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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report May 2, 1995
I.R.S.
Commission Employer
File State of Identification
Number Registrant Incorporation Number
001-11227 Washington Energy Company Washington 91-1005304
001-11271 Washington Natural Gas Company Washington 91-1005303
815 Mercer Street, Seattle, Washington 98111
(Address of Registrant's principal executive offices)
Registrant's telephone number, including area code: (206) 622-6767
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Item 5. Other Events
a) On April 27, 1995, Washington Energy Company made the following press
release:
RATE-CASE SETTLEMENT OF $17.7 MILLION FILED FOR GAS UTILITY;
CUSTOMER RATES COULD GO DOWN
SEATTLE -- Washington Natural Gas, the principal subsidiary
of Washington Energy Company (WEG:NYSE), today filed a negotiated
settlement in its general rate case, proposing an increase of
$17.7 million in annual revenue for the utility. Filed for
approval with the Washington Utilities and Transportation
Commission (WUTC), the settlement was a collaborative effort of
the staff of the WUTC, the Office of Public Counsel Section of
the Attorney General's Office, representatives of industrial
customers and the utility.
The settlement agreement would allow a return on common
equity in the range of 11 to 11.25 percent. However, an incentive
mechanism would provide the utility the opportunity to earn in
excess of this range as a result of managing its cost of service.
The settlement also stipulates that Washington Natural Gas
would not file for further general rate relief before May 1997,
except in certain limited circumstances.
Washington Natural Gas today also submitted purchased gas
adjustment filings to the WUTC, proposing to pass through to
customers purchased gas cost reductions totaling $46.5 million.
If approved, the purchased gas adjustment filings would result in
a reduction of revenue to the utility but would not have an
impact on the utility s profits, as they are part of a process to
pass through actual increases or decreases in purchased gas
costs.
If the settlement agreement is approved by the WUTC, rates
would be set in accordance with the cost of service study and
rate design adopted by Commission order on April 11, 1995. The
revised rates, requested by the company in a June 15, 1994
filing, better align rates with the cost of serving various
classes of customers.
The settlement agreement and purchased gas adjustment
filings request the Commission to rule so that the company may
place rates into effect by May 15, 1995.
"If these requests are approved by the WUTC, they would
satisfactorily resolve all outstanding rate filings of Washington
Natural Gas," Company Chairman, Chief Executive Officer and
President William P. Vititoe said.
Proposed tariffs would result in rate decreases of about
2.6 percent (or $1.13 monthly) for typical residential customers,
10 percent for firm commercial and industrial customers, and
15.2 percent for interruptible sales and transportation
customers; revenue would decrease 6.9 percent in total.
Washington Natural Gas serves more than 465,000 customers in
the central Puget Sound area of western Washington.
b) On April 28, 1995, Washington Energy Company made the following press
release:
QUARTERLY EARNINGS UP 51 PERCENT
SEATTLE -- Washington Energy Company's earnings for the second quarter,
ended March 31, rose 51 percent compared to the same quarter one year ago,
Chairman, CEO and President William P. Vititoe announced today. Earnings for
the quarter were $11.2 million, or 47 cents per share. One year ago, second-
quarter earnings were $7.4 million, or 32 cents per share.
Yesterday, Washington Natural Gas, the principal subsidiary of Washington
Energy Company, filed a negotiated general rate case settlement proposing an
increase of $17.7 million in annual revenue for the utility. The company had
requested a $35.4 million increase to offset higher costs related to additions
and upgrades to plant, financing and general operations. Filed for approval
with the Washington Utilities and Transportation Commission (WUTC), the
settlement was a collaborative effort of the staff of the WUTC, the Office of
Public Counsel Section of the Attorney General's Office, representatives of
industrial customers and the utility.
The utility also submitted purchased gas adjustment filings yesterday to
the WUTC, proposing to pass through to customers purchased gas cost reductions
totaling $46.5 million.
"If these requests are approved by the WUTC, they would satisfactorily
resolve all outstanding rate filings of Washington Natural Gas," Company
Chairman, Chief Executive Officer and President William P. Vititoe said.
Vititoe attributed the quarterly earnings improvement primarily to: 1) a
rate increase granted in June 1994 for the company's utility subsidiary,
Washington Natural Gas Company; 2) continuing growth in the number of utility
customers; and 3) cost savings resulting from the company's restructuring and
work-force reduction last summer.
Washington Energy reported a net loss of $36.9 million, or $1.56 per
share, for the 12 months ending March 31. This loss was primarily the result
of charges taken in the third and fourth quarters of the prior fiscal year,
ending September 30, 1994.
Analysis of quarterly results
Utility gross margin was up $8.4 million for the quarter, compared to the
same period last year.
The utility rate increase implemented last June accounts for approxi
mately $8 million of the improvement.
Customer growth increased gas sales volumes. The utility served 21,309
more customers during the quarter, an increase of 4.9 percent over the
comparable period one year ago.
Weather for the period, however, offset most of the improvement from
increased customers. Weather was 17 percent warmer than normal and 10 percent
warmer than in the same period one year ago, restraining gas sales.
Utility operating and maintenance costs were down $2.0 million, or 11
percent, for the quarter, primarily as a result of the restructuring and work-
force reduction last summer.
Analysis of 12-month results
Vititoe noted that the 12-month results suffered as a result of $42.6
million (after tax) in previously announced one-time charges, taken in the
1994 fiscal year. The charges resulted from management strategies to focus on
the core utility business long-term.
Weather for the 12 months was 13 percent warmer than normal and 8 percent
warmer than in the same period one year ago.
Washington Energy Company common stock trades on the New York Stock
Exchange under the symbol, "WEG."
WASHINGTON ENERGY COMPANY
SUMMARY INCOME STATEMENT AND OTHER FINANCIAL DATA
(Dollars in thousands, except per share amounts)
3 Months Ended 12 Months Ended
March 31 (1) March 31
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1995 1994 1995 1994
Washington Energy Company ---------- ----------- ---------- -----------
Operating revenues
Regulated utility sales $ 149,763 $ 141,821 $ 422,126 $ 396,378
Merchandise, conservation products, and other 7,756 9,348 26,051 57,353
Oil and natural gas --- (2) --- (2) --- (2) 17,253 (2)
---------- ---------- ---------- ---------
Total operating revenues 157,519 151,169 448,177 470,984
Operating income after income taxes $ 22,420 $ 16,500 $ 38,268 $ 42,512
Net loss on merger of oil and gas subsidiary $ --- $ --- $ (30,015)(2)$ ---
Preferred dividend requirement - Washington Natural Gas $ (1,755) $ (1,118) $ (5,851) $ (3,039)
Income (loss) from continuing operations $ 11,228 $ 7,446 $ (36,167) $ 7,305
Discontinued operations, net of income taxes $ --- $ --- $ (752) $ (11,047)
Net income (loss) $ 11,228 $ 7,446 $ (36,919) $ (3,742)
Preferred dividends --- --- --- 58
Premium - preferred redemption --- --- --- 673
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Earnings (loss) on common stock $ 11,228 $ 7,446 $ (36,919) $ (4,473)
Earnings (loss) per common share .47 .32 (1.56) (.19)
Dividends per common share .25 .25 1.00 1.20
Average common shares outstanding (in thousands) 23,859 23,443 23,690 23,283
Book value per share 11.37 13.95
Capitalization and short-term debt
Common $ 272,129 $ 328,006
Preferred 90,000 60,000
Long-term debt 290,060 333,260
Current portion long-term debt 40,140 20,280
Commercial paper and notes payable 98,250 126,642
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Total capitalization and short-term debt $ 790,579 $ 868,188
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Net plant $ 801,300 $ 758,861
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Operating income (loss) by business segment
before income taxes
Regulated utility sales $ 30,116 $ 20,443 $ 39,357 $ 41,980
Merchandise, conservation products, and other (564) (794) (1,106) 2,878
Oil and natural gas --- (2) --- (2) --- (2) 3,610 (2)
Other (739) (681) (1,104) (3,659)
---------- ---------- ---------- ----------
Total $ 28,813 $ 18,968 $ 37,147 $ 44,809
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(1) Results for the quarter are not indicative of what can be expected for a full year of operations
because operating revenues and earnings are greatly affected by variations in weather conditions.
(2) Subsequent to September 30, 1993, operating revenues and expenses have been reclassified
to other income (expense) due to the merger of the exploration and production subsidiary
with Cabot Oil & Gas Corp. in May, 1994, consistent with the presentation of earnings
from ownership of Cabot stock.
WASHINGTON ENERGY COMPANY
SUMMARY INCOME STATEMENT AND OTHER FINANCIAL DATA (Continued)
(Dollars in thousands)
3 Months Ended 12 Months Ended
March 31 (1) March 31
------------------------ -----------------------
1995 1994 1995 1994
Washington Natural Gas Company ---------- ---------- ---------- ----------
Operating revenues
Firm gas sales $ 129,171 $ 122,875 $ 351,603 $ 329,664
Interruptible gas sales 14,742 14,390 50,166 48,946
Transportation 3,267 2,175 10,491 9,206
Rentals and other 2,583 2,381 9,866 8,562
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Total operating revenues $ 149,763 $ 141,821 $ 422,126 $ 396,378
Gross utility margin -
Gas sales less gas purchases $ 62,036 $ 54,774 $ 172,377 $ 163,169
Transportation margin 3,267 2,175 10,491 9,206
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Total margin $ 65,303 $ 56,949 $ 182,868 $ 172,375
Net income $ 14,362 $ 9,171 $ 3,883 $ 11,128
Gas volumes (000's of therms)
Firm gas sales 234,403 236,189 631,158 613,830
Interruptible gas sales 41,478 42,092 144,951 136,112
Transportation 42,560 33,467 137,891 148,389
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Total gas volumes 318,441 311,748 914,000 898,331
Customers served (average)
Firm gas sales 464,605 443,257 454,346 433,023
Interruptible gas sales 1,037 1,057 1,039 1,051
Transportation 50 36 43 45
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Total customers 465,692 444,350 455,428 434,119
Annual increase in customers 21,309 22,261
Weather % colder (+) or warmer (-) than normal (in terms
of degree days) -17% -7% -13% -5%
Degree days 1,622 1,803 4,160 4,514
(1) Results for the quarter are not indicative of what can be expected for a full year of operations because operating
revenues and earnings are greatly affected by variations in weather conditions.
Signatures
Pursuant to the Requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WASHINGTON ENERGY COMPANY
by /s/ James P. Torgerson
Senior Vice President - Finance,
Planning and Development and
Chief Financial Officer
WASHINGTON NATURAL GAS COMPANY
by /s/ James P. Torgerson
Senior Vice President - Finance,
Planning and Development and
Chief Financial Officer
May 2, 1995