Natural Gas Distribution

Producing good returns through innovative rate designs
Using technology to enhance customer experiences and
gain efficiencies

Our natural gas business had a solid year, delivering operating income of $226 million, compared to $231 million in 2010. We also added more than 19,000 customers across our six-state territory.

We continued our long-term strategy of implementing innovative rate designs, including decoupling, energy-efficiency incentives and infrastructure cost recovery mechanisms, and other periodic rate adjustments. Additionally, we settled a rate case in our South Texas division allowing us to raise base rates by $4.6 million. We extended asset management agreements and revenue-sharing mechanisms in Arkansas, Louisiana and Oklahoma. Through these agreements, third-party companies pay us for the opportunity to manage certain gas storage assets, minimizing our financial risk.

By focusing on our credit and collections practices, and with the benefit of low natural gas prices and Low Income Home Energy Assistance Program funding, we decreased our bad debt expense by $8 million. Our bad debt-to-revenue ratio is now less than 1 percent, which is better than the national average.

Last year, we invested $295 million in capital – in part for system safety and reliability, such as replacing cast iron and bare steel pipe and installing remote-control valves. In 2012, we plan to increase our capital spending to approximately $350 million, the majority being directed to ongoing replacement programs to improve system integrity and operations.

We made great strides in deploying drive-by metering technology in our Houston and South Texas service areas. When complete in 2013, the $98 million upgrade of these 1.3 million meters is expected to increase productivity by allowing us to read 10,000 meters per vehicle per day, up from 500 meters per person per day.

A number of initiatives have enhanced our customers’ experience. Continued expansion of our conservation improvement programs in Arkansas, Minnesota and Oklahoma resulted in record-setting customer participation and energy savings. My Energy Analyzer, a free online tool, helps residential natural gas customers better understand the factors that drive their bill and helps them manage their consumption.

Additionally, we introduced new self-service tools that allow customers to make one-time and future payments, schedule routine service appointments with a technician, request a bill due date extension and more. These types of efforts helped earn a first-place ranking in the Midwest region of the J.D. Power and Associates annual gas utility residential customer satisfaction study.

Natural Gas Distribution

Delivering Results

  • $226 million in operating income
  • Added 19,000+ customers
  • Decreased bad debt expense by $8 million. Our bad debt-to-revenue ratio is now less than 1 percent, compared to the national average of 2 percent
  • Invested $295 million in capital, in part for system safety and reliability
  • Launched My Energy Analyzer, a free online tool that helps customers better understand their bill
  • Expanded conservation programs and achieved record-setting participation
  • Earned a J.D. Power and Associates first-place ranking in the Midwest region

Natural Gas Distribution

Pursuing Opportunities

Through collaboration with industry groups, local governments and state agencies, we are working to support the viability of natural gas as a transportation fuel.

Pursuing Opportunities

  • Increase capital spending to approximately $350 million in 2012 to enhance system integrity and operations
  • In 2013, expect to complete the $98 million upgrade of 1.3 million meters in Houston and South Texas to drive-by metering, which will significantly improve meter reading productivity
  • Promote the adoption of natural gas vehicles