What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2023-02-03 · 236 added, 109 removed, 555 unchanged (38% of the section changed)

4 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(Thousands of U.S.

26 unchanged sentences

Dividends on Common Stock ( 43,602 ) ( 41,608 ) ( 87,201 ) ( 83,212 )

Balance at December 31 $ 1,713,176 $ 1,281,963

Balance at March 31 $ 1,810,454 $ 1,407,683 $ 1,810,454 $ 1,407,683

Earnings Per Common Share:

10 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(Thousands of U.S.

1 unchanged sentence

Net Income Available for Common Stock $ 140,880 $ 167,328 $ 310,570 $ 299,720

Other Comprehensive Income, Before Tax:

Other Comprehensive Income (Loss), Before Tax:

Unrealized Gain (Loss) on Derivative Financial Instruments Arising During the Period

1 unchanged sentence

Reclassification Adjustment for Realized (Gains) Losses on Derivative Financial Instruments in Net Income 18,940 130,221 178,281 292,809

159,342 162,588

Other Comprehensive Income, Before Tax 456,935 325,720

Other Post-Retirement Adjustment for Regulatory Proceeding — ( 7,351 ) — ( 7,351 )

Other Comprehensive Income (Loss), Before Tax 329,484 ( 518,736 ) 786,418 ( 193,016 )

Income Tax Expense (Benefit) Related to Unrealized Gain (Loss) on Derivative Financial Instruments Arising During the Period

2 unchanged sentences

5,208 35,641 48,779 80,141

Income Tax Expense (Benefit) Related to Other Post-Retirement Adjustment for Regulatory Proceeding — ( 1,544 ) — ( 1,544 )

Income Taxes – Net 90,602 ( 141,508 ) 215,549 ( 52,359 )

Other Comprehensive Income 331,987 236,571

Comprehensive Income $ 501,676 $ 368,963

Other Comprehensive Income (Loss) 238,882 ( 377,228 ) 570,869 ( 140,657 )

Comprehensive Income (Loss) $ 379,762 $ ( 209,900 ) $ 881,439 $ 159,063

See Notes to Condensed Consolidated Financial Statements

74 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

(Thousands of U.S.

6 unchanged sentences

Stock-Based Compensation 11,286 10,631

Reduction of Other Post-Retirement Regulatory Liability — ( 18,533 )

Other 10,758 14,494

13 unchanged sentences

Capital Expenditures ( 496,362 ) ( 415,415 )

Net Proceeds from Sale of Oil and Gas Producing Properties — 13,525

Deposit Paid for Upstream Assets ( 12,700 ) —

Sale of Fixed Income Mutual Fund Shares in Grantor Trust 10,000 30,000

10 unchanged sentences

Cash, Cash Equivalents, and Restricted Cash at October 1 137,718 120,138

Cash, Cash Equivalents, and Restricted Cash at December 31 $ 246,075 $ 79,065

Cash, Cash Equivalents, and Restricted Cash at March 31 $ 71,533 $ 154,939

Supplemental Disclosure of Cash Flow Information

12 unchanged sentences

Earnings for Interim Periods.

The Company, in its opinion, has included all adjustments (which consist of only normally recurring adjustments, unless otherwise disclosed in this Form 10-Q) that are necessary for a fair statement of the results of operations for the reported periods.

The Company, in its opinion, has included all adjustments (which consist of only normally recurring adjustments, unless otherwise disclosed in this Quarterly Report on Form 10-Q) that are necessary for a fair statement of the results of operations for the reported periods.

The consolidated financial statements and notes thereto, included herein, should be read in conjunction with the financial statements and notes for the years ended September 30, 2022, 2021 and 2020 that are included in the Company's 2022 Form 10-K.

The consolidated financial statements for the year ended September 30, 2023 will be audited by the Company's independent registered public accounting firm after the end of the fiscal year.

The earnings for the three months ended December 31, 2022 should not be taken as a prediction of earnings for the entire fiscal year ending September 30, 2023.

The earnings for the six months ended March 31, 2023 should not be taken as a prediction of earnings for the entire fiscal year ending September 30, 2023.

Most of the business of the Utility segment is seasonal in nature and is influenced by weather conditions.

3 unchanged sentences

The components, as reported on the Company’s Consolidated Balance Sheets, of the total cash, cash equivalents, and restricted cash presented on the Statement of Cash Flows are as follows (in thousands):

Three Months Ended

December 31, 2022 Three Months Ended

December 31, 2021

December 31, 2022 Balance at October 1, 2022 Balance at

December 31, 2021 Balance at October 1, 2021

Six Months Ended

March 31, 2023 Six Months Ended

March 31, 2022

March 31, 2023 Balance at October 1, 2022 Balance at

March 31, 2022 Balance at October 1, 2021

Cash and Temporary Cash Investments $ 71,533 $ 46,048 $ 52,569 $ 31,528

9 unchanged sentences

Account balances are charged off against the allowance approximately twelve months after the account is final billed or when it is anticipated that the receivable will not be recovered.

Activity in the allowance for uncollectible accounts for the three months ended December 31, 2022 and 2021 are as follows (in thousands):

Balance at Beginning of Period Additions Charged to Costs and Expenses Discounts on Purchased Receivables Net Accounts Receivable Recovered (Written-Off) Balance at End of Period

Three Months Ended December 31, 2022

Activity in the allowance for uncollectible accounts for the six months ended March 31, 2023 and 2022 are as follows (in thousands):

Balance at Beginning of Period Additions Charged to Costs and Expenses Discounts on Purchased Receivables Net Accounts Receivable Written-Off Balance at End of Period

Six Months Ended March 31, 2023

Allowance for Uncollectible Accounts $ 40,228 $ 10,973 $ 916 $ ( 3,971 ) $ 48,146

Three Months Ended December 31, 2021

Six Months Ended March 31, 2022

Allowance for Uncollectible Accounts $ 31,639 $ 9,684 $ 790 $ ( 630 ) $ 41,483

2 unchanged sentences

Gas stored underground normally declines during the first and second quarters of the year and is replenished during the third and fourth quarters.

In the Utility segment, the current cost of replacing gas withdrawn from storage is recorded in the Consolidated Statements of Income and a reserve for gas replacement is recorded in the Consolidated Balance Sheets under the caption “Other Accruals and Current Liabilities.” Such reserve, which amounted to $ 17.7 million at December 31, 2022, is reduced to zero by September 30 of each year as the inventory is replenished.

In the Utility segment, the current cost of replacing gas withdrawn from storage is recorded in the Consolidated Statements of Income and a reserve for gas replacement is recorded in the Consolidated Balance Sheets under the caption “Other Accruals and Current Liabilities.” Such reserve, which amounted to $ 106.8 million at March 31, 2023, is reduced to zero by September 30 of each year as the inventory is replenished.

Property, Plant and Equipment.

3 unchanged sentences

The Company does not recognize any gain or loss on the sale or other disposition of oil and gas properties unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center.

The Company's capitalized costs relating to oil and gas producing activities, net of accumulated depreciation, depletion and amortization, were $ 2.1 billion and $ 1.9 billion at December 31, 2022 and September 30, 2022, respectively.

The Company's capitalized costs relating to oil and gas producing activities, net of accumulated depreciation, depletion and amortization, were $ 2.2 billion and $ 1.9 billion at March 31, 2023 and September 30, 2022, respectively.

Capitalized costs include costs related to unproved properties, which are excluded from amortization until proved reserves are found or it is determined that the unproved properties are impaired.

Such costs amounted to $ 67.5 million and $ 66.0 million at December 31, 2022 and September 30, 2022, respectively.

Such costs amounted to $ 73.0 million and $ 66.0 million at March 31, 2023 and September 30, 2022, respectively.

All costs related to unproved properties are reviewed quarterly to determine if impairment has occurred.

5 unchanged sentences

If capitalized costs, net of accumulated depreciation, depletion and amortization and related deferred income taxes, exceed the ceiling at the end of any quarter, a permanent non-cash impairment is required to be charged to earnings in that quarter.

At December 31, 2022, the ceiling exceeded the book value of the oil and gas properties by approximately $ 3.3 billion.

The estimated future net cash flows were decreased by $ 954.3 million for hedging under the ceiling test at December 31, 2022.

At March 31, 2023, the ceiling exceeded the book value of the oil and gas properties by approximately $ 2.7 billion.

The estimated future net cash flows were decreased by $ 936.8 million for hedging under the ceiling test at March 31, 2023.

The principal assets of the Utility, Pipeline and Storage and Gathering segments, consisting primarily of gas distribution pipelines, transmission pipelines, storage facilities, gathering lines and compressor stations, are recorded at historical cost.

There were no indications of any impairments to property, plant and equipment in the Utility, Pipeline and Storage and Gathering segments at December 31, 2022.

There were no indications of any impairments to property, plant and equipment in the Utility, Pipeline and Storage and Gathering segments at March 31, 2023.

Accumulated Other Comprehensive Loss.

The components of Accumulated Other Comprehensive Loss and changes for the three months ended December 31, 2022 and 2021, net of related tax effect, are as follows (amounts in parentheses indicate debits) (in thousands):

The components of Accumulated Other Comprehensive Loss and changes for the six months ended March 31, 2023 and 2022, net of related tax effect, are as follows (amounts in parentheses indicate debits) (in thousands):

Gains and Losses on Derivative Financial Instruments Funded Status of the Pension and Other Post-Retirement Benefit Plans Total

Three Months Ended December 31, 2022

Balance at October 1, 2022 $ ( 572,163 ) $ ( 53,570 ) $ ( 625,733 )

Three Months Ended March 31, 2023

Balance at January 1, 2023 $ ( 240,176 ) $ ( 53,570 ) $ ( 293,746 )

Other Comprehensive Gains and Losses Before Reclassifications

1 unchanged sentence

Amounts Reclassified From Other Comprehensive Income 13,732 — 13,732

Balance at December 31, 2022 $ ( 240,176 ) $ ( 53,570 ) $ ( 293,746 )

Three Months Ended December 31, 2021

Balance at March 31, 2023 $ ( 1,294 ) $ ( 53,570 ) $ ( 54,864 )

Six Months Ended March 31, 2023

Balance at October 1, 2022 $ ( 572,163 ) $ ( 53,570 ) $ ( 625,733 )

2 unchanged sentences

Amounts Reclassified From Other Comprehensive Income 129,502 — 129,502

Balance at December 31, 2021 $ ( 213,391 ) $ ( 63,635 ) $ ( 277,026 )

Balance at March 31, 2023 $ ( 1,294 ) $ ( 53,570 ) $ ( 54,864 )

Three Months Ended March 31, 2022

Balance at January 1, 2022 $ ( 213,391 ) $ ( 63,635 ) $ ( 277,026 )

Other Comprehensive Gains and Losses Before Reclassifications

( 466,001 ) — ( 466,001 )

Amounts Reclassified From Other Comprehensive Loss 94,580 — 94,580

Other Post-Retirement Adjustment for Regulatory Proceeding — ( 5,807 ) ( 5,807 )

Balance at March 31, 2022 $ ( 584,812 ) $ ( 69,442 ) $ ( 654,254 )

Six Months Ended March 31, 2022

Balance at October 1, 2021 $ ( 449,962 ) $ ( 63,635 ) $ ( 513,597 )

Other Comprehensive Gains and Losses Before Reclassifications

( 347,518 ) — ( 347,518 )

Amounts Reclassified From Other Comprehensive Loss 212,668 — 212,668

Other Post-Retirement Adjustment for Regulatory Proceeding — ( 5,807 ) ( 5,807 )

Balance at March 31, 2022 $ ( 584,812 ) $ ( 69,442 ) $ ( 654,254 )

During the quarter ended March 31, 2022, the PaPUC concluded a regulatory proceeding that addressed the recovery of other post-employment benefit (“OPEB”) expenses in Distribution Corporation's Pennsylvania service territory.

As a result of that proceeding, Distribution Corporation suspended regulatory accounting for OPEB expenses in Pennsylvania and a regulatory deferral of $ 7.4 million ($ 5.8 million after-tax) related to the funded status of Distribution Corporation’s other post-retirement benefit plans in Pennsylvania was reclassified to accumulated other comprehensive loss.

For further discussion of this regulatory proceeding, refer to Note 11 — Regulatory Matters under the heading “Pennsylvania Jurisdiction.”

Reclassifications Out of Accumulated Other Comprehensive Loss.

The details about the reclassification adjustments out of accumulated other comprehensive loss for the three months ended December 31, 2022 and 2021 are as follows (amounts in parentheses indicate debits to the income statement) (in thousands):

The details about the reclassification adjustments out of accumulated other comprehensive loss for the six months ended March 31, 2023 and 2022 are as follows (amounts in parentheses indicate debits to the income statement) (in thousands):

Details About Accumulated Other Comprehensive Loss Components Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Statement Where Net Income is Presented

Three Months Ended

March 31, Six Months Ended March 31,

2023 2022 2023 2022

Gains (Losses) on Derivative Financial Instrument Cash Flow Hedges:

6 unchanged sentences

The components of the Company’s Other Current Assets are as follows (in thousands):

At December 31, 2022 At September 30, 2022

At March 31, 2023 At September 30, 2022

Prepayments $ 14,821 $ 17,757

5 unchanged sentences

The components of the Company’s Other Accruals and Current Liabilities are as follows (in thousands):

At December 31, 2022 At September 30, 2022

At March 31, 2023 At September 30, 2022

Accrued Capital Expenditures $ 39,232 $ 64,720

9 unchanged sentences

For purposes of determining earnings per common share, the potentially dilutive securities the Company had outstanding were restricted stock units and performance shares.

For the quarter ended December 31, 2022, the diluted weighted average shares outstanding shown on the Consolidated Statements of Income reflects the potential dilution as a result of these securities as determined using the Treasury Stock Method.

For the quarter and six months ended March 31, 2023, the diluted weighted average shares outstanding shown on the Consolidated Statements of Income reflects the potential dilution as a result of these securities as determined using the Treasury Stock Method.

Restricted stock units and performance shares that are antidilutive are excluded from the calculation of diluted earnings per common share.

There were 1,987 securities and 8,732 securities excluded as being antidilutive for the quarters ended December 31, 2022 and December 31, 2021, respectively.

There were 9,909 securities and 4,094 securities

excluded as being antidilutive for the quarter and six months ended March 31, 2023, respectively.

There were 13,815 securities and 11,883 securities excluded as being antidilutive for the quarter and six months ended March 31, 2022, respectively.

Stock-Based Compensation.

The Company granted 202,259 performance shares during the quarter ended December 31, 2022.

The weighted average fair value of such performance shares was $ 64.28 per share for the quarter ended December 31, 2022.

The Company granted 202,259 performance shares during the six months ended March 31, 2023.

The weighted average fair value of such performance shares was $ 64.28 per share for the six months ended March 31, 2023.

Performance shares are an award constituting units denominated in common stock of the Company, the number of which may be adjusted over a performance cycle based upon the extent to which performance goals have been satisfied.

1 unchanged sentence

The performance shares do not entitle the participant to receive dividends during the vesting period.

The performance shares granted during the quarter ended December 31, 2022 include awards that must meet a performance goal related to either relative return on capital over a three-year performance cycle ("ROC performance shares"), methane intensity and greenhouse gas emissions reductions over a three-year performance cycle ("ESG performance shares") or relative shareholder return over a three-year performance cycle ("TSR performance shares").

The performance shares granted during the six months ended March 31, 2023 include awards that must meet a performance goal related to either relative return on capital over a three-year performance cycle ("ROC performance shares"), methane intensity and greenhouse gas emissions reductions over a three-year performance cycle ("ESG performance shares") or relative shareholder return over a three-year performance cycle ("TSR performance shares").

The performance goal related to the ROC performance shares over the three-year performance cycle is the Company’s total return on capital relative to the total return on capital of other companies in a group selected by the Compensation Committee (“Report Group”).

14 unchanged sentences

This price is multiplied by the number of TSR performance shares awarded, the result of which is recorded as compensation expense over the vesting term of the award.

The Company granted 115,073 restricted stock units during the quarter ended December 31, 2022.

The weighted average fair value of such restricted stock units was $ 59.69 per share for the quarter ended December 31, 2022.

The Company granted 115,073 restricted stock units during the six months ended March 31, 2023.

The weighted average fair value of such restricted stock units was $ 59.69 per share for the six months ended March 31, 2023.

Restricted stock units represent the right to receive shares of common stock of the Company (or the equivalent value in cash or a combination of cash and shares of common stock of the Company, as determined by the Company) at the end of a specified time period.

3 unchanged sentences

Note 2 – Asset Acquisitions and Divestitures

On March 22, 2023, the Company entered into a purchase and sale agreement to acquire certain upstream assets located in Potter and Tioga counties, Pennsylvania from SWN Production Company, LLC effective as of January 1, 2023 for total consideration of $ 127.0 million, subject to certain purchase price adjustments at closing.

These assets are contiguous with existing Company-owned upstream assets in Pennsylvania.

The Company made a deposit of $ 12.7 million at the signing of the purchase and sale agreement and intends to finance the remaining acquisition cost using short and/or long-term borrowings.

The transaction is expected to close before the end of June 2023.

On June 30, 2022, the Company completed the sale of Seneca’s California assets, all of which are in the Exploration and Production segment, to Sentinel Peak Resources California LLC for a total sale price of $ 253.5 million, consisting of $ 240.9 million in cash and contingent consideration valued at $ 12.6 million at closing.

8 unchanged sentences

Note 3 – Revenue from Contracts with Customers

The following tables provide a disaggregation of the Company's revenues for the three months ended December 31, 2022 and 2021, presented by type of service from each reportable segment.

Quarter Ended December 31, 2022 (Thousands)

The following tables provide a disaggregation of the Company's revenues for the quarter and six months ended March 31, 2023 and 2022, presented by type of service from each reportable segment.

Quarter Ended March 31, 2023 (Thousands)

Revenues By Type of Service Exploration and Production Pipeline and Storage Gathering Utility All Other Corporate and Intersegment Eliminations Total Consolidated

13 unchanged sentences

Total Revenues $ 244,552 $ 95,103 $ 56,981 $ 407,116 $ — $ ( 86,491 ) $ 717,261

Quarter Ended December 31, 2021 (Thousands)

Six Months Ended March 31, 2023 (Thousands)

Revenues By Type of Service Exploration and Production Pipeline and Storage Gathering Utility All Other Corporate and Intersegment Eliminations Total Consolidated

13 unchanged sentences

Total Revenues $ 521,525 $ 192,759 $ 113,394 $ 718,796 $ — $ ( 170,355 ) $ 1,376,119

Quarter Ended March 31, 2022 (Thousands)

Revenues By Type of Service Exploration and Production Pipeline and Storage Gathering Utility All Other Corporate and Intersegment Eliminations Total Consolidated

Production of Natural Gas $ 335,961 $ — $ — $ — $ — $ — $ 335,961

Production of Crude Oil 49,613 — — — — — 49,613

Natural Gas Processing 985 — — — — — 985

Natural Gas Gathering Service — — 52,604 — — ( 49,447 ) 3,157

Natural Gas Transportation Service — 72,671 — 41,483 — ( 18,233 ) 95,921

Natural Gas Storage Service — 21,451 — — — ( 9,253 ) 12,198

Natural Gas Residential Sales — — — 287,027 — — 287,027

Natural Gas Commercial Sales — — — 43,193 — — 43,193

Natural Gas Industrial Sales — — — 2,193 — — 2,193

Other 5,305 1,275 — ( 4,147 ) — ( 143 ) 2,290

Total Revenues from Contracts with Customers 391,864 95,397 52,604 369,749 — ( 77,076 ) 832,538

Alternative Revenue Programs — — — ( 547 ) — — ( 547 )

Derivative Financial Instruments ( 130,271 ) — — — — — ( 130,271 )

Total Revenues $ 261,593 $ 95,397 $ 52,604 $ 369,202 $ — $ ( 77,076 ) $ 701,720

Six Months Ended March 31, 2022 (Thousands)

Revenues By Type of Service Exploration and Production Pipeline and Storage Gathering Utility All Other Corporate and Intersegment Eliminations Total Consolidated

Production of Natural Gas $ 697,242 $ — $ — $ — $ — $ — $ 697,242

Production of Crude Oil 91,984 — — — — — 91,984

Natural Gas Processing 2,013 — — — — — 2,013

Natural Gas Gathering Service — — 104,829 — — ( 97,627 ) 7,202

Natural Gas Transportation Service — 138,940 — 69,257 — ( 35,858 ) 172,339

Natural Gas Storage Service — 42,251 — — — ( 18,278 ) 23,973

Natural Gas Residential Sales — — — 466,038 — — 466,038

Natural Gas Commercial Sales — — — 67,191 — — 67,191

Natural Gas Industrial Sales — — — 3,340 — — 3,340

Other 7,451 2,556 — ( 6,147 ) 6 ( 293 ) 3,573

Total Revenues from Contracts with Customers 798,690 183,747 104,829 599,679 6 ( 152,056 ) 1,534,895

Alternative Revenue Programs — — — 6,281 — — 6,281

Derivative Financial Instruments ( 292,899 ) — — — — — ( 292,899 )

Total Revenues $ 505,791 $ 183,747 $ 104,829 $ 605,960 $ 6 $ ( 152,056 ) $ 1,248,277

The Company records revenue related to its derivative financial instruments in the Exploration and Production segment.

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The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following table sets forth, by level within the fair value hierarchy, the Company's financial assets and liabilities (as applicable) that were accounted for at fair value on a recurring basis as of December 31, 2022 and September 30, 2022.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Recurring Fair Value Measures At fair value as of December 31, 2022

Recurring Fair Value Measures At fair value as of March 31, 2023

(Thousands of Dollars) Level 1 Level 2 Level 3 Netting

1 unchanged sentence

Cash Equivalents – Money Market Mutual Funds $ 53,519 $ — $ — $ — $ 53,519

Hedging Collateral Deposits 1,600 — — — 1,600

Derivative Financial Instruments:

35 unchanged sentences

Derivative Financial Instruments

The derivative financial instruments reported in Level 2 at December 31, 2022 and September 30, 2022 include natural gas price swap agreements, natural gas no cost collars, and foreign currency contracts, all of which are used in the Company’s Exploration and Production segment.

Hedging collateral deposits of $ 1.6 million (at December 31, 2022) and $ 91.7 million (at September 30, 2022), which were associated with the price swap agreements, no cost collars and foreign currency contracts, have been reported in Level 1.

The derivative financial instruments reported in Level 2 at March 31, 2023 and September 30, 2022 include natural gas price swap agreements, natural gas no cost collars, and foreign currency contracts, all of which are used in the Company’s

Exploration and Production segment.

Hedging collateral deposits of $ 91.7 million at September 30, 2022, which were associated with the price swap agreements, no cost collars and foreign currency contracts, have been reported in Level 1.

The fair value of the Level 2 price swap agreements and no cost collars is based on an internal cash flow model that uses observable inputs (i.e.

2 unchanged sentences

The authoritative guidance for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities.

At December 31, 2022, the Company determined that nonperformance risk associated with the price swap agreements, no cost collars and foreign currency contracts would have no material impact on its financial position or results of operation.

At March 31, 2023, the Company determined that nonperformance risk associated with the price swap agreements, no cost collars and foreign currency contracts would have no material impact on its financial position or results of operation.

To assess nonperformance risk, the Company considered information such as any applicable collateral posted, master netting arrangements, and applied a market-based method by using the counterparty's (assuming the derivative is in a gain position) or the Company’s (assuming the derivative is in a loss position) credit default swaps rates.

Derivative financial instruments reported in Level 2 at December 31, 2022 also includes the contingent consideration associated with the sale of the Exploration and Production segment's California assets on June 30, 2022, which is discussed at Note 2 – Asset Acquisitions and Divestitures and at Note 5 – Financial Instruments.

Derivative financial instruments reported in Level 2 at March 31, 2023 also includes the contingent consideration associated with the sale of the Exploration and Production segment's California assets on June 30, 2022, which is discussed at Note 2 – Asset Acquisitions and Divestitures and at Note 5 – Financial Instruments.

The fair value of the contingent consideration was calculated using a Monte Carlo simulation model that uses observable inputs, including the ICE Brent closing price as of the valuation date, initial and max trigger price, volatility, risk free rate, time of maturity and counterparty risk.

For the quarters ended December 31, 2022 and December 31, 2021, there were no assets or liabilities measured at fair value and classified as Level 3.

For the quarters ended March 31, 2023 and March 31, 2022, there were no assets or liabilities measured at fair value and classified as Level 3.

Note 5 – Financial Instruments

2 unchanged sentences

Based on these criteria, the fair market value of long-term debt, including current portion, was as follows (in thousands):

December 31, 2022 September 30, 2022

March 31, 2023 September 30, 2022

Amount Fair Value Carrying

11 unchanged sentences

The components of the Company's Other Investments are as follows (in thousands):

At December 31, 2022 At September 30, 2022

At March 31, 2023 At September 30, 2022

Life Insurance Contracts $ 42,745 $ 42,171

8 unchanged sentences

The Company uses derivative financial instruments to manage commodity price risk in the Exploration and Production segment.

The Company enters into over-the-counter no cost collars and over-the-counter swap agreements for natural gas to manage the price risk associated with forecasted sales of natural gas.

The Company enters into over-the-counter no cost collar and swap agreements to manage the price risk associated with forecasted sales of natural gas.

In addition, the Company also enters into foreign exchange forward contracts to manage the risk of currency fluctuations associated with transportation costs denominated in Canadian currency in the Exploration and Production segment.

5 unchanged sentences

Changes in the fair value of this contingent consideration are marked-to-market each reporting period, with changes in fair value recognized in Other Income (Deductions) on the Consolidated Statement of Income.

The fair value of this contingent

consideration was estimated to be $ 8.4 million and $ 8.2 million at December 31, 2022 and September 30, 2022, respectively.

A $ 0.2 million mark-to-market adjustment was recorded during the quarter ended December 31, 2022.

The Company has presented its net derivative assets and liabilities as “Fair Value of Derivative Financial Instruments” on its Consolidated Balance Sheets at December 31, 2022 and September 30, 2022.

The fair value of this contingent consideration was estimated to be $ 5.9 million and $ 8.2 million at March 31, 2023 and September 30, 2022, respectively.

A $ 2.5 million mark-to-market adjustment was recorded during the quarter ended March 31, 2023.

A $ 2.3 million mark-to-market adjustment was recorded during the six months ended March 31, 2023.

The Company has presented its net derivative assets and liabilities as “Fair Value of Derivative Financial Instruments” on its Consolidated Balance Sheets at March 31, 2023 and September 30, 2022.

Cash Flow Hedges

For derivative financial instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and reclassified into earnings in the period or periods during which the hedged transaction affects earnings.

As of December 31, 2022, the Company had 389.0 Bcf of natural gas commodity derivative contracts (swaps and no cost collars) outstanding.

As of December 31, 2022, the Company was hedging a total of $ 54.7 million of forecasted transportation costs denominated in Canadian dollars with foreign currency forward contracts.

As of December 31, 2022, the Company had $ 327.8 million ($ 240.2 million after-tax) of net hedging losses included in the accumulated other comprehensive income (loss) balance.

It is expected that $ 180.6 million ($ 132.4 million after-tax) of such unrealized losses will be reclassified into the Consolidated Statement of Income within the next 12 months as the underlying hedged transactions are recorded in earnings.

As of March 31, 2023, the Company had 462.9 Bcf of natural gas commodity derivative contracts (swaps and no cost collars) outstanding.

As of March 31, 2023, the Company was hedging a total of $ 51.0 million of forecasted transportation costs denominated in Canadian dollars with foreign currency forward contracts.

As of March 31, 2023, the Company had $ 1.3 million of net hedging losses after taxes included in the accumulated other comprehensive income (loss) balance.

It is expected that $ 37.4 million of unrealized gains after taxes will be reclassified into the Consolidated Statement of Income within the next 12 months as the underlying hedged transactions are recorded in earnings.

The Effect of Derivative Financial Instruments on the Statement of Financial Performance for the

Three Months Ended December 31, 2022 and 2021 (Thousands of Dollars)

Three Months Ended March 31, 2023 and 2022 (Thousands of Dollars)

Derivatives in Cash Flow Hedging Relationships Amount of Derivative Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on

2 unchanged sentences

Three Months Ended

December 31, Location of Derivative Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet into the Consolidated Statement of Income Amount of Derivative Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet into the Consolidated Statement of Income for the

March 31, Location of Derivative Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet into the Consolidated Statement of Income Amount of Derivative Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet into the Consolidated Statement of Income for the

Three Months Ended

3 unchanged sentences

Total $ 310,544 $ ( 641,606 ) $ ( 18,940 ) $ ( 130,221 )

The Effect of Derivative Financial Instruments on the Statement of Financial Performance for the

Six Months Ended March 31, 2023 and 2022 (Thousands of Dollars)

Derivatives in Cash Flow Hedging Relationships Amount of Derivative Gain or

(Loss) Recognized in Other

Comprehensive Income (Loss) on

the Consolidated Statement of

Comprehensive Income (Loss)

Six Months Ended

(Loss) Reclassified from

Accumulated Other

Comprehensive Income (Loss) on

the Consolidated Balance Sheet

into the Consolidated Statement of

Income for the

Six Months Ended

2023 2022 2023 2022

Commodity Contracts $ 607,743 $ ( 479,114 ) Operating Revenue $ ( 177,930 ) $ ( 292,899 )

Foreign Currency Contracts 394 640 Operating Revenue ( 351 ) 90

Total $ 608,137 $ ( 478,474 ) $ ( 178,281 ) $ ( 292,809 )

The Company may be exposed to credit risk on any of the derivative financial instruments that are in a gain position.

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The majority of the Company’s counterparties are financial institutions and energy traders.

The Company has over the-counter swap positions, no cost collars and applicable foreign currency forward contracts with fifteen counterparties of which one is in a net gain position.

The Company had $ 3.8 million of credit exposure with the counterparty in a gain position at December 31, 2022.

As of December 31, 2022, no collateral was received from the counterparties by the Company.

The Company has over the-counter swap positions, no cost collars and applicable foreign currency forward contracts with sixteen counterparties of which eight are in a net gain position.

On average, the Company had $ 4.6 million of credit exposure per counterparty in a gain position at March 31, 2023.

The maximum credit exposure per counterparty in a gain position at March 31, 2023 was $ 11.1 million.

As of March 31, 2023, no collateral was received from the counterparties by the Company.

The Company's gain position on such derivative financial instruments had not exceeded the established thresholds at which the counterparties would be required to post collateral, nor had the counterparties' credit ratings declined to levels at which the counterparties were required to post collateral.

As of December 31, 2022, thirteen of the fifteen counterparties to the Company’s outstanding derivative financial contracts (specifically the over-the-counter swaps, over-the-counter no cost collars and applicable foreign currency forward contracts) had a common credit-risk related contingency feature.

In the event the Company’s credit rating increases or falls below a certain threshold (applicable debt ratings), the available credit extended to the Company would either increase or

As of March 31, 2023, fourteen of the sixteen counterparties to the Company’s outstanding derivative financial contracts (specifically the over-the-counter swaps, over-the-counter no cost collars and applicable foreign currency forward contracts) had a common credit-risk related contingency feature.

In the event the Company’s credit rating increases or falls below a certain threshold (applicable debt ratings), the available credit extended to the Company would either increase or decrease.

A decline in the Company’s credit rating, in and of itself, would not cause the Company to be required to post or increase the level of its hedging collateral deposits (in the form of cash deposits, letters of credit or treasury debt instruments).

If the Company’s outstanding derivative financial contracts with a credit-risk contingency feature were in a liability position (or if the liability were larger) and/or the Company’s credit rating declined, then hedging collateral deposits or an increase to such deposits could be required.

At December 31, 2022, the fair market value of the derivative financial instrument liabilities with a credit-risk related contingency feature was $ 224.9 million according to the Company’s internal model (discussed in Note 4 – Fair Value Measurements), and the Company posted $ 1.6 million in hedging collateral deposits.

If the Company’s outstanding derivative financial contracts with a credit-risk contingency feature were in a liability position (or

if the liability were larger) and/or the Company’s credit rating declined, then hedging collateral deposits or an increase to such deposits could be required.

At March 31, 2023, the fair market value of the derivative financial instrument liabilities with a credit-risk related contingency feature was $ 7.1 million according to the Company’s internal model (discussed in Note 4 – Fair Value Measurements), and no hedging collateral deposits were required to be posted by the Company at March 31, 2023.

Depending on the movement of commodity prices in the future, it is possible that these liability positions could swing into asset positions, at which point the Company would be exposed to credit risk on its derivative financial instruments.

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Note 6 – Income Taxes

The effective tax rate was 25.3 % for both of the quarters ended December 31, 2022 and December 31, 2021.

During the quarter ended December 31, 2022, the Company was unable to utilize the Enhanced Oil Recovery tax credit, which it was able to utilize during the quarter ended December 31, 2021.

However, the effective tax rate remained the same for both periods as the Company continues to record a benefit of the reduction in the Pennsylvania state income tax rate that was enacted in July 2022.

The effective tax rates for the quarters ended March 31, 2023 and March 31, 2022 were 26.2 % and 25.6 %, respectively.

The effective tax rates for the six months ended March 31, 2023 and March 31, 2022 were 25.7 % and 25.5 % , respectively.

During the quarter and six months ended March 31, 2022, the Company was able to utilize the Enhanced Oil Recovery tax credit, which was not available during the quarter and six months ended March 31, 2023 due to the sale of its California properties.

On April 14, 2023, the IRS issued guidance that provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain, replace, or improve natural gas transmission and distribution property must be capitalized.

The Company is currently analyzing this guidance to determine the potential impact on the financial statements.

Note 7 – Capitalization

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(Thousands, except per share amounts)

Balance at January 1, 2023 91,787 $ 91,787 $ 1,025,639 $ 1,713,176 $ ( 293,746 )

Net Income Available for Common Stock 140,880

Dividends Declared on Common Stock ($ 0.475 Per Share) ( 43,602 )

Other Comprehensive Income, Net of Tax 238,882

Share-Based Payment Expense (1)

Common Stock Issued Under Stock and Benefit Plans 8 8 502

Balance at March 31, 2023 91,795 $ 91,795 $ 1,031,341 $ 1,810,454 $ ( 54,864 )

Balance at October 1, 2022 91,478 $ 91,478 $ 1,027,066 $ 1,587,085 $ ( 625,733 )

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Common Stock Issued (Repurchased) Under Stock and Benefit Plans 317 317 ( 6,043 )

Balance at December 31, 2022 91,787 $ 91,787 $ 1,025,639 $ 1,713,176 $ ( 293,746 )

Balance at March 31, 2023 91,795 $ 91,795 $ 1,031,341 $ 1,810,454 $ ( 54,864 )

Balance at January 1, 2022 91,437 $ 91,437 $ 1,013,821 $ 1,281,963 $ ( 277,026 )

Net Income Available for Common Stock 167,328

Dividends Declared on Common Stock ($ 0.455 Per Share) ( 41,608 )

Other Comprehensive Loss, Net of Tax ( 377,228 )

Share-Based Payment Expense (1)

Common Stock Issued Under Stock and Benefit Plans 12 12 271

Balance at March 31, 2022 91,449 $ 91,449 $ 1,018,784 $ 1,407,683 $ ( 654,254 )

Balance at October 1, 2021 91,182 $ 91,182 $ 1,017,446 $ 1,191,175 $ ( 513,597 )

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Dividends Declared on Common Stock ($ 0.91 Per Share) ( 83,212 )

Other Comprehensive Income, Net of Tax 236,571

Other Comprehensive Loss, Net of Tax ( 140,657 )

Share-Based Payment Expense (1)

Common Stock Issued (Repurchased) Under Stock and Benefit Plans

Balance at December 31, 2021 91,437 $ 91,437 $ 1,013,821 $ 1,281,963 $ ( 277,026 )

267 267 ( 8,394 )

Balance at March 31, 2022 91,449 $ 91,449 $ 1,018,784 $ 1,407,683 $ ( 654,254 )

(1) Paid in Capital includes compensation costs associated with performance shares and/or restricted stock awards.

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Common Stock.

During the three months ended December 31, 2022, the Company issued 12,055 original issue shares of common stock as a result of SARs exercises, 113,531 original issue shares of common stock for restricted stock units that vested and 278,687 original issue shares of common stock for performance shares that vested.

The Company also issued 7,230 original issue shares of common stock to the non-employee directors of the Company who receive compensation under the Company’s 2009 Non-Employee Director Equity Compensation Plan, including the reinvestment of dividends for certain non-

employee directors who elected to defer their shares pursuant to the dividend reinvestment feature of the Company's Deferred Compensation Plan for Directors and Officers during the three months ended December 31, 2022.

During the six months ended March 31, 2023, the Company issued 12,055 original issue shares of common stock as a result of SARs exercises, 113,531 original issue shares of common stock for restricted stock units that vested and 278,687 original issue shares of common stock for performance shares that vested.

The Company also issued 14,680 original issue shares of common stock to the non-employee directors of the Company who receive compensation under the Company’s 2009 Non-Employee Director Equity Compensation Plan, including the reinvestment of dividends for certain non-employee directors who elected to defer their shares pursuant to the dividend reinvestment feature of the Company's Deferred Compensation Plan for Directors and Officers (the "DCP") during the six months ended March 31, 2023.

In addition, the Company issued 824 original issue shares of common stock to officers of the Company who elected to defer their shares pursuant to the dividend reinvestment feature of the Company's DCP Plan during the six months ended March 31, 2023.

Holders of stock-based compensation awards will often tender shares of common stock to the Company for payment of applicable withholding taxes.

During the three months ended December 31, 2022, 102,761 shares of common stock were tendered to the Company for such purposes.

During the six months ended March 31, 2023, 102,761 shares of common stock were tendered to the Company for such purposes.

The Company considers all shares tendered as cancelled shares restored to the status of authorized but unissued shares, in accordance with New Jersey law.

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The Company elected to draw $ 250.0 million under the facility on October 27, 2022.

The Company is using the proceeds for general corporate purposes, which included the redemption in November 2022 of $ 150.0 million of the Company's outstanding long-term debt maturing in March 2023.

The Company used the proceeds for general corporate purposes, which included using $ 150.0 million for the November 2022 redemption of a portion of the Company's outstanding long-term debt with a maturity date in March 2023.

Current Portion of Long-Term Debt.

The Current Portion of Long-Term Debt at December 31, 2022 consists of $ 350.0 million of 3.75 % notes and $ 49.0 million of 7.395 % notes that mature in March 2023.

None of the Company's long-term debt as of March 31, 2023 had a maturity date within the following twelve-month period.

The Current Portion of Long-Term Debt at September 30, 2022 consisted of $ 500.0 million of 3.75 % notes and $ 49.0 million of 7.395 % notes.

The Company redeemed $ 150.0 million of the 3.75 % notes on November 25, 2022 using a portion of the proceeds from short-term borrowings, as discussed above.

In March 2023, the Company redeemed the remaining $ 350.0 million of the 3.75 % notes as well as the $ 49.0 million of 7.395 % notes.

Note 8 – Commitments and Contingencies

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It is the Company’s policy to accrue estimated environmental clean-up costs (investigation and remediation) when such amounts can reasonably be estimated and it is probable that the Company will be required to incur such costs.

At December 31, 2022, the Company has estimated its remaining clean-up costs related to former manufactured gas plant sites will be approximately $ 4.0 million.

The Company's liability for such clean-up costs has been recorded in Other Liabilities on the Consolidated Balance Sheet at December 31, 2022.

The Company expects to recover its environmental clean-up costs through rate recovery over a period of approximately one year and is currently not aware of any material additional exposure to environmental liabilities.

At March 31, 2023, the Company has estimated its remaining clean-up costs related to former manufactured gas plant sites will be approximately $ 3.8 million.

The Company's liability for such clean-up costs has been recorded in Other Liabilities on the Consolidated Balance Sheet at March 31, 2023.

The Company expects to recover its environmental clean-up costs through rate recovery over a period of less than one year and is currently not aware of any material additional exposure to environmental liabilities.

However, changes in environmental laws and regulations, new information or other factors could have an adverse financial impact on the Company.

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The Company remains committed to the project and, on June 29, 2022, received an extension of time from FERC, until December 31, 2024, to construct the project.

As of December 31, 2022, the Company has spent approximately $ 55.9 million on the project, all of which is recorded on the balance sheet.

As of March 31, 2023, the Company has spent approximately $ 55.9 million on the project, all of which is recorded on the balance sheet.

The Company is involved in other litigation and regulatory matters arising in the normal course of business.

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There have not been any changes in the basis of segmentation nor in the basis of measuring segment profit or loss from those used in the Company’s 2022 Form 10-K.

A listing of segment assets at December 31, 2022 and September 30, 2022 is shown in the tables below.

Quarter Ended December 31, 2022 (Thousands)

A listing of segment assets at March 31, 2023 and September 30, 2022 is shown in the tables below.

Quarter Ended March 31, 2023 (Thousands)

Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated

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$ 60,982 $ 23,858 $ 24,334 $ 31,720 $ 140,894 $( 69 ) $ 55 $ 140,880

Six Months Ended March 31, 2023 (Thousands)

Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated

Revenue from External Customers

$ 521,525 $ 131,844 $ 4,374 $ 718,376 $ 1,376,119 $ — $ — $ 1,376,119

Intersegment Revenues $ — $ 60,915 $ 109,020 $ 420 $ 170,355 $ — $( 170,355 ) $ —

Segment Profit:

Net Income (Loss) $ 152,174 $ 53,335 $ 49,072 $ 55,537 $ 310,118 $( 350 ) $ 802 $ 310,570

(Thousands) Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated

Segment Assets:

At December 31, 2022 $ 2,531,218 $ 2,355,063 $ 894,564 $ 2,392,682 $ 8,173,527 $ 1,681 $( 40,294 ) $ 8,134,914

At March 31, 2023 $ 2,489,665 $ 2,357,852 $ 882,405 $ 2,363,918 $ 8,093,840 $ 2,105 $( 128,703 ) $ 7,967,242

At September 30, 2022 $ 2,507,541 $ 2,394,697 $ 878,796 $ 2,299,473 $ 8,080,507 $ 2,036 $( 186,281 ) $ 7,896,262

Quarter Ended December 31, 2021 (Thousands)

Quarter Ended March 31, 2022 (Thousands)

Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated

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Net Income (Loss) $ 71,121 $ 25,470 $ 22,092 $ 53,048 $ 171,731 $ — $( 4,403 ) $ 167,328

Six Months Ended March 31, 2022 (Thousands)

Exploration and Production Pipeline and Storage Gathering Utility Total Reportable Segments All Other Corporate and Intersegment Eliminations Total Consolidated

Revenue from External Customers

$ 505,791 $ 129,342 $ 7,202 $ 605,776 $ 1,248,111 $ — $ 166 $ 1,248,277

Intersegment Revenues $ — $ 54,405 $ 97,627 $ 184 $ 152,216 $ 6 $( 152,222 ) $ —

Segment Profit:

Net Income (Loss) $ 133,490 $ 50,637 $ 45,229 $ 75,178 $ 304,534 $( 7 ) $( 4,807 ) $ 299,720

Note 10 – Retirement Plan and Other Post-Retirement Benefits

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Retirement Plan Other Post-Retirement Benefits

Three Months Ended December 31, 2022 2021 2022 2021

Three Months Ended March 31, 2023 2022 2023 2022

Service Cost $ 1,297 $ 2,190 $ 147 $ 332

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Net Periodic Benefit Cost (Income) $ ( 1,155 ) $ 9,976 $ ( 1,147 ) $ ( 2,477 )

Retirement Plan Other Post-Retirement Benefits

Six Months Ended March 31, 2023 2022 2023 2022

Service Cost $ 2,594 $ 4,379 $ 293 $ 664

Interest Cost 21,258 11,414 7,824 4,533

Expected Return on Plan Assets ( 33,297 ) ( 26,147 ) ( 12,806 ) ( 14,680 )

Amortization of Prior Service Cost (Credit) 218 268 ( 214 ) ( 214 )

Amortization of (Gains) Losses ( 3,840 ) 13,202 ( 4,378 ) ( 3,805 )

Net Amortization and Deferral for Regulatory Purposes (Including Volumetric Adjustments) (1)

10,756 12,838 7,314 10,519

Net Periodic Benefit Cost (Income) $ ( 2,311 ) $ 15,954 $ ( 1,967 ) $ ( 2,983 )

(1) The Company’s policy is to record retirement plan and other post-retirement benefit costs in the Utility segment on a volumetric basis to reflect the fact that the Utility segment experiences higher throughput of natural gas in the winter months and lower throughput of natural gas in the summer months.

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Employer Contributions.

The Company did not make any contributions to its tax-qualified, noncontributory defined benefit retirement plan (Retirement Plan) or its VEBA trusts for its other post-retirement benefits during the three months ended December 31, 2022, and does not anticipate making any such contributions during the remainder of fiscal 2023.

The Company did not make any contributions to its tax-qualified, noncontributory defined benefit retirement plan (Retirement Plan) or its VEBA trusts for its other post-retirement benefits during the six months ended March 31, 2023, and does not anticipate making any such contributions during the remainder of fiscal 2023.

Note 11 – Regulatory Matters

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The order provided for a return on equity of 8.7 %, and directed the implementation of an earnings sharing mechanism to be in place beginning on April 1, 2018.

The order also authorized the Company to recover approximately $ 15 million annually for pension and other post-employment benefit ("OPEB") expenses from customers.

The order also authorized the Company to recover approximately $ 15 million annually for pension and OPEB expenses from customers.

Because the Company’s future pension and OPEB costs were projected to be satisfied with existing funds held in reserve, in July 2022, Distribution Corporation made a filing with the NYPSC to effectuate a pension and OPEB surcredit to customers to offset these amounts being collected in base rates effective October 1, 2022.

On September 16, 2022, the NYPSC issued an order approving the filing.

The surcredit will remain in effect until modified by the NYPSC in another proceeding, or until December 31, 2024, whichever is earlier.

The surcredit will remain in effect until modified by the NYPSC in another proceeding, or until

December 31, 2024, whichever is earlier.

With the implementation of this surcredit, Distribution Corporation will no longer be funding the Retirement Plan or its VEBA trusts in its New York jurisdiction.

On August 13, 2021, the NYPSC issued an order extending the date through which qualified pipeline replacement costs incurred by the Company can be recovered using the existing system modernization tracker for two years (until March 31, 2023).

The extension is contingent on the Company not filing a base rate case that would result in new rates becoming effective prior to April 1, 2023.

On December 9, 2022, the Company filed a petition with the NYPSC to effectuate a system improvement tracker through which qualified pipeline replacement costs would be tracked and recovered, and to recover certain deferred costs associated with the existing system modernization tracker, effective April 1, 2023.

That petition has been noticed for public comment and a determination is pending.

On December 9, 2022, the Company filed a petition with the NYPSC to effectuate a system improvement tracker through which qualified pipeline replacement costs through September 30, 2024 would be tracked and recovered, and to recover certain deferred costs associated with the existing system modernization tracker, effective April 1, 2023.

The NYPSC approved the petition via order dated March 17, 2023 contingent on the Company not filing a base rate case that would result in new rates becoming effective prior to October 1, 2024.

On January 19, 2023, the NYPSC issued an order in its Effects of COVID-19 on Utility Service (20-M-0266) and Energy Affordability for Low Income Utility Customers (14-M-0565) proceedings whereby a Phase 2 Utility Arrears Relief Program was authorized.

Specifically, the order directed Distribution Corporation and certain other New York utilities to, among other things, address arrears on residential non-energy affordability program ratepayer accounts that did not receive a credit under the NYPSC’s Phase 1 program and small commercial ratepayer accounts by issuing a one-time bill credit to such customers to reduce or eliminate accrued arrears through May 1, 2022.

The credits shall be processed within 90 days of the

effective date of the order, provided that residential non-EAP customers who had their service disconnected for non-payment in 2022 shall be allowed the opportunity to have their service reinstated in order to receive the credit through June 30, 2023.

Specifically, the order directed Distribution Corporation and certain other New York utilities to, among other things, address arrears on residential non-energy affordability program (EAP) ratepayer accounts that did not receive a credit under the NYPSC’s Phase 1 program and small commercial ratepayer accounts by issuing a one-time bill credit to such customers to reduce or eliminate accrued arrears through May 1, 2022.

The credits shall be processed within 90 days of the effective date of the order, provided that residential non-EAP customers who had their service disconnected for non-payment in 2022 shall be allowed the opportunity to have their service reinstated in order to receive the credit through June 30, 2023.

The order further directs utilities to suspend residential service terminations for non-payment while arrears credits are applied to accounts through March 1, 2023, or 30 days after credits have been applied, whichever is later.

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Utilities proposed various offsets to Phase 2 program costs, and Distribution Corporation has proposed certain offsets as part of an uncollectible expense reconciliation proposal.

Distribution Corporation will make a filing with the NYPSC seeking approval of its uncollectible expense reconciliation mechanism no later than 30 days from the January 19, 2023 effective date of the order.

On February 17, 2023, Distribution Corporation made a filing with the NYPSC seeking approval of its uncollectible expense reconciliation mechanism and a determination is pending.

Application of the proposed offsets and collection periods will be determined when the NYPSC rules on the uncollectible expense reconciliation filing.

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On October 28, 2022, Distribution Corporation made a filing with the PaPUC seeking an increase in its annual base rate operating revenues of $ 28.1 million with a proposed effective date of December 27, 2022.

The Company is also proposing, among other things, to implement a weather normalization adjustment (WNA) mechanism and a new energy efficiency and conservation pilot program for residential customers.

On December 8, 2022, the PaPUC issued an order suspending the filing until July 27, 2023 by operation of law unless directed otherwise by the PaPUC.

The matter has been assigned to an administrative law judge and remains pending.

Following discovery, the submission of testimony and an evidentiary hearing, the parties to the proceeding agreed to a settlement that authorizes, among other things, an increase in Distribution Corporation’s annual base rate operating revenues of $ 23 million as of August 1, 2023.

On April 13, 2023, Distribution Corporation filed a joint petition with the PaPUC seeking approval of the settlement on behalf of all active parties to the proceeding.

The joint petition is currently pending before the PaPUC.

Effective October 1, 2021, pursuant to a tariff supplement filed with the PaPUC, Distribution Corporation reduced base rates by $ 7.7 million in order to stop collecting OPEB expenses from customers.

It also began to refund customers overcollected OPEB expenses in the amount of $ 50.0 million.

Certain other matters in the tariff supplement were unresolved.

These matters were resolved with the PaPUC’s approval of an Administrative Law Judge’s Recommended Decision on February 24, 2022.

It also began to refund to customers overcollected OPEB expenses in the amount of $ 50.0 million.

All matters with respect to this tariff supplement were finalized on February 24, 2022 with the PaPUC’s approval of an Administrative Law Judge’s Recommended Decision.

Concurrent with that decision, the Company discontinued regulatory accounting for OPEB expenses and recorded an $ 18.5 million adjustment during the quarter ended March 31, 2022 to reduce its regulatory liability for previously deferred OPEB income amounts through September 30, 2021 and to increase Other Income (Deductions) on the consolidated financial statements by a like amount.

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FERC Jurisdiction

Supply Corporation’s 2020 rate settlement provides that no party may make a rate filing for new rates to be effective before February 1, 2024, except that Supply Corporation may file an NGA general Section 4 rate case to change rates if the corporate federal income tax rate is increased.

corporate federal income tax rate is increased.

If no case has been filed, Supply Corporation must file for rates to be effective February 1, 2025.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements