Atmos Energy 1998 Annual Report Download - page 36

On June 9,1998, the Kentucky Public Service Commission
issued an Order approving an Experimental Performance-Based
Ratemaking (“PBR”) mechanism related to gas procurement and
gas transportation activities filed by the Western Kentucky
Division. The PBR mechanism is incorporated into the Western
Kentucky Division’s Gas Cost Adjustment Clause.
The Georgia Public Service Commission and the Tennessee
Regulatory Authority have approved Weather Normalization
Adjustments (“WNA”). The WNAs, effective October through
May each year in Georgia, and November through April each
year in Tennessee, allow the United Cities Division to increase
the base rate portion of customers’ bills when weather is warmer
than normal and decrease the base rate when weather is colder
than normal. The net effect of the WNA was an increase/
(decrease) in revenues of $.7million, $2.6million and $(2.6)
million in 1998,1997 and 1996, respectively.
In May 1996, the Company filed to increase revenues by
approximately $7.7million for a portion of its Energas Division
service area, which includes approximately 200,000 customers
inside the city limits of 67 cities in West Texas. All cities either
approved, or took no action to reject, a settlement allowing a
$5.3million increase in annual revenues to be effective for bills
rendered on or after November 1,1996. In October 1996, the
Company filed a rate request with the Railroad Commission of
Texas to increase revenues by approximately $.5million for the
remaining 22,000 rural customers in West Texas. The rate request
was approved and became effective in April 1997.
4INCOME TAXES
The components of income tax expense for 1998,1997 and 1996
are as follows:
1998 1997 1996
(In thousands)
Current
Federal $31,694 $ 7,917 $13,641
State 4,503 1,000 2,515
Deferred
Federal (3,352) 4,807 7,024
State (616) 1,000 561
Investment tax credits (423) (426) (425)
$31,806 $14,298 $23,316
Deferred income taxes reflect the tax effect of differences
between the basis of assets and liabilities for book and tax pur-
poses. The tax effect of temporary differences that give rise to sig-
nificant components of the deferred tax liabilities and deferred
tax assets at September 30,1998 and 1997 are presented below:
1998 1997
(In thousands)
Deferred tax assets:
Costs expensed for book purposes
and capitalized for tax purposes $ 1,049 $ 641
Accruals not currently deductible
for tax purposes 7,189 12,398
Customer advances 3,730 3,160
Nonqualified benefit plans 11,297 9,118
Postretirement benefits 10,093 5,757
Unamortized investment tax credit 1,427 1,723
Regulatory liabilities 3,175 3,117
Other, net 2,838 3,758
Total deferred tax assets 40,798 39,672
Deferred tax liabilities:
Difference in net book value
and net tax value of assets (114,229) (102,038)
Pension funding (4,120) (4,190)
Gas cost adjustment 8,943 (6,568)
Regulatory assets (4,941) (8,673)
Other, net (6,664) (6,031)
Total deferred tax liabilities (121,011) (127,500)
Net deferred tax liabilities $ (80,213) $ (87,828)
SFAS No. 109 deferred accounts for
rate regulated entities (included
in other deferred credits) $ 13,475 $ 15,072
Reconciliations of the provisions for income taxes computed
at the statutory rate to the reported provisions for income taxes
for 1998,1997 and 1996 are set forth below:
1998 1997 1996
(In thousands)
Tax at statutory rate of 35% $30,474 $13,348 $22,564
Common stock dividends
deductible for tax reporting (695) (706) (684)
State taxes 2,526 1,300 2,000
Other, net (499) 356 (564)
Provision for income taxes $31,806 $14,298 $23,316
32 ATMOS ENERGY CORPORATION