Notes to Consolidated Financial Statements
(Unaudited)
Note 1 – Basis of Presentation
Corning Natural Gas Holding Corporation (“Holding
Company”) was incorporated in New York in July 2013 to serve as a holding company for Corning Natural Gas Corporation (the
“Gas Company” or “Corning Gas”) and its dormant subsidiary Corning Natural Gas Appliance Corporation (“Appliance
Company”). Pike County Light & Power Company (“Pike”) is also a wholly-owned subsidiary of the Holding Company.
The Holding Company has 50% ownership interests in our joint ventures Leatherstocking Gas Company, LLC (“Leatherstocking
Gas”), its subsidiary, Leatherstocking Gas Development Corporation, and Leatherstocking Pipeline Company, LLC (“Leatherstocking
Pipeline”). As used in this document, the term “the Company” refers to the consolidated operations of the Holding
Company, Gas Company and Pike.
The Holding Company’s primary
business, through its subsidiaries Corning Gas and Pike, is natural gas and electricity distribution. Corning Gas serves approximately
15,000 residential, commercial, industrial and municipal customers in the Corning, Hammondsport and Virgil, New York, areas and
two other gas utilities which serve the Elmira and Bath, New York, areas. It is franchised to supply gas service in all of the
political subdivisions in which it operates. It also transports for a gas producer from the producer’s gathering networks.
Corning Gas is under the jurisdiction of the New York Public Service Commission (“NYPSC”) which oversees and sets rates
for New York gas distribution companies. In addition, Corning Gas has contracts with Corning Incorporated and Woodhull Municipal
Gas Company, a small local utility, to provide maintenance service on their gas lines. Pike is an electricity and gas utility regulated
by the Pennsylvania Public Utility Commission (“PAPUC”). Pike provides electric service to approximately 4,800 customers
in the Townships of Westfall, Milford and the northern part of Dingman and in the Boroughs of Milford and Matamoras. Pike provides
natural gas service to approximately 1,200 customers in Westfall Township and the Borough of Matamoras. All of these communities
are located in Pike County, Pennsylvania. Additionally, Leatherstocking Gas distributes gas in Susquehanna and Bradford Counties,
Pennsylvania, and has an application pending before the NYPSC for authority to provide gas distribution services in Broome County,
New York. Leatherstocking Pipeline, an unregulated company, serves one customer in Lawton, Pennsylvania.
The market for natural gas in
our traditional service territories is relatively saturated with limited growth potential. However, growth opportunities do exist
in extending our mains to areas adjacent or reasonably close to areas we currently serve. In addition, the Gas Company continues
to see expansion opportunities in the commercial and industrial markets. We completed a new pipeline to Marcellus Shale gas in
Pennsylvania in 2009 and are transporting that gas throughout our pipeline infrastructure. In addition, the Holding Company has
interests in two joint ventures, Leatherstocking Gas and Leatherstocking Pipeline (the “Joint Ventures”), to transport
and provide gas to areas of the northeast currently without gas service. Through Leatherstocking Gas, we are continuing to pursue
opportunities to provide natural gas to unserved areas of New York and Pennsylvania. Our electric and gas service territory in
Pike County, Pennsylvania is seeing economic growth and we are experiencing customer load and revenue growth for both electric
and gas. In May 2018 Corning Gas renegotiated our supply arrangement with a local gas producer.
The information furnished herewith
reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the period.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or omitted pursuant to SEC rules and regulations, although
the Holding Company believes the disclosures which are made are adequate to make the information presented not misleading.
The consolidated financial statements
contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Holding
Company’s latest annual report on Form 10-K for the fiscal year ended September 30, 2018 (“Annual Report”), filed
on December 20, 2018. These interim consolidated financial statements are unaudited.
Our significant accounting
policies are described in the notes to the Consolidated Financial Statements in the Holding Company’s Annual Report. It
is important to understand that the application of generally accepted accounting principles in the United States of America
involves certain assumptions, judgments and estimates that affect reported amounts of assets, liabilities, revenues and
expenses. Thus, the application of these principles can have varying results from company to company.
Because our business is highly seasonal
in nature, sales for each quarter of the year vary and are not comparable. Sales vary depending on seasonal variations in temperature,
although the Gas Company’s weather normalization and revenue decoupling clauses approved by the New York Public Service Commission
(“NYPSC”) serve to stabilize net revenue, by insulating the Gas Company, to an extent, from the effects of unusual
temperature variations and conservation. Certain larger customer classes are not covered by weather normalization or revenue decoupling
and weather will impact revenue from these classes. Neither Pike nor Leatherstocking have weather normalization or revenue decoupling
clauses.
It is the Holding Company’s policy
to reclassify amounts in the prior year financial statements to conform to the current year presentation.
Adoption of New Accounting Guidance
On October 1, 2018, we adopted Accounting
Standards Update (“ASU”) 2016-01 “Financial Instruments—Recognition and Measurement of Financial Assets
and Financial Liabilities” (“ASU 2016-01”) and Accounting Standards Codification (“ASC”) 606
– “Revenues from Contracts with Customers” (“ASC 606”).
With respect to ASU 2016-01, we reclassified
net after-tax unrealized gains on equity securities of $100,131 as of October 1, 2018 from accumulated other comprehensive
income (loss) to retained earnings. We continue to carry our investments in equity securities at fair value and there is no change
to the asset values or total stockholders’ equity that we would have otherwise recorded. Beginning in fiscal 2019, we are
including unrealized gains and losses arising from the changes in the fair values of our equity securities as a component of investment
income in the Consolidated Statements of Income. ASU 2016-01 prohibited the restatement of prior year financial statements
and for periods ending prior to 2018, unrealized gains and losses from the changes in fair value of available-for-sale equity
securities were recorded in other comprehensive income.
We adopted ASC 606 using the modified
retrospective method, whereby the cumulative effect of the adoption is required to be recorded as an adjustment to retained earnings.
For the three and nine months ended June 30, 2019, the Company recognized revenues from contracts with customers in accordance
with ASC 606. The revenues recognized were equivalent to the revenues that would have been recognized had the Companies not adopted
ASC 606 and had recognized all revenues in accordance with ASC 605 – Revenue Recognition (ASC 605). For the three and nine
months ended June 30, 2018, the Company recognized revenues, including revenues from contracts with customers, in accordance with
ASC 605. No prior period adjustment or charge to retained earnings for cumulative impact was required as a result of the Company’s
adoption of ASC 606. ASC 606 also provides for certain other disclosures which are included in Note 2.
In March 2017, the FASB issued authoritative
guidance related to the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance
requires segregation of the service cost component from the other components of net periodic pension cost and net periodic postretirement
benefit cost for financial reporting purposes. The service cost component is to be presented on the income statement in the same
line items as other compensation costs included within Operating Expenses and the other components of net periodic pension cost
and net periodic postretirement benefit cost are to be presented on the income statement below the subtotal labeled Operating Income
(Loss). Under this guidance, the service cost component is eligible to be capitalized as part of the cost of inventory or property,
plant and equipment while the other components of net periodic pension cost and net periodic postretirement benefit cost are generally
not eligible for capitalization, unless allowed by a regulator. The Company adopted this guidance effective October 1, 2018. The
Company applied the guidance retrospectively for the pension and postretirement benefit costs using amounts disclosed in prior
period financial statement notes as estimates for the reclassifications in accordance with a practical expedient allowed under
the guidance. Operation and maintenance expenses decreased $487,871 and $590,740 and Other Income (expense) increased by the same
amount for the nine months ended June 30, 2019 and 2018 respectively as a result of the reclassifications. Operation and maintenance
expenses decreased $162,623 and $196,914 and Other Income (expense) increased by the same amount for the three months ended June
30, 2019 and 2018 respectively as a result of the reclassifications.
New Accounting Pronouncements
Not Yet Adopted
In February 2016, the Financial Accounting
Standards Board (“FASB”) issued ASU No. 2016-02, Leases (ASC Topic 842), which requires lessees to recognize substantially
all leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right of use
("ROU") model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases
with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern
and classification of expense recognition in the income statement. The new standard is effective for annual and interim periods
beginning after December 15, 2018. ASU 2016-02 requires entities to adopt a modified retrospective transition method for
leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial
statements. The Company continues to evaluate the impact that adopting ASU 2016-02 will have on its consolidated financial
statements, but does not believe it will have a material impact at this time.
Note 2 – Revenue From Contracts With Customers
The following tables present, for the three and nine months
ended June 30, 2019, revenue from contracts with customers as defined in ASC 606, as well as additional revenue from sources
other than contracts with customers, disaggregated by major source.
|
|
|
For the three months ended June 30, 2019
|
|
|
|
|
Revenues from contracts with customers
|
|
|
|
Other revenues (a)
|
|
|
|
Total utility operating revenues
|
|
Corning Gas:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential gas
|
|
|
$3,289,092
|
|
|
|
$3,432
|
|
|
|
$3,292,524
|
|
Commercial gas
|
|
|
481,535
|
|
|
|
(27,031
|
)
|
|
|
454,504
|
|
Transportation
|
|
|
945,835
|
|
|
|
—
|
|
|
|
945,835
|
|
Street lights gas
|
|
|
108
|
|
|
|
—
|
|
|
|
108
|
|
Wholesale
|
|
|
357,364
|
|
|
|
—
|
|
|
|
357,364
|
|
Local production
|
|
|
162,708
|
|
|
|
—
|
|
|
|
162,708
|
|
Total Corning Gas
|
|
|
$5,236,642
|
|
|
|
($23,599
|
)
|
|
|
$5,213,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pike:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential gas
|
|
|
$195,908
|
|
|
|
$6,121
|
|
|
|
$202,029
|
|
Commercial gas
|
|
|
60,461
|
|
|
|
—
|
|
|
|
60,461
|
|
Total Pike retail gas
|
|
|
256,369
|
|
|
|
6,121
|
|
|
|
262,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential electric
|
|
|
603,535
|
|
|
|
(6,943
|
)
|
|
|
596,592
|
|
Commercial electric
|
|
|
841,150
|
|
|
|
—
|
|
|
|
841,150
|
|
Electric – street lights
|
|
|
29,833
|
|
|
|
—
|
|
|
|
29,833
|
|
Total Pike retail electric
|
|
|
1,474,518
|
|
|
|
(6,943
|
)
|
|
|
1,467,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pike
|
|
|
$1,730,887
|
|
|
|
($822
|
)
|
|
|
$1,730,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated utility operating revenue
|
|
|
$6,967,529
|
|
|
|
($24,421
|
)
|
|
|
$6,943,108
|
|
(a) Other revenues include revenue from alternative revenue programs,
such as revenue decoupling mechanisms under New York gas rate plans and weather normalization clauses. This also reflects reductions
in revenues resulting from the deferral as regulatory liabilities of the net benefits of the federal Tax Cuts and Jobs Act of 2017.
See “Regulatory Matters” in Note 10.
|
|
|
For the nine months ended June 30, 2019
|
|
|
|
|
Revenues from contracts with customers
|
|
|
|
Other revenues (a)
|
|
|
|
Total utility operating revenues
|
|
Corning Gas:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential gas
|
|
|
$13,913,428
|
|
|
|
$156,987
|
|
|
|
$14,070,415
|
|
Commercial gas
|
|
|
2,228,169
|
|
|
|
(96,514
|
)
|
|
|
2,131,655
|
|
Transportation
|
|
|
3,587,388
|
|
|
|
—
|
|
|
|
3,587,388
|
|
Street lights gas
|
|
|
363
|
|
|
|
—
|
|
|
|
363
|
|
Wholesale
|
|
|
2,008,337
|
|
|
|
—
|
|
|
|
2,008,337
|
|
Local production
|
|
|
525,857
|
|
|
|
—
|
|
|
|
525,857
|
|
Total Corning Gas
|
|
|
$22,263,542
|
|
|
|
$60,473
|
|
|
|
$22,324,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pike:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential gas
|
|
|
$1,232,125
|
|
|
|
$15,511
|
|
|
|
$1,247,636
|
|
Commercial gas
|
|
|
305,873
|
|
|
|
—
|
|
|
|
305,873
|
|
Total Pike retail gas
|
|
|
1,537,998
|
|
|
|
15,511
|
|
|
|
1,553,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential electric
|
|
|
2,984,694
|
|
|
|
58,398
|
|
|
|
3,043,092
|
|
Commercial electric
|
|
|
3,112,054
|
|
|
|
—
|
|
|
|
3,112,054
|
|
Electric – street lights
|
|
|
96,872
|
|
|
|
—
|
|
|
|
96,872
|
|
Total Pike retail electric
|
|
|
6,193,620
|
|
|
|
58,398
|
|
|
|
6,252,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pike
|
|
|
$7,731,618
|
|
|
|
$73,909
|
|
|
|
$7,805,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated utility operating revenue
|
|
|
$29,995,160
|
|
|
|
$134,382
|
|
|
|
$30,129,542
|
|
(a) Other revenues include revenue from alternative revenue programs,
such as revenue decoupling mechanisms under New York gas rate plans and weather normalization clauses. This also reflects reductions
in revenues resulting from the deferral as regulatory liabilities of the net benefits of the federal Tax Cuts and Jobs Act of 2017.
See “Regulatory Matters” in Note 10.
The Gas Company records revenues
from residential and commercial customers based on meters read on a cyclical basis throughout each month, while certain large industrial
and utility customers’ meters are read at the end of each month. Several meters are read at the end of each month to calculate
local production revenues. The Gas Company does not accrue revenue for gas delivered but not yet billed, as the NYPSC requires
that such accounting must be adopted during a rate proceeding which the Gas Company has not done. The Gas Company, as part of its
currently effective rate plan, has a weather normalization clause as protection against severe weather fluctuations. This affects
space heating customers and is activated when degree days are 2.2% greater or less than the 30-year average. As a result, the effect
on revenue fluctuations of weather related gas sales is somewhat moderated.
Pike recognizes revenues for electric
and gas service on a monthly billing cycle basis. Pike does not accrue for gas and electricity delivered. Pike does not have a
weather normalization clause as protection against severe weather.
In addition to weather normalization, the
Gas Company has implemented a revenue decoupling mechanism (RDM). The RDM reconciles actual delivery service revenues to allowed
delivery service revenues (which are based on the annual customer and volume forecasts in the last rate case) for certain residential
customers. The Gas Company will refund or surcharge customers for differences between actual and allowed revenues. The shortfall
or excess after the annual reconciliation will be surcharged or refunded to customers over a twelve-month period starting September
1st each year. Pike does not have a revenue decoupling mechanism as part of their rate structure.
Revenues are recorded as
energy is delivered, generated, or services are provided and billed to customers. Amounts billed are recorded in customer accounts
receivable, with payment generally due the following month.
Note 3 - Pension and Other Post-Retirement Benefit Plans
Components of Net Periodic Benefit Cost:
Pension Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Nine Months Ended June 30,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
|
|
2019
|
|
|
|
2018
|
|
Service Cost
|
|
|
$116,453
|
|
|
|
$107,161
|
|
|
|
$349,360
|
|
|
|
$321,482
|
|
Interest Cost
|
|
|
258,774
|
|
|
|
240,301
|
|
|
|
776,323
|
|
|
|
720,902
|
|
Expected return on plan assets
|
|
|
(319,966)
|
|
|
|
(300,205)
|
|
|
|
(959,898)
|
|
|
|
(900,614)
|
|
Amortization of net gain
|
|
|
212,665
|
|
|
|
242,497
|
|
|
|
637,996
|
|
|
|
727,491
|
|
Net periodic benefit cost
|
|
|
$267,926
|
|
|
|
$289,754
|
|
|
|
$803,781
|
|
|
|
$869,261
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Nine Months Ended June 30,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
|
|
2019
|
|
|
|
2018
|
|
Service Cost
|
|
|
$4,123
|
|
|
|
$4,445
|
|
|
|
$12,369
|
|
|
|
$13,336
|
|
Interest Cost
|
|
|
11,939
|
|
|
|
12,060
|
|
|
|
35,817
|
|
|
|
36,180
|
|
Amortization of prior service cost
|
|
|
888
|
|
|
|
887
|
|
|
|
2,664
|
|
|
|
2,660
|
|
Amortization of net (gain) loss
|
|
|
(1,677
|
)
|
|
|
1,374
|
|
|
|
(5,032
|
)
|
|
|
4,121
|
|
Net periodic benefit cost
|
|
|
$15,273
|
|
|
|
$18,766
|
|
|
|
$45,818
|
|
|
|
$56,297
|
|
For ratemaking and financial statement
purposes, pension expense represents the amount approved by the NYPSC in the Gas Company’s most recently approved rate case.
Pension expense for ratemaking and financial statement purposes was $221,152 for the three months ended June 30, 2019 and $219,000
for the three months ended June 30, 2018. Pension expense for ratemaking and financial statement purposes was $663,457 for the
nine months ended June 30, 2019 and $656,000 for the nine months ended June 30, 2018. Total pension costs are recorded in accordance
with accounting prescribed by the NYPSC in 1993. The cumulative net difference between the pension expense for ratemaking and financial
statement purposes, since 1993, has been deferred as a regulatory asset and amounted to $792,492 and $874,689 at June 30, 2019
and June 30, 2018, respectively.
The NYPSC has allowed the Gas Company
to recover incremental costs associated with other post-retirement benefits through rates on a current basis. Other post-retirement
benefit expense (benefit) (OPEB) for ratemaking and financial statement purposes was $16,408 for the three months ended June 30,
2019 and $15,000 for the three months ended June 30, 2018. Other post-retirement benefit expense (benefit) for ratemaking and financial
statement purposes was $42,614 for the nine months ended June 30, 2019 and $44,000 for the nine months ended June 30, 2018. The
difference between the other post-retirement benefit expense (benefit) for ratemaking and financial statement purposes, and the
amount computed above has been deferred as a regulatory asset.
The Company has adopted (see
Note 1) the FASB issued authoritative guidance related to the presentation of net periodic pension cost and net periodic
postretirement benefit cost. The new guidance requires segregation of the service cost component from the other components of
net periodic pension cost and net periodic postretirement benefit cost for financial reporting purposes. The service
cost component is to be presented on the income statement in the same line items as other compensation costs included within
Operating Expenses and the other components of net periodic pension cost and net periodic postretirement benefit cost are to
be presented on the income statement below the subtotal labeled Operating Income (Loss). Operation and maintenance expenses
decreased $487,871 and Other Income (expense) increased by the same amount for the nine months ended June 30, 2019 as a
result of the reclassifications. Operation and maintenance expenses decreased $590,740 and Other Income (expense) increased
by the same amount for the nine months ended June 30, 2018 as a result of the reclassifications. For the three month period
ended June 30, 2019 and 2018 Operation and maintenance expenses decreased and Other Income (expense) increased by $173,366
and $205,445 respectively. Total pension and OPEB costs are recorded in accordance with accounting prescribed by the
NYPSC in 1993 and 1998 respectively. The FASB guidance and income statement presentation does not affect the recoverability
of service cost component and the other components of net periodic pension and postretirement benefit cost from
customers.
Contributions
The Gas Company expects to contribute
$711,098 to its Pension Plan during the year ending September 30, 2019. A total of $577,045 was paid to the Pension Plan during
the nine months ending June 30, 2019 and $830,046 was paid to the Pension Plan during the nine months ended June 30, 2018.
Note 4 – Financing Activities
On August 15, 2018, the Gas Company
entered into a $3.6 million multiple disbursement term note with Manufactures and Traders Trust Company (“M&T”)
which permitted draws from time to time for capital expenditures in accordance with its terms until October 31, 2018 at which time
amounts outstanding under the note totaling $3.6 million converted to a ten year term loan, payable in 119 equal monthly installments
with an additional final installment of unpaid principal and interest due on November 30, 2028. Before converting to a term
loan, borrowings on the note had a variable interest rate of the one-month LIBOR rate plus 3% (5.26% as of September 30, 2018).
After October 31, 2018, the interest rate was fixed at 4.71%. Additional terms of this note are substantially the same as
those in the Gas Company’s November 2017 Credit Agreement with M&T. As of June 30, 2019, the outstanding balance
of this note was approximately $3.5 million.
On December 4, 2018, Pike entered into
a demand note with M&T for $510,000, payable in 364 days unless otherwise converted into a term note (“replacement term
note”). On February 1, 2019 Pike converted the $510,000 demand note to a 10 year term loan with a fixed interest rate
of 4.89%. As of June 30, 2019, the outstanding balance of this note was $489,659.
On June 27, 2019, the Gas Company
entered into a $3.127 million multiple disbursement term note with M&T which permits draws from time to time for capital expenditures
in accordance with its terms until October 31, 2019 at which time amounts outstanding under the note totaling $3.127 million convert
to a ten year term loan, payable in 119 equal monthly installments with an additional final installment of unpaid principal and
interest due on November 30, 2029. Before converting to a term loan, borrowings on the note have a variable interest rate
of the one-month LIBOR rate plus 3% (5.4375% as of June 30, 2019). After October 31, 2019, the interest rate will be fixed
at 1.80 percentage points above the sum of the yield on United States Treasury Obligations adjusted to a constant maturity of ten
(10) years in effect two (2) New York Business Days prior to the Amortization Commencement Date, as published by the Board of Governors
of the Federal Reserve System in the Federal Reserve Statistical Release H.15 (519), or by such other quoting service, index or
commonly available source utilized by M&T. Additional terms of this note are substantially the same as those in the
Gas Company’s November 2017 Credit Agreement with M&T. As of June 30, 2019, the outstanding balance of this note
was approximately $1.832 million.
On June 27, 2019, Pike Light
& Power Company entered into a $2.072 million multiple disbursement term note with M&T which permits draws from time to
time for capital expenditures in accordance with its terms until October 31, 2019 at which time amounts outstanding under the note
totaling $2.072 million convert to a ten year term loan, payable in 119 equal monthly installments with an additional final installment
of unpaid principal and interest due on November 30, 2029. Before converting to a term loan, borrowings on the note have
a variable interest rate of the one-month LIBOR rate plus 3% (5.4375% as of June 30, 2019). After October 31, 2019, the interest
rate will be fixed at 1.80 percentage points above the sum of the yield on United States Treasury Obligations adjusted to a constant
maturity of ten (10) years in effect two (2) New York Business Days prior to the Amortization Commencement Date, as published by
the Board of Governors of the Federal Reserve System in the Federal Reserve Statistical Release H.15 (519), or by such other quoting
service, index or commonly available source utilized by M&T. Additional terms of this note are substantially the same
as those in the Gas Company’s November 2017 Credit Agreement with M&T. As of June 30, 2019, the outstanding balance
of this note was approximately $1.639 million.
We are in compliance with our financial covenant calculations
as of June 30, 2019.
Note 5 – Fair Value of Financial Instruments
The Holding Company has determined
the fair value of debt and other financial instruments using a valuation hierarchy. The hierarchy, which prioritizes the inputs
used in measuring fair value, consists of three levels. Level 1 uses observable inputs such as quoted prices in active markets;
Level 2 uses inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3,
which is defined as unobservable inputs in which little or no market data exists, requires the Holding Company to develop its own
assumptions. The carrying amount of debt on the Consolidated Balance Sheets approximates fair value as a result of instruments
bearing interest rates that approximate current market rates for similar instruments, and the carrying amounts for cash, accounts
receivable and accounts payable approximate fair value due to their short-term nature. Investment assets, which fund the Holding
Company’s deferred compensation plan, are valued based on Level 1 inputs.
The Holding Company has determined
the fair value of certain assets through application of FASB ASC 820 “Fair Value Measurements and Disclosures”.
Fair value of assets and liabilities measured on a recurring
basis at June 30, 2019 and September 30, 2018 are as follows:
Fair Value Measurements at Reporting Date Using:
|
|
|
Fair Value
|
|
|
|
Quoted Prices In Active Markets for Identical Assets/Liabilities (Level 1)
|
|
|
|
Level 2
|
|
|
|
Level 3
|
|
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities
|
|
|
$2,167,876
|
|
|
|
$2,167,876
|
|
|
|
$—
|
|
|
|
$—
|
|
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities
|
|
|
$2,193,578
|
|
|
|
$2,193,578
|
|
|
|
$—
|
|
|
|
$—
|
|
A summary of the marketable securities at June 30, 2019
and September 30, 2018 is as follows:
|
|
|
Cost Basis
|
|
|
|
Unrealized Gain
|
|
|
|
Unrealized Loss
|
|
|
|
Market Value
|
|
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
|
$117,713
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$117,713
|
|
Metlife stock value
|
|
|
39,395
|
|
|
|
—
|
|
|
|
—
|
|
|
|
39,395
|
|
Government and agency bonds
|
|
|
264,706
|
|
|
|
6,711
|
|
|
|
—
|
|
|
|
271,417
|
|
Corporate bonds
|
|
|
177,249
|
|
|
|
3,098
|
|
|
|
—
|
|
|
|
180,347
|
|
Mutual funds
|
|
|
22,359
|
|
|
|
366
|
|
|
|
—
|
|
|
|
22,725
|
|
Holding Company Preferred A Stock
|
|
|
572,876
|
|
|
|
41,246
|
|
|
|
—
|
|
|
|
614,122
|
|
Equity securities
|
|
|
771,299
|
|
|
|
150,858
|
|
|
|
—
|
|
|
|
922,157
|
|
Total securities
|
|
|
$1,965,597
|
|
|
|
$202,279
|
|
|
|
$—
|
|
|
|
$2,167,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
|
$158,210
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$158,210
|
|
Metlife stock value
|
|
|
38,197
|
|
|
|
—
|
|
|
|
—
|
|
|
|
38,197
|
|
Government and agency bonds
|
|
|
264,376
|
|
|
|
—
|
|
|
|
9,246
|
|
|
|
255,130
|
|
Corporate bonds
|
|
|
193,526
|
|
|
|
—
|
|
|
|
3,716
|
|
|
|
189,810
|
|
Mutual funds
|
|
|
22,359
|
|
|
|
—
|
|
|
|
292
|
|
|
|
22,067
|
|
Holding Company Preferred A Stock
|
|
|
572,875
|
|
|
|
—
|
|
|
|
23,144
|
|
|
|
549,731
|
|
Equity securities
|
|
|
813,215
|
|
|
|
167,218
|
|
|
|
—
|
|
|
|
980,433
|
|
Total securities
|
|
|
$2,062,758
|
|
|
|
$167,218
|
|
|
|
$36,398
|
|
|
|
$2,193,578
|
|
Realized gains included in earnings for the periods reported
in investment income are as follows:
Investment Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Nine Months Ended June 30,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
|
|
2019
|
|
|
|
2018
|
|
Net realized gains and (losses) recognized during the
period on investments
|
|
|
$7,042
|
|
|
|
$4,185
|
|
|
|
($2,378
|
)
|
|
|
$31,152
|
|
Unrealized gains on equity securities included in
investment income for the three and nine months ended June 30, 2019 were $18,014 and $76,947, respectively. Unrealized gains of
$0 and $0 were included in investment income for the three and nine months ended June 30, 2018, respectively.
Financial assets and liabilities valued using level
1 inputs are based on unadjusted quoted market prices as of the close of business on the days noted within active markets.
Note 6 – Stockholders’ Equity
For the three months ended June 30,
2019, there were a total of 5,569 shares of common stock issued for $95,866. For the nine months ended June 30, 2019 there were
a total of 19,200 shares of common stock issued for $318,852. The amounts issued were for the following:
|
|
|
Three
months ended June 30, 2019
|
|
|
|
Nine
months ended June 30, 2019
|
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Shares
|
|
|
|
Amount
|
|
Dividend reinvestment program
(DRIP)
|
|
|
2,269
|
|
|
|
$45,992
|
|
|
|
7,300
|
|
|
|
$133,423
|
|
Directors
|
|
|
3,150
|
|
|
|
46,589
|
|
|
|
9,450
|
|
|
|
138,651
|
|
Leatherstocking Gas Company
|
|
|
150
|
|
|
|
3,285
|
|
|
|
450
|
|
|
|
8,778
|
|
Officers
|
|
|
—
|
|
|
|
—
|
|
|
|
2,000
|
|
|
|
38,000
|
|
Total
|
|
|
5,569
|
|
|
|
$95,866
|
|
|
|
19,200
|
|
|
|
$318,852
|
|
Shares issued to Leatherstocking Gas
were used to compensate its independent director, Carl Hayden.
For the three months ended September
30, 2018, dividends were paid on October 12, 2018 to stockholders of record on September 30, 2018 in the amount of $422,740. For
the quarter ended December 31, 2018, $423,836 was accrued for dividends paid on January 14, 2019 to stockholders of record on December
31, 2018. For the quarter ended March 31, 2019, $439,814 was accrued for dividends paid on April 15, 2019 to stockholders of record
on March 31, 2019. For the quarter ended June 30, 2019, $440,622 was accrued for dividends paid on July 15, 2019 to stockholders
of record on June 30, 2019.
Series A Cumulative Preferred Stock
accrues cumulative dividends at a rate of 6.0% of the liquidation preference per share ($25.00) and are expected to be paid on
or about the 14th day of April, July, October and January of each year and began October 14, 2016. For the three months ended September
30, 2018, dividends were paid on October 12, 2018 in the amount of $78,975. For the three months ended December 31, 2018, $78,975
was paid on January 14, 2019. For the three months ended March 31, 2019, $78,975 was accrued for dividends paid on April 15, 2019.
For the three months ended June 30, 2019, $78,975 was accrued for dividends paid on July 15, 2019. Dividends on the Series A Cumulative
Preferred Stock are reported as interest expense.
Series B Convertible Preferred Stock
accrues cumulative dividends at a rate of 4.8% of the liquidation preference per share ($20.75) and are expected to be paid on
or about the 14th day of April, July, October and January of each year and began October 14, 2016. At September 30, 2018 there
was $61,066 accrued for Series B dividends paid on October 12, 2018. For the three months ended December 31, 2018, $61,066 was
accrued for dividends paid on January 14, 2019. For the three months ended March 31, 2019, $61,066 was accrued for dividends paid
on April 15, 2019. For the three months ended June 30, 2019, $61,065 was accrued for dividends paid on July 15, 2019. See Note
9 for additional information on the preferred stock, including its mandatory redemption provisions.
Basic earnings (loss) per share are
computed by dividing income (loss) available for common stock (net income less dividends declared on Series B Preferred Stock)
by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution
that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
293,116 shares of common stock issuable
upon conversion of Series B Convertible Preferred Stock were excluded from the calculation of diluted earnings per share for the
three months ended June 30, 2019 and 2018 because their inclusion would have been anti-dilutive.
Note 7 – Investment in Joint Ventures
The Holding Company has an interest
in Leatherstocking Gas and Leatherstocking Pipeline (the Joint Ventures), each of which is a joint venture with Mirabito Regulated
Industries, LLC, accounted for by the equity method.
The following table represents the
Holding Company’s investment activity in the Joint Ventures for the nine months ended June 30, 2019 and 2018:
|
|
|
2019
|
|
|
|
2018
|
|
Beginning balance in investment
in joint ventures
|
|
|
$2,740,575
|
|
|
|
$2,707,406
|
|
Loss from joint ventures
|
|
|
(15,324
|
)
|
|
|
(16,595
|
)
|
Ending balance in joint ventures
|
|
|
$2,725,251
|
|
|
|
$2,690,811
|
|
As of and for the nine months ended
June 30, 2019 and 2018, the Joint Ventures financial summary is as follows:
|
|
|
2019
|
|
|
|
2018
|
|
Total assets
|
|
|
$13,000,000
|
|
|
|
$13,000,000
|
|
Total liabilities
|
|
|
$7,600,000
|
|
|
|
$7,600,000
|
|
Net loss
|
|
|
$31,000
|
|
|
|
$34,000
|
|
Note 8 – Income Taxes
Income tax expense for the periods ended June 30 are as follows:
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
June 30, 2019
|
|
|
|
June 30, 2018
|
|
|
|
June 30, 2019
|
|
|
|
June 30, 2018
|
|
Current
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
Deferred
|
|
|
58,875
|
|
|
|
301,270
|
|
|
|
1,326,628
|
|
|
|
1,736,447
|
|
Total
|
|
|
$58,875
|
|
|
|
$301,270
|
|
|
|
$1,326,628
|
|
|
|
$1,736,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual income tax expense differs from the expected tax expense (computed by applying the federal corporate
tax rate of 21% before income tax expense) as follows:
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
Nine Months Ended
|
|
|
June 30, 2019
|
|
June 30, 2018
|
|
June 30, 2019
|
|
June 30, 2018
|
Expected federal tax expense
|
|
|
$20,423
|
|
|
|
$60,798
|
|
|
|
$1,000,257
|
|
|
|
$981,286
|
|
State tax expense (net of federal)
|
|
|
2,480
|
|
|
|
35,312
|
|
|
|
263,120
|
|
|
|
229,013
|
|
Federal income sur credit amortization
|
|
|
11,761
|
|
|
|
—
|
|
|
|
46,046
|
|
|
|
—
|
|
Regulatory deferral for tax rate difference
|
|
|
—
|
|
|
|
126,098
|
|
|
|
—
|
|
|
|
478,054
|
|
Prior period tax write off
|
|
|
—
|
|
|
|
—
|
|
|
|
(11,405
|
)
|
|
|
—
|
|
Other, net
|
|
|
24,211
|
|
|
|
79,062
|
|
|
|
28,610
|
|
|
|
48,094
|
|
Actual tax expense
|
|
|
$58,875
|
|
|
|
$301,270
|
|
|
|
$1,326,628
|
|
|
|
$1,736,447
|
|
On December 22, 2017, the Federal Tax
Cuts and Jobs Act (“Tax Act”) was signed into law. The Tax Act makes significant changes to the federal tax structure,
which will impact the tax liabilities of utility companies. On August 9, 2018 the NYSPSC issued an order in Case 17-M-0815 that
required the Company to return to customers the difference between the federal income tax allowance in base rates and the new statutory
rate of 21%. The refund to customers began on October 1, 2018. Impacted customers will experience a decrease of 5.20% on their
overall bill in the year starting October 1, 2018 and 7.83% in the year starting October 1, 2019. The amounts returned to customers
will be $1,317,719 and $2,112,540 during the years ending September 30, 2019 and 2020, respectively. These refunds will not impact
the Company’s earnings. The impact of the change in the Tax Act on deferred regulatory balances will be deferred until the
Company’s next base rate case. The Company has recorded those amounts as Regulatory Liabilities on the accompanying consolidated
balance sheets.
The PAPUC issued an order in Case M-2018-2641242
that requires the Company to return to customers the difference between the federal income tax allowance in base rates and the
new statutory rate of 21%. Pike’s electric customers began receiving a total refund of $73,923 or decrease of 0.67% on their
overall bill beginning October 1, 2018. This refund is subject to reconciliation and will remain in effect until Pike’s next
base rate case. No refunds were ordered for Pike’s gas operation because amounts were not material. The impact of the change
in the Tax Act on deferred regulatory balances will be deferred until the Company’s next base rate case. The Company has
recorded those amounts as Regulatory Liabilities on the accompanying consolidated balance sheets.
Note 9 – Preferred Stock
The Holding Company filed a Registration
Statement on Form S-1 with the Securities and Exchange Commission with respect to a subscription rights offering to its stockholders
to issue up to approximately $11.0 million in preferred stock. The subscription rights were distributed on a one-for-one basis
to stockholders of record as of April 14, 2016 and expired on June 20, 2016. The Form S-1 covered 2,469,861 subscription rights
for the purchase of up to 140,000 shares of 6% Series A Preferred Stock and up to 360,000 shares of 4.8% Series B Preferred Stock.
Each subscription right entitled the holder to purchase either: (i) one-eighth share of the 6% Series A Preferred Stock, par value
$0.01 per share, for $25.00 per share, or (ii) one-sixth share of the 4.8% Series B Preferred Stock, par value $0.01 per share,
for $20.75 per share, which is convertible in accordance with its terms into 1.2 shares of common stock, subject to adjustment.
Of the 140,000 shares of Series A Preferred Stock available, 105,303 shares were subscribed and of the 360,000 shares of Series
B Preferred Stock available, 244,263 shares were subscribed. In August of 2017 the Company privately placed an additional 105,297
shares of Series A Preferred Stock.
Series A Preferred Stock accrues cumulative
dividends at a rate of 6.0% of the liquidation preference per share ($25.00) and are expected to be paid on or about the 14
th
day of April, July, October and January of each year. The dates of record for the dividends, are March 31, June 30, September 30
and December 31, immediately preceding the relevant dividend payment date. On September 30, 2023, outstanding shares of Series
A Preferred Stock will mature and be redeemed solely in cash at a redemption price equal to the liquidation preference per share
plus an amount equal to all accrued but unpaid dividends subject to our having funds legally available for redemption under New
York law. The dividends for each of the nine month periods ended June 30, 2019 and 2018 were $236,925, and these are recorded as
interest expense. For the three months ended June 30, 2019 and 2018 the dividends were $78,975, and these are recorded as interest
expense.
In accordance with ASC 480, because
of the mandatory redemption feature this is treated as liability. The issuance costs are treated as debt issuance costs and will
be amortized over the life of the instrument. The debt issuance costs reduce the carrying value of the liability. The amortization
of the Series A Preferred Stock debt issuance costs was $15,548 and $15,269 for the nine months ended June 30, 2019 and 2018, respectively.
The amortization of the Series A Preferred Stock debt issuance costs was $5,183 and $5,090 for the three months ended June 30,
2019 and 2018, respectively.
Series B Preferred Stock accrues cumulative
dividends at a rate of 4.8% of the liquidation preference per share ($20.75) and are expected to be paid on or about the 14th day
of April, July, October and January of each year commencing October 14, 2016. The dates of record for the dividends, if any, will
be March 31, June 30, September 30 and December 31, immediately preceding the relevant dividend payment date. Our president, Michael
German along with his wife, owns 57,936 of these shares.
Although by its terms the Series B
Preferred Stock is mandatorily redeemable on September 30, 2026, in accordance with ASC 480 it is not considered mandatorily redeemable
for accounting purposes as a result of the conversion feature presenting a contingency related to the redemption dates. Accordingly,
this is not considered a liability. However, as a result of the decision related to conversion and not reaching redemption resting
with the holder, this instrument has been classified as temporary equity in accordance with ASC 480. Upon conversion, the instrument
would be reclassified as permanent equity. Dividends were $183,197 for both the nine months ended June 30, 2019 and 2018. Dividends
were $61,065 for both the three months ended June 30, 2019 and 2018. The issuance costs of approximately $120,000 reduced the initial
proceeds and will be accreted until redemption or conversion. During the nine months ended June 30, 2019 and 2018 there was accretion
of $11,285 and $11,284, respectively. During the three months ended June 30, 2019 and 2018 there was accretion of $3,762 and $3,761,
respectively.
Note 10 – Regulatory Matters
On June 17, 2016, the Gas Company filed
with the NYPSC a three-year plan to implement a levelized increase in revenues from gas delivery service of $3,463,287 in each
year over the period June 1, 2017 through May 31, 2020, resulting in total bill impacts on customers in each year of 10.4%.
On June 15, 2017, the NYPSC, in Case
16-G-0369, issued an Order Adopting Terms of Joint Proposal and Establishing Gas Rate Plan (the “June 2017 Order”)
adopting without substantive modification a Joint Proposal (the “2017 Joint Proposal”) among the Gas Company, the Staff
of the Department of Public Service, and multiple intervenors (which represent large industrial customers) to resolve all issues
in Case 16-G-0369. As adopted by the June 2017 Order, the 2017 Joint Proposal is a comprehensive settlement extending for three
consecutive Rate Years (the twelve months ending May 31, 2018, 2019 and 2020) and permits Corning Gas to increase its base rates
for gas delivery service. The new base rates under the June 2017 Order, when offset by the elimination of existing surcharges at
the beginning of Rate Year 1 and levelized over the three Rate Years, result in the following incremental revenue increases over
the prior Rate Year: Rate Year 1 - $1,558,553, Rate Year 2 - $1,573,706, and Rate Year 3 - $1,566,594, equating to increases of
approximately 6.2%, 5.9% and 5.5%, respectively, as a percentage of total delivery revenues including gas costs. The 2017 Joint
Proposal, as adopted, permits a rate of return on common equity of 9.0%, and an “Earnings Sharing Mechanism” that provides
for Corning Gas to retain all earnings above 9.00% up to and including 9.50%, and for customers to retain 50% of the earnings above
9.50% up to and including 10.00%, 75% of earnings above 10.00% up to and including 10.50%, and 90% of earnings above 10.50%.
The 2017 Joint Proposal, as adopted,
provides true-ups for property taxes, pension costs, plant expenditures, large customer revenue, local production revenue and continues
performance metrics for safety and customer satisfaction from the prior rate case. Although the stringency of certain performance
measures and the amount of certain negative revenue adjustments for failure to meet specific standards are increased, the 2017
Joint Proposal, as approved by the June 2017 Order, also provides opportunities for positive revenue adjustments for exceeding
applicable standards with regard to certain measures. Because the June 2017 Order approving the 2017 Joint Proposal was issued
after the June 1, 2017 commencement of Rate Year 1 of the three-year rate plan and new rates did not go into effect until July
1, 2017, the 2017 Order provided for each of the Gas Company and its customers to be placed in the same position in which they
would have been if the new rates had gone into effect as of June 1, 2017. Any resulting revenue adjustments in favor of the Gas
Company are deferred for future recovery, with interest. The Rate Year 3 rate increase of $1,556,594 became effective June 1, 2019.
On August 9, 2018 the NYSPSC issued
an order in Case 17-M-0815 that required the Company to return to customers the difference between the federal income tax allowance
in base rates and the new statutory rate of 21%. The refund to customers began on October 1, 2018. Customers will experience an
average decrease of 5.20% on their overall bill in the year starting October 1, 2018 and 7.83% in the year starting October 1,
2019. The amounts returned to customers will be $1,317,719 and $2,112,540 respectively. These refunds will not impact the Company’s
allowed earnings.
In addition, the impact of the change
in the Tax Act on deferred regulatory balances will be deferred until the Company’s next base rate case. The Company has
recorded those amounts a Regulatory Liabilities on the accompanying Consolidated Balance Sheets.
The PAPUC issued an order in Case M-2018-2641242
that require the Company to return to customers the difference between the federal income tax allowance in base rates and the new
statutory rate of 21%. Pike’s electric customers are receiving an annual refund of $73,923 or decrease of 0.67% on their
overall bill effective October 1, 2018. No refunds were ordered for Pike’s gas operation because amounts were not material.
The impact of the change in the Tax Act on deferred regulatory balances will be deferred until the Company’s next base rate
case. The Company has recorded those amounts as a Regulatory Liabilities on the accompanying Consolidated Balance Sheets.
The PAPUC issued an order on February 7, 2019 in
Docket S-2019-3007089 and S-2019-3007332 authorizing Pike to issue debt in the amount of $2,732,154. The authorization expires
on December 31, 2019, if the transaction has not taken place by that date.
Total Regulatory Assets on the accompanying
Consolidated Balance Sheets as of June 30, 2019 amounts to $8,243,856 compared to $9,559,035 at September 30, 2018. The Regulatory
Assets include $1,544,347 at June 30, 2019 and $1,544,347 at September 30, 2018 that is subject to Deferred Accounting Petitions
and $806,799 at June 30, 2019 and $845,708 at September 30, 2018 that is under regulatory audit. The remaining items in regulatory
assets are either approved in rates, part of annual reconciliations approved by the NYSPSC and PAPUC or approved through various
commission directives.
The Gas Company in accordance with
the rate order in Case 16-G-0204 is required to make capital expenditures to reach a net plant target of $50,427,717, $53,930,803
and $56,959,911 at May 31, 2018, 2019 and 2020 respectively. The annual net plant target is developed by taking the forecast Rate
Year average of the monthly averages of: (1) plant in service, (2) construction work in process, (3) deferred taxes
associated with tax depreciation, accelerated recovery of plant and contributions in aid of construction (“CIAC”),
and (4) depreciation reserve including accelerated recovery of plant. If the actual net plant in service falls short of the
target net plant in service for a particular Rate Year, Corning Gas will defer carrying costs for customers’ benefit equal
to the shortfall multiplied by the authorized pre-tax rate of return, as well as depreciation expense associated with the shortfall.
If the actual net plant in service exceeds the target net plant in service for a particular Rate Year, no adjustment (
i.e.
,
no surcharge to customers) will be made. The determination of any shortfall or excess will be made on a cumulative basis at the
end of the three year period. For the period ended May 31, 2018, the Company exceeded the target by $318,396. For the period ended
May 31, 2019, the Company exceeded the target by $269,090.
Note 11 – Segment Reporting
The Company’s reportable
segments have been determined based upon the nature of the products and services offered, customer base, availability of discrete
internal financial information, homogeneity of products, delivery channel and other factors.
The Gas Company is a gas distribution
company providing gas on a commodity and transportation basis to its customers in the Southern Tier of New York State. Pike provides
electricity and natural gas to Pike County, Pennsylvania. The Holding Company is the parent company of all subsidiaries and has
a 50% ownership in the Leatherstocking joint ventures. The Appliance Company’s information is presented with the Holding
Company as it has little activity.
The following table reflects the results
of the segments consistent with the Holding Company’s internal financial reporting process. The following results are used
in part, by management, both in evaluating the performance of, and in allocating resources to, each of the segments for the three
months and nine months ended June 30, 2019 and 2018.
As of and for the three months ended
June 30, 2019
|
|
|
Gas Company
|
|
|
|
Pike
|
|
|
|
Holding Company
|
|
|
|
Total Consolidated
|
|
Total electric utility revenue
|
|
|
$0
|
|
|
|
$1,467,575
|
|
|
|
$0
|
|
|
|
$1,467,575
|
|
Total gas utility revenue
|
|
|
$5,213,043
|
|
|
|
$262,490
|
|
|
|
$0
|
|
|
|
$5,475,533
|
|
Investment income
|
|
|
$34,454
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$34,454
|
|
Equity earnings from joint ventures
|
|
|
$0
|
|
|
|
$0
|
|
|
|
($56,877
|
)
|
|
|
($56,877
|
)
|
Net income (loss)
|
|
|
$254,705
|
|
|
|
($96,466
|
)
|
|
|
($119,859
|
)
|
|
|
$38,380
|
|
Income tax expense (benefit)
|
|
|
$67,402
|
|
|
|
$2,844
|
|
|
|
($11,371
|
)
|
|
|
$58,875
|
|
Interest expense
|
|
|
$323,052
|
|
|
|
$157,264
|
|
|
|
$78,976
|
|
|
|
$559,292
|
|
Depreciation expense
|
|
|
$460,400
|
|
|
|
$164,759
|
|
|
|
$$915
|
|
|
|
$626,074
|
|
Amortization expense
|
|
|
$125,864
|
|
|
|
$111,457
|
|
|
|
$16,174
|
|
|
|
$253,495
|
|
Total assets
|
|
|
$83,042,452
|
|
|
|
$26,851,360
|
|
|
|
$3,216,038
|
|
|
|
$113,109,850
|
|
Capital expenditures
|
|
|
$879,754
|
|
|
|
$580,981
|
|
|
|
$0
|
|
|
|
$1,460,735
|
|
As of and for the three months ended
June 30, 2018
|
|
|
Gas Company
|
|
|
|
Pike
|
|
|
|
Holding Company
|
|
|
|
Total Consolidated
|
|
Total electric utility revenue
|
|
|
$0
|
|
|
|
$2,068,433
|
|
|
|
$0
|
|
|
|
$2,068,433
|
|
Total gas utility revenue
|
|
|
$5,257,250
|
|
|
|
$290,445
|
|
|
|
$0
|
|
|
|
$5,547,695
|
|
Investment income
|
|
|
$3,030
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$3,030
|
|
Equity earnings from joint ventures
|
|
|
$0
|
|
|
|
$0
|
|
|
|
($51,861
|
)
|
|
|
($51,861
|
)
|
Net income (loss)
|
|
|
$167,912
|
|
|
|
$262,328
|
|
|
|
($95,345
|
)
|
|
|
$334,895
|
|
Income tax expense (benefit)
|
|
|
$71,874
|
|
|
|
$269,996
|
|
|
|
($40,600
|
)
|
|
|
$301,270
|
|
Interest expense
|
|
|
$302,554
|
|
|
|
$103,186
|
|
|
|
$81,486
|
|
|
|
$487,226
|
|
Depreciation expense
|
|
|
$446,165
|
|
|
|
$146,321
|
|
|
|
$915
|
|
|
|
$593,401
|
|
Amortization expense
|
|
|
$36,708
|
|
|
|
$51,389
|
|
|
|
$19,031
|
|
|
|
$107,128
|
|
Total assets
|
|
|
$80,514,116
|
|
|
|
$25,640,851
|
|
|
|
$3,354,728
|
|
|
|
$109,509,695
|
|
Capital expenditures
|
|
|
$661,918
|
|
|
|
$277,351
|
|
|
|
$0
|
|
|
|
$939,269
|
|
As of and for the nine months ended
June 30, 2019
|
|
|
Gas Company
|
|
|
|
Pike
|
|
|
|
Holding Company
|
|
|
|
Total Consolidated
|
|
Total electric utility revenue
|
|
|
$0
|
|
|
|
$6,252,018
|
|
|
|
$0
|
|
|
|
$6,252,018
|
|
Total gas utility revenue
|
|
|
$22,324,015
|
|
|
|
$1,553,509
|
|
|
|
$0
|
|
|
|
$23,877,524
|
|
Investment income
|
|
|
$94,352
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$94,352
|
|
Loss from joint ventures
|
|
|
$0
|
|
|
|
$0
|
|
|
|
($15,324
|
)
|
|
|
($15,324
|
)
|
Net income (loss)
|
|
|
$3,196,579
|
|
|
|
$491,894
|
|
|
|
($251,971
|
)
|
|
|
$3,436,502
|
|
Income tax expense
|
|
|
$1,124,665
|
|
|
|
$198,083
|
|
|
|
$3,880
|
|
|
|
$1,326,628
|
|
Interest expense
|
|
|
$1,048,523
|
|
|
|
$476,377
|
|
|
|
$251,591
|
|
|
|
$1,776,491
|
|
Depreciation expense
|
|
|
$1,369,717
|
|
|
|
$494,266
|
|
|
|
$2,745
|
|
|
|
$1,866,728
|
|
Amortization expense
|
|
|
$230,322
|
|
|
|
$282,830
|
|
|
|
$34,986
|
|
|
|
$548,138
|
|
Total assets
|
|
|
$83,042,452
|
|
|
|
$26,851,360
|
|
|
|
$3,216,038
|
|
|
|
$113,109,850
|
|
Capital expenditures
|
|
|
$2,939,110
|
|
|
|
$1,508,091
|
|
|
|
$0
|
|
|
|
$4,447,201
|
|
As of and for the nine months ended
June 30, 2018
|
|
|
Gas Company
|
|
|
|
Pike
|
|
|
|
Holding Company
|
|
|
|
Total Consolidated
|
|
Total electric utility revenue
|
|
|
$0
|
|
|
|
$5,910,445
|
|
|
|
$0
|
|
|
|
$5,910,445
|
|
Total gas utility revenue
|
|
|
$21,032,049
|
|
|
|
$1,502,339
|
|
|
|
$0
|
|
|
|
$22,534,388
|
|
Investment income
|
|
|
$62,525
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$62,525
|
|
Loss from joint ventures
|
|
|
$0
|
|
|
|
$0
|
|
|
|
($16,595
|
)
|
|
|
($16,595
|
)
|
Net income (loss)
|
|
|
$2,377,704
|
|
|
|
$484,575
|
|
|
|
($186,217
|
)
|
|
|
$2,676,062
|
|
Income tax expense (benefit)
|
|
|
$1,387,086
|
|
|
|
$427,237
|
|
|
|
($77,876
|
)
|
|
|
$1,736,447
|
|
Interest expense
|
|
|
$981,115
|
|
|
|
$373,759
|
|
|
|
$245,525
|
|
|
|
$1,600,399
|
|
Depreciation expense
|
|
|
$1,330,423
|
|
|
|
$443,587
|
|
|
|
$2,745
|
|
|
|
$1,776,755
|
|
Amortization expense
|
|
|
$122,819
|
|
|
|
$154,812
|
|
|
|
$26,554
|
|
|
|
$304,185
|
|
Total assets
|
|
|
$80,514,116
|
|
|
|
$25,640,851
|
|
|
|
$3,354,728
|
|
|
|
$109,509,695
|
|
Capital expenditures
|
|
|
$3,106,213
|
|
|
|
$717,299
|
|
|
|
$0
|
|
|
|
$3,823,512
|
|
Note 12 – Subsequent
Events – State adopted law
On July 18, 2019, New York
signed the Climate Leadership and Community Protection Act. The Act sets out a series of goals to significantly reduce the use
of carbon-based fossil fuels and lower New York State’s greenhouse emissions by certain dates out to 2050. The New York State
Climate Action Council has roughly three years to develop a scoping plan to recommend changes the State can make to reduce carbon
emissions. The Act has the potential to significantly impact the Company’s New York operations over the next thirty (30)
years. However, it is yet to be determined what the impact on the Company may be.