Public Utilities, Policy [Policy Text Block]

Rate Regulated Basis of Accounting—The Company’s regulated operations follow the accounting and reporting requirements of ASC 980, Regulated Operations. The economic effects of regulation can result in a regulated company deferring costs that have been or are expected to be recovered from customers in a period different from the period in which the costs would be charged to expense by an unregulated enterprise. When this situation occurs, costs are deferred as assets in the consolidated balance sheet (regulatory assets) and recorded as expenses when such amounts are reflected in rates. Additionally, regulators can impose liabilities upon a regulated company for amounts previously collected from customers and for current collection in rates of costs that are expected to be incurred in the future (regulatory liabilities). In the event the provisions of ASC 980 no longer apply to any or all regulatory assets or liabilities, the Company would write off such amounts and include them in the consolidated statements of income and comprehensive income in the period which ASC 980 no longer applied.

Regulatory assets and liabilities included in the Company’s consolidated balance sheets as of September 30, 2023 and 2022 are as follows:

	*September 30*
	*2023*		*2022*
Assets:
Current Assets:
Regulatory assets:
Accrued WNA revenues	$	414,689	$	193,518
Under-recovery of gas costs		1,383,340		1,316,580
Under-recovery of RNG revenues		797,804		—
Accrued pension		243,017		237,911
Other deferred expenses		15,426		129,459
Total current		2,854,276		1,877,468
Utility Property:
In service:
Other		479,647		11,945
Construction work in progress:
AFUDC		356,325		461,342
Other Non-Current Assets:
Regulatory assets:
Premium on early retirement of debt		1,256,059		1,370,246
Accrued pension		3,786,265		3,894,561
Other deferred expenses		347,121		181,740
Total non-current		5,389,445		5,446,547

Total regulatory assets	$	9,079,693	$	7,797,302
Liabilities and Stockholders' Equity:
Current Liabilities:
Regulatory liabilities:
Over-recovery of SAVE Plan revenues	$	146,861	$	158,847
Rate refund		652,018		—
Deferred income taxes		527,034		363,297
Supplier refunds		275,649		2,484,992
Other deferred liabilities		31,154		160,930
Total current		1,632,716		3,168,066
Deferred Credits and Non-Current Other Liabilities:
Asset retirement obligations		10,792,831		10,204,079
Regulatory cost of retirement obligations		13,029,376		12,277,796
Regulatory liabilities:
Deferred income taxes		16,249,776		13,193,006
Deferred postretirement medical		1,781,917		30,118
Total non-current		41,853,900		35,704,999

Total regulatory liabilities	$	43,486,616	$	38,873,065

Amortization of $213,450 and $156,467 of regulatory assets for the years ended September 30, 2023 and 2022, respectively, is included in operations and maintenance expense on the consolidated statements of income. Amortization of $237,911 and $206,679 of regulatory assets for the years ended September 30, 2023 and 2022, respectively, is included in other income, net on the consolidated statements of income. Amortization of $114,187 of regulatory assets for both years ended September 30, 2023 and 2022 is included in interest expense on the consolidated statements of income.

As of September 30, 2023, the Company had regulatory assets in the amount of $8,600,046 on which the Company did not earn a return during the recovery period.

Asset Retirement Obligation [Policy Text Block]

Asset Retirement Obligations—ASC 410, Asset Retirement and Environmental Obligations, requires entities to record the fair value of a liability for an ARO when there exists a legal obligation for the retirement of the asset. When the liability is initially recorded, the entity capitalizes the cost, thereby increasing the carrying amount of the underlying asset. In subsequent periods, the liability is accreted, and the capitalized cost is depreciated over the useful life of the underlying asset. The Company has recorded AROs for its future legal obligations related to purging and capping its distribution mains and services upon retirement, although the timing of such retirements is uncertain.

The Company’s composite depreciation rates include a component to provide for the cost of asset retirement. As a result, the Company accrues the estimated cost of retirement of its utility plant through depreciation expense and creates a corresponding regulatory liability. The costs of retirement considered in the development of the depreciation component include those costs associated with the legal liability. Therefore, the ARO is reclassified from the regulatory cost of retirement obligation. If the legal obligations were to exceed the regulatory liability provided for in the depreciation rates, the Company would establish a regulatory asset for such difference with the anticipation of future recovery through rates charged to customers. In 2022, the Company increased its asset retirement obligation to reflect revisions to the estimated cash flows for asset retirements due to increasing costs.

The following is a summary of the AROs:

	*Years Ended September 30*
	*2023*			*2022*
Beginning balance	$	10,204,079		$	7,628,958
Liabilities incurred		91,670			236,926
Liabilities settled		(180,865	)		(131,763	)
Accretion		677,947			397,692
Revisions to estimated cash flows		—			2,072,266
Ending balance	$	10,792,831		$	10,204,079

Accounts Receivable [Policy Text Block]

Customer Receivables and Allowance for Credit Losses—Accounts receivable include amounts billed to customers for natural gas sales and related services and gas sales occurring subsequent to normal billing cycles but before the end of the period. The Company provides an estimate for losses on these receivables by utilizing historical information, current account balances, account aging and current economic conditions. Customer accounts are charged off annually when deemed uncollectible or when turned over to a collection agency for action.

A reconciliation of changes in the allowance for credit losses is as follows:

	*Years Ended September 30*
	*2023*			*2022*
Beginning balance	$	371,271		$	242,010
Provision for credit losses		54,211			492,875
Recoveries of accounts written off		181,676			135,143
Accounts written off		(451,994	)		(498,757	)
Ending balance	$	155,164		$	371,271

Receivable [Policy Text Block]

Financing Receivables—Financing receivables represent a contractual right to receive money either on demand, or on fixed or determinable dates, and are recognized as assets on the entity’s balance sheet. Trade receivables, resulting from the sale of natural gas and other services to customers, are the Company's primary type of financing receivables. These receivables are short-term in nature with a provision for credit losses included in the consolidated financial statements.

Revenue [Policy Text Block]

Unbilled Revenues—The Company bills its natural gas customers on a monthly cycle; however, the billing cycle for most customers does not coincide with the accounting periods used for financial reporting. As the Company recognizes revenue when gas is delivered, an accrual is made to estimate revenues for natural gas delivered to customers but not billed during the accounting period. The amounts of unbilled revenue receivable included in accounts receivable on the consolidated balance sheets at September 30, 2023 and 2022 were $1,240,097 and $1,585,062, respectively.

Debt, Policy [Policy Text Block]

Debt Expenses—Debt issuance expenses are deferred and amortized over the lives of the debt instruments. The unamortized balances are offset against the carrying value of long-term debt.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value—Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. The Company determines fair value based on the following fair value hierarchy which prioritizes each input to the valuation methods into one of the following three broad levels:

•

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

•

Level 2 – Inputs other than quoted prices in Level 1 that are either for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

•

Level 3 – Unobservable inputs for the asset or liability where there is little, if any, market activity which require the Company to develop its own assumptions.

The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). All fair value disclosures are categorized within one of the three categories in the hierarchy. See fair value disclosures below and in Notes 9 and 13.

Excise and Sales Taxes [Policy Text Block]

Excise and Sales Taxes—Certain excise and sales taxes imposed by the state and local governments in the Company’s service territory are collected by the Company from its customers. These taxes are accounted for on a net basis and therefore are not included as revenues in the Company’s consolidated income statements.

Stockholders' Equity, Policy [Policy Text Block]

Stock Issue—The Company may issue common stock to increase its cash position or lower its outstanding debt, thus strengthening the balance sheet.

During fiscal 2023, 194,719 shares of common stock were issued related to the DRIP, Restricted Stock, stock option exercises and ATM activity.

In March 2022, the Company issued 1,350,000 shares of common stock in an equity offering resulting in net proceeds of nearly $27 million. The net proceeds were invested in Roanoke Gas to supplement the funding of its infrastructure improvement and replacement program and in Midstream to reduce its outstanding debt. An additional 95,443 shares of common stock were issued during fiscal 2022 related to the DRIP, Restricted Stock, stock option exercises and ATM activity.

Derivatives, Policy [Policy Text Block]

Derivative and Hedging Activities—ASC 815, Derivatives and Hedging, requires the recognition of all derivative instruments as assets or liabilities in the Company’s consolidated balance sheet and measurement of those instruments at fair value.

The Company’s hedging and derivatives policy allows management to enter into derivatives for the purpose of managing the commodity and financial market risks of its business operations. The Company’s hedging and derivatives policy specifically prohibits the use of derivatives for speculative purposes. The key market risks that the Company may hedge against include the price of natural gas and the cost of borrowed funds.

From time to time, the Company has entered into collars, swaps and caps for the purpose of hedging the price of natural gas in order to provide price stability during the winter months. The fair value of these instruments is recorded in the consolidated balance sheets with the offsetting entry to either under- or over-recovery of gas costs. Net income and other comprehensive income are not affected by the change in market value as any cost incurred or benefit received from these instruments is recoverable or refunded through the PGA as the SCC allows for full recovery of prudent costs associated with natural gas purchases. At September 30, 2023 and 2022, the Company had no outstanding derivative instruments for the purchase of natural gas.

The Company has five interest rate swaps associated with certain of its variable rate debt. Roanoke Gas has two variable rate term notes in the amounts of $15 million and $10 million, with corresponding swap agreements to convert the variable interest rates into fixed rates of 2.00% and 2.49%, respectively. Under the provisions of the $10 million note, Roanoke Gas received $5 million on April 1, 2022 and the remaining $5 million on September 30, 2022. Midstream has three swap agreements corresponding to the $14 million, $10 million, and $8 million variable rate term notes. The swap agreements convert these three notes into fixed rate instruments with effective interest rates of 3.24%, 3.14%, and 2.443%, respectively. The swaps qualify as cash flow hedges with changes in fair value reported in other comprehensive income. No portion of the swaps were deemed ineffective during the periods presented.

See Notes 7 and 13 for additional information on the swaps and fair value.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Standards

In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, which provides a practical expedient that allows entities the option of not evaluating existing land easements under the new lease standard for those easements that were entered into prior to adoption. New or modified land easements will require evaluation on a prospective basis. The new guidance is effective for the Company for the annual reporting period ending September 30, 2023 and interim periods within that annual period. The new guidance did not have a material effect on the Company's consolidated financial statements.

Recently Issued Accounting Standards

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. In combination with ASU 2021-01 and ASU 2022-06, the ASU provides temporary optional guidance to ease the potential burden in accounting for and recognizing the effects of reference rate change on financial reporting. The new guidance applies specifically to contracts and hedging relationships that reference LIBOR, or any other referenced rate that is expected to be discontinued due to reference rate reform. The new guidance is effective for the Company through December 31, 2024. The Intercontinental Exchange Benchmark Administration, the administrator for LIBOR and other inter-bank offered rates, announced that the LIBOR rates for one-day, one-month, six-month and one-year would cease publication in June 2023 and that no new financial contracts may use LIBOR after December 31, 2021. Subsequent to June 30, 2023, the one-day, one-month, six-month, and one-year LIBOR settings will continue to be published under an unrepresentative synthetic methodology until the end of September 2024 in order to bridge the transition to other reference rates. The Company has transitioned all but one LIBOR-based variable rate note to a new reference rate as of September 30, 2023. Each of the revised notes has a corresponding swap that was also transitioned to align with the related notes. The last LIBOR-based variable rate note will mature in fiscal 2024.

Other accounting standards that have been issued or proposed by the FASB or other standard–setting bodies are not currently applicable to the Company or are not expected to have a significant impact on the Company’s financial position, results of operations and cash flows.