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Note 4 - Regulatory Matters

12 Months Ended

Sep. 30, 2025

Public Utilities Disclosure [Text Block]

4.	REGULATORY MATTERS

The SCC exercises regulatory authority over the natural gas operations of Roanoke Gas. Such regulation encompasses terms, conditions and rates to be charged to customers for natural gas service, safety standards, service extension and depreciation.

In response to continued inflationary pressures, Roanoke Gas filed a general rate application on February 2, 2024 with the SCC seeking to increase its non-gas base rates by $4.33 million and its permitted return on equity from 9.44% to 10.35% reflecting its higher cost of capital, including higher interest expense. The SCC permitted the Company to implement its new rates on an interim basis for customer billings on or after July 1, 2024, subject to refund. On October 16, 2024, the Company reached a settlement with the SCC staff on all outstanding issues in the case. Under the terms of the settlement, the Company agreed to an annual incremental revenue requirement increase of $4.08 million based on a return on equity of 9.90%. On April 10, 2025, the SCC issued a final order approving the settlement agreement in its entirety. Refunds for the difference in amounts that were billed based on interim and settlement rates, which had previously been accrued, were made to customers in May 2025.

On December 2, 2025, the Company filed a non-gas base rate application with the SCC to increase revenues by $4.3 million annually, with interim rates proposed to customers in the second quarter of fiscal 2026.

On May 30, 2025, Roanoke Gas filed for approval of an updated RNG Rider to become effective October 1, 2025. The RNG Rider recovers costs associated with the RNG facility to produce renewable natural gas that was approved by the SCC in 2022. The revenue requirement associated with the RNG Rider is $1.66 million. The impact to customers is affected by the under-recovered costs during the prior fiscal year, the sale of environmental credits and the over crediting of customers for RIN sales, resulting in a net impact to customers of approximately $699,000. The Company received a final order from the SCC approving the Company's updated RNG Rider on September 26, 2025.

On June 30, 2025, Roanoke Gas filed for approval of an updated annual SAVE Rider to become effective October 1, 2025. The proposed SAVE Rider revenue requirement of $2.64 million is designed to recover the costs associated with an estimated $10.33 million of SAVE eligible investment during fiscal 2026. The revenue requirement also included an adjustment for under-recovered costs incurred during the prior year. The Commission approved the Company’s updated SAVE Rider on September 26, 2025, which contained a slightly lower revenue requirement of $2.61 million.

On June 2, 2022, Roanoke Gas filed an application with the SCC to acquire certain natural gas distribution assets from a local housing authority. Under this application, the Company requested the approval to acquire such facilities at five separate apartment complexes, located in the Company’s service territory, that were under housing authority management. Under the proposed plan, the housing authority would renew existing natural gas distribution facilities to include mains, services, and meter installations and then transfer ownership of these facilities to Roanoke Gas. In turn, Roanoke Gas would assume responsibility for the operation and maintenance of these assets and recognize a gain related to the asset acquisition equal to the cost associated with the renewal. The SCC approved the application in July 2022.

The housing authority completed the transfer of two apartment complexes to Roanoke Gas in fiscal 2022, one complex in fiscal 2023, one complex in fiscal 2024 and the last complex in fiscal 2025. For fiscal years 2024 and 2025, Roanoke Gas recognized pre-tax income of approximately $782,000 and $762,000, respectively, for the assets transferred by analogy to ASC 958. The assets are included under utility property, in service on the consolidated balance sheets and the income is recorded in other income, net on the consolidated statements of income. There are no ongoing obligations between the parties for the properties transferred. Additionally, there are no remaining facilities to be transferred in the future under the plan.