Related Party Transactions

9 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Note 14 — Related Party Transactions

UGI provides certain financial and administrative services to UGI Utilities. UGI bills UGI Utilities monthly for all direct expenses incurred by UGI on behalf of UGI Utilities and an allocated share of indirect corporate expenses incurred or paid with respect to services provided to UGI Utilities. The allocation of indirect UGI corporate expenses to UGI Utilities utilizes a weighted, three-component formula comprising revenues, operating expenses and net assets employed and considers UGI Utilities’ relative percentage of such items to the total of such items for all UGI operating subsidiaries for which general and administrative services are provided. Management believes that this allocation method is reasonable and equitable to UGI Utilities and this allocation method has been accepted by the PAPUC in past rate case proceedings and management audits as a reasonable method of allocating such expenses. UGI Utilities also engages in other services with various other affiliates pursuant to arrangements authorized by the PAPUC using similar allocation or market-based pricing methods. These billed expenses are classified as “Operating and administrative expenses — related parties” in the Condensed Consolidated Statements of Income. In addition, UGI Utilities provides limited administrative services to UGI and certain of UGI’s subsidiaries under PAPUC affiliated interest agreements. Amounts billed to these entities by UGI Utilities totaled $1,536 and $1,665 during the three months ended June 30, 2019 and 2018, respectively, and $4,228 and $4,070 during the nine months ended June 30, 2019 and 2018, respectively.

UGI Utilities is a party to SCAAs with Energy Services which have terms of up to three years. At June 30, 2019, UGI Utilities was a party to four SCAAs with Energy Services, and, during the periods covered by the financial statements, was a party to other SCAAs with Energy Services. Under the SCAAs, UGI Utilities has, among other things, released certain natural gas storage and transportation contracts (subject to recall for operational purposes) to Energy Services for the terms of the SCAAs. UGI Utilities also transferred certain associated natural gas storage inventories upon the commencement of the SCAAs, receives a transfer of storage inventories at the end of the SCAAs, and makes payments associated with refilling storage inventories during the term of the SCAAs. UGI Utilities incurred costs associated with Energy Services’ SCAAs totaling $7,045 and $8,114 during the three months ended June 30, 2019 and 2018, respectively, and $10,314 and $11,394 during the nine months ended June 30, 2019 and 2018, respectively. Energy Services, in turn, provides a firm delivery service and makes certain payments to UGI Utilities for its various obligations under the SCAAs. These payments totaled $784 and $701 during the three months ended June 30, 2019 and 2018, respectively, and $2,303 and $2,127 during the nine months ended June 30, 2019 and 2018, respectively. In conjunction with the SCAAs, UGI Utilities received security deposits from Energy Services. The amounts of such security deposits, which are included in “Other current liabilities” on the Condensed Consolidated Balance Sheets, at June 30, 2019 was $7,640 and at September 30, 2018 and June 30, 2018, was $11,040.

UGI Utilities reflects the historical cost of the natural gas storage inventories and any exchange receivable from Energy Services (representing amounts of natural gas inventories used but not yet replenished by Energy Services) in “Inventories” on the Condensed Consolidated Balance Sheets. At June 30, 2019, September 30, 2018 and June 30, 2018, the carrying values of these gas storage inventories, comprising approximately 3.3 bcf, 6.7 bcf and 3.6 bcf of natural gas, were $8,234, $17,701 and $9,294, respectively.

UGI Utilities has gas supply and delivery service agreements with Energy Services pursuant to which Energy Services provides certain gas supply and related delivery service to Gas Utility primarily during the heating-season months of November through March. The aggregate amount of these transactions (exclusive of transactions pursuant to the SCAAs) during the three months ended June 30, 2019 and 2018 totaled $3,222 and $5,828, respectively, and during the nine months ended June 30, 2019 and 2018 totaled $93,579 and $87,782, respectively.

From time to time, UGI Utilities sells natural gas or pipeline capacity to Energy Services. During the three months ended June 30, 2019 and 2018, revenues associated with such sales to Energy Services totaled $10,041 and $11,582, respectively. During the nine months ended June 30, 2019 and 2018, revenues associated with such sales to Energy Services totaled $57,467 and $93,974, respectively. Also from time to time, UGI Utilities purchases natural gas and pipeline capacity from Energy Services (in addition to those transactions already described above) and purchases a firm storage service from UGI Storage Company, a subsidiary of Energy Services, under one-year agreements. During the three months ended June 30, 2019 and 2018, such purchases totaled $16,568 and $19,429, respectively. During the nine months ended June 30, 2019 and 2018, such purchases totaled $107,245 and $140,455, respectively.