* Laclede Gas Company meets all of the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is filing this Form with reduced disclosure format.
FILING FORMAT
The Laclede Group, Inc. (Laclede Group or the Company) and Laclede Gas Company (Laclede Gas or the Utility) previously filed joint Forms 10-K, with the Utility’s Financial Statements, Notes to Financial Statements, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Exhibit 99.1 in the combined reports. In fiscal year 2011, the Company and the Utility began filing separate reports with the SEC.
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Certain matters discussed in this report, excluding historical information, include forward-looking statements. Certain words, such as “may,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “seek,” and similar words and expressions identify forward-looking statements that involve uncertainties and risks. Future developments may not be in accordance with our expectations or beliefs and the effect of future developments may not be those anticipated. Among the factors that may cause results to differ materially from those contemplated in any forward-looking statement are:
•
weather conditions and catastrophic events, particularly severe weather in the natural gas producing areas of the country;
volatility in gas prices, particularly sudden and sustained changes in natural gas prices, including the related impact on margin deposits associated with the use of natural gas derivative instruments;
the impact of changes and volatility in natural gas prices on our competitive position in relation to suppliers of alternative heating sources, such as electricity;
changes in gas supply and pipeline availability, particularly those changes that impact supply for and access to our service area;
legislative, regulatory and judicial mandates and decisions, some of which may be retroactive, including those affecting
allowed rates of return
incentive regulation
industry structure
purchased gas adjustment provisions
rate design structure and implementation
regulatory assets
non-regulated and affiliate transactions
franchise renewals
environmental or safety matters, including the potential impact of legislative and regulatory actions related to climate change and pipeline safety
taxes
pension and other postretirement benefit liabilities and funding obligations
accounting standards, including the effect of potential changes relative to adoption of or convergence with international accounting standards;
the results of litigation;
retention of, ability to attract, ability to collect from, and conservation efforts of, customers;
capital and energy commodity market conditions, including the ability to obtain funds with reasonable terms for necessary capital expenditures and general operations and the terms and conditions imposed for obtaining sufficient gas supply;
discovery of material weakness in internal controls; and
employee workforce issues.
Readers are urged to consider the risks, uncertainties, and other factors that could affect our business as described in this report. All forward-looking statements made in this report rely upon the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. We do not, by including this statement, assume any obligation to review or revise any particular forward-looking statement in light of future events.
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. Business
Overview
Laclede Gas Company (Laclede Gas or the Utility) is a wholly-owned subsidiary of The Laclede Group, Inc. (Laclede Group). Laclede Gas is a public utility engaged in the retail distribution and sale of natural gas. Laclede Gas is the largest natural gas distribution utility in Missouri, serving approximately 625,000 residential, commercial, and industrial customers in the City of St. Louis and parts of ten counties in eastern Missouri. As of September 30, 2011, Laclede Gas had 1,622 employees, including 14 part-time employees. Laclede Gas has no subsidiaries, but does have certain non-regulated activities, which are presented separately from its regulated utility operations.
Operating Revenues for the last three fiscal years are presented below. For more detailed financial information regarding the Utility’s segments, see of the Notes to Financial Statements.
(Thousands)
2011
2010
2009
Utility
$
913,190
864,297
1,053,993
Other
19,138
10,327
2,246
Total Operating Revenues
932,328
874,624
1,056,239
The information we file or furnish to the Securities and Exchange Commission (SEC), including annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K and their amendments, are available on our website, www.lacledegas.com, in the SEC Filings section under About Laclede Gas as soon as reasonably practical after the information is filed or furnished to the SEC.
REGULATED GAS DISTRIBUTION
NATURAL GAS SUPPLY
The Utility focuses its gas supply portfolio around a number of large natural gas suppliers with equity ownership or control of assets strategically situated to complement Laclede’s regionally diverse firm transportation arrangements.
Laclede Gas’ fundamental gas supply strategy is to meet the two-fold objective of 1) ensuring that the gas supplies it acquires are dependable and will be delivered when needed and 2) insofar as is compatible with that dependability, purchasing gas that is economically priced. In structuring its natural gas supply portfolio, Laclede Gas continues to focus on natural gas assets that are strategically positioned to meet the Utility’s primary objectives. Laclede Gas utilizes both Mid-Continent and Gulf Coast gas sources to provide a level of supply diversity that facilitates the optimization of pricing differentials as well as protecting against the potential of regional supply disruptions.
In fiscal year 2011, Laclede Gas purchased natural gas from 28 different suppliers to meet current gas sales and storage injection requirements. The Utility entered into firm agreements with suppliers including major producers and marketers providing flexibility to meet the temperature sensitive needs of its customers. Natural gas purchased by Laclede Gas for delivery to our utility service area through the Mississippi River Transmission Corporation (MRT) system totaled 60.2 billion cubic feet (Bcf). The Utility also holds firm transportation on several other interstate pipeline systems that provide access to gas supplies upstream of MRT. In addition to deliveries from MRT, 7.5 Bcf of gas was purchased on the Panhandle Eastern Pipe Line Company system, and 10.5 Bcf on the Southern Star Central Pipeline system. Some of the Utility’s commercial and industrial customers purchased their own gas with Laclede Gas transporting 15.5 Bcf to them through the Utility’s distribution system.
The fiscal year 2011 peak day sendout of natural gas to utility customers, including transportation customers, occurred on February 9, 2011, when the average temperature was 14 degrees Fahrenheit. On that day, our customers consumed 0.836 Bcf of natural gas. About 84% of this peak day demand was met with natural gas transported to St. Louis through the MRT, Panhandle, and Southern Star transportation systems, and the other 16% was met from the Utility’s on-system storage and peak shaving resources.