10-Q 1 ogs-20210930.htm 10-Q ogs-20210930
000158773212/31Q3false91752732240.010.01250,000,000250,000,00053,584,32653,166,73353,584,32653,166,73312,60513,1590.580.580.580.540.540.54The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those senior notes immediately due and payable in full.The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those senior notes immediately due and payable in full.The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those senior notes immediately due and payable in full.The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those senior notes immediately due and payable in 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2021.
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________.

Commission file number  001-36108

ONE Gas, Inc.
(Exact name of registrant as specified in its charter)
Oklahoma46-3561936
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
  
15 East Fifth Street
Tulsa,OK74103
(Address of principal
executive offices)
(Zip Code)

Registrant’s telephone number, including area code   (918) 947-7000

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
Common Stock, par value $0.01 per shareOGSNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes        No  

On October 25, 2021, the Company had 53,587,508 shares of common stock outstanding.





























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ONE Gas, Inc.
TABLE OF CONTENTS
Part I.
Financial InformationPage No.
Item 1.
Consolidated Financial Statements (Unaudited)
 
Consolidated Statements of Income - Three and Nine Months Ended September 30, 2021 and 2020
 
Consolidated Statements of Comprehensive Income - Three and Nine Months Ended September 30, 2021 and 2020
 
Consolidated Balance Sheets - September 30, 2021 and December 31, 2020
 
Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2021 and 2020
 
Consolidated Statements of Equity - Three and Nine Months Ended September 30, 2021 and 2020
 Notes to Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures
Part II.
Other Information
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
Signature
 

As used in this Quarterly Report, references to “we,” “our,” “us” or the “Company” refer to ONE Gas, Inc., an Oklahoma corporation, and its predecessors and subsidiaries, unless the context indicates otherwise.

The statements in this Quarterly Report that are not historical information, including statements concerning plans and objectives of management for future operations, economic performance or related assumptions, are forward-looking statements. Forward-looking statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “should,” “goal,” “forecast,” “guidance,” “could,” “may,” “continue,” “might,” “potential,” “scheduled,” “likely,” and other words and terms of similar meaning. Although we believe that our expectations regarding future events are based on reasonable assumptions, we can give no assurance that such expectations or assumptions will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements are described under Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Forward-Looking Statements,” and Part II, Item 1A, “Risk Factors” in this Quarterly Report and under Part I, Item IA, “Risk Factors,” in our Annual Report.

3


AVAILABLE INFORMATION

We make available, free of charge, on our website (www.onegas.com) copies of our Annual Report, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports filed or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act and reports of holdings of our securities filed by our officers and directors under Section 16 of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC, which also makes these materials available on its website (www.sec.gov). Copies of our Code of Business Conduct and Ethics, Corporate Governance Guidelines, Certificate of Incorporation, bylaws, the written charters of our Audit Committee, Executive Compensation Committee, Corporate Governance Committee and Executive Committee and our Environmental, Social and Governance Report are also available on our website, and copies of these documents are available upon request.

In addition to filings with the SEC and materials posted on our website, we also use social media platforms as channels of information distribution to reach public investors. Information contained on our website or posted on or disseminated through our social media accounts is not incorporated by reference into this report.


4


GLOSSARY - The abbreviations, acronyms and industry terminology used in this Quarterly Report are defined as follows:
AAOAccounting Authority Order
ADITAccumulated deferred income taxes
Annual ReportAnnual Report on Form 10-K for the year ended December 31, 2020
ASCAccounting Standards Codification
ASUAccounting Standards Update
BcfBillion cubic feet
CERCLAFederal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
Clean Air ActFederal Clean Air Act, as amended
Clean Water ActFederal Water Pollution Control Amendments of 1972, as amended
CNGCompressed natural gas
COVID-19Coronavirus Disease 2019
DOTUnited States Department of Transportation
EDITExcess accumulated deferred income taxes resulting from a change in enacted tax rates
EPAUnited States Environmental Protection Agency
EPSEarnings per share
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
GAAPAccounting principles generally accepted in the United States of America
GPACGas Pipeline Advisory Committee
GRIPGas Reliability Infrastructure Program
GSRSGas System Reliability Surcharge
Heating Degree Day or HDD
A measure designed to reflect the demand for energy needed for heating based on the extent to which the daily average temperature falls below a reference temperature for which no heating is required, usually 65 degrees Fahrenheit
HCA(s)High consequence area(s)
KCCKansas Corporation Commission
KDHEKansas Department of Health and Environment
LDCLocal distribution company
LIBORLondon Interbank Offered Rate
MAOP(s)Maximum allowable operating pressure(s)
MGPManufactured gas plant
MMcfMillion cubic feet
Moody’sMoody’s Investors Service, Inc.
Net marginNon-GAAP measure defined as total revenues less cost of natural gas
NPRMNotice of Proposed Rulemaking
NYSENew York Stock Exchange
OCCOklahoma Corporation Commission
ODFAOklahoma Development Finance Authority
ONE GasONE Gas, Inc.
ONE Gas 2021 Term Loan FacilityONE Gas’ $2.5 billion two-year unsecured term loan facility, dated February 22, 2021, which terminated on March 11, 2021
ONE Gas 364-day Credit AgreementONE Gas’ $250 million 364-day revolving credit agreement, dated April 7, 2020, which terminated on March 16, 2021
ONE Gas Credit AgreementONE Gas’ $1.0 billion second amended and restated revolving credit agreement, which expires on March 16, 2026
PBRCPerformance-Based Rate Change
PHMSAUnited States Department of Transportation Pipeline and Hazardous Materials Safety Administration
PPEPersonal protective equipment
Quarterly Report(s)Quarterly Report(s) on Form 10-Q
RNGRenewable natural gas
ROEReturn on equity, calculated consistent with utility ratemaking principles in each jurisdiction in which we operate
RRC
Railroad Commission of Texas
S&PStandard & Poor’s Ratings Services
SECSecurities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
Senior Notes
ONE Gas’ registered notes consisting of $1.0 billion of 0.85 percent senior notes due 2023, $400 million of floating-rate senior notes due 2023, $700 million of 1.10 percent senior notes due 2024, $300 million of 3.61 percent senior notes due 2024, $300 million of 2.00 percent senior notes due 2030, $600 million of 4.658 percent senior notes due 2044 and $400 million of 4.50 percent notes due 2048
TPFATexas Public Finance Authority
WNAWeather normalization adjustment(s)
XBRLeXtensible Business Reporting Language
5


PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
ONE Gas, Inc.  
CONSOLIDATED STATEMENTS OF INCOME  
Three Months EndedNine Months Ended
 September 30,September 30,
(Unaudited)
2021202020212020
(Thousands of dollars, except per share amounts)
Total revenues$273,923 $244,640 $1,214,862 $1,046,095 
Cost of natural gas59,399 40,485 467,169 329,134 
Operating expenses
Operations and maintenance105,732 100,285 320,152 308,641 
Depreciation and amortization51,150 47,998 154,288 142,898 
General taxes15,835 15,193 49,999 46,931 
Total operating expenses172,717 163,476 524,439 498,470 
Operating income41,807 40,679 223,254 218,491 
Other income (expense), net(1,805)198 (1,758)(3,196)
Interest expense, net(15,392)(15,542)(45,828)(47,078)
Income before income taxes24,610 25,335 175,668 168,217 
Income taxes(4,357)(4,256)(29,746)(30,136)
Net income$20,253 $21,079 $145,922 $138,081 
Earnings per share
Basic$0.38 $0.40 $2.73 $2.60 
Diluted$0.38 $0.39 $2.72 $2.59 
Average shares (thousands)
Basic53,710 53,190 53,516 53,084 
Diluted53,793 53,408 53,618 53,313 
Dividends declared per share of stock$0.58 $0.54 $1.74 $1.62 
See accompanying Notes to Consolidated Financial Statements.
6


ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
 Three Months EndedNine Months Ended
 September 30,September 30,
(Unaudited)
2021202020212020
 
(Thousands of dollars)
Net income$20,253 $21,079 $145,922 $138,081 
Other comprehensive income, net of tax    
Change in pension and other postemployment benefit plan liability, net of tax of $(91), $(75), $(273) and $(224), respectively300 223 899 670 
Total other comprehensive income, net of tax300 223 899 670 
Comprehensive income$20,553 $21,302 $146,821 $138,751 
See accompanying Notes to Consolidated Financial Statements.

7


ONE Gas, Inc.  
CONSOLIDATED BALANCE SHEETS  
 September 30,December 31,
(Unaudited)
20212020
Assets
(Thousands of dollars)
Property, plant and equipment  
Property, plant and equipment$7,138,445 $6,838,603 
Accumulated depreciation and amortization2,060,335 1,971,546 
Net property, plant and equipment5,078,110 4,867,057 
Current assets  
Cash and cash equivalents6,467 7,993 
Accounts receivable, net118,383 292,985 
Materials and supplies52,638 52,766 
Natural gas in storage166,778 93,946 
Regulatory assets300,485 56,773 
Assets from price risk management activities77,380  
Other current assets30,759 35,406 
Total current assets752,890 539,869 
Goodwill and other assets  
Regulatory assets2,050,332 366,956 
Goodwill157,953 157,953 
Other assets94,633 96,877 
Total goodwill and other assets2,302,918 621,786 
Total assets$8,133,918 $6,028,712 
See accompanying Notes to Consolidated Financial Statements.
8


ONE Gas, Inc.  
CONSOLIDATED BALANCE SHEETS  
(Continued)
 September 30,December 31,
(Unaudited)
20212020
Equity and Liabilities
(Thousands of dollars)
Equity and long-term debt
Common stock, $0.01 par value:
authorized 250,000,000 shares; issued and outstanding 53,584,326 shares at September 30, 2021; issued and outstanding 53,166,733 shares at December 31, 2020
$536 $532 
Paid-in capital1,785,476 1,756,921 
Retained earnings535,964 483,635 
Accumulated other comprehensive loss(6,878)(7,777)
   Total equity2,315,098 2,233,311 
Long-term debt, excluding current maturities and net of issuance costs of $12,605 and $13,159, respectively3,683,137 1,582,428 
Total equity and long-term debt5,998,235 3,815,739 
Current liabilities  
Short-term debt336,000 418,225 
Accounts payable127,544 152,313 
Accrued taxes other than income69,374 63,800 
Regulatory liabilities63,194 15,761 
Customer deposits59,433 68,028 
Other current liabilities64,591 78,952 
Total current liabilities720,136 797,079 
Deferred credits and other liabilities  
Deferred income taxes677,034 656,806 
Regulatory liabilities556,843 547,563 
Employee benefit obligations74,373 97,637 
Other deferred credits107,297 113,888 
Total deferred credits and other liabilities1,415,547 1,415,894 
Commitments and contingencies
Total liabilities and equity$8,133,918 $6,028,712 
See accompanying Notes to Consolidated Financial Statements.





















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10


ONE Gas, Inc.  
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
(Unaudited)
20212020
 
(Thousands of dollars)
Operating activities  
Net income$145,922 $138,081 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization154,288 142,898 
Deferred income taxes29,224 11,175 
Share-based compensation expense8,076 7,439 
Provision for doubtful accounts8,128 8,836 
Changes in assets and liabilities:
Accounts receivable166,474 144,399 
Materials and supplies128 240 
Natural gas in storage(72,832)(1,118)
Asset removal costs(35,195)(29,019)
Accounts payable(17,244)(50,848)
Accrued taxes other than income5,574 9,776 
Customer deposits(8,595)(2,668)
Regulatory assets and liabilities - current(273,659)(49,055)
Regulatory assets and liabilities - noncurrent(1,651,445)24,577 
Other assets and liabilities - current(10,537)(20,550)
Other assets and liabilities - noncurrent(8,884)(8,834)
Cash provided by (used in) operating activities(1,560,577)325,329 
Investing activities  
Capital expenditures(347,701)(348,915)
Other investing expenditures(3,374)(1,379)
Other investing receipts1,676 2,482 
Cash used in investing activities(349,399)(347,812)
Financing activities  
Borrowings (repayments) on short-term debt, net(82,225)(208,500)
Issuance of debt, net of discounts2,498,895 297,750 
Long-term debt financing costs(35,110)(2,885)
Issuance of common stock24,104 16,325 
Repayment of long-term debt(400,000) 
Dividends paid(92,832)(85,698)
Tax withholdings related to net share settlements of stock compensation(4,382)(6,178)
Cash provided by (used in) financing activities1,908,450 10,814 
Change in cash and cash equivalents(1,526)(11,669)
Cash and cash equivalents at beginning of period7,993 17,853 
Cash and cash equivalents at end of period$6,467 $6,184 
See accompanying Notes to Consolidated Financial Statements.

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ONE Gas, Inc. 
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
Common Stock IssuedCommon StockPaid-in Capital
 (Shares)
(Thousands of dollars)
January 1, 202153,166,733 $532 $1,756,921 
Net income   
Other comprehensive income   
Common stock issued and other78,278  (1,705)
Common stock dividends - $0.58 per share
  260 
March 31, 202153,245,011 $532 $1,755,476 
Net income   
Other comprehensive income   
Common stock issued and other254,226 3 21,175 
Common stock dividends - $0.58 per share
  260 
June 30, 202153,499,237 $535 $1,776,911 
Net income   
Other comprehensive income   
Common stock issued and other85,089 1 8,324 
Common stock dividends - $0.58 per share
  241 
September 30, 202153,584,326 $536 $1,785,476 
January 1, 202052,771,749 $528 $1,733,092 
Net income   
Other comprehensive income   
Common stock issued and other89,059 1 (3,737)
Common stock dividends - $0.54 per share
  232 
March 31, 202052,860,808 $529 $1,729,587 
Net income   
Other comprehensive income   
Common stock issued and other59,722  5,974 
Common stock dividends - $0.54 per share
  227 
June 30, 202052,920,530 $529 $1,735,788 
Net income—   
Other comprehensive income—   
Common stock issued and other176,363 2 15,334 
Common stock dividends - $0.54 per share
—  228 
September 30, 202053,096,893 $531 $1,751,350 
See accompanying Notes to Consolidated Financial Statements.


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ONE Gas, Inc. 
CONSOLIDATED STATEMENTS OF EQUITY
(Continued)
(Unaudited)
Retained EarningsAccumulated Other Comprehensive LossTotal Equity
 
(Thousands of dollars)
January 1, 2021$483,635 $(7,777)$2,233,311 
Net income95,575  95,575 
Other comprehensive income 300 300 
Common stock issued and other  (1,705)
Common stock dividends - $0.58 per share
(31,142) (30,882)
March 31, 2021$548,068 $(7,477)$2,296,599 
Net income30,093  30,093 
Other comprehensive income 299 299 
Common stock issued and other  21,178 
Common stock dividends - 0.58 per share
(31,163) (30,903)
June 30, 2021$546,998 $(7,178)$2,317,266 
Net income20,253  20,253 
Other comprehensive income 300 300 
Common stock issued and other  8,325 
Common stock dividends - $0.58 per share
(31,287) (31,046)
September 30, 2021$535,964 $(6,878)$2,315,098 
January 1, 2020$402,509 $(6,739)$2,129,390 
Net income91,677  91,677 
Other comprehensive income 224 224 
Common stock issued and other  (3,736)
Common stock dividends - $0.54 per share
(28,775) (28,543)
March 31, 2020$465,411 $(6,515)$2,189,012 
Net income25,325  25,325 
Other comprehensive income 223 223 
Common stock issued and other  5,974 
Common stock dividends - $0.54 per share
(28,774) (28,547)
June 30, 2020$461,962 $(6,292)$2,191,987 
Net income21,079  21,079 
Other comprehensive income 223 223 
Common stock issued and other  15,336 
Common stock dividends - $0.54 per share
(28,836) (28,608)
September 30, 2020$454,205 $(6,069)$2,200,017 
See accompanying Notes to Consolidated Financial Statements.

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ONE Gas, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. These statements also have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The 2020 year-end consolidated balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes in our Annual Report. Our significant accounting policies are described in Note 1 of our Notes to Consolidated Financial Statements in our Annual Report. Due to the seasonal nature of our business, the results of operations for the nine months ended September 30, 2021, are not necessarily indicative of the results that may be expected for a 12-month period.

We provide natural gas distribution services to our approximately 2.2 million customers through our divisions in Oklahoma, Kansas and Texas through Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, respectively. We primarily serve residential, commercial and transportation customers in all three states.

Use of Estimates - The preparation of our consolidated financial statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amount of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. These estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Items that may be estimated include, but are not limited to, the economic useful life of assets, fair value of assets and liabilities, provision for doubtful accounts, unbilled revenues for natural gas delivered but for which meters have not been read, natural gas purchased but for which no invoice has been received, provision for income taxes, including any deferred tax valuation allowances, reserves for environmental remediation, the results of litigation and various other recorded or disclosed amounts.

We evaluate these estimates on an ongoing basis using historical experience and other methods we consider reasonable based on the circumstances. Nevertheless, actual results may differ significantly from the estimates. Any effects on our financial position or results of operations from revisions to these estimates are recorded in the period when the facts that give rise to the revision become known to us.

Segments - We operate in one reportable business segment: regulated public utilities that deliver natural gas primarily to residential, commercial and transportation customers. The accounting policies for our segment are the same as those described in Note 1 of our Notes to Consolidated Financial Statements in our Annual Report. We evaluate our financial performance principally on net income. For the three and nine months ended September 30, 2021, and 2020, we had no single external customer from which we received 10 percent or more of our gross revenues.

Property, Plant and Equipment and Asset Removal Costs - Accounts payable for construction work in process and asset removal costs decreased by approximately $7.5 million and $4.3 million for the nine months ended September 30, 2021 and 2020, respectively. Such amounts are not included in capital expenditures or asset removal costs in our consolidated statements of cash flows.

Goodwill Impairment Test – We assess our goodwill for impairment at least annually on July 1, unless events or changes in circumstances indicate an impairment may have occurred before that time. As part of our goodwill impairment test, we may first assess qualitative factors (including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance) to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If further testing is necessary or a quantitative test is elected to refresh our recurring qualitative assessments, we perform a quantitative impairment test for goodwill. We did not identify any impairment indicators for our goodwill and determined that no further testing was necessary.

Accounts Receivable - Accounts receivable represent valid claims against nonaffiliated customers for natural gas sold or services rendered, net of allowances for doubtful accounts. We assess the creditworthiness of our customers. Those customers who do not meet minimum standards may be required to provide security, including deposits and other forms of collateral, when appropriate and allowed by our tariffs. With approximately 2.2 million customers across three states, we are not exposed materially to a concentration of credit risk. We maintain an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends, consideration of the current environment and other information. We recover natural
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gas costs related to accounts written off when they are deemed uncollectible through the purchased-gas cost adjustment mechanisms in each of our jurisdictions. At September 30, 2021 and December 31, 2020, our allowance for doubtful accounts was $18.9 million and $16.6 million, respectively.

Reclassifications - Certain reclassifications have been made in the prior-year financial statements to conform to the current-year presentation. We have updated our 2020 Statements of Cash Flows for the nine months ended September 30, 2020, to disaggregate “regulatory assets and liabilities” and “other assets and liabilities” into current and non-current components that are presented on our balance sheet to conform to our current year presentation.

Recently Issued Accounting Standards Update - In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. In the first quarter 2020, we adopted this new guidance effective for contracts modified between March 12, 2020 and December 31, 2022. Our revolving line of credit under the ONE Gas Credit Agreement and our remaining $400 million of floating-rate senior notes due 2023 utilize LIBOR as the reference rate. If modified, we may elect the optional practical expedients to account for the modifications prospectively. Our adoption did not result in a material impact to our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. ASU 2019-12 also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This standard is effective for interim and annual periods in fiscal years beginning after December 15, 2020. We adopted this new guidance on January 1, 2021. Our adoption did not result in a material impact to our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force).” Under this guidance, a company should defer implementation costs that it incurs if a company would capitalize those same costs under the internal-use software guidance for an arrangement that is a software license. The deferred implementation costs should be amortized over the term of the hosting arrangement, including any probable renewals. We are party to hosting arrangements identified as service contracts for various information systems used in our operations. We adopted this new guidance using the prospective transition approach for implementation costs incurred in hosting arrangement service contracts beginning January 1, 2020. In certain jurisdictions, we have orders from our regulators allowing us to amortize deferred implementation costs for hosting arrangements entered into after January 1, 2020, over the life approved by our regulators for our internal-use software systems rather than the term of the hosting arrangement. The difference in amortization calculated between the term of the hosting arrangement and internal-use software life approved by our regulators is deferred as a regulatory asset and amortized over the remaining internal-use software life that exceeds the term of the hosting arrangement. Our adoption did not result in a material impact to our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments,” which introduces new guidance to the accounting for credit losses on instruments within its scope, including trade receivables. We adopted this new guidance in the first quarter 2020 using the modified retrospective method. Our financial assets within scope of this guidance primarily include our trade receivables from customers. Our policy for measuring our allowance for doubtful accounts is disclosed in Note 1 of our Notes to Consolidated Financial Statements in our Annual Report. We did not create any new accounting policies, nor did we modify any of our existing policies as a result of adopting this guidance. Our adoption did not result in a cumulative adjustment to our opening retained earnings or have a material impact to our consolidated financial statements.
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2.REVENUE

The following table sets forth our revenues disaggregated by source for the periods indicated:
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
(Thousands of dollars)
Natural gas sales to customers$240,591 $212,723 $1,105,835 $936,749 
Transportation revenues25,342 24,305 87,760 82,543 
Miscellaneous revenues4,363 3,800 12,091 11,390 
Total revenues from contracts with customers270,296 240,828 1,205,686 1,030,682 
Other revenues - natural gas sales related545 (66)849 6,478 
Other revenues 3,082 3,878 8,327 8,935 
Total other revenues3,627 3,812 9,176 15,413 
Total revenues$273,923 $244,640 $1,214,862 $1,046,095 

Accrued unbilled natural gas sales revenues at September 30, 2021 and December 31, 2020, were $54.3 million and $144.9 million, respectively, and are included in accounts receivable on our consolidated balance sheets.

3. REGULATORY ASSETS AND LIABILITIES

The tables below present a summary of regulatory assets and liabilities, net of amortization, for the periods indicated:
September 30, 2021
CurrentNoncurrentTotal
(Thousands of dollars)
Winter weather event costs$255,051 $1,708,247 $1,963,298 
Pension and postemployment benefit costs16,513 307,073 323,586 
Reacquired debt costs812 4,258 5,070 
MGP remediation costs98 29,865 29,963 
Ad-valorem tax8,065  8,065 
WNA1,563  1,563 
Customer credit deferrals16,153  16,153 
Other2,230 889 3,119 
Total regulatory assets, net of amortization300,485 2,050,332 2,350,817 
Income tax rate changes (556,843)(556,843)
Over-recovered purchased-gas costs(63,194) (63,194)
Total regulatory liabilities, net of amortization(63,194)(556,843)(620,037)
Net regulatory assets and liabilities$237,291 $1,493,489 $1,730,780 
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December 31, 2020
CurrentNoncurrentTotal
(Thousands of dollars)
Under-recovered purchased-gas costs$16,502 $ $16,502 
Pension and postemployment benefit costs16,541 341,266 357,807 
Reacquired debt costs812 4,866 5,678 
MGP remediation costs98 18,711 18,809 
Ad-valorem tax5,558  5,558 
WNA4,806  4,806 
Customer credit deferrals10,267  10,267 
Other2,189 2,113 4,302 
Total regulatory assets, net of amortization56,773 366,956 423,729 
Income tax rate changes (547,563)(547,563)
Over-recovered purchased-gas costs(15,761) (15,761)
Total regulatory liabilities(15,761)(547,563)(563,324)
Net regulatory assets and liabilities$41,012 $(180,607)$(139,595)

Regulatory assets in our consolidated balance sheets, as authorized by various regulatory authorities, are probable of recovery. Base rates and certain riders are designed to provide a recovery of costs during the period such rates are in effect, but do not generally provide for a return on investment for amounts we have deferred as regulatory assets. All of our regulatory assets are subject to review by the respective regulatory authorities during future regulatory proceedings. We are not aware of any evidence that these costs will not be recoverable through either riders or base rates, and we believe that we will be able to recover such costs consistent with our historical recoveries.

Winter weather event costs - In February 2021, the U.S. experienced Winter Storm Uri, a historic winter weather event impacting supply, market pricing and demand for natural gas in a number of states, including our service territories of Kansas, Oklahoma, and Texas. During this time, the governors of Kansas, Oklahoma, and Texas each declared a state of emergency, and certain regulatory agencies issued emergency orders that impacted the utility and natural gas industries, including statewide utility curtailment programs and orders requiring jurisdictional natural gas and electric utilities to do all things possible and necessary to ensure that natural gas and electricity utility services continued to be provided to their customers. Due to the historic nature of this winter weather event, we experienced unforeseeable and unprecedented market pricing for gas costs in our Kansas, Oklahoma, and Texas jurisdictions, which resulted in aggregated natural gas purchases for the month of February of approximately $2.1 billion.

On February 16, 2021, the OCC approved an emergency order (i) directing natural gas and electric utilities to prioritize deliveries of natural gas and electricity for services necessary for life, health, and public safety, and of natural gas to electric generation facilities that serve human needs customers, and (ii) directing local utilities to communicate with their customers in order to reduce all non-essential energy consumption, and to reduce load in a safe and reasonable manner. The OCC order recognized that the severe weather conditions resulted in increased commodity prices for both gas and electric utilities, along with issues relating to commodity acquisition, line pressure, and supply shortages. The OCC order expired on February 20, 2021.

In response to a motion filed by Oklahoma Natural Gas, on March 2, 2021, the OCC issued an order stating that Oklahoma Natural Gas shall defer to a regulatory asset the extraordinary costs associated with this unprecedented winter weather event, including commodity costs, operational costs and carrying costs. The order further states that after all deferred costs have been accumulated and recorded, Oklahoma Natural Gas shall file a compliance report detailing the extent of such costs incurred. The order also provided that recovery of the deferred costs will be addressed in a future proceeding that will include a prudence review.

In April 2021, a bill permitting the state to pursue securitized financing of extraordinary expenses, such as fuel costs, financing costs and other operational costs incurred by regulated utilities during extreme weather events, was signed into law by the Oklahoma governor. On April 29, 2021, Oklahoma Natural Gas submitted an initial application requesting a financing order pursuant to this legislation. On July 30, 2021, Oklahoma Natural Gas filed a supplemental motion with its compliance report pursuant to the March 2, 2021 order from the OCC detailing the extent of extraordinary costs incurred and all required components pursuant to the legislation for the issuance of a financing order, which includes a proposed period of 20 years over which these costs will be collected from customers. On October 4, 2021, the Public Utility Division of the OCC filed responsive testimony recommending that a financing order for securitization be approved. A hearing before the administrative
17


law judge has been scheduled for November 22, 2021. The OCC has 180 days from the filing date of the supplemental motion to consider the issuance of a financing order. If the OCC approves the financing order, the ODFA has 24 months to complete the process to issue the securitized bonds.

On February 15, 2021, the KCC issued an emergency order (i) directing all jurisdictional natural gas and electric utilities to coordinate efforts and take all reasonably feasible, lawful, and appropriate actions to ensure adequate delivery of natural gas and electricity to interconnected, non-jurisdictional utilities in Kansas, (ii) requiring jurisdictional natural gas and electric utilities to do all things possible and necessary to ensure that natural gas and electricity utility services continued to be provided to their customers in Kansas, and (iii) allowing those electric and natural gas distribution utilities who incur extraordinary costs to ensure their customers and other interconnected customers continued to receive utility service during this unprecedented cold weather event to defer those costs to a regulatory asset account. These deferred costs may also include carrying costs at the utility’s weighted average cost of capital. Each jurisdictional utility will be required to file a compliance report detailing the extent of such costs incurred and presenting a plan to minimize the financial impacts of this event on ratepayers over a reasonable time frame. These costs will be subject to review for reasonableness and accuracy in future regulatory proceedings. On March 9, 2021, the KCC issued an order adopting the KCC staff’s recommendation to open company-specific dockets to accept each utility’s filing of financial impact compliance reports and permit the KCC staff to conduct a review of the utility’s compliance report and its actions during the winter weather event. In April 2021, a bill permitting the utilities to pursue securitization to finance extraordinary expenses incurred during extreme weather events, was signed into law by the Kansas governor. The bill gives the KCC the authority to oversee and authorize the issuance of ratepayer-backed securitized bonds issued by a public utility.

On July 30, 2021, Kansas Gas Service submitted its compliance report to the KCC, which includes a proposal to issue securitized bonds and collect the extraordinary costs resulting from Winter Storm Uri from its customers over a period of either 5, 7 or 10 years. A procedural schedule will be developed to determine the timeline for evaluating Kansas Gas Service’s compliance report. If the KCC approves Kansas Gas Service’s proposed financing plan, then Kansas Gas Service will file an application, in a separate proceeding, requesting a financing order for the issuance of securitized utility tariff bonds. The KCC will have 180 days from the date of the filing requesting a financing order to consider Kansas Gas Service’s application. If the KCC approves the financing order, we can begin the process to issue the securitized bonds.

In May 2021, Kansas Gas Service filed a motion requesting a limited waiver of penalty provisions of its tariff to eliminate the multipliers in the penalty calculation when calculating the penalties to assess on marketers and individually balanced transportation customers for their unauthorized natural gas usage during Winter Storm Uri. On October 8, 2021, a non-unanimous settlement agreement was filed with the KCC to reach a resolution on these penalties. A proposed procedural schedule for consideration of the settlement agreement was filed and under this proposed agreement, the KCC would issue an order on the settlement by December 30, 2021. Under the terms of the settlement, if approved, any amounts collected from these penalties would reduce the regulatory asset for the winter weather event by no more than $83.0 million.

On February 13, 2021, the RRC issued a Notice to Local Distribution Companies acknowledging that due to the demand for natural gas expected during the upcoming winter weather event, natural gas utility LDCs may be required to pay extraordinarily high prices in the market for natural gas and may be subjected to other extraordinary costs when responding to the event. The RRC also encouraged natural gas utilities to continue to work to ensure that the citizens of the State of Texas were provided with safe and reliable natural gas service. To partially defer and reduce the impact on customers for these costs that ultimately are reflected in customer bills, the RRC authorized LDCs to record a regulatory asset to account for the extraordinary costs associated with this winter weather event, including but not limited to gas cost and other costs related to the procurement and transportation of gas supply. These costs will be subject to review for reasonableness and accuracy in future regulatory proceedings.

In June 2021, a bill permitting the state to pursue securitized financing of extraordinary expenses, such as fuel costs, financing costs and other operational costs incurred by utilities during Winter Storm Uri, was signed into law by the Texas governor. This bill gives the RRC the authority to approve amounts to be recovered from the issuance of ratepayer-backed securitized bonds by the TPFA. Pursuant to this legislation and a June 17, 2021 RRC Notice to Gas Utilities, Texas Gas Service submitted an application to the RRC on July 30, 2021, for an order authorizing the amount of extraordinary costs for recovery and other such specifications necessary for the issuance of securitized bonds. On October 29, 2021, Texas Gas Service, the other natural gas utilities in Texas participating in the securitization process, staff of the RRC and all intervenors filed a unanimous settlement agreement with the RRC. The signatories agreed that all costs to purchase natural gas volumes during Winter Storm Uri by Texas Gas Service were reasonable, necessary and prudently incurred. Texas Gas Service agreed to reduce its regulatory asset amount to be securitized by the amount of extraordinary costs attributable to the West Texas Service Area, which will be recovered through a separate surcharge over a three-year period. The unanimous settlement agreement will be considered by the RRC at a hearing on November 2, 2021. The RRC has 150 days from the date of the filing to consider Texas Gas Service’s
18


application and an additional 90 days to issue a single financing order for Texas Gas Service and any other natural gas utilities in Texas participating in the securitization process, which will include a determination of the period over which the costs will be collected from customers. Upon issuance of a financing order, the TPFA will begin the process to issue the securitized bonds.

In accordance with these regulatory orders associated with the winter weather event, we have deferred approximately $2.0 billion in extraordinary costs for natural gas purchases, related financing and carrying costs and other operational costs, which includes $1.3 billion of costs attributable to Oklahoma Natural Gas customers, $385.8 million of costs attributable to Kansas Gas Service customers and $255.1 million of costs attributable to Texas Gas Service customers, which includes $59.5 million attributable to the West Texas Service Area. The amounts deferred at September 30, 2021, include invoiced costs for natural gas purchases that have not been paid as we work with our suppliers to resolve discrepancies in invoiced amounts. The amounts deferred may be adjusted as the differences are resolved. In addition, as a result of Winter Storm Uri, we were assessed penalties as a result of over- or under-deliveries of natural gas during periods that operational flow orders were imposed on us. Regarding Kansas Gas Service’s motion requesting a limited waiver of penalty provisions of its tariff, if the non-unanimous settlement agreement filed with the KCC is approved, we anticipate assessing penalties on our transport customers or their agents. Amounts recorded reflect management’s best estimate of the amounts we may pay or receive and may be adjusted in future periods as the disposition of such penalties is determined. As these amounts are related to the extraordinary gas purchase costs associated with Winter Storm Uri, which are deferred, future adjustments are not expected to have a material impact on earnings.

Other regulatory assets and liabilities - Purchased-gas costs represent the natural gas costs that have been over- or under- recovered from customers through the purchased-gas cost adjustment mechanisms, and includes natural gas utilized in our operations and premiums paid and any cash settlements received from our purchased natural gas call options.

The OCC, KCC and regulatory authorities in Texas have approved the recovery of pension costs and other postemployment benefits costs through rates for Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, respectively. The costs recovered through rates are based on the net periodic benefit cost for defined benefit pension and other postemployment costs. Differences, if any, between the net periodic benefit cost, net of deferrals, and the amount recovered through rates are reflected in earnings. We historically have recovered defined benefit pension and other postemployment benefit costs through rates. We believe it is probable that regulators will continue to include the net periodic pension and other postemployment benefit costs in our cost of service.

We amortize reacquired debt costs in accordance with the accounting guidelines prescribed by the OCC and KCC.

Weather normalization represents revenue over- or under- recovered through the WNA rider in Kansas. This amount is deferred as a regulatory asset or liability for a 12-month period. Kansas Gas Service then applies an adjustment to the customers’ bills for 12 months to refund the over-collected revenue or bill the under-collected revenue.

Ad-valorem tax represents an increase or decrease in Kansas Gas Service’s taxes above or below the amount approved in base rates. This amount is deferred as a regulatory asset or liability for a 12-month period. Kansas Gas Service then applies an adjustment to the customers’ bills for 12 months to refund the over-collected revenue or bill the under-collected revenue.

The customer credit deferrals and the noncurrent regulatory liability for income tax rate changes represents deferral of the effects of enacted federal and state income tax rate changes on our ADIT and the effects of these changes on our rates. At September 30, 2021, the noncurrent regulatory liability for income tax rate changes includes the reclassification of $29.3 million of deferred taxes related to the reduction of the state income tax rate in Oklahoma. Additionally, it includes the reclassification of $81.5 million of deferred taxes related to the elimination of state income tax for utilities in Kansas at September 30, 2021 and December 31, 2020. See Note 10 for additional information regarding the impact of income tax rate changes during the third quarter 2021.

See Note 12 for additional information regarding our regulatory assets for MGP remediation costs.

We have received accounting orders in each of our jurisdictions authorizing us to accumulate and defer for regulatory purposes certain incremental costs incurred, including bad debt expenses, and certain lost revenues, net of offsetting expense reductions associated with COVID-19. Pursuant to these orders, the recovery of any net incremental costs and lost revenues will be determined in future rate cases or alternative rate recovery filings in each jurisdiction. For financial reporting purposes, any amounts deferred as a regulatory asset for future recovery under these accounting orders must be probable of recovery. At September 30, 2021, no regulatory assets have been recorded. We continue to evaluate the impacts of COVID-19 on our business and will record regulatory assets for financial reporting purposes at such time as recovery is deemed probable.

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Recovery through rates resulted in amortization of regulatory assets of approximately $0.5 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and approximately $4.4 million and $2.4 million for the nine months ended September 30, 2021 and 2020, respectively.

4.CREDIT FACILITY AND SHORT-TERM DEBT

In June 2021, we increased the size of our commercial paper program to permit the issuance of commercial paper to fund short-term borrowing needs in an aggregate principal amount not to exceed $1.0 billion outstanding at any time. Prior to this increase, our commercial paper program permitted us to issue commercial paper in an aggregate principal amount not to exceed $700 million outstanding at any time. The maturities of the commercial paper vary but may not exceed 270 days from the date of issue. The commercial paper are generally sold at par less a discount representing an interest factor. At September 30, 2021, we had $336.0 million of commercial paper outstanding.

On March 16, 2021, we entered into the second amended and restated ONE Gas Credit Agreement, which was previously amended and restated on October 5, 2017.

The ONE Gas Credit Agreement provides for a $1.0 billion revolving unsecured credit facility and includes a $20 million letter of credit subfacility and a $60 million swingline subfacility. We can request an increase in commitments of up to an additional $500 million upon satisfaction of customary conditions, including receipt of commitments from either new lenders or increased commitments from existing lenders. We will be able to extend the maturity date by one year, subject to the lenders’ consent, up to two times. The ONE Gas Credit Agreement expires in March 2026, and is available to provide liquidity for working capital, capital expenditures, acquisitions and mergers, the issuance of letters of credit and for other general corporate purposes.

The ONE Gas Credit Agreement utilizes LIBOR as the reference rate for determining interest to accrue on the borrowings. In the event LIBOR is not available, and such circumstances are unlikely to be temporary, our lenders may establish an alternative interest rate for the senior notes by replacing LIBOR with one or more secured overnight financing-based rates or another alternate benchmark rate.

The ONE Gas Credit Agreement contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining ONE Gas’ total debt-to-capital ratio of no more than 72.5 percent at the end of any calendar quarter through December 31, 2021, and 70 percent at the end of any calendar quarter thereafter. At September 30, 2021, our total debt-to-capital ratio was 63 percent and we were in compliance with all covenants under the ONE Gas Credit Agreement. We may reduce the unutilized portion of the ONE Gas Credit Agreement in whole or in part without premium or penalty. The ONE Gas Credit Agreement contains customary events of default. Upon the occurrence of certain events of default, the obligations under the ONE Gas Credit Agreement may be accelerated and the commitments may be terminated.

At September 30, 2021, we had $1.2 million in letters of credit issued and no borrowings under the ONE Gas Credit Agreement, with $998.8 million of remaining credit, which is available to repay any of our commercial paper borrowings.

In connection with the second amendment of the ONE Gas Credit Agreement on March 16, 2021, all commitments under our ONE Gas 364-day Credit Agreement, dated as of April 7, 2020, were terminated and all obligations under the ONE Gas 364-day Credit Agreement were paid in full and discharged.

5.LONG-TERM DEBT

Senior Notes - In March 2021, we issued $1.0 billion of 0.85 percent senior notes due 2023, $700 million of 1.10 percent senior notes due 2024, and $800 million of floating-rate senior notes due 2023. The floating-rate senior notes bear interest at a rate equal to three-month LIBOR plus 61 basis points per year, reset quarterly for the applicable interest period (0.73 percent at September 30, 2021). The net proceeds from the issuance were used for payment of gas purchases and related costs resulting from Winter Storm Uri and general corporate purposes.

In the event LIBOR is not available, and such circumstances are unlikely to be temporary, we or our designee may establish an alternative interest rate for our floating-rate senior notes due 2023 by replacing LIBOR with one or more secured financing-based rates or another alternate benchmark rate.

We may redeem the senior notes issued in March 2021 in whole or in part, plus accrued and unpaid interest to the redemption date, on or after September 11, 2021. We did not have the right to redeem these senior notes prior to September 11, 2021.

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On September 21, 2021, we redeemed $400 million of the floating-rate senior notes due 2023 at par, using a combination of cash on hand and commercial paper.

In April 2020, we issued $300 million of 2.00 percent senior notes due 2030. The proceeds from the issuance were used to reduce the amount of outstanding commercial paper and for general corporate purposes.

The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those Senior Notes immediately due and payable in full.

ONE Gas 2021 Term Loan Facility - On February 22, 2021, we entered into the ONE Gas 2021 Term Loan Facility as part of the financing of our natural gas purchases in order to provide sufficient liquidity to satisfy our obligations as a result of Winter Storm Uri. The net proceeds of the March 2021 debt issuance reduced the commitments under the ONE Gas 2021 Term Loan Facility on a dollar-for-dollar basis, and as a result no commitments remained outstanding and the facility was terminated concurrently with the closing of the debt issuance.

6.EQUITY

At-the-Market Equity Program - In February 2020, we initiated an at-the-market equity program by entering into an equity distribution agreement under which we may issue and sell shares of our common stock with an aggregate offering price up to $250 million (including any shares of common stock that may be sold pursuant to the master forward sale confirmation entered into in connection with the equity distribution agreement and the related supplemental confirmations). Sales of common stock are made by means of ordinary brokers’ transactions on the NYSE, in block transactions or as otherwise agreed to between us and the sales agent. We are under no obligation to offer and sell common stock under the program. For the nine months ended September 30, 2021 and 2020, respectively, we issued and sold 281,124 shares and 179,514 shares of our common stock for $21.4 million and $13.6 million, generating proceeds, net of issuance costs, of $21.1 million and $13.5 million. At September 30, 2021, we had $215.0 million of equity available for issuance under the program.

Dividends Declared - In November 2021, we declared a dividend of $0.58 per share ($2.32 per share on an annualized basis) for shareholders of record as of November 15, 2021, payable on December 1, 2021.

7.ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table sets forth the effect of reclassifications from accumulated other comprehensive loss in our consolidated statements of income for the periods indicated:
Three Months EndedNine Months EndedAffected Line Item in the
Details About Accumulated OtherSeptember 30,September 30,Consolidated Statements
Comprehensive Loss Components2021202020212020of Income
(Thousands of dollars)
Pension and other postemployment benefit plan obligations (a)
Amortization of net loss$11,474 $10,623 $34,422 $31,869 
Amortization of unrecognized prior service credit(70)(29)(210)(87)
11,404 10,594 34,212 31,782 
Regulatory adjustments (b)(11,013)(10,296)(33,040)(30,888)
391 298 1,172 894 Income before income taxes
(91)(75)(273)(224)Income tax expense
Total reclassifications for the period$300 $223 $899 $670 Net income
(a) These components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 9 for additional detail of our net periodic benefit cost.
(b) Regulatory adjustments represent pension and other postemployment benefit costs expected to be recovered through rates and are deferred as part of our regulatory assets. See Note 3 for additional disclosures of regulatory assets and liabilities.

8.EARNINGS PER SHARE

Basic EPS is based on net income and is calculated based upon the daily weighted-average number of common shares outstanding during the periods presented. Also, this calculation includes fully vested stock awards that have not yet been issued
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as common stock. Diluted EPS includes basic EPS, plus unvested stock awards granted under our compensation plans, but only to the extent these instruments dilute earnings per share.

The following tables set forth the computation of basic and diluted EPS from continuing operations for the periods indicated:
 Three Months Ended September 30, 2021
 IncomeSharesPer Share
Amount
 
(Thousands, except per share amounts)
Basic EPS Calculation   
Net income available for common stock
$20,253 53,710 $0.38 
Diluted EPS Calculation   
Effect of dilutive securities 83  
Net income available for common stock and common stock equivalents$20,253 53,793 $0.38