XML 28 R16.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Note 8 - Derivatives and Hedging
 6 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

8.

Derivatives and Hedging

 

The Company’s hedging and derivative policy allows management to enter into derivatives for the purpose of managing the commodity and financial market risks of its business operations, including the price of natural gas and the cost of borrowed funds.  This policy specifically prohibits the use of derivatives for speculative purposes.

 

The Company has five interest rate swaps associated with certain of its variable rate debt as of March 31, 2024.  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.  Midstream has three swap agreements corresponding to the variable rate term notes with original principal amounts of $14 million, $10 million, and $8 million.  The swap agreements convert two of these notes into fixed rate instruments with effective interest rates of 3.24% and 3.14%, respectively.  The swap agreement pertaining to the $8 million note remains in place and was concurrently re-designated to hedge an applicable portion of the note taking into account the temporary suspension of amortization described in Note 7, and converts that portion of the note to a fixed rate of 2.443%.  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.

 

The fair value of the current and non-current portions of the interest rate swaps are reflected in the condensed consolidated balance sheets under the caption interest rate swaps.  The table in Note 11 reflects the effect on income and other comprehensive income of the Company's cash flow hedges.