit cost Service cost $ 3,044 $ 3,014 Interest cost 10,113 11,387 Expected return on assets (14,624 ) (15,296 ) Amortization of net loss 9,027 8,886 Net periodic benefit cost $ 7,560 $ 7,991 Other Postemployment Benefits Three Months Ended March 31, 2017 2016 ( Thousands of dollars ) Components of net periodic benefit cost Service cost $ 627 $ 638 Interest cost 2,472 2,627 Expected return on assets (3,147 ) (3,071 ) Amortization of unrecognized prior service cost (1,149 ) (908 ) Amortization of net loss 1,621 1,151 Net periodic benefit cost $ 424 $ 437 We recover qualified pension benefit plan and other postemployment benefit plan costs through rates charged to our customers. Certain utility commissions require that the recovery of these costs be based on specific guidelines. The difference between these regulatory-based amounts and the periodic benefit cost calculated pursuant to GAAP is deferred as a regulatory asset or liability and amortized to expense over periods in which this difference will be recovered in rates, as authorized by the applicable utility commission. Regulatory deferrals related to net periodic benefit cost were not material for the three months ended March 31, 2017. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Notes) | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies [Line Items] | |
COMMITMENTS AND CONTINGENCIES | 9. COMMITMENTS AND CONTINGENCIES Environmental Matters - We are subject to multiple historical, wildlife preservation and environmental laws and/or regulations, which affect many aspects of our present and future operations. Regulated activities include, but are not limited to, those involving air emissions, storm water and wastewater discharges, handling and disposal of solid and hazardous wastes, wetland preservation, hazardous materials transportation, and pipeline and facility construction. These laws and regulations require us to obtain and/or comply with a wide variety of environmental clearances, registrations, licenses, permits and other approvals. Failure to comply with these laws, regulations, licenses and permits may expose us to fines, penalties and/or interruptions in our operations that could be material to our results of operations. In addition, emission controls and/or other regulatory or permitting mandates under the Clean Air Act and other similar federal and state laws could require unexpected capital expenditures. 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 statutes or 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 the three months ended March 31, 2017 and 2016 . We own or retain legal responsibility for the environmental conditions at 12 former manufactured natural gas sites in Kansas. These sites contain potentially harmful materials that are subject to control or remediation under various environmental laws and regulations. A consent agreement with the KDHE governs all work at these sites. The terms of the consent agreement require us to investigate these sites and set remediation activities based upon the results of the investigations and risk analysis. Remediation typically involves the management of contaminated soils and may involve removal of structures and monitoring and/or remediation of groundwater. We have completed or addressed removal of the source of soil contamination at 11 of the 12 sites, and continue to monitor groundwater at eight of the 12 sites according to plans approved by the KDHE. Regulatory closure has been achieved at three of the sites, subject to any future regulatory remediation requirements that may require additional costs. During 2016, we completed a site assessment at the twelfth site where no active soil remediation has occurred. We have submitted a work plan to the KDHE for approval to remove contaminated soil at this site. Costs associated with the remediation at this site are not expected to be material to our results of operations or financial position. With regard to one of our former manufactured natural gas sites, periodic monitoring and a 2016 interim site investigation indicated elevated levels of potentially harmful materials. Additional testing and work plan development is underway in 2017 to determine a remediation work plan to present to the KDHE for approval, which could impact our estimates of the cost of remediation at this site. In the fourth quarter of 2016, we estimated the potential costs associated with additional investigation and remediation to be in the range of $4.0 million to $7.0 million . A single reliable estimate of the remediation costs is not feasible due to the amount of uncertainty in the ultimate remediation approach that will be utilized. Accordingly, we recorded a reserve of $4.0 million for this site in the fourth quarter of 2016. 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 the three months ended March 31, 2017 and 2016 . A number of environmental issues may exist with respect to manufactured gas plants 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. With the trend toward stricter standards, greater regulation and more extensive permit requirements for the types of assets operated by us that are subject to environmental regulation, 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 high-consequence areas. 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 high-consequence areas; • a verification of records for pipelines in class 3 and 4 locations and high-consequence areas to confirm maximum allowable operating pressures; and • a requirement to test previously untested pipelines operating above 30 percent yield strength in high-consequence areas. 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 include changes to pipeline integrity management requirements and other safety-related requirements. The NPRM comment period ended July 7, 2016, and comments are under review by PHMSA. The potential capital and operating expenditures associated with the NPRM are currently being evaluated and could be significant depending on the final regulations. Legal Proceedings - We are a party to various litigation matters and claims that have arisen in the normal course of our operations. While the results of litigation and claims cannot be predicted with certainty, we believe the reasonably possible losses from such matters, individually and in the aggregate, are not material. Additionally, we believe the probable final outcome of such matters will not have a material adverse effect on our results of operations, financial position or cash flows. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Notes) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |
Fair Value Disclosures | 10. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS Accounting Treatment - We record all derivative instruments at fair value, with the exception of normal purchases and normal sales that 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 a different accounting treatment. If certain conditions are met, we may elect to designate a derivative instrument as a hedge to mitigate the risk of exposure to changes in fair values or cash flows. The table below summarizes the various ways in which we account for our derivative instruments and the impact on our financial statements: Recognition and Measurement Accounting Treatment Balance Sheet Income Statement Normal purchases and normal sales - Recorded at historical cost - 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 We have not elected to designate any of our derivative instruments as hedges. Premiums paid and any cash settlements received associated with the commodity derivative instruments entered into by us are included in, and recoverable through, the purchased-gas cost adjustment mechanisms. Determining Fair Value - 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 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. Derivative Instruments - At March 31, 2017 , we had no purchased natural gas call options. At December 31, 2016 , we held purchased natural gas call options for the heating season ended March 31, 2017, with total notional amounts of 14.3 Bcf, for which we paid premiums of $5.4 million , and had a fair value of $6.5 million . The premiums paid and any cash settlements received are recorded as part of our unrecovered purchased-gas costs in current regulatory assets as these contracts are included in, and recoverable through, the purchased-gas cost adjustment mechanisms. Additionally, changes in fair value associated with these contracts are deferred as part of our unrecovered purchased-gas costs in our Balance Sheets. Our natural gas call options are classified as Level 1 as fair value amounts are based on unadjusted quoted prices in active markets including NYMEX-settled prices. There were no transfers between levels for the three months ended March 31, 2017 and 2016 . Other Financial Instruments - The approximate fair value of cash and cash equivalents, accounts receivable and accounts payable is equal to book value, due to the short-term nature of these items. Our cash and cash equivalents are comprised of bank and money market accounts, and are classified as Level 1. Short-term notes payable and commercial paper are due upon demand and, therefore, the carrying amounts approximate fair value and are classified as Level 1. The book value of our long-term debt, including current maturities, was $1.2 billion at both March 31, 2017 and December 31, 2016 . The estimated fair value of our long-term debt, including current maturities, was $1.2 billion at both March 31, 2017 and December 31, 2016 , respectively. The estimated fair value of our Senior Notes at March 31, 2017 and December 31, 2016 , was determined using quoted market prices, and are considered Level 2. |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Significant Accounting Policies [Line Items] | |
Use of Estimates | Use of Estimates - The preparation of our 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 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, provision for doubtful accounts, 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 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. |
Segments | Segments - We operate in one reportable and operating business segment: regulated public utilities that deliver natural gas to residential, commercial, industrial, wholesale, public authority and transportation customers. The accounting policies for our segment are the same as described in Note 1 of our Notes to the Financial Statements in our Annual Report. We evaluate our financial performance principally on operating income. For the three months ended March 31, 2017 , and 2016 , we had no single external customer from which we received 10 percent or more of our gross revenues. |
Recently Issued Accounting Standards Update | Recently Issued Accounting Standards Update - In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires (1) separation of net periodic service costs for pension and other postemployment benefits into service cost and other components, (2) presentation of the service cost component in the same line as other compensation costs rendered by pertinent employees during the period, which will be the only portion of benefit cost eligible for capitalization and (3) reporting the other components of net periodic benefit costs separately from the service cost component and outside a subtotal of income from operations. We are evaluating the impact of this guidance, which is required to be adopted for our interim and annual reports for periods beginning after December 15, 2017, and early adoption is permitted. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 of the goodwill test, where the measurement of a goodwill impairment loss was determined by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Upon adoption, a goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This new guidance is required for our interim and annual reports for periods beginning after December 15, 2019, and early adoption is permitted. We do not expect this guidance to have a material impact on our financial statements and will adjust our goodwill testing procedures accordingly upon adoption. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which includes various new aspects to simplify how share-based payments are accounted for and presented in the financial statements. The new standard modifies several aspects of the accounting and reporting for employee share-based payments and related tax accounting impacts, including the presentation in the statements of operations and cash flows. We adopted this new guidance in the current quarter, and in accordance with the transition requirements, we recorded $5.2 million of excess tax benefits in income tax expense and will transition all provisions of this new guidance prospectively, other than our presentation of our withholding shares for tax-withholding purposes, which will be accounted for retrospectively in the financing activities section of the statement of cash flows. We recorded a noncash cumulative-effect increase of $11.0 million to retained earnings, with an offset to a deferred tax asset, as of the beginning of the reporting period in 2017, for excess tax benefits earned prior to January 1, 2017, that had not been recognized. We continue our use of the estimation method to account for share unit awards forfeitures rather than actual forfeitures. The retrospective impact of our withholding shares for tax-withholding purposes to our Statement of Cash Flows for the three months ended March 31, 2016, was a $8.8 million increase to net cash provided by operating activities and a $8.8 million decrease to net cash used in financing activities. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which prescribes recognizing lease assets and liabilities on the balance sheet and includes disclosure of key information about leasing arrangements. A modified retrospective transition approach is required for leases existing at the time of adoption. We are evaluating our population of leases, analyzing lease agreements, and holding meetings with cross-functional teams to determine the potential impact of this accounting standard on our financial position and results of operations and the transition approach we will utilize. This new guidance is required for our interim and annual reports for periods beginning after December 15, 2018, and early adoption is permitted. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which clarifies and converges the revenue recognition principles under GAAP and International Financial Reporting Standards. In July 2015, FASB delayed the effective date for one year. We have substantially completed evaluating all of our sources of revenue to determine the potential effect on our financial position, results of operations, cash flows and the related accounting policies and business processes. We continue to monitor accounting task forces and the FASB for additional implementation guidance related to: (1) the accounting for funds received from third parties to partially or fully reimburse the cost of construction of an asset; (2) the evaluation of collectability from customers if a utility has regulatory mechanisms to help assure recovery of uncollected accounts from ratepayers; and (3) the accounting for alternative revenue programs, such as performance-based ratemaking and weather normalization, that may impact the final conclusions of our evaluation. Until these items are resolved, we cannot complete our evaluation of the potential effect the new guidance will have on our financial position, results of operations, cash flows, business processes or the transition method we will utilize to adopt the new guidance. We will adopt this new guidance for our interim and annual reports beginning with the first quarter 2018. |
DERIVATIVE FINANCIAL INSTRUME20
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Derivatives and Fair Value Measurement [Abstract] | |
Derivatives | Accounting Treatment - We record all derivative instruments at fair value, with the exception of normal purchases and normal sales that 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 a different accounting treatment. If certain conditions are met, we may elect to designate a derivative instrument as a hedge to mitigate the risk of exposure to changes in fair values or cash flows. The table below summarizes the various ways in which we account for our derivative instruments and the impact on our financial statements: Recognition and Measurement Accounting Treatment Balance Sheet Income Statement Normal purchases and normal sales - Recorded at historical cost - 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 We have not elected to designate any of our derivative instruments as hedges. Premiums paid and any cash settlements received associated with the commodity derivative instruments entered into by us are included in, and recoverable through, the purchased-gas cost adjustment mechanisms. |
Fair Value Measurement | Determining Fair Value - 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 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. |
REGULATORY ASSETS AND LIABILI21
REGULATORY ASSETS AND LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES | The tables below present a summary of regulatory assets, net of amortization, and liabilities for the periods indicated: March 31, 2017 Current Noncurrent Total ( Thousands of dollars ) Under-recovered purchased-gas costs $ 17,914 $ — $ 17,914 Pension and postemployment benefit costs 32,110 417,402 449,512 Weather normalization 19,781 — 19,781 Reacquired debt costs 812 7,906 8,718 Other 4,019 5,030 9,049 Total regulatory assets, net of amortization 74,636 430,338 504,974 Over-recovered purchased-gas costs (a) (12,838 ) — (12,838 ) Ad valorem tax (a) (1,142 ) — (1,142 ) Total regulatory liabilities (13,980 ) — (13,980 ) Net regulatory assets (liabilities) $ 60,656 $ 430,338 $ 490,994 (a) Included in other current liabilities in our Balance Sheets. December 31, 2016 Current Noncurrent Total ( Thousands of dollars ) Under-recovered purchased-gas costs $ 29,901 $ — $ 29,901 Pension and postemployment benefit costs 31,498 427,448 458,946 Weather normalization 17,661 — 17,661 Reacquired debt costs 812 8,108 8,920 Other 3,274 4,966 8,240 Total regulatory assets, net of amortization 83,146 440,522 523,668 Over-recovered purchased-gas costs (a) (10,154 ) — (10,154 ) Ad valorem tax (a) (1,768 ) — (1,768 ) Total regulatory liabilities (11,922 ) — (11,922 ) Net regulatory assets (liabilities) $ 71,224 $ 440,522 $ 511,746 |
ACCUMULATED OTHER COMPREHENSI22
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Reclassification out of Accumulated Other Comprehensive Income [Table Text Block] | The following table sets forth the effect of reclassifications from accumulated other comprehensive income (loss) in our Statements of Income for the periods indicated: Three Months Ended Details about Accumulated Other Comprehensive March 31, Affected Line Item in the Income (Loss) Components 2017 2016 Statements of Income ( Thousands of dollars ) Pension and other postemployment benefit plan obligations (a) Amortization of net loss $ 10,648 $ 10,037 Amortization of unrecognized prior service cost (1,149 ) (908 ) 9,499 9,129 Regulatory adjustments (b) (9,290 ) (8,941 ) 209 188 Income before income taxes (80 ) (72 ) Income tax expense Total reclassifications for the period $ 129 $ 116 Net income (a) These components of accumulated other comprehensive income (loss) are included in the computation of net periodic benefit cost. See Note 8 for additional detail of our net periodic benefit cost . (b) Regulatory adjustments represent pension and other postemployment benefit costs expected to be recovered through rates and are deferred as part of our regulatory assets. See Note 2 for additional disclosures of regulatory assets and liabilities. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
EARNINGS PER SHARE [Line Items] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following tables set forth the computation of basic and diluted EPS from continuing operations for the periods indicated: Three Months Ended March 31, 2017 Income Shares Per Share Amount ( Thousands, except per share amounts ) Basic EPS Calculation Net income available for common stock $ 76,456 52,576 $ 1.45 Diluted EPS Calculation Effect of dilutive securities — 480 Net income available for common stock and common stock equivalents $ 76,456 53,056 $ 1.44 Three Months Ended March 31, 2016 Income Shares Per Share Amount ( Thousands, except per share amounts ) Basic EPS Calculation Net income available for common stock $ 64,743 52,519 $ 1.23 Diluted EPS Calculation Effect of dilutive securities — 588 Net income available for common stock and common stock equivalents $ 64,743 53,107 $ 1.22 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Employee Benefit Plans [Line Items] | |
Schedule of Net Benefit Costs [Table Text Block] | The following tables set forth the components of net periodic benefit cost for our pension and other postemployment benefit plans for the periods indicated: Pension Benefits Three Months Ended March 31, 2017 2016 ( Thousands of dollars ) Components of net periodic benefit cost Service cost $ 3,044 $ 3,014 Interest cost 10,113 11,387 Expected return on assets (14,624 ) (15,296 ) Amortization of net loss 9,027 8,886 Net periodic benefit cost $ 7,560 $ 7,991 Other Postemployment Benefits Three Months Ended March 31, 2017 2016 ( Thousands of dollars ) Components of net periodic benefit cost Service cost $ 627 $ 638 Interest cost 2,472 2,627 Expected return on assets (3,147 ) (3,071 ) Amortization of unrecognized prior service cost (1,149 ) (908 ) Amortization of net loss 1,621 1,151 Net periodic benefit cost $ 424 $ 437 |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) number in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2017USD ($) | Mar. 31, 2016 | |
Significant Accounting Policies [Line Items] | ||
Number of natural gas distribution services customers | 2 | |
Segment Reporting, Disclosure of Major Customers | 0 | 0 |
Excess tax benefit related to the share-based compensation provision | $ 5.2 | |
Operating loss carryforward related to the share-based compensation provision | 11 | |
Prior period cash flow reclass related to the share-based compensation provision | $ 8.8 |
REGULATORY ASSETS AND LIABILI26
REGULATORY ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | $ 74,636 | $ 83,146 |
Regulatory Assets, Noncurrent | 430,338 | 440,522 |
Net regulatory assets (liabilities), current | 60,656 | 71,224 |
Net regulatory assets (liabilities), noncurrent | 430,338 | 440,522 |
Net Regulatory Assets | 490,994 | 511,746 |
Over-recovered purchased-gas costs [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Liability, Current | (12,838) | (10,154) |
Regulatory Liability, Noncurrent | 0 | 0 |
Regulatory Liabilities | (12,838) | (10,154) |
Ad valorem tax [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Liability, Current | (1,142) | (1,768) |
Regulatory Liability, Noncurrent | 0 | 0 |
Regulatory Liabilities | (1,142) | (1,768) |
Total regulated liabilities [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Liability, Current | (13,980) | (11,922) |
Regulatory Liability, Noncurrent | 0 | 0 |
Regulatory Liabilities | (13,980) | (11,922) |
Under-recovered purchased-gas costs [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 17,914 | 29,901 |
Regulatory Assets, Noncurrent | 0 | 0 |
Regulatory Assets | 17,914 | 29,901 |
Pension and postretirement benefit costs [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 32,110 | 31,498 |
Regulatory Assets, Noncurrent | 417,402 | 427,448 |
Regulatory Assets | 449,512 | 458,946 |
Weather normalization [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 19,781 | 17,661 |
Regulatory Assets, Noncurrent | 0 | 0 |
Regulatory Assets | 19,781 | 17,661 |
Reacquired debt costs [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 812 | 812 |
Regulatory Assets, Noncurrent | 7,906 | 8,108 |
Regulatory Assets | 8,718 | 8,920 |
Other regulatory assets [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 4,019 | 3,274 |
Regulatory Assets, Noncurrent | 5,030 | 4,966 |
Regulatory Assets | 9,049 | 8,240 |
Total regulatory assets, net of amortization [Member] | ||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | ||
Regulatory Assets, Current | 74,636 | 83,146 |
Regulatory Assets, Noncurrent | 430,338 | 440,522 |
Regulatory Assets | $ 504,974 | $ 523,668 |
CREDIT FACILITIES (Details)
CREDIT FACILITIES (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Short-term Debt [Line Items] | |
Ratio of Indebtedness to Net Capital | 0.4 |
Commercial paper maximum borrowing capacity | $ 700 |
Short-term Debt | 85.4 |
Letters of Credit Outstanding, Amount | 1.8 |
Line of Credit Facility, Remaining Borrowing Capacity | $ 612.8 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Note Payable Due 2019 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Covenant Description | 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 aggregate principal amount of the outstanding Senior Notes to declare those senior notes immediately due and payable in full. |
Long-term Debt, Gross | $ 300 |
Debt Instrument, Interest Rate, Stated Percentage | 2.07% |
Note Payable Due 2024 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Covenant Description | 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 aggregate principal amount of the outstanding Senior Notes to declare those senior notes immediately due and payable in full. |
Long-term Debt, Gross | $ 300 |
Debt Instrument, Interest Rate, Stated Percentage | 3.61% |
Notes Payable Due 2044 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Covenant Description | 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 aggregate principal amount of the outstanding Senior Notes to declare those senior notes immediately due and payable in full. |
Long-term Debt, Gross | $ 600 |
Debt Instrument, Interest Rate, Stated Percentage | 4.658% |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Jun. 30, 2017 | Mar. 31, 2017 | |
Treasury stock acquired, shares | 37 | |
Treasury stock acquired, value | $ 2,469 | |
Subsequent Event [Member] | ||
Common Stock, Dividends, Per Share, Declared | $ 0.42 | |
Common Stock, Dividends, Declared, Annualized Basis | $ 1.68 |
ACCUMULATED OTHER COMPREHENSI30
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Amortization of net loss | $ 10,648 | $ 10,037 |
Amortization of unrecognized prior service cost | (1,149) | (908) |
Reclassification adjustment, before tax and regulatory adjustments | 9,499 | 9,129 |
Regulatory adjustments | (9,290) | (8,941) |
Reclassification adjustment, before tax | 209 | 188 |
Reclassification adjustment, Tax | (80) | (72) |
Reclassification adjustment, net of tax | $ 129 | $ 116 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Basic EPS Calculation | ||
Net income available for common stock | $ 76,456 | $ 64,743 |
Weighted Average Number of Shares Outstanding, Basic | 52,576 | 52,519 |
Earnings Per Share, Basic | $ 1.45 | $ 1.23 |
Diluted EPS Calculation | ||
Net income available for common stock | $ 76,456 | $ 64,743 |
Effect of dilutive securities on income | $ 0 | $ 0 |
Effect of dilutive securities on shares | 480 | 588 |
Weighted Average Number of Shares Outstanding, Diluted | 53,056 | 53,107 |
Earnings Per Share, Diluted | $ 1.44 | $ 1.22 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Components of net periodic benefit cost: | ||
Amortization of unrecognized prior service cost | $ (1,149) | $ (908) |
Amortization of net loss | 10,648 | 10,037 |
ONE Gas Pension Plans [Member] | ||
Components of net periodic benefit cost: | ||
Service cost | 3,044 | 3,014 |
Interest cost | 10,113 | 11,387 |
Expected return on assets | (14,624) | (15,296) |
Amortization of net loss | 9,027 | 8,886 |
Net periodic benefit cost | 7,560 | 7,991 |
ONE Gas Postretirement Benefit Plans [Member] | ||
Components of net periodic benefit cost: | ||
Service cost | 627 | 638 |
Interest cost | 2,472 | 2,627 |
Expected return on assets | (3,147) | (3,071) |
Amortization of unrecognized prior service cost | (1,149) | (908) |
Amortization of net loss | 1,621 | 1,151 |
Net periodic benefit cost | $ 424 | $ 437 |
COMMITMENTS AND CONTINGENCIES33
COMMITMENTS AND CONTINGENCIES (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies [Line Items] | |
Number Of Former Manufactured Gas Sites Where We Own Or Retain Legal Responsibility For Environmental Conditions | 12 |
Number of sites where we have completed or addressed removal of the source of soil contamination according to plans approved by KDHE. | 11 |
Number of sites with ongoing groundwater monitoring | 8 |
Number of sites where regulatory closure has been achieved | 3 |
Environmental Reserve Estimate Range, Low | 4 |
Environmental Reserve Estimate Range, High | 7 |
Environmental Reserve Estimate, Actual | 4 |
Percentage yield of high consequence pipeline areas | 30.00% |
DERIVATIVE FINANCIAL INSTRUME34
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Details) | 3 Months Ended | ||
Mar. 31, 2017USD ($)MMcf | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)MMcf | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |||
Derivative, Nonmonetary Notional Amount | MMcf | 0 | 14,300 | |
Premiums recorded in other current assets on natural gas contracts held | $ 5,400,000 | ||
Fair Value Assets, Transfers between Levels | $ 0 | $ 0 | |
Long-term Debt, including current maturities | 1,192,647,000 | 1,192,446,000 | |
Long-term Debt | 1,200,000,000 | 1,200,000,000 | |
Fair Value, Inputs, Level 1 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |||
Fair value, natural gas call options | 6,500,000 | ||
Fair Value, Inputs, Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |||
Long-term Debt, Fair Value | $ 1,200,000,000 | $ 1,200,000,000 |