|
þ
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Commission
File Number
|
Exact name of registrant as
specified in its charter; address of principal executive offices; registrant's telephone number, including area code
|
State or Other Jurisdiction of
Incorporation
|
I.R.S.
Employer
Identification No.
|
1-16163
|
WGL Holdings, Inc.
101 Constitution Ave., N.W.
Washington, D.C. 20080
(703) 750-2000
|
Virginia
|
52-2210912
|
0-49807
|
Washington Gas Light Company
101 Constitution Ave., N.W.
Washington, D.C. 20080
(703) 750-4440
|
District of
Columbia
and Virginia
|
53-0162882
|
Large accelerated filer
þ
|
|
Accelerated filer
¨
|
|
Non-accelerated filer
¨
|
|
Smaller reporting company
¨
|
|
|
|
(Do not check if a smaller reporting company)
|
|||||
Emerging growth company
¨
|
|
|
|
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
|
|||||||
Large accelerated filer
¨
|
|
Accelerated filer
¨
|
|
Non-accelerated filer
þ
|
|
Smaller reporting company
¨
|
|
|
|
(Do not check if a smaller reporting company)
|
|||||
Emerging growth company
¨
|
|
|
|
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
|
|||||||
PART I. Financial Information
|
|
|
|
Item 1.
Financial Statements (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PART II. Other Information
|
|
|
|
|
|
|
|
|
|
|
|
INTRODUCTION
|
•
|
the occurrence of any event, change or other circumstances that could give rise to the termination of the Agreement and Plan of Merger among WGL, AltaGas and Wrangler, Inc. (Merger Agreement);
|
•
|
the inability of WGL or AltaGas to satisfy conditions to the closing of the merger;
|
•
|
the required regulatory approvals for the merger may not be received, may not be received in a timely manner, or may be received subject to imposed conditions or restrictions that cause a failure of a closing condition to the merger or that could have a detrimental impact on the combined company following completion of the merger;
|
•
|
the effect of the announcement of the merger on the ability of WGL to retain customers and retain and hire key personnel;
|
•
|
the effect of the announcement of the merger on the ability of WGL to maintain relationships with its suppliers;
|
•
|
potential litigation in connection with the merger;
|
•
|
the incurrence of significant costs for advisory services in connection with the merger;
|
•
|
the impact of the terms and conditions of the Merger Agreement on WGL’s interim operations and its ability to make significant changes to its business or pursue otherwise attractive business opportunities without the consent of AltaGas;
|
•
|
the level and rate at which we incur costs and expenses, and the extent to which we are allowed to recover from customers, through the regulatory process, such costs and expenses relating to constructing, operating and maintaining Washington Gas’ distribution system;
|
•
|
the availability of natural gas and electricity supply, interstate pipeline transportation and storage capacity;
|
•
|
the outcome of new and existing matters before courts, regulators, government agencies or arbitrators, including those relating to construction of the Constitution Pipeline, disputes relating to our purchase of natural gas under the Antero gas supply contracts, and the August 2016 explosion and fire at an apartment complex in Silver Spring, Maryland;
|
•
|
factors beyond our control that affect the ability of natural gas producers, pipeline gatherers and natural gas processors to deliver natural gas into interstate pipelines for delivery to the entrance points of Washington Gas' distribution system;
|
•
|
security breaches of our information technology infrastructure, including cyber attacks and cyber-terrorism;
|
•
|
leaks, mechanical problems, incidents or other operational issues in our natural gas distribution system, including the effectiveness of our efforts to mitigate the effects of receiving low-HHC natural gas;
|
•
|
changes and developments in economic, competitive, political and regulatory conditions;
|
•
|
unusual weather conditions and changes in natural gas consumption patterns;
|
•
|
changes in energy commodity market conditions, including the relative prices of alternative forms of energy such as electricity, fuel oil and propane;
|
•
|
changes in the value of derivative contracts and the availability of suitable derivative counterparties;
|
•
|
changes in our credit ratings, disruptions in credit market and equity capital market conditions or other factors that may affect our access to and cost of capital;
|
•
|
factors affecting the timing of construction and the effective operation of pipelines in which we have invested;
|
•
|
the credit-worthiness of customers; suppliers and derivatives counterparties;
|
•
|
changes in laws and regulations, including tax, environmental, pipeline integrity and employment laws and regulations;
|
•
|
legislative, regulatory and judicial mandates or decisions affecting our business operations, including interpretations of the Tax Cuts and Jobs Act (the Tax Act);
|
•
|
the timing and success of business and product development efforts and technological improvements;
|
•
|
the level of demand from government agencies and the private sector for commercial energy systems, and delays in federal government budget appropriations;
|
•
|
the pace of deregulation of energy markets and the availability of other competitive alternatives to our products and services;
|
•
|
changes in accounting principles;
|
•
|
our ability to manage the outsourcing of several business processes;
|
•
|
strikes or work stoppages by unionized employees;
|
•
|
acts of nature and catastrophic events, including terrorist acts; and
|
•
|
decisions made by management and co-investors in non-controlled investees.
|
(In thousands)
|
December 31,
2017 |
|
September 30,
2017 |
||||
ASSETS
|
|
|
|
||||
Property, Plant and Equipment
|
|
|
|
||||
At original cost
|
$
|
6,217,878
|
|
|
$
|
6,143,841
|
|
Accumulated depreciation and amortization
|
(1,538,998
|
)
|
|
(1,513,790
|
)
|
||
Net property, plant and equipment
|
4,678,880
|
|
|
4,630,051
|
|
||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
64,110
|
|
|
8,524
|
|
||
Receivables
|
|
|
|
||||
Accounts receivable
|
519,980
|
|
|
398,149
|
|
||
Gas costs and other regulatory assets
|
17,663
|
|
|
21,705
|
|
||
Unbilled revenues
|
278,256
|
|
|
165,483
|
|
||
Allowance for doubtful accounts
|
(32,451
|
)
|
|
(32,025
|
)
|
||
Net receivables
|
783,448
|
|
|
553,312
|
|
||
Materials and supplies—principally at average cost
|
20,456
|
|
|
20,172
|
|
||
Storage gas
|
206,978
|
|
|
243,984
|
|
||
Prepaid taxes
|
38,824
|
|
|
31,549
|
|
||
Other prepayments
|
74,612
|
|
|
86,465
|
|
||
Derivatives
|
17,665
|
|
|
15,327
|
|
||
Other
|
40,174
|
|
|
26,556
|
|
||
Total current assets
|
1,246,267
|
|
|
985,889
|
|
||
Deferred Charges and Other Assets
|
|
|
|
||||
Regulatory assets
|
|
|
|
||||
Gas costs
|
117,474
|
|
|
90,136
|
|
||
Pension and other post-retirement benefits
|
132,837
|
|
|
139,499
|
|
||
Other
|
117,962
|
|
|
104,596
|
|
||
Prepaid post-retirement benefits
|
234,982
|
|
|
231,577
|
|
||
Derivatives
|
32,168
|
|
|
38,389
|
|
||
Investments in unconsolidated affiliates
|
489,354
|
|
|
394,201
|
|
||
Other
|
12,650
|
|
|
11,671
|
|
||
Total deferred charges and other assets
|
1,137,427
|
|
|
1,010,069
|
|
||
Total Assets
|
$
|
7,062,574
|
|
|
$
|
6,626,009
|
|
CAPITALIZATION AND LIABILITIES
|
|
|
|
||||
Capitalization
|
|
|
|
||||
WGL Holdings common shareholders’ equity
|
$
|
1,609,607
|
|
|
$
|
1,502,690
|
|
Non-controlling interest
|
3,210
|
|
|
6,851
|
|
||
Washington Gas Light Company preferred stock
|
28,173
|
|
|
28,173
|
|
||
Total equity
|
1,640,990
|
|
|
1,537,714
|
|
||
Long-term debt
|
1,679,893
|
|
|
1,430,861
|
|
||
Total capitalization
|
3,320,883
|
|
|
2,968,575
|
|
||
Current Liabilities
|
|
|
|
||||
Current maturities of long-term debt
|
300,000
|
|
|
250,000
|
|
||
Notes payable and project financing
|
558,700
|
|
|
559,844
|
|
||
Accounts payable and other accrued liabilities
|
431,327
|
|
|
423,824
|
|
||
Wages payable
|
22,146
|
|
|
18,096
|
|
||
Accrued interest
|
17,669
|
|
|
7,806
|
|
||
Dividends declared
|
26,520
|
|
|
26,452
|
|
||
Customer deposits and advance payments
|
55,158
|
|
|
65,841
|
|
||
Gas costs and other regulatory liabilities
|
57,275
|
|
|
22,814
|
|
||
Accrued taxes
|
35,676
|
|
|
17,657
|
|
||
Derivatives
|
35,021
|
|
|
43,990
|
|
||
Other
|
50,002
|
|
|
52,664
|
|
||
Total current liabilities
|
1,589,494
|
|
|
1,488,988
|
|
||
Deferred Credits
|
|
|
|
||||
Unamortized investment tax credits
|
153,502
|
|
|
155,007
|
|
||
Deferred income taxes
|
413,065
|
|
|
868,067
|
|
||
Accrued pensions and benefits
|
184,293
|
|
|
181,552
|
|
||
Asset retirement obligations
|
300,130
|
|
|
296,810
|
|
||
Regulatory liabilities
|
|
|
|
||||
Accrued asset removal costs
|
286,234
|
|
|
292,173
|
|
||
Other post-retirement benefits
|
130,882
|
|
|
135,035
|
|
||
Other—principally deferred taxes
|
452,091
|
|
|
9,403
|
|
||
Derivatives
|
128,885
|
|
|
122,607
|
|
||
Other
|
103,115
|
|
|
107,792
|
|
||
Total deferred credits
|
2,152,197
|
|
|
2,168,446
|
|
||
Commitments and Contingencies (Note 13)
|
|
|
|
||||
Total Capitalization and Liabilities
|
$
|
7,062,574
|
|
|
$
|
6,626,009
|
|
|
Three Months Ended
December 31, |
||||||
(In thousands, except per share data)
|
2017
|
|
2016
|
||||
OPERATING REVENUES
|
|
|
|
||||
Utility
|
$
|
374,990
|
|
|
$
|
327,063
|
|
Non-utility
|
277,450
|
|
|
282,424
|
|
||
Total Operating Revenues
|
652,440
|
|
|
609,487
|
|
||
OPERATING EXPENSES
|
|
|
|
||||
Utility cost of gas
|
122,273
|
|
|
75,500
|
|
||
Non-utility cost of energy-related sales
|
225,502
|
|
|
252,886
|
|
||
Operation and maintenance
|
102,226
|
|
|
100,717
|
|
||
Depreciation and amortization
|
40,985
|
|
|
35,283
|
|
||
General taxes and other assessments
|
44,887
|
|
|
40,388
|
|
||
Total Operating Expenses
|
535,873
|
|
|
504,774
|
|
||
OPERATING INCOME
|
116,567
|
|
|
104,713
|
|
||
Equity in earnings of unconsolidated affiliates
|
5,892
|
|
|
265
|
|
||
Other income (expenses) — net
|
(780
|
)
|
|
478
|
|
||
Interest expense
|
20,197
|
|
|
16,235
|
|
||
INCOME BEFORE INCOME TAXES
|
101,482
|
|
|
89,221
|
|
||
INCOME TAX (BENEFIT) EXPENSE
|
(31,110
|
)
|
|
33,454
|
|
||
NET INCOME
|
$
|
132,592
|
|
|
$
|
55,767
|
|
Non-controlling interest
|
(5,778
|
)
|
|
(2,535
|
)
|
||
Dividends on Washington Gas Light Company preferred stock
|
330
|
|
|
330
|
|
||
NET INCOME APPLICABLE TO COMMON STOCK
|
$
|
138,040
|
|
|
$
|
57,972
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
|
|
|
||||
Basic
|
51,319
|
|
|
51,172
|
|
||
Diluted
|
51,549
|
|
|
51,445
|
|
||
EARNINGS PER AVERAGE COMMON SHARE
|
|
|
|
||||
Basic
|
$
|
2.69
|
|
|
$
|
1.13
|
|
Diluted
|
$
|
2.68
|
|
|
$
|
1.13
|
|
DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
0.5100
|
|
|
$
|
0.4875
|
|
|
Three Months Ended
December 31, |
||||||
(In thousands)
|
2017
|
|
2016
|
||||
NET INCOME
|
$
|
132,592
|
|
|
$
|
55,767
|
|
OTHER COMPREHENSIVE INCOME, BEFORE INCOME TAXES:
|
|
|
|
||||
Qualified cash flow hedging instruments
|
52
|
|
|
49,455
|
|
||
Pension and other post-retirement benefit plans
|
|
|
|
||||
Change in net prior service credit
|
(274
|
)
|
|
(217
|
)
|
||
Change in actuarial net loss
|
527
|
|
|
588
|
|
||
Total other comprehensive income before taxes
|
$
|
305
|
|
|
$
|
49,826
|
|
INCOME TAX EXPENSE RELATED TO OTHER COMPREHENSIVE INCOME
|
61
|
|
|
20,413
|
|
||
OTHER COMPREHENSIVE INCOME
|
$
|
244
|
|
|
$
|
29,413
|
|
COMPREHENSIVE INCOME
|
$
|
132,836
|
|
|
$
|
85,180
|
|
Non-controlling interest
|
(5,778
|
)
|
|
(2,535
|
)
|
||
Dividends on Washington Gas Light Company preferred stock
|
330
|
|
|
330
|
|
||
COMPREHENSIVE INCOME ATTRIBUTABLE TO WGL HOLDINGS
|
$
|
138,284
|
|
|
$
|
87,385
|
|
|
Three Months Ended December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
132,592
|
|
|
$
|
55,767
|
|
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
|
|
||||
Depreciation and amortization
|
40,985
|
|
|
35,283
|
|
||
Amortization of:
|
|
|
|
||||
Other regulatory assets and liabilities—net
|
1,634
|
|
|
823
|
|
||
Debt related costs
|
550
|
|
|
445
|
|
||
Deferred income taxes
|
(29,264
|
)
|
|
34,852
|
|
||
Dividends received from equity method investments
|
5,628
|
|
|
—
|
|
||
Accrued/deferred pension and other post-retirement benefit cost
|
2,393
|
|
|
5,424
|
|
||
Earnings in equity interest
|
(5,892
|
)
|
|
265
|
|
||
Compensation expense related to stock-based awards
|
5,802
|
|
|
4,912
|
|
||
Provision for doubtful accounts
|
3,781
|
|
|
2,704
|
|
||
Unrealized (gain) loss on derivative contracts
|
12,524
|
|
|
(30,339
|
)
|
||
Amortization of investment tax credits
|
(1,845
|
)
|
|
(1,396
|
)
|
||
Other non-cash credits—net
|
(197
|
)
|
|
2,105
|
|
||
Changes in operating assets and liabilities (Note 16)
|
(175,402
|
)
|
|
(201,340
|
)
|
||
Net Cash Used In Operating Activities
|
(6,711
|
)
|
|
(90,495
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Common stock issued
|
—
|
|
|
251
|
|
||
Long-term debt issued
|
300,000
|
|
|
—
|
|
||
Debt issuance costs
|
(1,482
|
)
|
|
(375
|
)
|
||
Notes payable issued —net
|
(1,144
|
)
|
|
324,001
|
|
||
Contributions from non-controlling interest
|
1,659
|
|
|
7,331
|
|
||
Distributions to non-controlling interest
|
(136
|
)
|
|
—
|
|
||
Project financing
|
—
|
|
|
8,877
|
|
||
Dividends on common stock and preferred stock
|
(26,520
|
)
|
|
(23,921
|
)
|
||
Other financing activities—net
|
(6,558
|
)
|
|
(1,295
|
)
|
||
Net Cash Provided by Financing Activities
|
265,819
|
|
|
314,869
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Capital expenditures (excluding Allowance for Funds Used During Construction)
|
(99,054
|
)
|
|
(155,758
|
)
|
||
Investments in non-utility interests
|
(104,468
|
)
|
|
(62,007
|
)
|
||
Distributions and receipts from non-utility interests
|
—
|
|
|
1,565
|
|
||
Loans to external parties
|
—
|
|
|
(863
|
)
|
||
Net Cash Used in Investing Activities
|
(203,522
|
)
|
|
(217,063
|
)
|
||
INCREASE IN CASH AND CASH EQUIVALENTS
|
55,586
|
|
|
7,311
|
|
||
Cash and Cash Equivalents at Beginning of Year
|
8,524
|
|
|
5,573
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
64,110
|
|
|
$
|
12,884
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Note 16)
|
|
|
|
(In thousands)
|
December 31,
2017 |
|
September 30,
2017 |
||||
ASSETS
|
|
|
|
||||
Property, Plant and Equipment
|
|
|
|
||||
At original cost
|
$
|
5,358,064
|
|
|
$
|
5,310,337
|
|
Accumulated depreciation and amortization
|
(1,440,276
|
)
|
|
(1,422,622
|
)
|
||
Net property, plant and equipment
|
3,917,788
|
|
|
3,887,715
|
|
||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
6,652
|
|
|
1
|
|
||
Receivables
|
|
|
|
||||
Accounts receivable
|
263,001
|
|
|
190,740
|
|
||
Gas costs and other regulatory assets
|
17,663
|
|
|
21,705
|
|
||
Unbilled revenues
|
205,107
|
|
|
107,967
|
|
||
Allowance for doubtful accounts
|
(24,447
|
)
|
|
(23,741
|
)
|
||
Net receivables
|
461,324
|
|
|
296,671
|
|
||
Materials and supplies—principally at average cost
|
20,410
|
|
|
20,126
|
|
||
Storage gas
|
84,960
|
|
|
92,753
|
|
||
Prepaid taxes
|
31,899
|
|
|
23,350
|
|
||
Other prepayments
|
22,776
|
|
|
13,238
|
|
||
Receivables from associated companies
|
27,010
|
|
|
32,362
|
|
||
Derivatives
|
4,343
|
|
|
5,061
|
|
||
Other
|
120
|
|
|
102
|
|
||
Total current assets
|
659,494
|
|
|
483,664
|
|
||
Deferred Charges and Other Assets
|
|
|
|
||||
Regulatory assets
|
|
|
|
||||
Gas costs
|
117,474
|
|
|
90,136
|
|
||
Pension and other post-retirement benefits
|
132,082
|
|
|
138,573
|
|
||
Other
|
117,570
|
|
|
104,538
|
|
||
Prepaid post-retirement benefits
|
233,676
|
|
|
230,283
|
|
||
Derivatives
|
15,385
|
|
|
16,244
|
|
||
Other
|
4,459
|
|
|
3,561
|
|
||
Total deferred charges and other assets
|
620,646
|
|
|
583,335
|
|
||
Total Assets
|
$
|
5,197,928
|
|
|
$
|
4,954,714
|
|
CAPITALIZATION AND LIABILITIES
|
|
|
|
||||
Capitalization
|
|
|
|
||||
Common shareholder’s equity
|
$
|
1,295,914
|
|
|
$
|
1,164,749
|
|
Preferred stock
|
28,173
|
|
|
28,173
|
|
||
Long-term debt
|
1,084,619
|
|
|
1,134,461
|
|
||
Total capitalization
|
2,408,706
|
|
|
2,327,383
|
|
||
Current Liabilities
|
|
|
|
||||
Current maturities of long-term debt
|
50,000
|
|
|
—
|
|
||
Notes payable and project financing
|
205,772
|
|
|
166,772
|
|
||
Accounts payable and other accrued liabilities
|
196,363
|
|
|
219,827
|
|
||
Wages payable
|
20,191
|
|
|
16,508
|
|
||
Accrued interest
|
15,593
|
|
|
3,967
|
|
||
Dividends declared
|
22,166
|
|
|
22,098
|
|
||
Customer deposits and advance payments
|
54,711
|
|
|
64,194
|
|
||
Gas costs and other regulatory liabilities
|
57,275
|
|
|
22,814
|
|
||
Accrued taxes
|
46,954
|
|
|
12,808
|
|
||
Payables to associated companies
|
107,597
|
|
|
94,844
|
|
||
Derivatives
|
24,636
|
|
|
30,263
|
|
||
Other
|
7,349
|
|
|
7,473
|
|
||
Total current liabilities
|
808,607
|
|
|
661,568
|
|
||
Deferred Credits
|
|
|
|
||||
Unamortized investment tax credits
|
3,921
|
|
|
4,100
|
|
||
Deferred income taxes
|
463,805
|
|
|
888,385
|
|
||
Accrued pensions and benefits
|
182,540
|
|
|
179,814
|
|
||
Asset retirement obligations
|
294,939
|
|
|
291,871
|
|
||
Regulatory liabilities
|
|
|
|
||||
Accrued asset removal costs
|
286,234
|
|
|
292,173
|
|
||
Other post-retirement benefits
|
130,056
|
|
|
134,181
|
|
||
Other—principally deferred taxes
|
450,409
|
|
|
9,403
|
|
||
Derivatives
|
119,048
|
|
|
112,299
|
|
||
Other
|
49,663
|
|
|
53,537
|
|
||
Total deferred credits
|
1,980,615
|
|
|
1,965,763
|
|
||
Commitments and Contingencies (Note 13)
|
|
|
|
||||
Total Capitalization and Liabilities
|
$
|
5,197,928
|
|
|
$
|
4,954,714
|
|
|
Three Months Ended December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
OPERATING REVENUES
|
$
|
377,470
|
|
|
$
|
333,986
|
|
OPERATING EXPENSES
|
|
|
|
||||
Utility cost of gas
|
124,745
|
|
|
82,431
|
|
||
Operation and maintenance
|
79,551
|
|
|
82,166
|
|
||
Depreciation and amortization
|
33,646
|
|
|
30,126
|
|
||
General taxes and other assessments
|
39,983
|
|
|
36,255
|
|
||
Total Operating Expenses
|
277,925
|
|
|
230,978
|
|
||
OPERATING INCOME
|
99,545
|
|
|
103,008
|
|
||
Other expense — net
|
(1,792
|
)
|
|
(779
|
)
|
||
Interest expense
|
14,973
|
|
|
12,762
|
|
||
INCOME BEFORE INCOME TAXES
|
82,780
|
|
|
89,467
|
|
||
INCOME TAX EXPENSE
|
24,854
|
|
|
34,006
|
|
||
NET INCOME
|
$
|
57,926
|
|
|
$
|
55,461
|
|
Dividends on Washington Gas preferred stock
|
330
|
|
|
330
|
|
||
NET INCOME APPLICABLE TO COMMON STOCK
|
$
|
57,596
|
|
|
$
|
55,131
|
|
|
Three Months Ended
December 31, |
||||||
(In thousands)
|
2017
|
|
2016
|
||||
NET INCOME
|
$
|
57,926
|
|
|
$
|
55,461
|
|
OTHER COMPREHENSIVE INCOME, BEFORE INCOME TAXES:
|
|
|
|
||||
Pension and other post-retirement benefit plans
|
|
|
|
||||
Change in net prior service credit
|
(274
|
)
|
|
(217
|
)
|
||
Change in actuarial net loss
|
527
|
|
|
588
|
|
||
Total pension and other post-retirement benefit plans
|
$
|
253
|
|
|
$
|
371
|
|
INCOME TAX EXPENSE RELATED TO OTHER COMPREHENSIVE INCOME
|
61
|
|
|
147
|
|
||
OTHER COMPREHENSIVE INCOME
|
$
|
192
|
|
|
$
|
224
|
|
COMPREHENSIVE INCOME
|
$
|
58,118
|
|
|
$
|
55,685
|
|
|
Three Months Ended December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
57,926
|
|
|
$
|
55,461
|
|
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
|
|
||||
Depreciation and amortization
|
33,646
|
|
|
30,126
|
|
||
Amortization of:
|
|
|
|
||||
Other regulatory assets and liabilities—net
|
1,634
|
|
|
823
|
|
||
Debt related costs
|
401
|
|
|
353
|
|
||
Deferred income taxes
|
7,386
|
|
|
34,145
|
|
||
Accrued/deferred pension and other post-retirement benefit cost
|
2,398
|
|
|
5,411
|
|
||
Compensation expense related to stock-based awards
|
4,518
|
|
|
4,652
|
|
||
Provision for doubtful accounts
|
3,928
|
|
|
2,241
|
|
||
Unrealized (gain) loss on derivative contracts
|
1,446
|
|
|
(15,128
|
)
|
||
Amortization of investment tax credits
|
(179
|
)
|
|
—
|
|
||
Other non-cash charges—net
|
(197
|
)
|
|
2,447
|
|
||
Changes in operating assets and liabilities (Note 16)
|
(141,364
|
)
|
|
(169,830
|
)
|
||
Net Cash Used In Operating Activities
|
(28,457
|
)
|
|
(49,299
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Capital contributions from WGL Holdings, Inc.
|
100,000
|
|
|
—
|
|
||
Debt issuance costs
|
(236
|
)
|
|
(375
|
)
|
||
Notes payable issued —net
|
39,000
|
|
|
177,000
|
|
||
Project financing
|
—
|
|
|
5,200
|
|
||
Dividends on common stock and preferred stock
|
(22,166
|
)
|
|
(21,453
|
)
|
||
Other financing activities—net
|
(6,197
|
)
|
|
(1,226
|
)
|
||
Net Cash Provided by Financing Activities
|
110,401
|
|
|
159,146
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Capital expenditures (excluding Allowance for Funds Used During Construction)
|
(75,293
|
)
|
|
(109,847
|
)
|
||
Net Cash Used In Investing Activities
|
(75,293
|
)
|
|
(109,847
|
)
|
||
INCREASE IN CASH AND CASH EQUIVALENTS
|
6,651
|
|
|
—
|
|
||
Cash and Cash Equivalents at Beginning of Year
|
1
|
|
|
1
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
6,652
|
|
|
$
|
1
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Note 16)
|
|
|
|
ACCOUNTING STANDARDS ADOPTED IN FISCAL YEAR 2018
|
||||||
Standard
|
|
Description
|
|
Date of adoption
|
|
Effect on the financial statements or other significant matters
|
ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
|
|
This standard simplifies several aspects of the accounting for share-based payment transactions, including accounting for income taxes, forfeitures, statutory tax withholding requirements and classification in the statement of cash flows.
|
|
October 1, 2017
|
|
Forfeitures
- WGL has elected to continue to estimate forfeitures for its share-based payment awards rather than account for forfeitures when they occur.
Income Taxes - On October 1, 2017, WGL and Washington Gas recorded $4.3 million and $4.2 million, respectively, on a modified retrospective basis, as a cumulative effect adjustment to retained earnings. For the three months ended December 31, 2017, WGL and Washington Gas recorded $3.4 million and $3.2 million, respectively, to current tax expense for excess tax benefits related to performance shares that vested in the quarter. Cash Flows - WGL and Washington Gas reclassified $3.6 million and $3.5 million, respectively, retroactively on the statement of cash flows for the three months ended December 31, 2016 from operating to financing activities related to shares withheld to pay for employee taxes. Statutory Tax Withholding - No changes were made. |
ASU 2016-06, Derivatives and Hedging (Topic 815) - Contingent Put and Call Options in Debt Instruments
|
|
The amendments in this update clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt
instruments are clearly and closely related to their debt hosts. The guidance states that for contingent call (put) options to be considered clearly and closely related, they can be indexed only to interest rates or credit risk. An entity is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence.
|
|
October 1, 2017
|
|
The implementation of this standard did not have an effect on WGL or Washington Gas' financial statements.
|
ASU 2015-11, Inventory (Topic 330) - Simplifying the Measurement of Inventory
|
|
This standard reduces the complexity in the current measurement of inventory. This ASU requires inventory to be measured at the lower of cost and net realizable value, where net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation (no change to the definition of net realizable value). The amendment eliminates the guidance that requires inventory to be stated at the lower-of-cost or market, which includes consideration of the replacement cost of inventory and the net realizable value of inventory, less an approximately normal profit margin.
|
|
October 1, 2017
|
|
The implementation of this standard did not have a material effect on WGL or Washington Gas' financial statements.
|
OTHER NEWLY ISSUED ACCOUNTING STANDARDS
|
||||||
Standard
|
|
Description
|
|
Required date of adoption
|
|
Effect on the financial statements or other significant matters
|
ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
|
|
This standard requires entities to report the service cost component in the same financial statement line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are to be presented separately from service cost and outside of operating income. In addition, only the service cost component of net benefit cost is eligible for capitalization. Changes to the presentation of service costs and other components of net benefit cost should be applied retrospectively. Changes in capitalization practices should be implemented prospectively.
|
|
October 1, 2018
|
|
We are currently evaluating the interaction of this standard with the various regulatory provisions concerning pensions and post-retirement benefit costs. We anticipate that the change in capitalization of retirement benefits will not have a material impact on WGL or Washington Gas' financial statements.
|
ASU 2016-15, Statement of Cash Flows (Topic 230)—Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)
|
|
This update provides guidance on the classification of certain cash receipts and payments in the statement of cash flows.
|
|
October 1, 2018*
|
|
We are in the process of evaluating the impact the adoption of this standard will have on our financial statements. We do not anticipate that adoption of this standard will have a material effect on WGL or Washington Gas' financial statements.
|
ASU 2014-09, Revenue from Contracts with Customers (Topic 606), including subsequent ASUs clarifying the guidance.
|
|
ASU 2014-09 establishes a comprehensive revenue recognition model clarifying the method used to determine the timing and requirements for revenue recognition from contracts with customers. The disclosure requirements under the new standard will enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
|
|
October 1, 2018
|
|
An implementation team is currently evaluating all revenue streams and reviewing contracts with customers, as well as, related financial statement disclosures to determine the impact the adoption of this standard will have on our financial statements. WGL is also monitoring final conclusions for industry specific implementation issues that could impact the timing of revenue recognition for our regulated utility tariff based sales, including the evaluation of collectability from customers if a utility has regulatory mechanisms to help assure recovery of uncollected accounts from ratepayers and accounting for contributions in aid of construction (CIAC). WGL will adopt using the modified retrospective approach.
|
ASU 2016-01, Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
|
|
The new standard amends certain disclosure requirements associated with the fair value of financial instruments, and significantly revises an entity’s accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value.
|
|
October 1, 2018*
|
|
We performed a preliminary evaluation and the adoption of this standard will primarily impact the disclosure of our financial instruments in our Fair Value Measurements Footnote.
|
ASU 2016-02, Leases (Topic 842)
|
|
This standard requires recognition of a right-to-use asset and lease liability on the statement of financial position and disclosure of key information about leasing arrangements. The standard requires application using a modified retrospective approach.
|
|
October 1, 2019*
|
|
We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.
|
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
|
|
For credit losses on financial instruments, this standard changes the current incurred loss impairment methodology to an expected loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.
|
|
October 1, 2020*
|
|
We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.
|
ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted improvements to Accounting for Hedging Activities
|
|
The new standard amends the hedge accounting and recognition requirements by expanding an entity's ability to hedge non-financial and financial risk components and reduce the complexity in fair value hedges of interest rate risk. Additionally, this standard eliminates the requirement to separately measure and disclose the ineffective portion of the hedge with the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item.
|
|
October 1, 2020*
|
|
We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.
|
WGL Holdings, Inc.
|
|||||||
(In millions)
|
December 31, 2017
|
|
September 30, 2017
|
||||
Accounts payable—trade
|
$
|
383.7
|
|
|
$
|
361.6
|
|
Employee benefits and payroll accruals
|
21.2
|
|
|
35.0
|
|
||
Other accrued liabilities
|
26.4
|
|
|
27.2
|
|
||
Total
|
$
|
431.3
|
|
|
$
|
423.8
|
|
Washington Gas Light Company
|
|||||||
(In millions)
|
December 31, 2017
|
|
|
September 30, 2017
|
|
||
Accounts payable—trade
|
$
|
163.5
|
|
|
$
|
174.9
|
|
Employee benefits and payroll accruals
|
20.1
|
|
|
32.4
|
|
||
Other accrued liabilities
|
12.8
|
|
|
12.5
|
|
||
Total
|
$
|
196.4
|
|
|
$
|
219.8
|
|
Committed Credit Available
($ In millions)
|
|||||||||||
December 31, 2017
|
WGL
(b)
|
|
Washington Gas
|
|
Total Consolidated
|
||||||
Committed credit agreements
|
|
|
|
|
|
||||||
Unsecured revolving credit facility, expires December 19, 2019
(a)
|
$
|
650.0
|
|
|
$
|
350.0
|
|
|
$
|
1,000.0
|
|
Less: Commercial Paper
|
(341.9
|
)
|
|
(162.0
|
)
|
|
(503.9
|
)
|
|||
Net committed credit available
|
$
|
308.1
|
|
|
$
|
188.0
|
|
|
$
|
496.1
|
|
Weighted average interest rate
|
1.76
|
%
|
|
1.48
|
%
|
|
1.67
|
%
|
|||
September 30, 2017
|
|
|
|
|
|
||||||
Committed credit agreements
|
|
|
|
|
|
||||||
Unsecured revolving credit facility, expires December 19, 2019
(a)
|
$
|
650.0
|
|
|
$
|
350.0
|
|
|
$
|
1,000.0
|
|
Less: Commercial Paper
|
(382.0
|
)
|
|
(123.0
|
)
|
|
(505.0
|
)
|
|||
Net committed credit available
|
$
|
268.0
|
|
|
$
|
227.0
|
|
|
$
|
495.0
|
|
Weighted average interest rate
|
1.52
|
%
|
|
1.22
|
%
|
|
1.45
|
%
|
(a)
|
Washington Gas has the right to request extensions with the banks’ approval. Washington Gas’ revolving credit facility permits it to borrow an additional
$100 million
, with the banks’ approval, for a total of
$450 million
.
|
(b)
|
WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.
|
Long-Term Debt Outstanding
|
|||||||||||
($ In millions)
|
WGL
(a)
|
|
Washington Gas
|
|
Total Consolidated
|
||||||
December 31, 2017
|
|
|
|
|
|
||||||
Long-term debt
(b)
|
$
|
850.0
|
|
|
$
|
1,146.0
|
|
|
$
|
1,996.0
|
|
Unamortized discount
|
(1.6
|
)
|
|
(3.0
|
)
|
|
(4.6
|
)
|
|||
Unamortized debt expense
|
(3.1
|
)
|
|
(8.4
|
)
|
|
(11.5
|
)
|
|||
Total Long-Term Debt
|
$
|
845.3
|
|
|
$
|
1,134.6
|
|
|
$
|
1,979.9
|
|
Weighted average interest rate
|
2.60
|
%
|
|
4.89
|
%
|
|
3.91
|
%
|
|||
September 30, 2017
|
|
|
|
|
|
||||||
Long-term debt
(b)
|
$
|
550.0
|
|
|
$
|
1,146.0
|
|
|
$
|
1,696.0
|
|
Unamortized discount
|
(1.5
|
)
|
|
(3.0
|
)
|
|
(4.5
|
)
|
|||
Unamortized debt expense
|
(2.1
|
)
|
|
(8.5
|
)
|
|
(10.6
|
)
|
|||
Total Long-Term Debt
|
$
|
546.4
|
|
|
$
|
1,134.5
|
|
|
$
|
1,680.9
|
|
Weighted average interest rate
|
2.81
|
%
|
|
4.89
|
%
|
|
4.21
|
%
|
Long-Term Debt Issuances and Retirements
|
|||||||||||
($ In millions)
|
Principal
(b)
|
|
Interest
Rate
|
|
Effective
Cost
|
|
Nominal
Maturity Date
|
||||
Three Months Ended December 31, 2017
|
|
|
|
|
|
|
|
||||
WGL
(a)
|
|
|
|
|
|
|
|
||||
Issuances:
|
|
|
|
|
|
|
|
||||
11/29/2017
|
$
|
300.0
|
|
|
1.88
|
%
|
(c)
|
2.01
|
%
|
|
11/29/2019
|
Total consolidated issuances
|
$
|
300.0
|
|
|
|
|
|
|
|
WGL Holdings, Inc.
Components of Total Equity
|
|||||||||||||||||||||||||||||||||
(In thousands, except shares)
|
Common Stock
|
|
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Income (Loss), Net of Taxes
|
|
WGL Holdings Common Shareholders' Equity
|
|
Non-controlling Interest
|
|
Washington Gas Light Company Preferred Stock
|
|
Total Equity
|
||||||||||||||||||
Shares
|
Amount
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance at
September 30, 2017
|
51,219,000
|
|
$
|
582,716
|
|
|
$
|
10,149
|
|
|
$
|
915,822
|
|
|
$
|
(5,997
|
)
|
|
$
|
1,502,690
|
|
|
$
|
6,851
|
|
|
$
|
28,173
|
|
|
$
|
1,537,714
|
|
Net income (loss)
|
—
|
|
—
|
|
|
—
|
|
|
138,040
|
|
|
—
|
|
|
138,040
|
|
|
(5,778
|
)
|
|
330
|
|
|
132,592
|
|
||||||||
Contributions from non-controlling interest
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,659
|
|
|
—
|
|
|
1,659
|
|
||||||||
Distributions to non-controlling interest
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(136
|
)
|
|
—
|
|
|
(136
|
)
|
||||||||
Business combination
(a)
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
614
|
|
|
—
|
|
|
614
|
|
||||||||
Other
comprehensive income
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
244
|
|
|
244
|
|
|
—
|
|
|
—
|
|
|
244
|
|
||||||||
Stock-based compensation
(b)
|
133,540
|
|
11,251
|
|
|
(20,534
|
)
|
|
4,174
|
|
|
—
|
|
|
(5,109
|
)
|
|
—
|
|
|
—
|
|
|
(5,109
|
)
|
||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common stock
|
—
|
|
—
|
|
|
—
|
|
|
(26,258
|
)
|
|
—
|
|
|
(26,258
|
)
|
|
—
|
|
|
—
|
|
|
(26,258
|
)
|
||||||||
Preferred stock
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(330
|
)
|
|
(330
|
)
|
||||||||
Balance at
December 31, 2017
|
51,352,540
|
|
$
|
593,967
|
|
|
$
|
(10,385
|
)
|
|
$
|
1,031,778
|
|
|
$
|
(5,753
|
)
|
|
$
|
1,609,607
|
|
|
$
|
3,210
|
|
|
$
|
28,173
|
|
|
$
|
1,640,990
|
|
Balance at September 30, 2016
|
51,080,612
|
|
$
|
574,496
|
|
|
$
|
12,519
|
|
|
$
|
827,085
|
|
|
$
|
(38,539
|
)
|
|
$
|
1,375,561
|
|
|
$
|
409
|
|
|
$
|
28,173
|
|
|
$
|
1,404,143
|
|
Net income (loss)
|
—
|
|
—
|
|
|
—
|
|
|
57,972
|
|
|
—
|
|
|
57,972
|
|
|
(2,535
|
)
|
|
330
|
|
|
55,767
|
|
||||||||
Contributions from non-controlling interest
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,331
|
|
|
—
|
|
|
7,331
|
|
||||||||
Other
comprehensive income
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,413
|
|
|
29,413
|
|
|
—
|
|
|
—
|
|
|
29,413
|
|
||||||||
Stock-based compensation
(b)
|
104,676
|
|
6,564
|
|
|
(6,567
|
)
|
|
(126
|
)
|
|
—
|
|
|
(129
|
)
|
|
—
|
|
|
—
|
|
|
(129
|
)
|
||||||||
Issuance of
common stock (c) |
25,680
|
|
1,613
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,613
|
|
|
—
|
|
|
—
|
|
|
1,613
|
|
||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Common stock
|
—
|
|
—
|
|
|
—
|
|
|
(24,965
|
)
|
|
—
|
|
|
(24,965
|
)
|
|
—
|
|
|
—
|
|
|
(24,965
|
)
|
||||||||
Preferred stock
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(330
|
)
|
|
(330
|
)
|
||||||||
Balance at
December 31, 2016
|
51,210,968
|
|
$
|
582,673
|
|
|
$
|
5,952
|
|
|
$
|
859,966
|
|
|
$
|
(9,126
|
)
|
|
$
|
1,439,465
|
|
|
$
|
5,205
|
|
|
$
|
28,173
|
|
|
$
|
1,472,843
|
|
Washington Gas Light Company
Components of Total Equity
|
|||||||||||||||||||||
(In thousands, except shares)
|
Common Stock
|
|
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated Other
Comprehensive Income (Loss), Net of Taxes
|
|
Total
|
||||||||||||
Shares
|
Amount
|
|
|
|
|
||||||||||||||||
Balance at September 30, 2017
|
46,479,536
|
|
$
|
46,479
|
|
|
$
|
492,101
|
|
|
$
|
630,691
|
|
|
$
|
(4,522
|
)
|
|
$
|
1,164,749
|
|
Net income
|
—
|
|
—
|
|
|
—
|
|
|
57,926
|
|
|
—
|
|
|
57,926
|
|
|||||
Other comprehensive income
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|
192
|
|
|||||
Stock-based compensation
(a)
|
—
|
|
—
|
|
|
(8,916
|
)
|
|
4,197
|
|
|
—
|
|
|
(4,719
|
)
|
|||||
Capital contributed by WGL Holdings
|
—
|
|
—
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
100,000
|
|
|||||
Dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common stock
|
—
|
|
—
|
|
|
—
|
|
|
(21,904
|
)
|
|
—
|
|
|
(21,904
|
)
|
|||||
Preferred stock
|
—
|
|
—
|
|
|
—
|
|
|
(330
|
)
|
|
—
|
|
|
(330
|
)
|
|||||
Balance at December 31, 2017
|
46,479,536
|
|
$
|
46,479
|
|
|
$
|
583,185
|
|
|
$
|
670,580
|
|
|
$
|
(4,330
|
)
|
|
$
|
1,295,914
|
|
Balance at September 30, 2016
|
46,479,536
|
|
$
|
46,479
|
|
|
$
|
488,135
|
|
|
$
|
586,662
|
|
|
$
|
(7,830
|
)
|
|
$
|
1,113,446
|
|
Net income
|
—
|
|
—
|
|
|
—
|
|
|
55,461
|
|
|
—
|
|
|
55,461
|
|
|||||
Other comprehensive income
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
224
|
|
|
224
|
|
|||||
Stock-based compensation
(a)
|
—
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
Dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common stock
|
—
|
|
—
|
|
|
—
|
|
|
(21,134
|
)
|
|
—
|
|
|
(21,134
|
)
|
|||||
Preferred stock
|
—
|
|
—
|
|
|
—
|
|
|
(330
|
)
|
|
—
|
|
|
(330
|
)
|
|||||
Balance at December 31, 2016
|
46,479,536
|
|
$
|
46,479
|
|
|
$
|
488,129
|
|
|
$
|
620,659
|
|
|
$
|
(7,606
|
)
|
|
$
|
1,147,661
|
|
Basic and Diluted EPS
|
||||||||||
(In thousands, except per share data)
|
Net Income
Applicable to
Common Stock
|
|
Shares
|
|
Per Share
Amount
|
|||||
Three Months Ended December 31, 2017
|
|
|
|
|
|
|||||
Basic EPS
|
$
|
138,040
|
|
|
51,319
|
|
|
$
|
2.69
|
|
Stock-based compensation plans
|
—
|
|
|
230
|
|
|
|
|||
Diluted EPS
|
$
|
138,040
|
|
|
51,549
|
|
|
$
|
2.68
|
|
Three Months Ended December 31, 2016
|
|
|
|
|
|
|||||
Basic EPS
|
$
|
57,972
|
|
|
51,172
|
|
|
$
|
1.13
|
|
Stock-based compensation plans
|
—
|
|
|
273
|
|
|
|
|||
Diluted EPS
|
$
|
57,972
|
|
|
51,445
|
|
|
$
|
1.13
|
|
Absolute Notional Amounts
of Open Positions on Derivative Instruments
|
||||||
Derivative transactions
|
WGL Holdings, Inc.
|
|
Washington Gas
|
|||
December 31, 2017
|
Notional Amounts
|
|||||
Natural Gas
(In millions of therms)
|
|
|
|
|||
Asset optimization & trading
|
21,960.9
|
|
|
11,768.0
|
|
|
Retail sales
|
143.2
|
|
|
—
|
|
|
Other risk-management activities
|
1,597.4
|
|
|
1,181.0
|
|
|
Electricity
(In millions of kWhs)
|
|
|
|
|||
Retail sales
|
9,279.2
|
|
|
—
|
|
|
Other risk-management activities
(a)
|
21,569.5
|
|
|
—
|
|
|
Interest Rate Swaps
(In millions of dollars)
|
$
|
250.0
|
|
|
—
|
|
September 30, 2017
|
|
|||||
Natural Gas
(In millions of therms)
|
|
|
|
|||
Asset optimization & trading
|
21,663.5
|
|
|
11,223.0
|
|
|
Retail sales
|
124.3
|
|
|
—
|
|
|
Other risk-management activities
|
1,546.7
|
|
|
1,181.0
|
|
|
Electricity
(In millions of kWhs)
|
|
|
|
|||
Retail sales
|
10,011.7
|
|
|
—
|
|
|
Other risk-management activities
(a)
|
22,962.1
|
|
|
—
|
|
|
Interest Rate Swaps
(In millions of dollars)
|
$
|
250.0
|
|
|
—
|
|
Washington Gas Light Company
Balance Sheet Classification of Derivative Instruments
(b)
|
|||||||||||||||
(In millions)
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2017
|
Gross
Derivative Assets |
|
Gross
Derivative Liabilities |
|
Netting of
Collateral |
|
Total
(a)
|
||||||||
Current Assets—Derivatives
|
$
|
9.4
|
|
|
$
|
(5.1
|
)
|
|
$
|
—
|
|
|
$
|
4.3
|
|
Deferred Charges and Other Assets—Derivatives
|
15.4
|
|
|
—
|
|
|
—
|
|
|
15.4
|
|
||||
Current Liabilities—Derivatives
|
—
|
|
|
(24.7
|
)
|
|
0.1
|
|
|
(24.6
|
)
|
||||
Deferred Credits—Derivatives
|
—
|
|
|
(119.0
|
)
|
|
—
|
|
|
(119.0
|
)
|
||||
Total
|
$
|
24.8
|
|
|
$
|
(148.8
|
)
|
|
$
|
0.1
|
|
|
$
|
(123.9
|
)
|
As of September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Current Assets—Derivatives
|
$
|
7.5
|
|
|
$
|
(2.4
|
)
|
|
$
|
—
|
|
|
$
|
5.1
|
|
Deferred Charges and Other Assets—Derivatives
|
16.5
|
|
|
(0.3
|
)
|
|
—
|
|
|
16.2
|
|
||||
Current Liabilities—Derivatives
|
—
|
|
|
(30.3
|
)
|
|
—
|
|
|
(30.3
|
)
|
||||
Deferred Credits—Derivatives
|
—
|
|
|
(112.3
|
)
|
|
—
|
|
|
(112.3
|
)
|
||||
Total
|
$
|
24.0
|
|
|
$
|
(145.3
|
)
|
|
$
|
—
|
|
|
$
|
(121.3
|
)
|
Collateral Not Offset Against Derivative Assets and Liabilities
(In millions)
|
|||||||
December 31, 2017
|
Collateral deposits posted with counterparties
|
|
Cash collateral held representing an obligation
|
||||
Washington Gas
|
$
|
8.1
|
|
|
$
|
0.1
|
|
WGL Energy Services
|
30.6
|
|
|
—
|
|
||
WGL Midstream
|
16.8
|
|
|
0.4
|
|
||
September 30, 2017
|
|
|
|
||||
Washington Gas
|
$
|
3.7
|
|
|
$
|
0.1
|
|
WGL Energy Services
|
23.7
|
|
|
—
|
|
||
WGL Midstream
|
44.4
|
|
|
1.6
|
|
Washington Gas Light Company
Fair Value Measurements Under the Fair Value Hierarchy
|
|||||||||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
At December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Natural gas related derivatives
|
$
|
—
|
|
|
$
|
8.4
|
|
|
$
|
16.4
|
|
|
$
|
24.8
|
|
Total Assets
|
$
|
—
|
|
|
$
|
8.4
|
|
|
$
|
16.4
|
|
|
$
|
24.8
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Natural gas related derivatives
|
$
|
—
|
|
|
$
|
(7.0
|
)
|
|
$
|
(141.8
|
)
|
|
$
|
(148.8
|
)
|
Total Liabilities
|
$
|
—
|
|
|
$
|
(7.0
|
)
|
|
$
|
(141.8
|
)
|
|
$
|
(148.8
|
)
|
At September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Natural gas related derivatives
|
$
|
—
|
|
|
$
|
7.0
|
|
|
$
|
17.0
|
|
|
$
|
24.0
|
|
Total Assets
|
$
|
—
|
|
|
$
|
7.0
|
|
|
$
|
17.0
|
|
|
$
|
24.0
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Natural gas related derivatives
|
$
|
—
|
|
|
$
|
(5.7
|
)
|
|
$
|
(139.6
|
)
|
|
$
|
(145.3
|
)
|
Total Liabilities
|
$
|
—
|
|
|
$
|
(5.7
|
)
|
|
$
|
(139.6
|
)
|
|
$
|
(145.3
|
)
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||
(In millions)
|
|
Net Fair Value
December 31, 2017 |
|
Valuation Techniques
|
|
Unobservable Inputs
|
|
Range
|
|
|
|
|
|
|
|
|
|
WGL Holdings, Inc.
|
|
|
|
|
|
|
|
|
Natural gas related derivatives
|
|
$(113.2)
|
|
Discounted Cash Flow
|
|
Natural Gas Basis Price
(per dekatherm)
|
|
($1.125) - $3.400
|
|
|
|
|
Option Model
|
|
Natural Gas Basis Price
(per dekatherm)
|
|
($1.030) - $3.100
|
|
|
$(3.7)
|
|
|
|
Annualized Volatility of Spot Market Natural Gas
|
|
30.2% - 714.1%
|
Electricity related derivatives
|
|
$(12.8)
|
|
Discounted Cash Flow
|
|
Electricity Congestion Price
(per megawatt hour)
|
|
($2.977) - $78.990
|
|
|
|
|
|
|
|
|
|
Washington Gas Light Company
|
|
|
|
|
|
|
|
|
Natural gas related derivatives
|
|
$(125.4)
|
|
Discounted Cash Flow
|
|
Natural Gas Basis Price
(per dekatherm)
|
|
($1.125) - $2.725
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Net Fair Value
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WGL Holdings, Inc.
|
|
|
|
|
|
|
|
|
Natural gas related derivatives
|
|
$(112.4)
|
|
Discounted Cash Flow
|
|
Natural Gas Basis Price
(per dekatherm)
|
|
($2.095) - $2.805
|
|
|
|
|
Option Model
|
|
Natural Gas Basis Price
(per dekatherm)
|
|
($2.095) - $2.358
|
|
|
$(2.2)
|
|
|
|
Annualized Volatility of Spot Market Natural Gas
|
|
28.7% - 566.8%
|
Electricity related derivatives
|
|
$(6.2)
|
|
Discounted Cash Flow
|
|
Electricity Congestion Price
(per megawatt hour)
|
|
($2.736) - $56.500
|
|
|
|
|
|
|
|
|
|
Washington Gas Light Company
|
|
|
|
|
|
|
|
|
Natural gas related derivatives
|
|
$(122.6)
|
|
Discounted Cash Flow
|
|
Natural Gas Basis Price
(per dekatherm)
|
|
($1.928) - $2.805
|
Reconciliation of Fair Value Measurements Using Significant Level 3 Inputs
|
||||||||||||||
|
WGL Holdings, Inc.
|
Washington Gas Light Company
|
||||||||||||
(In millions)
|
Natural Gas
Related
Derivatives
|
|
Electricity
Related
Derivatives
|
|
Total
|
Total - Natural Gas
Related
Derivatives
|
||||||||
Three Months Ended December 31, 2017
|
|
|
|
|
|
|
||||||||
Balance at October 1, 2017
|
$
|
(114.6
|
)
|
|
$
|
(6.2
|
)
|
|
$
|
(120.8
|
)
|
$
|
(122.6
|
)
|
Realized and unrealized gains (losses)
|
|
|
|
|
|
|
||||||||
Recorded to income
|
(4.1
|
)
|
|
(9.2
|
)
|
|
(13.3
|
)
|
(3.8
|
)
|
||||
Recorded to regulatory assets—gas costs
|
(6.9
|
)
|
|
—
|
|
|
(6.9
|
)
|
(6.9
|
)
|
||||
Transfers into Level 3
|
0.3
|
|
|
—
|
|
|
0.3
|
|
0.2
|
|
||||
Transfers out of Level 3
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
—
|
|
||||
Purchases
|
—
|
|
|
2.5
|
|
|
2.5
|
|
—
|
|
||||
Settlements
|
8.7
|
|
|
0.1
|
|
|
8.8
|
|
7.7
|
|
||||
Balance at December 31, 2017
|
$
|
(116.9
|
)
|
|
$
|
(12.8
|
)
|
|
$
|
(129.7
|
)
|
$
|
(125.4
|
)
|
Three Months Ended December 31, 2016
|
|
|
|
|
|
|
||||||||
Balance at October 1, 2016
|
$
|
(264.1
|
)
|
|
$
|
(9.1
|
)
|
|
$
|
(273.2
|
)
|
$
|
(251.6
|
)
|
Realized and unrealized gains (losses)
|
|
|
|
|
|
|
||||||||
Recorded to income
|
10.3
|
|
|
(3.6
|
)
|
|
6.7
|
|
17.0
|
|
||||
Recorded to regulatory assets—gas costs
|
22.0
|
|
|
—
|
|
|
22.0
|
|
22.0
|
|
||||
Transfers into Level 3
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
0.2
|
|
||||
Purchases
|
—
|
|
|
(2.8
|
)
|
|
(2.8
|
)
|
—
|
|
||||
Settlements
|
3.4
|
|
|
7.2
|
|
|
10.6
|
|
3.6
|
|
||||
Balance at December 31, 2016
|
$
|
(228.6
|
)
|
|
$
|
(8.3
|
)
|
|
$
|
(236.9
|
)
|
$
|
(208.8
|
)
|
Unrealized Gains (Losses) Recorded for Level 3 Measurements
|
||||||||||||||
|
WGL Holdings, Inc.
|
Washington Gas Light Company
|
||||||||||||
(In millions)
|
Natural Gas
Related
Derivatives
|
|
Electricity
Related
Derivatives
|
|
Total
|
Total - Natural Gas Related Derivatives
|
||||||||
Three Months Ended December 31, 2017
|
|
|
|
|
|
|
||||||||
Recorded to income
|
|
|
|
|
|
|
||||||||
Operating revenues—non-utility
|
$
|
(5.5
|
)
|
|
$
|
(13.6
|
)
|
|
$
|
(19.1
|
)
|
$
|
—
|
|
Utility cost of gas
|
(4.6
|
)
|
|
—
|
|
|
(4.6
|
)
|
(4.6
|
)
|
||||
Non-utility cost of energy-related sales
|
4.2
|
|
|
6.2
|
|
|
10.4
|
|
—
|
|
||||
Recorded to regulatory assets—gas costs
|
(7.5
|
)
|
|
—
|
|
|
(7.5
|
)
|
(7.5
|
)
|
||||
Total
|
$
|
(13.4
|
)
|
|
$
|
(7.4
|
)
|
|
$
|
(20.8
|
)
|
$
|
(12.1
|
)
|
Three Months Ended December 31, 2016
|
|
|
|
|
|
|
||||||||
Recorded to income
|
|
|
|
|
|
|
||||||||
Operating revenues—non-utility
|
$
|
(9.7
|
)
|
|
$
|
(5.9
|
)
|
|
$
|
(15.6
|
)
|
$
|
—
|
|
Utility cost of gas
|
15.6
|
|
|
—
|
|
|
15.6
|
|
15.6
|
|
||||
Non-utility cost of energy-related sales
|
(0.1
|
)
|
|
11.7
|
|
|
11.6
|
|
—
|
|
||||
Recorded to regulatory assets—gas costs
|
19.7
|
|
|
—
|
|
|
19.7
|
|
19.7
|
|
||||
Total
|
$
|
25.5
|
|
|
$
|
5.8
|
|
|
$
|
31.3
|
|
$
|
35.3
|
|
(a)
|
Balance is located in cash and cash equivalents in the accompanying balance sheets. These amounts may be offset by outstanding checks.
|
(b)
|
Balance is located in notes payable in the accompanying balance sheets.
|
(c)
|
Excludes current maturities.
|
•
|
Regulated Utility
– The regulated utility segment is our core business. It consists of Washington Gas and Hampshire. Washington Gas provides regulated gas distribution services (including the sale and delivery of natural gas) to end use customers and natural gas transportation services to an unaffiliated natural gas distribution company in West Virginia under a Federal Energy Regulatory Commission (FERC) approved interstate transportation service operating agreement. Hampshire provides regulated interstate natural gas storage services to Washington Gas under a FERC approved interstate storage service tariff.
|
•
|
Retail Energy-Marketing
– The retail energy-marketing segment consists of WGL Energy Services, which sells natural gas and electricity directly to retail customers in competition with regulated utilities and unregulated gas and electricity marketers.
|
•
|
Commercial Energy Systems
– The commercial energy systems segment consists of WGL Energy Systems which provides clean and energy efficient solutions including commercial solar, energy efficiency and combined heat and power projects and other distributed generation solutions to government and commercial clients. In addition, this segment comprises the operations of WGSW, a holding company formed to invest in alternative energy assets.
|
•
|
Midstream Energy Services
– The midstream energy services segment consists of WGL Midstream, which specializes in the investment, management, development and optimization of natural gas storage and transportation midstream infrastructure projects.
|
Operating Segment Financial Information
|
|||||||||||||||||||||||||||
(In thousands)
|
Operating Revenues
|
|
Depreciation and Amortization
|
|
Equity in
Earnings of Unconsolidated Affiliates |
|
EBIT
|
|
Total
Assets
|
|
Capital
Expenditures
|
|
Equity Method
Investments
|
||||||||||||||
Three Months Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Regulated utility
|
$
|
377,470
|
|
|
$
|
34,103
|
|
|
$
|
—
|
|
|
$
|
98,365
|
|
|
$
|
5,227,299
|
|
|
$
|
76,762
|
|
|
$
|
—
|
|
Retail energy-marketing
|
248,693
|
|
|
282
|
|
|
—
|
|
|
3,742
|
|
|
533,273
|
|
|
—
|
|
|
—
|
|
|||||||
Commercial energy systems
(a)
|
20,063
|
|
|
6,584
|
|
|
—
|
|
|
5,647
|
|
|
1,104,588
|
|
|
22,292
|
|
|
—
|
|
|||||||
Midstream energy services
|
17,687
|
|
|
4
|
|
|
5,892
|
|
|
22,185
|
|
|
802,613
|
|
|
—
|
|
|
489,354
|
|
|||||||
Other activities
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,171
|
)
|
|
269,719
|
|
|
—
|
|
|
—
|
|
|||||||
Eliminations
(b)
|
(11,473
|
)
|
|
12
|
|
|
—
|
|
|
1,689
|
|
|
(874,918
|
)
|
|
—
|
|
|
—
|
|
|||||||
Total consolidated
|
$
|
652,440
|
|
|
$
|
40,985
|
|
|
$
|
5,892
|
|
|
$
|
127,457
|
|
|
$
|
7,062,574
|
|
|
$
|
99,054
|
|
|
$
|
489,354
|
|
Three Months Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Regulated utility
|
$
|
333,986
|
|
|
$
|
30,560
|
|
|
$
|
—
|
|
|
$
|
102,717
|
|
|
$
|
4,891,722
|
|
|
$
|
111,681
|
|
|
$
|
—
|
|
Retail energy-marketing
|
298,684
|
|
|
305
|
|
|
—
|
|
|
29,185
|
|
|
518,914
|
|
|
404
|
|
|
—
|
|
|||||||
Commercial energy systems
(a)
|
14,857
|
|
|
4,399
|
|
|
2,387
|
|
|
4,663
|
|
|
932,908
|
|
|
43,673
|
|
|
68,573
|
|
|||||||
Midstream energy services
|
(24,988
|
)
|
|
9
|
|
|
(2,122
|
)
|
|
(28,484
|
)
|
|
607,806
|
|
|
—
|
|
|
305,492
|
|
|||||||
Other activities
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,198
|
)
|
|
417,672
|
|
|
—
|
|
|
—
|
|
|||||||
Eliminations
(b)
|
(13,052
|
)
|
|
10
|
|
|
—
|
|
|
1,108
|
|
|
(893,632
|
)
|
|
—
|
|
|
—
|
|
|||||||
Total consolidated
|
$
|
609,487
|
|
|
$
|
35,283
|
|
|
$
|
265
|
|
|
$
|
107,991
|
|
|
$
|
6,475,390
|
|
|
$
|
155,758
|
|
|
$
|
374,065
|
|
|
Three Months Ended December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Total consolidated EBIT
|
$
|
127,457
|
|
|
$
|
107,991
|
|
Interest expense
|
20,197
|
|
|
16,235
|
|
||
Income tax expense (benefit)
|
(31,110
|
)
|
|
33,454
|
|
||
Dividends on Washington Gas Light Company preferred stock
|
330
|
|
|
330
|
|
||
Net income applicable to common stock
|
$
|
138,040
|
|
|
$
|
57,972
|
|
(in millions)
|
|
December 31, 2017
|
September 30, 2017
|
||||
Current assets
|
|
$
|
5.8
|
|
$
|
4.4
|
|
Property, Plant and Equipment
|
|
137.5
|
|
121.7
|
|
||
Total assets
|
|
$
|
143.3
|
|
$
|
126.1
|
|
Current liabilities
|
|
0.2
|
|
0.2
|
|
||
Deferred credits
|
|
1.1
|
|
0.8
|
|
||
Total liabilities
|
|
$
|
1.3
|
|
$
|
1.0
|
|
|
Solar Investments
|
|
Pipelines
|
|
|
|||||||||||
(in millions)
|
|
Non-VIEs
(a)
|
|
VIEs
(b)
|
|
Non-VIEs
(c)
|
|
Total
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Investments in unconsolidated affiliates
|
|
$
|
—
|
|
|
$
|
238.6
|
|
|
$
|
250.8
|
|
|
$
|
489.4
|
|
Total assets
|
|
$
|
—
|
|
|
$
|
238.6
|
|
|
$
|
250.8
|
|
|
$
|
489.4
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Investments in unconsolidated affiliates
|
|
$
|
9.6
|
|
|
$
|
146.7
|
|
|
$
|
237.9
|
|
|
$
|
394.2
|
|
Total assets
|
|
$
|
9.6
|
|
|
$
|
146.7
|
|
|
$
|
237.9
|
|
|
$
|
394.2
|
|
Washington Gas Receivables From / Payables To Associated Companies
|
|||||||
(In millions)
|
December 31, 2017
|
|
September 30, 2017
|
||||
Receivables from associated companies
|
$
|
27.0
|
|
|
$
|
32.4
|
|
Payables to associated companies
|
$
|
107.6
|
|
|
$
|
94.8
|
|
Washington Gas - Gas Balancing Service Charges
|
||||||
|
Three Months Ended December 31,
|
|||||
(In millions)
|
2017
|
2016
|
||||
Gas balancing service charge
|
$
|
2.5
|
|
$
|
6.9
|
|
Components of Net Periodic Benefit Costs (Income)
|
|||||||||||||||
|
Three Months Ended December 31,
|
||||||||||||||
|
2017
|
|
2016
|
||||||||||||
(In millions)
|
Pension
Benefits
|
|
Health and
Life Benefits
|
|
Pension
Benefits
|
|
Health and
Life Benefits
|
||||||||
Service cost
|
$
|
3.7
|
|
|
$
|
1.3
|
|
|
$
|
4.1
|
|
|
$
|
1.4
|
|
Interest cost
|
9.9
|
|
|
2.9
|
|
|
9.6
|
|
|
2.9
|
|
||||
Expected return on plan assets
|
(10.6
|
)
|
|
(5.9
|
)
|
|
(10.3
|
)
|
|
(5.5
|
)
|
||||
Amortization of prior service cost (credit)
|
0.1
|
|
|
(4.4
|
)
|
|
0.1
|
|
|
(4.4
|
)
|
||||
Amortization of net actuarial loss
|
3.9
|
|
|
—
|
|
|
5.5
|
|
|
0.2
|
|
||||
Net periodic benefit cost (income)
|
7.0
|
|
|
(6.1
|
)
|
|
9.0
|
|
|
(5.4
|
)
|
||||
Amount allocated to construction projects
|
(1.1
|
)
|
|
1.0
|
|
|
(1.6
|
)
|
|
1.2
|
|
||||
Amount deferred as regulatory asset/liability
—
net
|
1.7
|
|
|
—
|
|
|
1.8
|
|
|
(0.1
|
)
|
||||
Amount charged (credited) to expense
|
$
|
7.6
|
|
|
$
|
(5.1
|
)
|
|
$
|
9.2
|
|
|
$
|
(4.3
|
)
|
WGL Holdings, Inc.
Changes in Accumulated Other Comprehensive Loss by Component
|
|||||||
(In thousands)
|
Three Months Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Beginning Balance
|
$
|
(5,997
|
)
|
|
$
|
(38,539
|
)
|
Qualified cash flow hedging instruments
(a)
|
52
|
|
|
49,455
|
|
||
Change in prior service credit
(b)
|
(274
|
)
|
|
(217
|
)
|
||
Amortization of actuarial loss
(b)
|
527
|
|
|
588
|
|
||
Current-period other comprehensive income
|
305
|
|
|
49,826
|
|
||
Income tax expense related to other comprehensive income
|
61
|
|
|
20,413
|
|
||
Ending Balance
|
$
|
(5,753
|
)
|
|
$
|
(9,126
|
)
|
(a)
|
Cash flow hedging instruments represent interest rate swap agreements related to debt issuances. Refer to Note 8- Derivative and Weather-related Instruments of the Notes to Condensed Consolidated Financial Statements for further discussion of the interest rate swap agreements.
|
(b)
|
These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14- Pension and other post-retirement benefit plans of the Notes to Condensed Consolidated Financial Statements for additional details.
|
Washington Gas Light Company
Changes in Accumulated Other Comprehensive Loss by Component
|
|||||||
(In thousands)
|
Three Months Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Beginning Balance
|
$
|
(4,522
|
)
|
|
$
|
(7,830
|
)
|
Change in prior service credit
(a)
|
(274
|
)
|
|
(217
|
)
|
||
Amortization of actuarial loss
(a)
|
527
|
|
|
588
|
|
||
Current-period other comprehensive income
|
253
|
|
|
371
|
|
||
Income tax expense related to other comprehensive income
|
61
|
|
|
147
|
|
||
Ending Balance
|
$
|
(4,330
|
)
|
|
$
|
(7,606
|
)
|
(a)
|
These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14-Pension and other post-retirement benefit plans of the Notes to Condensed Consolidated Financial Statements for additional details.
|
For the three months ended December 31,
|
2017
|
|
2016
|
||||
(In thousands)
|
|
|
|
||||
CHANGES IN OPERATING ASSETS AND LIABILITIES
|
|
|
|
||||
Accounts receivable and unbilled revenues—net
|
$
|
(237,959
|
)
|
|
$
|
(203,098
|
)
|
Gas costs and other regulatory assets/liabilities—net
|
38,503
|
|
|
35,400
|
|
||
Storage gas
|
37,006
|
|
|
(1,709
|
)
|
||
Prepaid taxes
|
(7,275
|
)
|
|
(7,901
|
)
|
||
Accounts payable and other accrued liabilities
|
40,575
|
|
|
87,512
|
|
||
Customer deposits and advance payments
|
(10,683
|
)
|
|
(12,611
|
)
|
||
Accrued taxes
|
18,019
|
|
|
11,149
|
|
||
Other current assets
|
(15,107
|
)
|
|
(21,887
|
)
|
||
Other current liabilities
|
(2,662
|
)
|
|
(22,569
|
)
|
||
Deferred gas costs—net
|
(26,023
|
)
|
|
(42,189
|
)
|
||
Deferred assets—other
|
(18,483
|
)
|
|
(4,431
|
)
|
||
Deferred liabilities—other
|
7,061
|
|
|
(16,194
|
)
|
||
Pension and other post-retirement benefits
|
(291
|
)
|
|
(3,583
|
)
|
||
Other—net
|
1,917
|
|
|
771
|
|
||
Changes in operating assets and liabilities
|
$
|
(175,402
|
)
|
|
$
|
(201,340
|
)
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
||||
Income taxes paid (refunded)—net
|
$
|
(956
|
)
|
|
$
|
(4,678
|
)
|
Interest paid
|
$
|
10,392
|
|
|
$
|
4,156
|
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
||||
Extinguishment of project debt financing
|
$
|
—
|
|
|
$
|
(29,871
|
)
|
Capital expenditure accruals included in accounts payable and other accrued liabilities
|
$
|
34,371
|
|
|
$
|
55,602
|
|
Dividends paid in common stock
|
$
|
—
|
|
|
$
|
1,362
|
|
Stock based compensation
|
$
|
11,251
|
|
|
$
|
6,564
|
|
Transfer of investments to fixed assets
|
$
|
10,054
|
|
|
$
|
3,959
|
|
Transfer of notes receivables to investments
|
$
|
—
|
|
|
$
|
10,031
|
|
For the three months ended December 31,
|
2017
|
|
2016
|
||||
(In thousands)
|
|
|
|
||||
CHANGES IN OPERATING ASSETS AND LIABILITIES
|
|
|
|
||||
Accounts receivable, unbilled revenues and receivables from associated companies—net
|
$
|
(167,271
|
)
|
|
$
|
(133,605
|
)
|
Gas costs and other regulatory assets/liabilities—net
|
38,503
|
|
|
35,400
|
|
||
Storage gas
|
7,793
|
|
|
(6,029
|
)
|
||
Prepaid taxes
|
(8,549
|
)
|
|
(11,934
|
)
|
||
Accounts payable and other accrued liabilities, including payables to associated companies
|
15,409
|
|
|
49,444
|
|
||
Customer deposits and advance payments
|
(9,483
|
)
|
|
(8,410
|
)
|
||
Accrued taxes
|
34,146
|
|
|
9,307
|
|
||
Other current assets
|
(9,904
|
)
|
|
(9,456
|
)
|
||
Other current liabilities
|
(124
|
)
|
|
(29,859
|
)
|
||
Deferred gas costs—net
|
(26,023
|
)
|
|
(42,189
|
)
|
||
Deferred assets—other
|
(17,649
|
)
|
|
(2,766
|
)
|
||
Deferred liabilities—other
|
539
|
|
|
(16,657
|
)
|
||
Pension and other post-retirement benefits
|
(442
|
)
|
|
(3,586
|
)
|
||
Other—net
|
1,691
|
|
|
510
|
|
||
Changes in operating assets and liabilities
|
$
|
(141,364
|
)
|
|
$
|
(169,830
|
)
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
||||
Income taxes paid (refunded)—net
|
$
|
(958
|
)
|
|
$
|
(6,449
|
)
|
Interest paid
|
$
|
2,977
|
|
|
$
|
683
|
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
||||
Extinguishment of project debt financing
|
$
|
—
|
|
|
$
|
(29,871
|
)
|
Capital expenditure accruals included in accounts payable and other accrued liabilities
|
$
|
25,325
|
|
|
$
|
40,601
|
|
•
|
WGL
—This section describes the financial condition and results of operations of WGL Holdings, Inc. and its subsidiaries on a consolidated basis. It includes discussions of our regulated operations, including Washington Gas and Hampshire, and our non-utility operations.
|
•
|
Washington Gas
—This section describes the financial condition and results of operations of Washington Gas, a subsidiary of WGL, which comprises the majority of the regulated utility segment.
|
•
|
regulated utility;
|
•
|
retail energy-marketing;
|
•
|
commercial energy systems; and
|
•
|
midstream energy services.
|
•
|
accounting for unbilled revenue;
|
•
|
accounting for regulatory operations — regulatory assets and liabilities;
|
•
|
accounting for income taxes;
|
•
|
accounting for contingencies;
|
•
|
accounting for derivatives;
|
•
|
accounting for fair value instruments;
|
•
|
accounting for investments;
|
•
|
impairment of long-lived assets;
|
•
|
principles of consolidation and non-controlling interests and
|
•
|
accounting for pension and other post-retirement benefit plans.
|
Regulated Utility Financial Data
|
|||||||||||
|
Three Months Ended December 31,
|
|
Increase/
|
||||||||
(In millions)
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
Utility net revenues
(1)
:
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
377.5
|
|
|
$
|
334.0
|
|
|
$
|
43.5
|
|
Less: Cost of gas
|
124.7
|
|
|
82.4
|
|
|
42.3
|
|
|||
Revenue taxes
|
24.0
|
|
|
22.1
|
|
|
1.9
|
|
|||
Total utility net revenues
|
228.8
|
|
|
229.5
|
|
|
(0.7
|
)
|
|||
Operation and maintenance
|
78.4
|
|
|
81.2
|
|
|
(2.8
|
)
|
|||
Depreciation and amortization
|
34.1
|
|
|
30.6
|
|
|
3.5
|
|
|||
General taxes and other assessments
|
16.1
|
|
|
14.2
|
|
|
1.9
|
|
|||
Other expenses—net
|
1.8
|
|
|
0.8
|
|
|
1.0
|
|
|||
EBIT
|
$
|
98.4
|
|
|
$
|
102.7
|
|
|
$
|
(4.3
|
)
|
•
|
higher customer growth;
|
•
|
new base rates in Virginia and the District of Columbia; and
|
•
|
lower operation and maintenance expenses primarily due to lower employee benefit costs.
|
•
|
lower realized and unrealized margins associated with our asset optimization program;
|
•
|
higher depreciation and amortization expenses associated with the implementation of our new billing system in the second quarter of the prior year as well as growth in our utility plant.
|
Composition of Changes in Utility Net Revenues
|
|||
(In millions)
|
Increase/
(Decrease)
|
||
Customer growth
|
$
|
2.5
|
|
Estimated effects of weather and consumption patterns
|
0.6
|
|
|
Impact of rate cases
|
11.4
|
|
|
Asset optimization:
|
|
||
Realized margins
|
(1.6
|
)
|
|
Unrealized mark-to-market valuations
|
(16.9
|
)
|
|
Revenue taxes
|
1.9
|
|
|
Other
|
1.4
|
|
|
Total
|
$
|
(0.7
|
)
|
Composition of Changes in Operation and Maintenance Expenses
|
|||
(In millions)
|
Increase/
(Decrease)
|
||
Employee incentives, direct labor costs and benefits
|
$
|
(3.0
|
)
|
System safety and integrity
|
1.0
|
|
|
Support services
|
(2.0
|
)
|
|
Uncollectible accounts
|
1.7
|
|
|
Other
|
(0.5
|
)
|
|
Total
|
$
|
(2.8
|
)
|
Retail Energy-Marketing Financial and Statistical Data
|
|||||||||||
|
Three Months Ended December 31,
|
|
Increase/
|
||||||||
(In millions)
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
Operating Results
|
|
|
|
|
|
||||||
Gross margins
(1)
:
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
248.7
|
|
|
$
|
298.7
|
|
|
$
|
(50.0
|
)
|
Less: Cost of energy
|
228.2
|
|
|
254.2
|
|
|
(26.0
|
)
|
|||
Revenue taxes
|
3.0
|
|
|
2.7
|
|
|
0.3
|
|
|||
Total gross margins
|
17.5
|
|
|
41.8
|
|
|
(24.3
|
)
|
|||
Operation expenses
|
12.0
|
|
|
11.1
|
|
|
0.9
|
|
|||
Depreciation and amortization
|
0.3
|
|
|
0.3
|
|
|
—
|
|
|||
General taxes and other assessments
|
1.5
|
|
|
1.2
|
|
|
0.3
|
|
|||
Other income (expenses) — net
|
—
|
|
|
—
|
|
|
—
|
|
|||
EBIT
|
$
|
3.7
|
|
|
$
|
29.2
|
|
|
$
|
(25.5
|
)
|
Analysis of gross margins
(In millions)
|
|
|
|
|
|
||||||
Natural gas
|
|
|
|
|
|
||||||
Realized margins
|
$
|
8.7
|
|
|
$
|
7.7
|
|
|
$
|
1.0
|
|
Unrealized mark-to-market gains (losses)
|
(3.0
|
)
|
|
14.1
|
|
|
(17.1
|
)
|
|||
Total gross margins—natural gas
|
$
|
5.7
|
|
|
$
|
21.8
|
|
|
$
|
(16.1
|
)
|
Electricity
|
|
|
|
|
|
||||||
Realized margins
|
$
|
11.6
|
|
|
$
|
14.9
|
|
|
$
|
(3.3
|
)
|
Unrealized mark-to-market gains
|
0.2
|
|
|
5.1
|
|
|
(4.9
|
)
|
|||
Total gross margins—electricity
|
$
|
11.8
|
|
|
$
|
20.0
|
|
|
$
|
(8.2
|
)
|
Total gross margins
|
$
|
17.5
|
|
|
$
|
41.8
|
|
|
$
|
(24.3
|
)
|
Other Retail Energy-Marketing Statistics
|
|
|
|
|
|
||||||
Natural gas
|
|
|
|
|
|
||||||
Therm sales
(millions of therms)
|
198.8
|
|
|
220.5
|
|
|
(21.7
|
)
|
|||
Number of customers
(end of period)
|
113,500
|
|
|
126,400
|
|
|
(12,900
|
)
|
|||
Electricity
|
|
|
|
|
|
||||||
Electricity sales
(millions of kWhs)
|
2,801.4
|
|
|
3,103.2
|
|
|
(301.8
|
)
|
|||
Number of accounts
(end of period)
|
108,900
|
|
|
122,600
|
|
|
(13,700
|
)
|
(1)
|
We utilize gross margins to assist with the analysis of profitability for the retail energy-marketing segment. Gross margins are calculated as revenues less the associated cost of energy and applicable revenue taxes. We consider gross margins to be a better reflection of performance than gross revenues or gross energy costs for our retail energy-marketing segment because gross margins are a direct measure of the success of our core strategy for the sale of natural gas and electricity. Gross margins should not be considered an alternative to, or a more meaningful indicator of our operating performance than, operating income. Additionally, gross margins may not be comparable to similarly titled measures of other companies.
|
Commercial Energy Systems Segment Financial Information
|
|||||||||||
|
Three Months Ended December 31,
|
|
Increase/
|
||||||||
(In millions)
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
Operating revenues
|
$
|
20.1
|
|
|
$
|
14.9
|
|
|
$
|
5.2
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Cost of sales
|
8.0
|
|
|
6.0
|
|
|
2.0
|
|
|||
Operations
|
6.3
|
|
|
5.9
|
|
|
0.4
|
|
|||
Depreciation and amortization
|
6.6
|
|
|
4.4
|
|
|
2.2
|
|
|||
General taxes and other assessments
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|||
Operating expenses
|
$
|
21.1
|
|
|
$
|
16.4
|
|
|
$
|
4.7
|
|
Equity earnings
|
—
|
|
|
2.4
|
|
|
(2.4
|
)
|
|||
Other income
|
0.9
|
|
|
1.3
|
|
|
(0.4
|
)
|
|||
Less: Non-controlling interest
|
(5.7
|
)
|
|
(2.5
|
)
|
|
(3.2
|
)
|
|||
EBIT
|
$
|
5.6
|
|
|
$
|
4.7
|
|
|
$
|
0.9
|
|
EBIT by division:
|
|
|
|
|
|
||||||
Energy-efficiency contracting
|
$
|
(0.6
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(0.1
|
)
|
Commercial distributed generation
|
(0.5
|
)
|
|
1.2
|
|
|
(1.7
|
)
|
|||
Investments in distributed generation
|
6.7
|
|
|
4.0
|
|
|
2.7
|
|
|||
Total
|
$
|
5.6
|
|
|
$
|
4.7
|
|
|
$
|
0.9
|
|
Midstream Energy Services Segment Financial Information
|
|||||||||||
|
Three Months Ended December 31,
|
|
Increase/
|
||||||||
(In millions)
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
Operating revenues
(a)
|
$
|
17.7
|
|
|
$
|
(25.0
|
)
|
|
$
|
42.7
|
|
Operating expenses
|
1.4
|
|
|
1.4
|
|
|
—
|
|
|||
Equity earnings
|
5.9
|
|
|
(2.1
|
)
|
|
8.0
|
|
|||
EBIT
|
$
|
22.2
|
|
|
$
|
(28.5
|
)
|
|
$
|
50.7
|
|
Composition of Consolidated Interest Expense
|
|||||||||||
|
Three Months Ended December 31,
|
|
Increase/
|
||||||||
(In millions)
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
Interest on long-term debt
|
$
|
19.0
|
|
|
$
|
15.8
|
|
|
$
|
3.2
|
|
Interest on short-term debt
|
1.8
|
|
|
1.0
|
|
|
0.8
|
|
|||
Other net, including allowance for funds used during construction
|
(0.6
|
)
|
|
(0.6
|
)
|
|
—
|
|
|||
Total
|
$
|
20.2
|
|
|
$
|
16.2
|
|
|
$
|
4.0
|
|
Consolidated Income Taxes
|
|||||||||||
|
Three Months Ended December 31,
|
|
Increase/
|
||||||||
(In millions)
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
Income before income taxes
|
$
|
101.5
|
|
|
$
|
89.2
|
|
|
$
|
12.3
|
|
Income tax (benefit) expense
|
(31.1
|
)
|
|
33.5
|
|
|
(64.6
|
)
|
|||
Effective income tax rate
|
(30.6
|
)%
|
|
37.6
|
%
|
|
(68.2
|
)%
|
|||
Income tax (benefit) expense
|
(31.1
|
)
|
|
33.5
|
|
|
(64.6
|
)
|
|||
Less Discrete re-measurement impact of Tax Act
|
(52.9
|
)
|
|
—
|
|
|
(52.9
|
)
|
|||
Income tax expense excluding discrete re-measurement impact
|
21.8
|
|
|
33.5
|
|
|
(11.7
|
)
|
|||
Effective income tax rate excluding discrete re-measurement impact
|
21.5
|
%
|
|
37.6
|
%
|
|
(16.1
|
)%
|
•
|
Reduction in federal income tax rate to a flat rate of 21% effective January 1, 2018.
|
•
|
100% bonus depreciation for eligible assets (excluding public utility property) placed in service after September 27, 2017 and before January 1, 2023, with the percentage of bonus depreciation phasing out by 20 percent each year thereafter through December 31, 2026.
|
•
|
For the regulated utility, the re-measurement of certain deferred tax assets and liabilities at 21% results in a net amount of excess deferred taxes to be refunded to ratepayers. The Tax Act prescribes the Average Rate Assumption Method as the methodology for the refund of certain excess deferred amounts for regulated public utilities with vintage asset records.
|
•
|
For tax years beginning after December 31, 2017, interest deductions of unregulated trades or businesses are subject to a limitation of 30% of adjusted taxable income Interest deductions claimed by regulated public utilities are not limited under this provision. The rules for allocating interest between regulated and unregulated operations have not yet been issued.
|
|
WGL
|
|
Washington Gas
|
||||
Rating Service
|
Senior
Unsecured
|
|
Commercial
Paper
|
|
Senior
Unsecured
|
|
Commercial
Paper
|
Fitch Ratings
(a)
|
A-
|
|
F2
|
|
A+
|
|
F1
|
Moody’s Investors Service
(b)
|
A3
|
|
P-2
|
|
A1
|
|
P-1
|
Standard & Poor’s Ratings Services
(c)
|
A-
|
|
A-1
|
|
A
|
|
A-1
|
|
Three Months Ended December 31,
|
|
|
||||||||
(In millions)
|
2017
|
|
2016
|
|
Variance
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
(6.7
|
)
|
|
$
|
(90.5
|
)
|
|
$
|
83.8
|
|
Financing activities
|
$
|
265.8
|
|
|
$
|
314.9
|
|
|
$
|
(49.1
|
)
|
Investing activities
|
$
|
(203.5
|
)
|
|
$
|
(217.1
|
)
|
|
$
|
13.6
|
|
Credit Exposure to Wholesale Counterparties
(In millions)
|
||||||||||||||||||
Rating
(a)
|
Exposure
Before Credit
Collateral
(b)
|
|
Offsetting Credit
Collateral Held
(c)
|
|
Net
Exposure
|
|
Number of
Counterparties
Greater Than
10%
(d)
|
|
Net Exposure of
Counterparties
Greater Than 10%
|
|||||||||
Washington Gas
|
|
|
|
|
|
|
|
|
|
|||||||||
Investment Grade
|
$
|
37.3
|
|
|
$
|
—
|
|
|
$
|
37.3
|
|
|
1
|
|
|
$
|
16.0
|
|
Non-Investment Grade
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
No External Ratings
|
12.7
|
|
|
4.0
|
|
|
8.7
|
|
|
—
|
|
|
—
|
|
||||
WGL Energy Services
|
|
|
|
|
|
|
|
|
|
|||||||||
Investment Grade
|
$
|
0.9
|
|
|
$
|
0.1
|
|
|
$
|
0.8
|
|
|
2
|
|
|
$
|
0.8
|
|
Non-Investment Grade
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
No External Ratings
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|
1
|
|
|
0.1
|
|
||||
WGL Midstream
|
|
|
|
|
|
|
|
|
|
|||||||||
Investment Grade
|
$
|
71.8
|
|
|
$
|
3.0
|
|
|
$
|
68.8
|
|
|
1
|
|
|
$
|
15.9
|
|
Non-Investment Grade
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
No External Ratings
|
27.3
|
|
|
2.9
|
|
|
24.4
|
|
|
—
|
|
|
—
|
|
(a)
|
Investment grade is primarily determined using publicly available credit ratings of the counterparty. If the counterparty has provided a guarantee by a higher-rated entity (e.g., its parent), it is determined based upon the rating of it guarantor. Included in “Investment grade” are counterparties with a minimum Standard & Poor’s or Moody’s Investor Service rating of BBB- or Baa3, respectively.
|
(b)
|
Includes the net of all open positions on energy-related derivatives subject to mark-to-market accounting requirements and the net receivable/payable for the realized transactions. Amounts due from counterparties are offset by liabilities payable to those counterparties to the extent that contractual netting arrangements are in place.
|
(c)
|
Represents cash deposits and letters of credit received from counterparties, not adjusted for probability of default.
|
(d)
|
Using a percentage of the net exposure.
|
Regulated Utility Segment
Roll Forward of Energy-Related Derivatives
|
|||
(In millions)
|
|
||
Net assets (liabilities) at September 30, 2017
|
$
|
(121.3
|
)
|
Recorded to income
|
(2.6
|
)
|
|
Recorded to regulatory assets/liabilities
|
(5.8
|
)
|
|
Realized net settlement of derivatives
|
5.7
|
|
|
Net assets (liabilities) at December 31, 2017
|
$
|
(124.0
|
)
|
Regulated Utility Segment
Maturity of Net Assets (Liabilities) Associated with our Energy-Related Derivatives
|
|
|
|||||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
(In millions)
|
Remainder of 2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Level 1 — Quoted prices in active markets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Level 2 — Significant other observable inputs
|
0.9
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|||||||
Level 3 — Significant unobservable inputs
|
(19.3
|
)
|
|
(12.8
|
)
|
|
(9.4
|
)
|
|
(8.4
|
)
|
|
(9.5
|
)
|
|
(66.0
|
)
|
|
(125.4
|
)
|
|||||||
Total net assets (liabilities) associated with our energy-related derivatives
|
$
|
(18.4
|
)
|
|
$
|
(12.3
|
)
|
|
$
|
(9.4
|
)
|
|
$
|
(8.4
|
)
|
|
$
|
(9.5
|
)
|
|
$
|
(66.0
|
)
|
|
$
|
(124.0
|
)
|
Retail Energy-Marketing Segment
Changes in Fair Value of Energy-Related Derivatives
|
|||
(In millions)
|
|
||
Net assets (liabilities) at September 30, 2017
|
$
|
(11.8
|
)
|
Net fair value of contracts entered into during the period
|
(1.2
|
)
|
|
Other changes in net fair value
|
(1.7
|
)
|
|
Realized net settlement of derivatives
|
(1.2
|
)
|
|
Net assets (liabilities) at December 31, 2017
|
$
|
(15.9
|
)
|
Retail Energy-Marketing Segment
Roll Forward of Energy-Related Derivatives
|
|||
(In millions)
|
|
||
Net assets (liabilities) at September 30, 2017
|
$
|
(11.8
|
)
|
Recorded to income
|
(1.6
|
)
|
|
Recorded to accounts payable
|
(1.3
|
)
|
|
Realized net settlement of derivatives
|
(1.2
|
)
|
|
Net assets (liabilities) at December 31, 2017
|
$
|
(15.9
|
)
|
Midstream Energy Services Segment
Changes in Fair Value of Energy-Related Derivatives
|
|||
(In millions)
|
|
||
Net assets (liabilities) at September 30, 2017
|
$
|
11.2
|
|
Net fair value of contracts entered into during the period
|
4.7
|
|
|
Other changes in net fair value
|
11.6
|
|
|
Realized net settlement of derivatives
|
(24.2
|
)
|
|
Net assets (liabilities) at December 31, 2017
|
$
|
3.3
|
|
Midstream Energy Services Segment
Roll Forward of Energy-Related Derivatives
|
|||
(In millions)
|
|
||
Net assets (liabilities) at September 30, 2017
|
$
|
11.2
|
|
Recorded to income
|
16.3
|
|
|
Realized net settlement of derivatives
|
(24.2
|
)
|
|
Net assets (liabilities) at December 31, 2017
|
$
|
3.3
|
|
WGL Energy Services
Value-at-Risk
|
|||||||||||
(In thousands)
|
High
|
|
Low
|
|
Average
|
||||||
Natural Gas Portfolio
|
$
|
184.0
|
|
|
$
|
2.1
|
|
|
$
|
11.2
|
|
Electric Portfolio
|
60.2
|
|
|
21.9
|
|
|
38.6
|
|
|||
Total
|
$
|
244.2
|
|
|
$
|
24.0
|
|
|
$
|
49.8
|
|
Gas Deliveries, Weather and Meter Statistics
|
||||||||
|
Three Months Ended December 31,
|
|
Increase/
|
|||||
|
2017
|
|
2016
|
|
(Decrease)
|
|||
Gas Sales and Deliveries
(millions of therms)
|
|
|
|
|
|
|||
Firm
|
|
|
|
|
|
|||
Gas sold and delivered
|
282.7
|
|
|
265.2
|
|
|
17.5
|
|
Gas delivered for others
|
158.5
|
|
|
161.6
|
|
|
(3.1
|
)
|
Total firm
|
441.2
|
|
|
426.8
|
|
|
14.4
|
|
Interruptible
|
|
|
|
|
|
|||
Gas sold and delivered
|
0.6
|
|
|
0.8
|
|
|
(0.2
|
)
|
Gas delivered for others
|
71.6
|
|
|
64.2
|
|
|
7.4
|
|
Total interruptible
|
72.2
|
|
|
65.0
|
|
|
7.2
|
|
Electric generation—delivered for others
|
32.1
|
|
|
23.6
|
|
|
8.5
|
|
Total deliveries
|
545.5
|
|
|
515.4
|
|
|
30.1
|
|
Degree Days
|
|
|
|
|
|
|||
Actual
|
1,335
|
|
|
1,196
|
|
|
139
|
|
Normal
|
1,311
|
|
|
1,318
|
|
|
(7
|
)
|
Percent colder (warmer) than normal
|
1.8
|
%
|
|
(9.3
|
)%
|
|
n/a
|
|
Average active customer meters
|
1,166,700
|
|
|
1,148,900
|
|
|
17,800
|
|
New customer meters added
|
3,673
|
|
|
3,703
|
|
|
(30
|
)
|
Income Taxes
|
|||||||||
|
Three Months Ended December 31,
|
|
Increase/
|
||||||
(In millions)
|
2017
|
|
2016
|
|
(Decrease)
|
||||
Income before income taxes
|
82.8
|
|
|
89.5
|
|
|
$
|
(6.7
|
)
|
Income tax expense
|
24.9
|
|
|
34.0
|
|
|
(9.1
|
)
|
|
Effective income tax rate
|
30.1
|
%
|
|
38.0
|
%
|
|
(7.9
|
)%
|
|
Income tax expense
|
24.9
|
|
|
34.0
|
|
|
(9.1
|
)
|
|
Less Discrete re-measurement impact of Tax Act
|
6.2
|
|
|
—
|
|
|
6.2
|
|
|
Income tax expense excluding discrete re-measurement impact
|
18.7
|
|
|
34.0
|
|
|
(15.3
|
)
|
|
Effective income tax rate excluding discrete re-measurement impact
|
22.6
|
%
|
|
38.0
|
%
|
|
(15.4
|
)%
|
•
|
Price Risk Related to the Regulated Utility Segment
|
•
|
Price Risk Related to the Non-Utility Segments
|
•
|
Value-At-Risk
|
•
|
Weather Risk
|
•
|
Interest-Rate Risk
|
|
WGL HOLDINGS, INC.
and
WASHINGTON GAS LIGHT COMPANY (Co-registrants)
|
|
|
|
|
Date: February 7, 2018
|
/s/ William R. Ford
|
|
|
William R. Ford
|
|
|
Vice President and Chief Accounting Officer (signing on behalf of the Registrants and as Principal Accounting Officer of each of the Registrants)
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of WGL Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Terry D. McCallister
|
|
Terry D. McCallister
|
|
Chairman and Chief Executive Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of WGL Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Vincent L. Ammann, Jr.
|
|
Vincent L. Ammann, Jr.
|
|
Senior Vice President and Chief Financial Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Washington Gas Light Company;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Terry D. McCallister
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Terry D. McCallister
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Chairman and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Washington Gas Light Company;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Vincent L. Ammann, Jr.
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Vincent L. Ammann, Jr.
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Senior Vice President and Chief Financial Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.
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/s/ Terry D. McCallister
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Terry D. McCallister
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Chairman and Chief Executive Officer
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/s/ Vincent L. Ammann, Jr.
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Vincent L. Ammann, Jr.
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Senior Vice President and Chief Financial Officer
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