Atmos Energy 2001 Annual Report Download - page 22

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16
adjustments current to recover the cost of natural gas that we purchase to deliver
to our customers.
Atmos has been successful in pursuing regulatory relief. During the past two years,
Atmos’ utility operations have been granted $20 million in additional revenues by six
regulatory commissions. In 2001, we concluded rate cases in Texas, Illinois, Colorado
and Virginia.
We will continue to seek regulatory approvals for changes that have significant
financial effects, such as weather-normalized rate structures, declining usage and
gas-supply hedging.
Because of the past winter’s high gas costs, we have undertaken a program to
hedge about half of our gas supply for the 2001–2002 heating season. In addition to
the gas we buy and place in storage during the summer months, we are using a variety
of financial derivatives to stabilize our future gas costs.
Our hedging measures will benefit our customers as well as Atmos by moderating
some of the negative effects of spiking gas costs. We’re gratified that all the regulatory
commissions in the states we serve have either approved outright or indicated broad
support for the objectives of our plan.
Future filings
Through approvals for marketing efforts and changes in rate design, we will seek to
overcome the financial effects of an industrywide trend of declining volume consumption,
owing to energy-efficient appliances, conservation and better-insulated houses and
commercial buildings.
We also will seek to recover extraordinary items, such as the significant increase
in bad debts resulting from the past winter’s high gas prices. In two states, we already
have been granted approval to recover a portion of these bad debts.
Although weather normalization is now in effect for 26 percent of our customer
base, much warmer-than-normal winter weather in recent years has hurt our financial
results. Our gas sales volumes are directly related to heating requirements during winter
weather. Rates that are weather-normalized help stabilize rates for our customers and
operating revenues for our utility business units. As a result, Atmos has a long-term
strategy to obtain weather-normalized rates in Texas, Louisiana and possibly other states.
To further mitigate the effects of adverse weather conditions on our earnings, we will
seek to shift more of our costs from the commodity to the base portion of rates.