10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2017

OR

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission File Number	Exact name of registrant as specified in its charter; address of principal executive offices; registrant's telephone number, including area code	State or Other Jurisdiction of Incorporation	I.R.S. Employer Identification No.
1-16163	WGL Holdings, Inc. 101 Constitution Ave., N.W. Washington, D.C. 20080 (703) 750-2000	Virginia	52-2210912
0-49807	Washington Gas Light Company 101 Constitution Ave., N.W. Washington, D.C. 20080 (703) 750-4440	District of Columbia and Virginia	53-0162882

Indicate by check mark whether each registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

WGL Holdings, Inc.:

Large accelerated filer þ	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
	(Do not check if a smaller reporting company)
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Washington Gas Light Company:

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer þ	Smaller reporting company ¨
	(Do not check if a smaller reporting company)
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date.

WGL Holdings, Inc. common stock, no par value, outstanding as of July 31, 2017: 51,219,000 shares.

Washington Gas Light Company common stock, $1 par value, outstanding as of July 31, 2017: 46,479,536 shares

All of the outstanding shares of common stock ($1 par value) of Washington Gas Light Company were held by WGL Holdings, Inc. as of July 31, 2017.

WGL Holdings, Inc.

Washington Gas Light Company

For the Quarter Ended June 30, 2017

Table of Contents

PART I. Financial Information
Item 1. Financial Statements (Unaudited)
WGL Holdings, Inc.
Condensed Consolidated Balance Sheets	4
Condensed Consolidated Statements of Income	5
Condensed Consolidated Statements of Comprehensive Income	6
Condensed Consolidated Statements of Cash Flows	7
Washington Gas Light Company
Condensed Balance Sheets	8
Condensed Statements of Income	9
Condensed Statements of Comprehensive Income	10
Condensed Statements of Cash Flows	11
Notes to Condensed Consolidated Financial Statements
WGL Holdings, Inc. and Washington Gas Light Company — Combined	12
Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
WGL Holdings, Inc.	51
Washington Gas Light Company	80
Item 3. Quantitative and Qualitative Disclosures About Market Risk	85
Item 4. Controls and Procedures	85
PART II. Other Information
Item 1. Legal Proceedings	86
Item 1A. Risk Factors	87
Item 4. Mine Safety Disclosures	88
Item 6. Exhibits	89
Signature	90

(i)

WGL Holdings, Inc.

Washington Gas Light Company

INTRODUCTION

FILING FORMAT

This Quarterly Report on Form 10-Q is a combined report being filed by two separate registrants: WGL Holdings, Inc. (WGL) and Washington Gas Light Company (Washington Gas). Except where the content clearly indicates otherwise, any reference in the report to “WGL,” “we,” “us” or “our” is to the holding company or WGL and all of its subsidiaries, including Washington Gas, which is a wholly owned subsidiary of WGL.

Part I—Financial information in this Quarterly Report on Form 10-Q includes separate financial statements (i.e. balance sheets, statements of income and comprehensive income and statements of cash flows) for WGL and Washington Gas. The Notes to Consolidated Financial Statements are presented on a combined basis for both WGL and Washington Gas. The Management’s Discussion and Analysis of Financial Condition and Results of Operations (Management’s Discussion) included under Item 2 is divided into two major sections for WGL and Washington Gas.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report, excluding historical information, include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the outlook for earnings, dividends, revenues and other future financial business performance, strategies, financing plans, AltaGas Ltd's proposed acquisition of us and other expectations. Forward-looking statements are typically identified by words such as, but not limited to, “estimates,” “expects,” “anticipates,” “intends,” “believes,” “plans” and similar expressions, or future or conditional terms such as “will,” “should,” “would” and “could.” Forward-looking statements speak only as of the filing date of this report, and the registrants assume no duty to update them. Factors that could cause actual results to differ materially from forward-looking statements or historical performance include those discussed in Item 1A. Risk Factors in the combined Annual Report on Form 10-K for WGL and Washington Gas for the fiscal year ended September 30, 2016, in Part II, Item 1A, Risk Factors in this quarterly report on Form 10-Q and in our other filings with the Securities and Exchange Commission, and may include, but are not limited to the following:

• the occurrence of any event, change or other circumstances that could give rise to the termination of the Agreement and Plan of Merger (Merger Agreement) among WGL, AltaGas Ltd. (AltaGas) and Wrangler, Inc.

• the inability of WGL or AltaGas to satisfy conditions to the closing of the merger;

• the required regulatory approvals and other clearances for the merger may not be received, may not be received in a timely manner, or may be received subject to imposed conditions or restrictions that cause a failure of a closing condition to the merger or that could have a detrimental impact on the combined company following completion of the merger;

• the effect of the announcement of the merger on the ability of WGL to retain customers and retain and hire key personnel;

• the effect of the announcement of the merger on the ability of WGL to maintain relationships with its suppliers;

• potential litigation in connection with the merger;

• the incurrence of significant costs for advisory services in connection with the merger;

• the impact of the terms and conditions of the Merger Agreement on WGL’s interim operations and its ability to make significant changes to its business or pursue otherwise attractive business opportunities without the consent of AltaGas;

• the level and rate at which we incur costs and expenses, and the extent to which we are allowed to recover from customers, through the regulatory process, such costs and expenses relating to constructing, operating and maintaining Washington Gas’ distribution system;

• the availability of natural gas and electricity supply, interstate pipeline transportation and storage capacity;

• factors beyond our control that affect the ability of natural gas producers, pipeline gatherers and natural gas processors to deliver natural gas into interstate pipelines for delivery to the entrance points of Washington Gas' distribution system;

• security breaches of our information technology infrastructure, including cyber attacks and cyber-terrorism;

• leaks, mechanical problems, incidents or other operational issues in our natural gas distribution system, including the effectiveness of our efforts to mitigate the effects of receiving low-HHC natural gas;

• changes and developments in economic, competitive, political and regulatory conditions;

• unusual weather conditions and changes in natural gas consumption patterns;

(ii)

WGL Holdings, Inc.

Washington Gas Light Company

• changes in energy commodity market conditions, including the relative prices of alternative forms of energy such as electricity, fuel oil and propane;

• changes in the value of derivative contracts and the availability of suitable derivative counterparties;

• changes in our credit ratings, disruptions in credit market and equity capital market conditions or other factors that may affect our access to and cost of capital;

• factors affecting the timing of construction and the effective operation of pipelines in which we have invested;

• the credit worthiness of customers; suppliers and derivatives counterparties;

• changes in laws and regulations, including tax, environmental, pipeline integrity and employment laws and regulations;

• legislative, regulatory and judicial mandates or decisions affecting our business operations;

• the timing and success of business and product development efforts and technological improvements;

• the level of demand from government agencies and the private sector for commercial energy systems, and delays in federal government budget appropriations;

• the pace of deregulation of energy markets and the availability of other competitive alternatives to our products and services;

• changes in accounting principles;

• our ability to manage the outsourcing of several business processes;

• strikes or work stoppages by unionized employees;

• acts of nature and catastrophic events, including terrorist acts and

• decisions made by management and co-investors in non-controlled investees.

All such factors are difficult to predict accurately and are generally beyond the direct control of the registrants. Readers are urged to use care and consider the risks, uncertainties and other factors that could affect our business as described in this Quarterly Report on Form 10-Q.

(iii)

WGL Holdings, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

Part I—Financial Information

Item 1—Financial Statements

(In thousands)	June 30, 2017			September 30, 2016
ASSETS
Property, Plant and Equipment
At original cost	$	5,856,655		$	5,542,916
Accumulated depreciation and amortization	(1,509,869		)	(1,415,679		)
Net property, plant and equipment	4,346,786			4,127,237
Current Assets
Cash and cash equivalents	9,570			5,573
Receivables
Accounts receivable	412,590			329,989
Gas costs and other regulatory assets	34,258			15,294
Unbilled revenues	156,041			173,076
Allowance for doubtful accounts	(28,876		)	(27,339		)
Net receivables	574,013			491,020
Materials and supplies—principally at average cost	17,741			18,414
Storage gas	210,531			207,132
Prepaid taxes	22,088			33,397
Other prepayments	77,135			42,626
Derivatives	23,842			18,510
Other	27,375			26,802
Total current assets	962,295			843,474
Deferred Charges and Other Assets
Regulatory assets
Gas costs	96,964			179,856
Pension and other post-retirement benefits	200,648			223,242
Other	101,910			98,592
Prepaid post-retirement benefits	191,491			180,686
Derivatives	36,219			55,020
Investments in direct financing leases, capital leases	—			29,780
Investments in unconsolidated affiliates	425,304			303,491
Other	11,876			8,072
Total deferred charges and other assets	1,064,412			1,078,739
Total Assets	$	6,373,493		$	6,049,450
CAPITALIZATION AND LIABILITIES
Capitalization
WGL Holdings common shareholders’ equity	$	1,521,283		$	1,375,561
Non-controlling interest	5,234			409
Washington Gas Light Company preferred stock	28,173			28,173
Total equity	1,554,690			1,404,143
Long-term debt	1,235,623			1,435,045
Total capitalization	2,790,313			2,839,188
Current Liabilities
Current maturities of long-term debt	250,000			—
Notes payable and project financing	538,854			331,385
Accounts payable and other accrued liabilities	377,133			405,351
Wages payable	21,160			17,908
Accrued interest	15,030			7,645
Dividends declared	26,452			25,283
Customer deposits and advance payments	61,476			86,384
Gas costs and other regulatory liabilities	20,652			12,973
Accrued taxes	20,659			15,672
Derivatives	45,898			82,334
Other	56,579			41,991
Total current liabilities	1,433,893			1,026,926
Deferred Credits
Unamortized investment tax credits	175,263			163,493
Deferred income taxes	845,109			726,763
Accrued pensions and benefits	235,050			228,377
Asset retirement obligations	209,612			203,105
Regulatory liabilities
Accrued asset removal costs	290,476			310,788
Other post-retirement benefits	103,352			113,875
Other	7,300			14,450
Derivatives	162,941			304,198
Other	120,184			118,287
Total deferred credits	2,149,287			2,183,336
Commitments and Contingencies (Note 13)
Total Capitalization and Liabilities	$	6,373,493		$	6,049,450

The accompanying notes are an integral part of these statements.

4

WGL Holdings, Inc.

Condensed Consolidated Statements of Income (Unaudited)

Part I—Financial Information

Item 1—Financial Statements (continued)

	Three Months Ended   June 30,					Nine Months Ended   June 30,
(In thousands, except per share data)	2017			2016		2017			2016
OPERATING REVENUES
Utility	$	198,968		$	181,622	$	992,301		$	912,612
Non-utility	275,396			258,965		933,300			977,048
Total Operating Revenues	474,364			440,587		1,925,601			1,889,660
OPERATING EXPENSES
Utility cost of gas	49,881			65,739		259,839			236,819
Non-utility cost of energy-related sales	233,025			197,880		787,691			832,087
Operation and maintenance	97,477			97,461		316,455			296,813
Depreciation and amortization	39,094			33,786		113,487			98,368
General taxes and other assessments	32,032			32,038		122,964			119,970
Total Operating Expenses	451,509			426,904		1,600,436			1,584,057
OPERATING INCOME	22,855			13,683		325,165			305,603
Equity in earnings of unconsolidated affiliates	7,508			4,527		15,117			10,558
Other income (expenses) — net	884			1,915		(591		)	3,689
Interest expense	25,062			12,998		55,552			38,757
INCOME BEFORE INCOME TAXES	6,185			7,127		284,139			281,093
INCOME TAX EXPENSE	2,149			4,772		106,381			103,619
NET INCOME	$	4,036		$	2,355	$	177,758		$	177,474
Non-controlling interest	(4,559		)	—		(12,533		)	—
Dividends on Washington Gas Light Company preferred stock	330			330		990			990
NET INCOME APPLICABLE TO COMMON STOCK	$	8,265		$	2,025	$	189,301		$	176,484
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic	51,219			50,622		51,200			50,158
Diluted	51,493			50,905		51,469			50,418
EARNINGS PER AVERAGE COMMON SHARE
Basic	$	0.16		$	0.04	$	3.70		$	3.52
Diluted	$	0.16		$	0.04	$	3.68		$	3.50
DIVIDENDS DECLARED PER COMMON SHARE	$	0.5100		$	0.4875	$	1.5075		$	1.4375

The accompanying notes are an integral part of these statements.

5

WGL Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Part I—Financial Information

Item 1—Financial Statements (continued)

	Three Months Ended   June 30,						Nine Months Ended June 30,
(In thousands)	2017			2016			2017			2016
NET INCOME	$	4,036		$	2,355		$	177,758		$	177,474
OTHER COMPREHENSIVE INCOME, BEFORE INCOME TAXES:
Qualified cash flow hedging instruments	51			(16,995		)	49,556			(34,545		)
Pension and other post-retirement benefit plans
Change in net prior service credit	(217		)	(216		)	(651		)	(644		)
Change in actuarial net loss	588			420			1,763			1,258
Total other comprehensive income (loss) before taxes	$	422		$	(16,791	)	$	50,668		$	(33,931	)
INCOME TAX EXPENSE (BENEFIT) RELATED TO OTHER COMPREHENSIVE INCOME	235			(6,969		)	20,816			(14,087		)
OTHER COMPREHENSIVE INCOME (LOSS)	$	187		$	(9,822	)	$	29,852		$	(19,844	)
COMPREHENSIVE INCOME (LOSS)	$	4,223		$	(7,467	)	$	207,610		$	157,630
Non-controlling interest	(4,559		)	—			(12,533		)	—
Dividends on Washington Gas Light Company preferred stock	330			330			990			990
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO WGL HOLDINGS	$	8,452		$	(7,797	)	$	219,153		$	156,640

The accompanying notes are an integral part of these statements.

6

WGL Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

Part I—Financial Information

Item 1—Financial Statements (continued)

	Nine Months Ended June 30,
(In thousands)	2017			2016
OPERATING ACTIVITIES
Net income	$	177,758		$	177,474
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation and amortization	113,487			98,368
Amortization of:
Other regulatory assets and liabilities—net	2,567			1,113
Debt related costs	1,307			967
Deferred income taxes	81,839			131,494
Dividends received from equity method investments	10,864			—
Accrued/deferred pension and other post-retirement benefit cost	16,227			14,832
Earnings in equity interest	(15,117		)	(11,491		)
Compensation expense related to stock-based awards	12,114			9,745
Provision for doubtful accounts	11,601			8,752
Impairment loss	—			3,000
Other non-cash credits—net	(584		)	(1,449		)
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable and unbilled revenues—net	(112,725		)	(68,380		)
Gas costs and other regulatory assets/liabilities—net	(11,285		)	(31,109		)
Storage gas	(3,399		)	38,725
Prepaid taxes	11,309			(63,795		)
Other prepayments	(34,509		)	(11,429		)
Accounts payable and other accrued liabilities	17,945			(19		)
Customer deposits and advance payments	(24,908		)	(8,125		)
Unamortized investment tax credits	11,770			21,527
Accrued taxes	4,987			19,827
Accrued interest	7,385			5,283
Other current assets	100			(6,032		)
Other current liabilities	10,987			(15,472		)
Deferred gas costs—net	82,892			37,601
Deferred assets—other	(15,917		)	(34,010		)
Deferred liabilities—other	(19,627		)	(12,721		)
Derivatives	(114,666		)	(71,078		)
Other—net	2,380			1,838
Net Cash Provided by Operating Activities	224,782			235,436
FINANCING ACTIVITIES
Common stock issued	295			78,050
Long-term debt issued	50,000			250,000
Long-term debt retired	—			(25,000		)
Debt issuance costs	(404		)	(284		)
Notes payable issued —net	217,000			(26,000		)
Contributions from non-controlling interest	17,358			—
Project financing	18,396			28,425
Dividends on common stock and preferred stock	(75,672		)	(68,970		)
Other financing activities—net	2,305			1,998
Net Cash Provided by Financing Activities	229,278			238,219
INVESTING ACTIVITIES
Capital expenditures (excluding Allowance for Funds Used During Construction)	(352,232		)	(348,594		)
Investments in non-utility interests	(110,952		)	(137,105		)
Distributions and receipts from non-utility interests	4,126			4,739
Proceeds from the sale of assets	9,858			19,749
Loans to external parties	(863		)	(2,643		)
Net Cash Used in Investing Activities	(450,063		)	(463,854		)
INCREASE IN CASH AND CASH EQUIVALENTS	3,997			9,801
Cash and Cash Equivalents at Beginning of Year	5,573			6,733
Cash and Cash Equivalents at End of Period	$	9,570		$	16,534
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid (refunded)—net	$	(3,890	)	$	3,032
Interest paid	$	53,027		$	33,080
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Project financing activities	$	(27,927	)	$	—
Capital expenditure accruals included in accounts payable and other accrued liabilities	$	38,101		$	51,814
Dividends paid in common stock	$	1,362		$	2,661
Stock issued related to compensation	$	6,564		$	6,742
Transfer of investments to property, plant and equipment	$	30,114		$	—
Transfer of accounts receivable to investments	$	10,031		$	—

7

Washington Gas Light Company

Condensed Balance Sheets (Unaudited)

Part I—Financial Information

Item 1—Financial Statements (continued)

(In thousands)	June 30, 2017			September 30, 2016
ASSETS
Property, Plant and Equipment
At original cost	$	5,119,662		$	4,874,905
Accumulated depreciation and amortization	(1,425,689		)	(1,348,173		)
Net property, plant and equipment	3,693,973			3,526,732
Current Assets
Cash and cash equivalents	1			1
Receivables
Accounts receivable	207,833			140,457
Gas costs and other regulatory assets	34,258			15,294
Unbilled revenues	93,869			89,945
Allowance for doubtful accounts	(21,648		)	(20,220		)
Net receivables	314,312			225,476
Materials and supplies—principally at average cost	17,695			18,368
Storage gas	67,203			82,473
Prepaid taxes	11,699			16,826
Other prepayments	16,491			10,924
Receivables from associated companies	16,094			13,799
Derivatives	6,979			7,285
Other	102			51
Total current assets	450,576			375,203
Deferred Charges and Other Assets
Regulatory assets
Gas costs	96,964			179,856
Pension and other post-retirement benefits	199,473			221,971
Other	101,849			98,527
Prepaid post-retirement benefits	190,458			179,675
Derivatives	15,127			25,590
Other	3,903			2,001
Total deferred charges and other assets	607,774			707,620
Total Assets	$	4,752,323		$	4,609,555
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholder’s equity	$	1,198,173		$	1,113,446
Preferred stock	28,173			28,173
Long-term debt	939,317			939,015
Total capitalization	2,165,663			2,080,634
Current Liabilities
Notes payable and project financing	202,782			104,385
Accounts payable and other accrued liabilities	187,193			204,980
Wages payable	19,225			16,235
Accrued interest	13,493			3,758
Dividends declared	22,098			21,453
Customer deposits and advance payments	60,829			80,936
Gas costs and other regulatory liabilities	20,652			12,973
Accrued taxes	20,567			17,639
Payables to associated companies	91,483			65,770
Derivatives	26,227			58,295
Other	7,230			7,193
Total current liabilities	671,779			593,617
Deferred Credits
Unamortized investment tax credits	4,283			4,851
Deferred income taxes	851,410			763,720
Accrued pensions and benefits	232,962			226,339
Asset retirement obligations	204,977			199,377
Regulatory liabilities
Accrued asset removal costs	290,476			310,788
Other post-retirement benefits	102,730			113,169
Other	7,300			14,450
Derivatives	143,810			232,040
Other	76,933			70,570
Total deferred credits	1,914,881			1,935,304
Commitments and Contingencies (Note 13)
Total Capitalization and Liabilities	$	4,752,323		$	4,609,555

The accompanying notes are an integral part of these statements.

8

Washington Gas Light Company

Condensed Statements of Income (Unaudited)

Part I—Financial Information

Item 1—Financial Statements (continued)

	Three Months Ended June 30,						Nine Months Ended June 30,
(In thousands)	2017			2016			2017			2016
OPERATING REVENUES	$	203,186		$	187,077		$	1,012,193		$	934,347
OPERATING EXPENSES
Utility cost of gas	54,093			71,194			279,713			258,554
Operation and maintenance	77,370			79,178			246,290			239,696
Depreciation and amortization	32,761			29,232			96,003			85,194
General taxes and other assessments	27,498			28,001			109,857			108,228
Total Operating Expenses	191,722			207,605			731,863			691,672
OPERATING INCOME (LOSS)	11,464			(20,528		)	280,330			242,675
Other expense — net	(908		)	(358		)	(3,044		)	(1,079		)
Interest expense	12,960			10,067			38,727			30,785
INCOME (LOSS) BEFORE INCOME TAXES	(2,404		)	(30,953		)	238,559			210,811
INCOME TAX EXPENSE (BENEFIT)	(733		)	(12,434		)	91,159			80,285
NET INCOME (LOSS)	$	(1,671	)	$	(18,519	)	$	147,400		$	130,526
Dividends on Washington Gas preferred stock	330			330			990			990
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK	$	(2,001	)	$	(18,849	)	$	146,410		$	129,536

The accompanying notes are an integral part of these statements.

9

Washington Gas Light Company

Condensed Statements of Comprehensive Income (Unaudited)

Part I—Financial Information

Item 1—Financial Statements (continued)

	Three Months Ended   June 30,						Nine Months Ended June 30,
(In thousands)	2017			2016			2017			2016
NET INCOME (LOSS)	$	(1,671	)	$	(18,519	)	$	147,400		$	130,526
OTHER COMPREHENSIVE INCOME, BEFORE INCOME TAXES:
Pension and other post-retirement benefit plans
Change in net prior service credit	(217		)	(216		)	(651		)	(644		)
Change in actuarial net loss	588			420			1,763			1,258
Total pension and other post-retirement benefit plans	$	371		$	204		$	1,112		$	614
INCOME TAX EXPENSE RELATED TO OTHER COMPREHENSIVE INCOME	145			82			439			244
OTHER COMPREHENSIVE INCOME	$	226		$	122		$	673		$	370
COMPREHENSIVE INCOME (LOSS)	$	(1,445	)	$	(18,397	)	$	148,073		$	130,896

The accompanying notes are an integral part of these statements.

10

Washington Gas Light Company

Condensed Statements of Cash Flows (Unaudited)

Part I—Financial Information

Item 1—Financial Statements (continued)

	Nine Months Ended June 30,
(In thousands)	2017			2016
OPERATING ACTIVITIES
Net income	$	147,400		$	130,526
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation and amortization	96,003			85,194
Amortization of:
Other regulatory assets and liabilities—net	2,567			1,113
Debt related costs	1,031			898
Deferred income taxes	64,040			90,032
Accrued/deferred pension and other post-retirement benefit cost	16,187			3,221
Compensation expense related to stock-based awards	11,185			8,431
Provision for doubtful accounts	9,333			7,094
Other non-cash charges—net	(1,151		)	318
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable, unbilled revenues and receivables from associated companies—net	(109,427		)	(75,427		)
Gas costs and other regulatory assets/liabilities—net	(11,285		)	(31,109		)
Storage gas	15,270			38,546
Prepaid taxes	5,127			(9,753		)
Other prepayments	(5,567		)	(9,755		)
Accounts payable and other accrued liabilities, including payables to associated companies	22,989			18,288
Customer deposits and advance payments	(20,107		)	(10,125		)
Accrued taxes	2,928			12,047
Accrued interest	9,735			7,484
Other current assets	622			2,696
Other current liabilities	(3,437		)	(4,656		)
Deferred gas costs—net	82,892			37,601
Deferred assets—other	(12,554		)	(22,216		)
Deferred liabilities—other	(1,663		)	(14,436		)
Derivatives	(109,529		)	(24,797		)
Other—net	2,550			(399		)
Net Cash Provided by Operating Activities	215,139			240,816
FINANCING ACTIVITIES
Long-term debt retired	—			(25,000		)
Debt issuance costs	(399		)	(171		)
Notes payable issued —net	119,000			61,000
Project financing	7,324			28,425
Dividends on common stock and preferred stock	(65,020		)	(61,669		)
Other financing activities—net	2,248			2,891
Net Cash Provided by Financing Activities	63,153			5,476
INVESTING ACTIVITIES
Capital expenditures (excluding Allowance for Funds Used During Construction)	(278,292		)	(266,041		)
Net proceeds from sale of assets	—			19,749
Net Cash Used In Investing Activities	(278,292		)	(246,292		)
INCREASE IN CASH AND CASH EQUIVALENTS	—			—
Cash and Cash Equivalents at Beginning of Year	1			1
Cash and Cash Equivalents at End of Period	$	1		$	1
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes refunded — net	$	—		$	21
Interest paid	$	36,202		$	25,108
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Project financing activities	$	(27,927	)	$	—
Capital expenditure accruals included in accounts payable and other accrued liabilities	$	28,666		$	41,264

The accompanying notes are an integral part of these statements.

11

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1. ACCOUNTING POLICIES

Basis of Presentation

WGL Holdings, Inc. (WGL) is a holding company that owns all of the shares of common stock of Washington Gas Light Company (Washington Gas), a regulated natural gas utility, and all of the shares of common stock of Washington Gas Resources Corporation (Washington Gas Resources) and Hampshire Gas Company (Hampshire). Washington Gas Resources owns all of the shares of common stock of four non-utility subsidiaries that include WGL Energy Services, Inc. (WGL Energy Services), WGL Energy Systems, Inc. (WGL Energy Systems), WGL Midstream, Inc. (WGL Midstream) and WGSW, Inc. (WGSW). Except where the content clearly indicates otherwise, “WGL,” “we,” “us” or “our” refers to the holding company or the consolidated entity of WGL Holdings, Inc. and all of its subsidiaries. Unless otherwise noted, these notes apply equally to WGL and Washington Gas.

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Therefore, certain financial information and note disclosures accompanying annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) are omitted in this interim report. The interim consolidated financial statements and accompanying notes should be read in conjunction with the combined Annual Report on Form 10-K for WGL and Washington Gas for the fiscal year ended September 30, 2016. Due to the seasonal nature of our businesses, the results of operations for the periods presented in this report are not necessarily indicative of actual results for the full fiscal years ending September 30, 2017 and 2016 of either WGL or Washington Gas.

The accompanying unaudited condensed financial statements for WGL and Washington Gas reflect all normal recurring adjustments that are necessary, in our opinion, to present fairly the results of operations in accordance with GAAP. On October 1, 2016, WGL and Washington Gas adopted Accounting Standards Update (ASU) 2015-03 and ASU 2015-15. These standards require an entity to account for debt issuance costs as a deduction from the carrying amount of debt in the balance sheet and the amortization of debt issuance costs presented as interest expense, consistent with debt discounts. Prior period amounts related to other deferred charges and other assets and long-term debt in the accompanying condensed balance sheets have been reclassified to conform to the current period presentation.

For a complete description of our accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements of the combined Annual Report on Form 10-K for WGL and Washington Gas for the fiscal year ended September 30, 2016.

Storage Gas Valuation

For Washington Gas and WGL Energy Services, storage gas inventories are accounted for using the first-in, first-out method. For WGL Midstream, storage gas inventory is accounted for using the weighted average cost method. Our inventory is stated at the lower-of-cost or market. Interim period inventory losses attributable to lower-of-cost or market adjustments may be reversed if the market value of the inventory is recovered by the end of the same fiscal year.

For the three and nine months ended June 30, 2017, WGL and Washington Gas did not record any lower-of-cost or market adjustments. For the three and nine months ended June 30, 2016, WGL recorded an increase to non-utility operating revenues due to a lower-of-cost or market adjustment of $0.7 million and recorded a decrease to non-utility operating revenues due to a lower-of-cost or market adjustment of $0.4 million, respectively. For the three and nine months ended June 30, 2016, Washington Gas did not record any lower-of-cost market adjustments.

12

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

ACCOUNTING STANDARDS ADOPTED IN FISCAL YEAR 2017
Standard	Description	Date of adoption	Effect on the financial statements or other significant matters
ASU 2015-03 and ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost and Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements	The standard requires an entity to present debt issuance costs in the balance sheet as a direct deduction of the debt liability and the amortization of debt issuance costs be presented as interest expense in a manner consistent with its accounting treatment of debt discounts. The standard requires retrospective application. An entity can defer and present debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The new guidance does not change the recognition and measurement guidance for debt issuance costs.	October 1, 2016	Implementation of these standards resulted in a reduction of other deferred assets and long-term debt in our Consolidated Balance Sheets. The amounts that were reclassified at September 30, 2016 for WGL and Washington Gas were $9.3 million and $6.8 million, respectively.
ASU 2015-02 and ASU 2016-17, Consolidation (Topic 810): Amendments to the Consolidation Analysis and Interests Held through Related Parties that are Under Common Control	The standards changed the analysis to be performed in determining whether certain types of legal entities should be consolidated, specifically the analysis of limited partnerships and similar entities, fee arrangements and related party relationships. The standard permits prospective or retrospective application for different parts. The consolidation guidance was also amended as to how a reporting entity, that is the single decision maker of a VIE, should treat indirect interests in the entity held through related parties that are under common control with the reporting entity, when determining whether it is the primary beneficiary of that VIE.	October 1, 2016	The amendments to the consolidation guidance under these standards were applied and did not have an impact on the financial statements.

13

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

ASU 2015-05, Intangibles-Goodwill and Other -Internal-Use Software (Subtopic 350-40)-Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
The standard clarifies that a cloud computing customer may account for the arrangement as a software license when (1) the customer has a contractual right to take possession of the software at any time during the hosting period without significant penalty, and (2) it is feasible for the customer to either operate the software on its own hardware or contract with another party unrelated to the vendor to host the software. If the arrangement does not meet these criteria, it would be accounted for as a service contract and accounted for as an operating expense in the period incurred. October 1, 2016 WGL elected to apply the standard on a prospective basis, which did not have a material impact on the financial statements.

OTHER NEWLY ISSUED ACCOUNTING STANDARDS
Standard	Description	Required date of adoption	Effect on the financial statements or other significant matters
ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting	This standard simplifies several aspects of the accounting for share-based payment transactions, including accounting for income taxes, forfeitures, and statutory tax withholding requirements.	October 1, 2017	We are finalizing our evaluation of this standard but do not expect the adoption of this standard to have a material impact on the financial statements.
ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost	This standard requires entities to report the service cost component in the same financial statement line item as other compensation costs arising from services rendered by the pertinent employees during the period.  The other components of net benefit cost are to be presented separately from service cost and outside of operating income.  In addition, only the service cost component of net benefit cost is eligible for capitalization.  Changes to the presentation of service costs and other components of net benefit cost should be applied retrospectively. Changes in capitalization practices should be implemented prospectively.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.
ASU 2016-15, Statement of Cash Flows (Topic 230)—Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)	This update provides guidance on the classification of certain cash receipts and payments in the statement of cash flows.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.

14

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

ASU 2014-09, Revenue from Contracts with Customers (Topic 606), including subsequent ASUs clarifying the guidance.	ASU 2014-09 establishes a comprehensive revenue recognition model clarifying the method used to determine the timing and requirements for revenue recognition from contracts with customers. The disclosure requirements under the new standard will enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	An implementation team is currently evaluating all revenue streams and reviewing contracts with customers, as well as, related financial statement disclosures to determine the impact the adoption of this standard will have on our financial statements. WGL is also monitoring unresolved industry specific implementation issues that could impact the timing of revenue recognition for our regulated utility tariff based sales, including the evaluation of collectability from customers if a utility has regulatory mechanisms to help assure recovery of uncollected accounts from ratepayers and accounting for contributions in aid of construction (CIAC). WGL will adopt using the modified retrospective approach.
ASU 2016-01, Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities	The new standard amends certain disclosure requirements associated with the fair value of financial instruments, and significantly revises an entity’s accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	We performed a preliminary evaluation and the adoption of this standard will primarily impact the disclosure of our financial instruments in our Fair Value Measurements Footnote.
ASU 2016-02, Leases (Topic 842)	This standard requires recognition of a right-to-use asset and lease liability on the statement of financial position and disclosure of key information about leasing arrangements. The standard requires application using a modified retrospective approach.	October 1, 2019 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	For credit losses on financial instruments, this standard changes the current incurred loss impairment methodology to an expected loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.	October 1, 2020 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.

NOTE 2. ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

15

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

The tables below provide details for the amounts included in “Accounts payable and other accrued liabilities” on the balance sheets for both WGL and Washington Gas.

WGL Holdings, Inc.
(In millions)	June 30, 2017		September 30, 2016
Accounts payable—trade	$	329.5	$	353.0
Employee benefits and payroll accruals	28.0		34.4
Other accrued liabilities	19.6		18.0
Total	$	377.1	$	405.4

Washington Gas Light Company
(In millions)	June 30, 2017		September 30, 2016
Accounts payable—trade	$	151.1	$	161.0
Employee benefits and payroll accruals	26.3		32.2
Other accrued liabilities	9.8		11.8
Total	$	187.2	$	205.0

NOTE 3. SHORT-TERM DEBT

WGL and Washington Gas satisfy their short-term financing requirements through the sale of commercial paper, financing arrangements with third-party lenders, or through bank borrowings. Due to the seasonal nature of the regulated utility and retail energy-marketing segments, short-term financing requirements can vary significantly during the year. Revolving credit agreements are maintained to support outstanding commercial paper and to permit short-term borrowing flexibility. The policy of each of WGL and Washington Gas is to maintain bank credit facilities in amounts equal to or greater than their expected maximum commercial paper position. The following is a summary of committed credit available at June 30, 2017 and September 30, 2016.

Committed Credit Available($ In millions)
June 30, 2017	WGL(b)			Washington Gas			Total Consolidated
Committed credit agreements
Unsecured revolving credit facility, expires December 19, 2019(a)	$	650.0		$	350.0		$	1,000.0
Less: Commercial Paper	325.0			161.0			486.0
Net committed credit available	$	325.0		$	189.0		$	514.0
Weighted average interest rate	1.42		%	1.16		%	1.33		%
September 30, 2016
Committed credit agreements
Unsecured revolving credit facility, expires December 19, 2019(a)	$	450.0		$	350.0		$	800.0
Less: Commercial Paper	227.0			42.0			269.0
Net committed credit available	$	223.0		$	308.0		$	531.0
Weighted average interest rate	0.73		%	0.46		%	0.69		%

^(a)  Washington Gas has the right to request extensions with the banks’ approval. Washington Gas’ revolving credit facility permits it to borrow an additional $100 million, with the banks’ approval, for a total of $450 million.

^(b)  WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

At June 30, 2017 and September 30, 2016, there were no outstanding bank loans from WGL’s or Washington Gas’ revolving credit facilities.

16

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

PROJECT FINANCING

Washington Gas has obtained third-party project financing on behalf of the Federal government to provide funds during the construction of certain energy management services projects entered into under Washington Gas' area-wide contract. In connection with work completed under the area-wide contract, the construction work is performed by WGL Energy Systems on behalf of Washington Gas and an inter-company payable is recorded for work provided by WGL Energy Systems. As work is performed, Washington Gas establishes a receivable representing the government's obligation to remit principal and interest. The payable and receivable are equal to each other at the end of the construction period, but there may be timing differences in the recognition of the project related payable and receivable during the construction period. When these projects are formally “accepted” by the government and deemed complete, Washington Gas assigns the ownership of the receivable to the third party lender in satisfaction of the obligation and removes both the receivable and the obligation related to the financing from its financial statements.

In December 2016, WGL Energy Systems entered into an agreement to obtain third-party financing and receive funds directly from the third party lender during the construction period associated with the related energy management service projects. As a result, Washington Gas will no longer be liable under future third party financing arrangements, for projects entered into under the area-wide contract. The general terms of the financing agreement are the same as the prior financing arrangements between Washington Gas and the third party lender mentioned above. Washington Gas will continue to record a receivable representing the government’s obligation, and will record an inter-company payable to WGL Energy Systems for the construction work performed for the same amount.

As of June 30, 2017, WGL and Washington Gas recorded $70.9 million and $65.2 million, respectively, in "Unbilled revenues" on the balance sheet, and $52.9 million and $41.8 million, respectively, in a corresponding short-term obligation to third party lenders in "Notes payable and project financing", for energy management services projects that were not complete. As of September 30, 2016, WGL and Washington Gas recorded $73.3 million in "Unbilled revenues" on the balance sheet and a $62.4 million corresponding short-term obligation to third party lenders in "Notes payable and project financing" for energy management services projects that were not complete. WGL Energy Systems did not obtain any third-party project financing on behalf of the Federal Government for the fiscal year ended September 30, 2016. Because these projects are financed for government agencies that have minimal credit risk, and with which we have previous collection experience, neither WGL nor Washington Gas recorded a corresponding reserve for bad debts related to these receivables at June 30, 2017 or September 30, 2016.

NOTE 4. LONG-TERM DEBT

UNSECURED NOTES

WGL and Washington Gas issue long-term notes with individual terms regarding interest rates, maturities and call or put options. These notes can have maturity dates of one or more years from the date of issuance.

At June 30, 2017 and September 30, 2016, WGL had the capacity under a shelf registration to issue an unspecified amount of long-term debt securities. As a result of certain covenants included in the Merger Agreement among WGL, AltaGas and Wrangler, Inc., WGL is limited to the length of term that we may issue debt. Refer to Note 16 — Planned Merger with AltaGas Ltd. for a discussion of the proposed merger.

At June 30, 2017 and September 30, 2016 Washington Gas had the capacity under a shelf registration statement to issue up to $350.0 million of additional Medium-Term Notes (MTNs).

The following tables show the outstanding notes as of June 30, 2017 and September 30, 2016.

17

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Long-Term Debt Outstanding
($ In millions)	WGL(a)			Washington Gas			Total Consolidated
June 30, 2017
Long-term debt (b)	$	550.0		$	946.0		$	1,496.0
Unamortized discount	(1.5		)	(0.1		)	(1.6		)
Unamortized debt expense	(2.2		)	(6.6		)	(8.8		)
Total Long-Term Debt	$	546.3		$	939.3		$	1,485.6
Weighted average interest rate	2.81		%	5.12		%	4.27		%
September 30, 2016
Long-term debt (b)	$	500.0		$	946.0		$	1,446.0
Unamortized discount	(1.6		)	(0.1		)	(1.7		)
Unamortized debt expense	(2.4		)	(6.9		)	(9.3		)
Total Long-Term Debt	$	496.0		$	939.0		$	1,435.0
Weighted average interest rate	2.50		%	5.12		%	4.21		%

^(a)  WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

^(b)  Includes Senior Notes and term loans for WGL and both MTNs and private placement notes for Washington Gas. Represents face value including current maturities.

The following tables show long-term debt issuances and retirements for the nine months ended June 30, 2017 and 2016.

Long-Term Debt Issuances and Retirements
($ In millions)	Principal(b)		Interest Rate			Effective Cost(d)		Nominal Maturity Date
Nine Months Ended June 30, 2017
WGL(a)
Issuances:
1/26/2017	$	50.0	1.57	%	(c)	1.57	%	1/26/2019
Total consolidated issuances	$	50.0
Nine Months Ended June 30, 2016
WGL (a)
Issuances:
2/18/2016	250.0		2.10	%	(c)	2.10	%	2/18/2018
Total	$	250.0
Washington Gas
Retirements:	$	25.0	5.17	%		n/a		1/18/2016
Total	$	25.0

(a)WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

(b)Represents face amount of Senior Notes and term loans for WGL and both MTNs and private placement notes for Washington Gas.

(c)Floating rate per annum that will be determined from time to time based on parameters set forth in the credit agreement.

(d)The estimated effective cost of the issued notes.

18

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 5. COMMON SHAREHOLDERS’ EQUITY

The tables below reflect the components of “Common shareholders’ equity” for WGL and “Common shareholder’s equity” for Washington Gas for the nine months ended June 30, 2017 and 2016.

WGL Holdings, Inc. Components of Common Shareholders’ Equity
(In thousands, except shares)	Common Stock			Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Taxes			WGL Holdings Common Shareholders' Equity			Non-controlling Interest			Washington Gas Light Company Preferred Stock			Total Equity
	Shares	Amount
Balance at September 30, 2016	51,080,612	$	574,496	$	12,519		$	827,085		$	(38,539	)	$	1,375,561		$	409		$	28,173		$	1,404,143
Net income (loss)	—	—		—			189,301			—			189,301			(12,533		)	990			177,758
Contributions from non-controlling interest	—	—		—			—			—			—			17,358			—			17,358
Other comprehensive income	—	—		—			—			29,852			29,852			—			—			29,852
Stock-based compensation(a)	112,146	6,564		(3,971		)	(468		)	—			2,125			—			—			2,125
Issuance of common stock(b)	26,242	1,657		—			—			—			1,657			—			—			1,657
Dividends declared:
Common stock	—	—		—			(77,213		)	—			(77,213		)	—			—			(77,213		)
Preferred stock	—	—		—			—			—			—			—			(990		)	(990		)
Balance at June 30, 2017	51,219,000	$	582,717	$	8,548		$	938,705		$	(8,687	)	$	1,521,283		$	5,234		$	28,173		$	1,554,690
Balance at September 30, 2015	49,728,662	$	485,456	$	14,934		$	757,093		$	(14,236	)	$	1,243,247		$	—		$	28,173		$	1,271,420
Net income	—	—		—			176,484			—			176,484			—			990			177,474
Other comprehensive income	—	—		—			—			(19,844		)	(19,844		)	—			—			(19,844		)
Stock-based compensation(a)	115,974	6,742		(3,652		)	(122		)	—			2,968			—			—			2,968
Issuance of common stock(c)	1,213,373	80,711		—			—			—			80,711			—			—			80,711
Dividends declared:
Common stock	—	—		—			(72,485		)	—			(72,485		)	—			—			(72,485		)
Preferred stock	—	—		—			—			—			—			—			(990		)	(990		)
Balance at June 30, 2016	51,058,009	$	572,909	$	11,282		$	860,970		$	(34,080	)	$	1,411,081		$	—		$	28,173		$	1,439,254

(a) Includes dividend equivalents related to our performance shares.

(b) Includes dividend reinvestment and common stock purchase plans.

(c) Includes shares issued under the ATM program and the dividend reinvestment and common stock purchase plans.

19

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Washington Gas Light Company Components of Common Shareholder’s Equity
(In thousands, except shares)	Common Stock			Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Taxes			Total
	Shares	Amount
Balance at September 30, 2016	46,479,536	$	46,479	$	488,135	$	586,662		$	(7,830	)	$	1,113,446
Net income	—	—		—		147,400			—			147,400
Other comprehensive income	—	—		—		—			673			673
Stock-based compensation(a)	—	—		2,319		—			—			2,319
Dividends declared:
Common stock	—	—		—		(64,675		)	—			(64,675		)
Preferred stock	—	—		—		(990		)	—			(990		)
Balance at June 30, 2017	46,479,536	$	46,479	$	490,454	$	668,397		$	(7,157	)	$	1,198,173

(a) Stock-based compensation is based on the stock awards of WGL that are allocated to Washington Gas Light Company for its pro-rata share.

20

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 6. EARNINGS PER SHARE

Basic earnings per share (EPS) of WGL is computed by dividing net income by the weighted average number of common shares outstanding during the reported period. Diluted EPS assumes the issuance of common shares pursuant to stock-based compensation plans at the beginning of the applicable period unless the effect of such issuance would be anti-dilutive. The following table reflects the computation of our basic and diluted EPS for the three and nine months ended June 30, 2017 and 2016.

Basic and Diluted EPS
(In thousands, except per share data)	Net Income Applicable to Common Stock		Shares	Per Share Amount
Three Months Ended June 30, 2017
Basic EPS	$	8,265	51,219	$	0.16
Stock-based compensation plans	—		274
Diluted EPS	$	8,265	51,493	$	0.16
Three Months Ended June 30, 2016
Basic EPS	$	2,025	50,622	$	0.04
Stock-based compensation plans	—		283
Diluted EPS	$	2,025	50,905	$	0.04
Nine Months Ended June 30, 2017
Basic EPS	$	189,301	51,200	$	3.70
Stock-based compensation plans	—		269
Diluted EPS	$	189,301	51,469	$	3.68
Nine Months Ended June 30, 2016
Basic EPS	$	176,484	50,158	$	3.52
Stock-based compensation plans	—		260
Diluted EPS	$	176,484	50,418	$	3.50

There were no anti-dilutive shares for the three or nine months ended June 30, 2017 and 2016.

NOTE 7. INCOME TAXES

As of June 30, 2017 and September 30, 2016, our uncertain tax positions were approximately $46.6 million and $42.3 million, respectively, primarily due to the change in tax accounting for repairs. If the amounts of unrecognized tax benefits are eventually realized, it would not materially impact the effective tax rate. It is reasonably possible that the amount of the unrecognized tax benefit with respect to some of WGL’s and Washington Gas’ uncertain tax positions will significantly increase or decrease in the next 12 months. At this time, however, an estimate of the range of reasonably possible outcomes cannot be determined.

Under Accounting Standards Codification (ASC) Topic 740, Income Taxes, Washington Gas recognizes any accrued interest associated with uncertain tax positions in interest expense and recognizes any accrued penalties associated with uncertain tax positions in other expenses in the statements of income. At June 30, 2017 and September 30, 2016, we did not have an accrual of interest expense related to uncertain tax positions.

WGL files a consolidated federal tax return and various other state returns. We are no longer subject to income tax examinations by the Internal Revenue Service for years ended prior to September 30, 2013. Substantially all state income tax years in major jurisdictions are closed for years ended prior to September 30, 2013.

NOTE 8. DERIVATIVE AND WEATHER-RELATED INSTRUMENTS

DERIVATIVE INSTRUMENTS

Regulated Utility Operations

Washington Gas enters into contracts that qualify as derivative instruments and are accounted for under ASC Topic 815. These derivative instruments are recorded at fair value on our balance sheets and Washington Gas does not currently designate any derivatives as hedges under ASC Topic 815. Washington Gas’ derivative instruments relate to: (i) Washington Gas’ asset

21

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

optimization program; (ii) managing price risk associated with the purchase of gas to serve utility customers and (iii) managing interest rate risk.

Asset Optimization. Washington Gas optimizes the value of its long-term natural gas transportation and storage capacity resources during periods when these resources are not being used to physically serve utility customers. Specifically, Washington Gas utilizes its transportation capacity assets to benefit from favorable natural gas prices between different geographic locations and utilizes its storage capacity assets to benefit from favorable natural gas prices between different time periods. As part of this asset optimization program, Washington Gas enters into physical and financial derivative transactions in the form of forward, futures and option contracts with the primary objective of securing operating margins that Washington Gas will ultimately realize. The derivative transactions entered into under this program are subject to mark-to-market accounting treatment under ASC 820.

Regulatory sharing mechanisms provide for the annual realized profit from these transactions to be shared between Washington Gas' shareholders and customers; therefore, changes in fair value are recorded through earnings, or as regulatory assets or liabilities to the extent that it is probable that realized gains and losses associated with these derivative transactions will be included in the rates charged to customers when they are realized. Unrealized gains and losses recorded to earnings may cause significant period-to-period volatility; this volatility does not change the operating margins that Washington Gas expects to ultimately realize from these transactions through the use of its storage and transportation capacity resources.

All physically and financially settled contracts under our asset optimization program are reported on a net basis in the statements of income in “Utility cost of gas.” Total net margins recorded to “Utility cost of gas” after sharing and management fees associated with all asset optimization transactions for the three months ended June 30, 2017 was a net gain of $9.1 million, including an unrealized gain of $3.2 million. During the three months ended June 30, 2016 we recorded a net loss of $19.0 million, including an unrealized loss of $25.2 million. Total net margins recorded for the nine months ended June 30, 2017 was a net gain of $62.5 million, including an unrealized gain of $39.7 million. During the nine months ended June 30, 2016, we recorded a net gain of $30.3 million, including an unrealized gain of $8.0 million.

Managing Price Risk. To manage price risk associated with acquiring natural gas supply for utility customers, Washington Gas enters into physical and financial derivative transactions in the form of forward, option and other contracts, as authorized by its regulators. Any gains and losses associated with these derivatives are recorded as regulatory liabilities or assets, respectively, to reflect the rate treatment for these economic hedging activities.

Managing Interest-Rate Risk. Washington Gas may utilize derivative instruments that are designed to minimize the risk of interest-rate volatility associated with planned issuances of debt securities. Any gains and losses associated with these types of derivatives are recorded as regulatory liabilities or assets, respectively, and amortized in accordance with regulatory requirements, typically over the life of the related debt.

Non-Utility Operations

Trading Activities. WGL Midstream enters into derivative contracts for the purpose of optimizing its storage and transportation capacity as well as managing the transportation and storage assets on behalf of third parties. WGL Midstream does not designate these derivatives as hedges under ASC Topic 815; therefore, changes in the fair value of these derivative instruments are reflected in the earnings of our non-utility operations and may cause significant period-to-period volatility in earnings.

Managing Price Risk. WGL Energy Services enters into certain derivative contracts as part of its strategy to manage the price risk associated with the sale and purchase of natural gas and electricity. WGL Energy Services elects "normal purchases and normal sales" treatment for a portion of these physical contracts related to the purchase of natural gas and electricity to serve its customers and therefore, they are not subject to the fair value accounting requirements of ASC Topic 815. Derivative instruments not designated as ''normal purchases and normal sales" are recorded at fair value on our consolidated balance sheets, and changes in the fair value of these derivative instruments are reflected in the earnings of our non-utility operations, which may cause significant period-to-period volatility in earnings. WGL Energy Services does not designate derivatives as hedges under ASC Topic 815.

Managing Interest-Rate Risk. WGL utilizes derivative instruments that are designed to limit the risk of interest-rate volatility associated with future debt issuances.

At June 30, 2017, WGL had $250 million of 30-year forward starting interest rate swaps which settle in January 2018. Through December 2016, WGL had designated these interest rate swaps as cash flow hedges in anticipation of a 30-year debt

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

issuance in January 2018, and reported the effective portion of changes in fair value as a component of other comprehensive income (loss). As a result of certain covenants related to the proposed merger with AltaGas, in January 2017, WGL de-designated these hedges and any further changes in the fair value of the interest rate swaps will be recorded to interest expense. The remaining balance in accumulated other comprehensive income at June 30, 2017 is $6.4 million related to these hedges. Refer to Note 16 — Planned Merger with AltaGas Ltd. for a discussion of the proposed merger. 

WGL also has amounts recorded within other comprehensive income (loss) for settled hedges related to prior debt issuances, which are being amortized to income over the life of the outstanding debt. The amortization was minimal for the nine months ended June 30, 2017 and 2016.

Consolidated Operations

Reflected in the tables below is information for WGL as well as Washington Gas. The information for WGL includes derivative instruments for both utility and non-utility operations.

At June 30, 2017 and September 30, 2016, respectively, the absolute notional amounts of our derivatives were as follows:

Absolute Notional Amounts of Open Positions on Derivative Instruments
Derivative transactions	WGL Holdings, Inc.		Washington Gas
June 30, 2017	Notional Amounts
Natural Gas(In millions of therms)
Asset optimization & trading	23,019.0		11,614.0
Retail sales	12.5		—
Other risk-management activities	1,546.6		1,201.0
Electricity(In millions of kWhs)
Retail sales	10,728.9		—
Other risk-management activities(a)	24,878.5		—
Interest Rate Swaps(In millions of dollars)	$	250.0	—
September 30, 2016
Natural Gas(In millions of therms)
Asset optimization & trading	21,084.5		12,725.0
Retail sales	50.2		—
Other risk-management activities	1,789.0		1,309.0
Electricity(In millions of kWhs)
Retail sales	4,377.5		—
Other risk-management activities(a)	21,070.4		—
Interest Rate Swaps(In millions of dollars)	$	250.0	—

(a) Comprised primarily of financial swaps, financial transmission rights and physical forward purchases.

The following tables present the balance sheet classification for all derivative instruments as of June 30, 2017 and September 30, 2016.

23

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

WGL Holdings, Inc. Balance Sheet Classification of Derivative Instruments
(In millions)	Derivative Instruments Not Designated as Hedging Instruments					Derivative Instruments Designated as Hedging Instruments
As of June 30, 2017	Gross Derivative Assets		Gross Derivative Liabilities			Gross Derivative Assets		Gross Derivative Liabilities			Netting of Collateral		Total(a)
Current Assets—Derivatives	$	32.6	$	(8.8	)	$	—	$	—		$	—	$	23.8
Deferred Charges and Other Assets—Derivatives	37.0		(0.8		)	—		—			—		36.2
Accounts payable and other accrued liabilities	0.5		—			—		—			—		0.5
Current Liabilities—Derivatives	11.9		(58.6		)	—		—			0.8		(45.9		)
Deferred Credits—Derivatives	14.2		(183.5		)	—		—			6.4		(162.9		)
Total	$	96.2	$	(251.7	)	$	—	$	—		$	7.2	$	(148.3	)
As of September 30, 2016
Current Assets—Derivatives	$	24.0	$	(5.5	)	$	—	$	—		$	—	$	18.5
Deferred Charges and Other Assets—Derivatives	55.6		(0.6		)	—		—			—		55.0
Current Liabilities—Derivatives	18.3		(113.2		)	—		—			12.6		(82.3		)
Deferred Credits—Derivatives	6.4		(279.3		)	0.2		(43.1		)	11.6		(304.2		)
Total	$	104.3	$	(398.6	)	$	0.2	$	(43.1	)	$	24.2	$	(313.0	)

Washington Gas Light Company Balance Sheet Classification of Derivative Instruments(b)
(In millions)
As of June 30, 2017	Gross Derivative Assets		Gross Derivative Liabilities			Netting of Collateral		Total(a)
Current Assets—Derivatives	$	10.7	$	(3.7	)	$	—	$	7.0
Deferred Charges and Other Assets—Derivatives	15.5		(0.4		)	—		15.1
Current Liabilities—Derivatives	0.1		(26.3		)	—		(26.2		)
Deferred Credits—Derivatives	—		(143.8		)	—		(143.8		)
Total	$	26.3	$	(174.2	)	$	—	$	(147.9	)
As of September 30, 2016
Current Assets—Derivatives	$	11.7	$	(4.4	)	$	—	$	7.3
Deferred Charges and Other Assets—Derivatives	26.2		(0.6		)	—		25.6
Current Liabilities—Derivatives	1.9		(60.2		)	—		(58.3		)
Deferred Credits—Derivatives	—		(232.0		)	—		(232.0		)
Total	$	39.8	$	(297.2	)	$	—	$	(257.4	)

(a) WGL has elected to offset the fair value of recognized derivative instruments against the right to reclaim or the obligation to return collateral for derivative instruments executed under the same master netting arrangement in accordance with ASC 815. All recognized derivative contracts and associated financial collateral subject to a master netting arrangement or similar that is eligible for offset under ASC 815 have been presented net in the balance sheet.

(b) Washington Gas did not have any derivative instruments outstanding that were designated as hedging instruments at June 30, 2017 or September 30, 2016.

The following table presents all gains and losses associated with derivative instruments for the three and nine months ended June 30, 2017 and 2016.

24

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Gains and Losses on Derivative Instruments
(In millions)	WGL Holdings, Inc.						Washington Gas
Three Months Ended June 30,	2017			2016			2017		2016
Recorded to income
Operating revenues—non-utility	$	8.3		$	(39.0	)	$	—	$	—
Utility cost of gas	5.5			(24.9		)	5.5		(24.9		)
Non-utility cost of energy-related sales	(0.8		)	48.4			—		—
Interest expense	(7.9		)	(0.1		)	—		—
Recorded to regulatory assets
Gas costs	6.4			(29.4		)	6.4		(29.4		)
Other	—			(8.8		)	—		(8.8		)
Recorded to other comprehensive income	0.1			(16.9		)	—		—
Total	$	11.6		$	(70.7	)	$	11.9	$	(63.1	)
Nine Months Ended June 30,	2017			2016			2017		2016
Recorded to income
Operating revenues—non-utility	$	25.8		$	7.6		$	—	$	—
Utility cost of gas	40.0			9.2			40.0		9.2
Non-utility cost of energy-related sales	25.9			50.6			—		—
Interest expense	(5.4		)	(0.2		)	—		—
Recorded to regulatory assets
Gas costs	62.6			24.9			62.6		24.9
Other	—			(8.8		)	—		(8.8		)
Recorded to other comprehensive income	49.6			(34.5		)	—		—
Total	$	198.5		$	48.8		$	102.6	$	25.3

Collateral

WGL utilizes standardized master netting agreements, which facilitate the netting of cash flows into a single net exposure for a given counterparty. As part of these master netting agreements, cash, letters of credit and parental guarantees may be required to be posted or obtained from counterparties in order to mitigate credit risk related to both derivatives and non-derivative positions. Under WGL’s offsetting policy, collateral balances are offset against the related counterparties’ derivative positions to the extent the application would not result in the over-collateralization of those derivative positions on the balance sheet.

The table below presents collateral not offset against derivative assets and liabilities at June 30, 2017 and September 30, 2016, respectively.

Collateral Not Offset Against Derivative Assets and Liabilities (In millions)
June 30, 2017	Collateral deposits posted with counterparties		Cash collateral held representing an obligation
Washington Gas	$	4.9	$	0.1
WGL Energy Services	18.5		—
WGL Midstream	33.6		0.6
September 30, 2016
Washington Gas	$	4.3	$	0.1
WGL Energy Services	9.1		—
WGL Midstream	18.5		5.4

Any collateral posted that is not offset against derivative assets and liabilities is included in “Other prepayments” in the accompanying balance sheets. Collateral received and not offset against derivative assets and liabilities is included in “Customer deposits and advance payments” in the accompanying balance sheets.

Certain derivative instruments of WGL, Washington Gas, WGL Energy Services and WGL Midstream contain contract provisions that require collateral to be posted if the credit rating of Washington Gas or WGL falls below certain levels or if counterparty exposure to WGL, Washington Gas, WGL Energy Services or WGL Midstream exceeds a certain level (credit-

25

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

related contingent features). Due to counterparty exposure levels, at June 30, 2017, WGL Energy Services posted $6.5 million of collateral related to its derivative liabilities that contained credit-related contingent features. At September 30, 2016, WGL Energy Services posted $5.5 million of collateral related to these aforementioned derivative liabilities. At June 30, 2017, WGL was not required to post collateral related to a derivative liability that contained a credit-related contingent feature. At September 30, 2016, WGL was required to post $6.5 million of collateral related to its derivative liabilities that contained credit-related contingent features. At both June 30, 2017 and September 30, 2016, Washington Gas and WGL Midstream were not required to post any collateral related to their respective derivative liabilities that contained credit-related contingent features. The following table shows the aggregate fair value of all derivative instruments with credit-related contingent features that are in a liability position, as well as the maximum amount of collateral that would be required if the most intrusive credit-risk-related contingent features underlying these agreements were triggered on June 30, 2017 and September 30, 2016, respectively.

Potential Collateral Requirements for Derivative Liabilities with Credit-Risk-Contingent Features
(In millions)	WGL Holdings, Inc.		Washington Gas
June 30, 2017
Derivative liabilities with credit-risk-contingent features	$	26.0	$	2.4
Maximum potential collateral requirements	$	23.4	$	2.4
September 30, 2016
Derivative liabilities with credit-risk-contingent features	$	53.9	$	11.3
Maximum potential collateral requirements	$	41.4	$	11.3

We do not enter into derivative contracts for speculative purposes.

Concentration of Credit Risk

We are exposed to credit risk from derivative instruments with wholesale counterparties, which is represented by the fair value of these instruments at the reporting date. We actively monitor and work to minimize counterparty concentration risk through various practices. At June 30, 2017, two counterparties each represented over 10% of Washington Gas’ credit exposure to wholesale derivative counterparties for a total credit risk of $30.7 million; four counterparties each represented over 10% of WGL Energy Services’ credit exposure to wholesale counterparties for a total credit risk of $1.2 million; and one counterparty represented over 10% of WGL Midstream’s credit exposure to wholesale counterparties for a total credit risk of $17.1 million.

WEATHER-RELATED INSTRUMENTS

WGL Energy Services utilizes weather-related instruments for managing the financial effects of weather risks. These instruments cover a portion of WGL Energy Services’ estimated revenue or energy-related cost exposure to variations in heating or cooling degree days. These contracts provide for payment to WGL Energy Services of a fixed-dollar amount for every degree day over or under specific levels during the calculation period depending upon the type of contract executed. For the three months ended June 30, 2017 and 2016, WGL Energy Services recorded a pre-tax loss of $0.3 million and $0.5 million, respectively. During the nine months ended June 30, 2017 and 2016, WGL Energy Services recorded pre-tax gains of $1.4 million and $3.8 million, respectively, related to these instruments included in "Non-utility cost of energy related sales" in the accompanying condensed consolidated statements of income.

NOTE 9. FAIR VALUE MEASUREMENTS

Recurring Basis

We measure the fair value of our financial assets and liabilities using a combination of the income and market approaches in accordance with ASC Topic 820. These financial assets and liabilities primarily consist of derivatives recorded on our balance sheet under ASC Topic 815 and short-term investments, commercial paper and long-term debt outstanding required to be disclosed at fair value. Under ASC Topic 820, fair value is defined as the exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To value our financial instruments, we use market data or assumptions that market participants would use, including assumptions about credit risk (both our own credit risk and the counterparty’s credit risk) and the risks inherent in the inputs to valuation.

26

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

We enter into derivative contracts in the futures and over-the-counter (OTC) wholesale and retail markets. These markets are the principal markets for the respective wholesale and retail contracts. Our relevant market participants are our existing counterparties and others who have participated in energy transactions at our delivery points. These participants have access to the same market data as WGL. We value our derivative contracts based on an “in-exchange” premise, and valuations are generally based on pricing service data or indicative broker quotes depending on the market location. We measure the net credit exposure at the counterparty level where the right to set-off exists. The net exposure is determined using the mark-to-market exposure adjusted for collateral, letters of credit and parent guarantees. We use published default rates from Standard & Poor’s Ratings Services and Moody’s Investors Service as inputs for determining credit adjustments.

ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy under ASC Topic 820 are described below:

Level 1.Level 1 of the fair value hierarchy consists of assets or liabilities that are valued using observable inputs based upon unadjusted quoted prices in active markets for identical assets or liabilities at the reporting date. WGL did not have any Level 1 derivatives at June 30, 2017 or September 30, 2016.

Level 2.Level 2 of the fair value hierarchy consists of assets or liabilities that are valued using directly or indirectly observable inputs either corroborated with market data or based on exchange traded market data. Level 2 includes fair values based on industry-standard valuation techniques that consider various assumptions: (i) quoted forward prices, including the use of mid-market pricing within a bid/ask spread; (ii) discount rates; (iii) implied volatility and (iv) other economic factors. Substantially all of these assumptions are observable throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the relevant market. At June 30, 2017 and September 30, 2016, Level 2 financial assets and liabilities included energy-related physical and financial derivative transactions such as forward, option and other contracts for deliveries at active market locations, as well as our interest rate swaps.

Level 3.Level 3 of the fair value hierarchy consists of assets or liabilities that are valued using significant unobservable inputs at the reporting date. These unobservable assumptions reflect our assumptions about estimates that market participants would use in pricing the asset or liability, including natural gas basis prices, annualized volatilities of natural gas prices, and electricity congestion prices. A significant change to any one of these inputs in isolation could result in a significant upward or downward fluctuation in the fair value measurement. These inputs may be used with industry standard valuation methodologies that result in our best estimate of fair value for the assets or liabilities at the reporting date.

Our Risk Analysis and Mitigation (RA&M) Group determines the valuation policies and procedures. The RA&M Group reports to WGL’s Chief Financial Officer. In accordance with WGL’s valuation policy, we may utilize a variety of valuation methodologies to determine the fair value of Level 3 derivative contracts, including internally developed valuation inputs and pricing models. The prices used in our valuations are corroborated using multiple pricing sources, and we periodically conduct assessments to determine whether each valuation model is appropriate for its intended purpose. The RA&M Group also evaluates changes in fair value measurements on a daily basis.

At June 30, 2017 and September 30, 2016, Level 3 derivative assets and liabilities included: (i) physical contracts valued at illiquid market locations with no observable market data; (ii) long-dated positions where observable pricing is not available over the majority of the life of the contract; (iii) contracts valued using historical spot price volatility assumptions and (iv) valuations using indicative broker quotes for inactive market locations.

The following tables set forth financial instruments recorded at fair value as of June 30, 2017 and September 30, 2016, respectively. A financial instrument’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy.

27

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

WGL Holdings, Inc. Fair Value Measurements Under the Fair Value Hierarchy
(In millions)	Level 1		Level 2			Level 3			Total
At June 30, 2017
Assets
Natural gas related derivatives	$	—	$	20.4		$	46.7		$	67.1
Electricity related derivatives	—		—			19.3			19.3
Interest rate derivatives	—		9.8			—			9.8
Total Assets	$	—	$	30.2		$	66.0		$	96.2
Liabilities
Natural gas related derivatives	$	—	$	(16.5	)	$	(199.0	)	$	(215.5	)
Electricity related derivatives	—		(4.6		)	(23.1		)	(27.7		)
Interest rate derivatives	—		(8.5		)	—			(8.5		)
Total Liabilities	$	—	$	(29.6	)	$	(222.1	)	$	(251.7	)
At September 30, 2016
Assets
Natural gas related derivatives	$	—	$	28.8		$	54.0		$	82.8
Electricity related derivatives	—		0.6			20.9			21.5
Interest rate derivatives	—		0.2			—			0.2
Total Assets	$	—	$	29.6		$	74.9		$	104.5
Liabilities
Natural gas related derivatives	$	—	$	(46.7	)	$	(318.2	)	$	(364.9	)
Electricity related derivatives	—		(3.8		)	(29.9		)	(33.7		)
Interest rate derivatives	—		(43.1		)	—			(43.1		)
Total Liabilities	$	—	$	(93.6	)	$	(348.1	)	$	(441.7	)

Washington Gas Light Company Fair Value Measurements Under the Fair Value Hierarchy
(In millions)	Level 1		Level 2			Level 3			Total
At June 30, 2017
Assets
Natural gas related derivatives	$	—	$	8.7		$	17.6		$	26.3
Total Assets	$	—	$	8.7		$	17.6		$	26.3
Liabilities
Natural gas related derivatives	$	—	$	(5.9	)	$	(168.3	)	$	(174.2	)
Total Liabilities	$	—	$	(5.9	)	$	(168.3	)	$	(174.2	)
At September 30, 2016
Assets
Natural gas related derivatives	$	—	$	15.4		$	24.4		$	39.8
Total Assets	$	—	$	15.4		$	24.4		$	39.8
Liabilities
Natural gas related derivatives	$	—	$	(21.2	)	$	(276.0	)	$	(297.2	)
Total Liabilities	$	—	$	(21.2	)	$	(276.0	)	$	(297.2	)

The following table includes quantitative information about the significant unobservable inputs used in the fair value measurement of our Level 3 financial instruments and the respective fair values of the net derivative asset and liability positions, by contract type, as of June 30, 2017 and September 30, 2016.

28

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Quantitative Information about Level 3 Fair Value Measurements
(In millions)	Net Fair Value June 30, 2017	Valuation Techniques	Unobservable Inputs	Range
WGL Holdings, Inc.
Natural gas related derivatives	$(152.3)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($1.300) - $2.898
		Option Model	Natural Gas Basis Price (per dekatherm)	($1.468) - $2.543
			Annualized Volatility of Spot Market Natural Gas	25.5% - 566.8%
Electricity related derivatives	$(3.8)	Discounted Cash Flow	Electricity Congestion Price (per megawatt hour)	($4.154) - $60.000
Washington Gas Light Company
Natural gas related derivatives	$(150.7)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($1.300) - $2.898
(In millions)	Net Fair Value September 30, 2016
WGL Holdings, Inc.
Natural gas related derivatives	$(264.1)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($2.021) - $3.290
		Option Model	Natural Gas Basis Price (per dekatherm)	($2.105) - $3.310
	$(0.1)		Annualized Volatility of Spot Market Natural Gas	25.5% - 869.9%
Electricity related derivatives	$(9.1)	Discounted Cash Flow	Electricity Congestion Price (per megawatt hour)	($6.199) - $68.700
Washington Gas Light Company
Natural gas related derivatives	$(251.6)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($2.021) - $3.290

The following tables are a summary of the changes in the fair value of our derivative instruments that are measured at net fair value on a recurring basis in accordance with ASC Topic 820 using significant Level 3 inputs during the three and nine months ended June 30, 2017 and 2016, respectively.

29

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Reconciliation of Fair Value Measurements Using Significant Level 3 Inputs
	WGL Holdings, Inc.									Washington Gas Light Company
(In millions)	Natural Gas Related Derivatives			Electricity Related Derivatives			Total			Total - Natural Gas Related Derivatives
Three Months Ended June 30, 2017
Balance at April 1, 2017	$	(150.2	)	$	(8.4	)	$	(158.6	)	$	(155.4	)
Realized and unrealized gains (losses)
Recorded to income	(6.0		)	1.7			(4.3		)	2.9
Recorded to regulatory assets—gas costs	3.0			—			3.0			3.0
Transfers into Level 3	0.1			—			0.1			—
Purchases	—			2.0			2.0			—
Settlements	0.8			0.9			1.7			(1.2		)
Balance at June 30, 2017	$	(152.3	)	$	(3.8	)	$	(156.1	)	$	(150.7	)
Three Months Ended June 30, 2016
Balance at April 1, 2016	$	(204.3	)	$	(30.5	)	$	(234.8	)	$	(194.3	)
Realized and unrealized gains (losses)
Recorded to income	(8.9		)	22.5			13.6			(21.6		)
Recorded to regulatory assets—gas costs	(27.6		)	—			(27.6		)	(27.6		)
Transfers into Level 3	0.1			—			0.1			—
Transfers out of Level 3	(0.2		)	—			(0.2		)	—
Purchases	—			(10.7		)	(10.7		)	—
Settlements	0.4			8.0			8.4			0.2
Balance at June 30, 2016	$	(240.5	)	$	(10.7	)	$	(251.2	)	$	(243.3	)
Nine Months Ended June 30, 2017
Balance at October 1, 2016	$	(264.1	)	$	(9.1	)	$	(273.2	)	$	(251.6	)
Realized and unrealized gains (losses)
Recorded to income	46.6			(2.5		)	44.1			34.7
Recorded to regulatory assets—gas costs	55.4			—			55.4			55.4
Transfers into Level 3	(0.7		)	—			(0.7		)	(0.4		)
Transfers out of Level 3	(0.5		)	—			(0.5		)	(0.3		)
Purchases	—			(1.0		)	(1.0		)	—
Settlements	11.0			8.8			19.8			11.5
Balance at June 30, 2017	$	(152.3	)	$	(3.8	)	$	(156.1	)	$	(150.7	)
Nine Months Ended June 30, 2016
Balance at October 1, 2015	$	(309.7	)	$	(16.0	)	$	(325.7	)	$	(281.1	)
Realized and unrealized gains (losses)
Recorded to income	34.6			(14.2		)	20.4			3.3
Recorded to regulatory assets—gas costs	15.9			—			15.9			15.9
Transfers into Level 3	(0.8		)	—			(0.8		)	(0.2		)
Transfers out of Level 3	8.7			—			8.7			8.8
Purchases	—			(4.4		)	(4.4		)	—
Settlements	10.8			23.9			34.7			10.0
Balance at June 30, 2016	$	(240.5	)	$	(10.7	)	$	(251.2	)	$	(243.3	)

Transfers between different levels of the fair value hierarchy may occur based on fluctuations in the valuation and on the level of observable inputs used to value the instruments from period to period. It is our policy to show both transfers into and out of the different levels of the fair value hierarchy at the fair value as of the beginning of the period. Transfers out of Level 3 for the periods presented were due to an increase in observable market inputs, primarily reflecting a decrease in the duration of the contracts being valued. Transfers into Level 3 for the periods presented were due to an increase in unobservable market inputs, primarily pricing points.

30

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

The table below sets forth the line items on the statements of income to which amounts are recorded for the three and nine months ended June 30, 2017 and 2016, respectively, related to fair value measurements using significant Level 3 inputs.

Realized and Unrealized Gains (Losses) Recorded to Income for Level 3 Measurements
	WGL Holdings, Inc.									Washington Gas Light Company
(In millions)	Natural Gas Related Derivatives			Electricity Related Derivatives			Total			Total - Natural Gas Related Derivatives
Three Months Ended June 30, 2017
Operating revenues—non-utility	$	(8.9	)	$	(1.1	)	$	(10.0	)	$	—
Utility cost of gas	2.9			—			2.9			2.9
Non-utility cost of energy-related sales	—			2.8			2.8			—
Total	$	(6.0	)	$	1.7		$	(4.3	)	$	2.9
Three Months Ended June 30, 2016
Operating revenues—non-utility	$	6.5		$	(17.4	)	$	(10.9	)	$	—
Utility cost of gas	(21.6		)	—			(21.6		)	(21.6		)
Non-utility cost of energy-related sales	6.2			39.9			46.1			—
Total	$	(8.9	)	$	22.5		$	13.6		$	(21.6	)
Nine Months Ended June 30, 2017
Operating revenues—non-utility	$	6.3		$	(9.6	)	$	(3.3	)	$	—
Utility cost of gas	34.7			—			34.7			34.7
Non-utility cost of energy-related sales	5.6			7.1			12.7			—
Total	$	46.6		$	(2.5	)	$	44.1		$	34.7
Nine Months Ended June 30, 2016
Operating revenues—non-utility	$	22.5		$	(25.9	)	$	(3.4	)	$	—
Utility cost of gas	3.3			—			3.3			3.3
Non-utility cost of energy-related sales	8.8			11.7			20.5			—
Total	$	34.6		$	(14.2	)	$	20.4		$	3.3

Unrealized gains (losses) attributable to derivative assets and liabilities measured using significant Level 3 inputs were recorded as follows, for the three and nine months ended June 30, 2017 and 2016, respectively.

31

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Unrealized Gains (Losses) Recorded for Level 3 Measurements
	WGL Holdings, Inc.									Washington Gas Light Company
(In millions)	Natural Gas Related Derivatives			Electricity Related Derivatives			Total			Total - Natural Gas Related Derivatives
Three Months Ended June 30, 2017
Recorded to income
Operating revenues—non-utility	$	(7.1	)	$	5.1		$	(2.0	)	$	—
Utility cost of gas	2.6			—			2.6			2.6
Non-utility cost of energy-related sales	(0.2		)	2.0			1.8			—
Recorded to regulatory assets—gas costs	2.7			—			2.7			2.7
Total	$	(2.0	)	$	7.1		$	5.1		$	5.3
Three Months Ended June 30, 2016
Recorded to income
Operating revenues—non-utility	$	6.7		$	(10.3	)	$	(3.6	)	$	—
Utility cost of gas	(22.2		)	—			(22.2		)	(22.2		)
Non-utility cost of energy-related sales	5.2			33.2			38.4			—
Recorded to regulatory assets—gas costs	(28.9		)	—			(28.9		)	(28.9		)
Total	$	(39.2	)	$	22.9		$	(16.3	)	$	(51.1	)
Nine Months Ended June 30, 2017
Recorded to income
Operating revenues—non-utility	$	5.2		$	4.0		$	9.2		$	—
Utility cost of gas	22.4			—			22.4			22.4
Non-utility cost of energy-related sales	(0.1		)	8.4			8.3			—
Recorded to regulatory assets—gas costs	38.0			—			38.0			38.0
Total	$	65.5		$	12.4		$	77.9		$	60.4
Nine Months Ended June 30, 2016
Recorded to income
Operating revenues—non-utility	$	26.1		$	(6.7	)	$	19.4		$	—
Utility cost of gas	(0.2		)	—			(0.2		)	(0.2		)
Non-utility cost of energy-related sales	2.6			15.1			17.7			—
Recorded to regulatory assets—gas costs	9.2			—			9.2			9.2
Total	$	37.7		$	8.4		$	46.1		$	9.0

The following table presents the carrying amounts and estimated fair values of our financial instruments at June 30, 2017 and September 30, 2016.

WGL Holdings, Inc. Fair Value of Financial Instruments
	June 30, 2017				September 30, 2016
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Money market funds(a)	$	15.4	$	15.4	$	10.6	$	10.6
Other short-term investments(a)	$	0.1	$	0.1	$	1.4	$	1.4
Commercial paper (b)	$	486.0	$	486.0	$	269.0	$	269.0
Project financing (b)	$	52.9	$	52.9	$	62.4	$	62.4
Long-term debt(c)	$	1,235.6	$	1,378.8	$	1,435.0	$	1,641.9

32

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Washington Gas Light Company Fair Value of Financial Instruments
	June 30, 2017				September 30, 2016
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Money market funds (a)	$	8.7	$	8.7	$	5.0	$	5.0
Other short-term investments (a)	$	0.1	$	0.1	$	1.4	$	1.4
Commercial paper (b)	$	161.0	$	161.0	$	42.0	$	42.0
Project financing (b)	$	41.8	$	41.8	$	62.4	$	62.4
Long-term debt (c)	$	939.3	$	1,073.2	$	939.0	$	1,126.4

^(a)  Balance is located in cash and cash equivalents in the accompanying balance sheets. These amounts may be offset by outstanding checks.

^(b)  Balance is located in notes payable in the accompanying balance sheets.

^(c)  Excludes current maturities. On October 1, 2016, WGL and Washington Gas adopted ASU 2015-03 and ASU 2015-15. This standard requires an entity to account for debt issuance costs as a valuation account presented as a deduction from the face amount of debt in the balance sheet. Prior period amounts related to other deferred charges and other assets and long-term debt in the accompanying condensed balance sheets have been recast to conform to the current period presentation.

Our money market funds are Level 1 valuations and their carrying amount approximates fair value. Other short-term investments are primarily overnight investment accounts; their carrying amount approximates fair value based on Level 2 inputs. The maturity of our commercial paper outstanding at both June 30, 2017 and September 30, 2016 is under 30 days. Due to the short-term nature of these notes, the carrying cost of our commercial paper approximates fair value using Level 2 inputs. Due to the nature of our project financing arrangements, the carrying cost approximates fair value using Level 2 inputs. Neither WGL’s nor Washington Gas’ long-term debt is actively traded. The fair value of long-term debt was estimated based on the quoted market prices of the U.S. Treasury issues having a similar term to maturity, adjusted for the credit quality of the debt issuer, WGL or Washington Gas. Our long-term debt fair value measurement is classified as Level 3.

NOTE 10. OPERATING SEGMENT REPORTING

We have four reportable operating segments: regulated utility, retail energy-marketing, commercial energy systems and midstream energy services. The division of these segments into separate revenue generating components is based upon regulation, products and services. Our chief operating decision maker is our Chief Executive Officer and we evaluate segment performance based on Earnings Before Interest and Taxes (EBIT). EBIT is defined as earnings before interest and taxes net of amounts attributable to non-controlling interests. Items we do not include in EBIT are interest expense, intercompany financing activity, dividends on Washington Gas preferred stock, and income taxes. EBIT includes transactions between reportable segments. We also evaluate our operating segments based on other relevant factors, such as penetration into their respective markets and return on equity.

Our four segments are summarized below.

• Regulated Utility – The regulated utility segment is our core business. It consists of Washington Gas and Hampshire. Washington Gas provides regulated gas distribution services (including the sale and delivery of natural gas) to end use customers and natural gas transportation services to an unaffiliated natural gas distribution company in West Virginia under a Federal Energy Regulatory Commission (FERC) approved interstate transportation service operating agreement. Hampshire provides regulated interstate natural gas storage services to Washington Gas under a FERC approved interstate storage service tariff.

• Retail Energy-Marketing – The retail energy-marketing segment consists of WGL Energy Services, which sells natural gas and electricity directly to retail customers in competition with regulated utilities and unregulated gas and electricity marketers.

• Commercial Energy Systems – The commercial energy systems segment consists of WGL Energy Systems which provides clean and energy efficient solutions including commercial solar, energy efficiency and combined heat and power projects and other distributed generation solutions to government and commercial clients. In addition, this segment comprises the operations of WGSW, a holding company formed to invest in alternative energy assets.

33

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

• Midstream Energy Services – The midstream energy services segment consists of WGL Midstream, which specializes in the investment, management, development and optimization of natural gas storage and transportation midstream infrastructure projects.

Administrative and business development activity costs associated with WGL and Washington Gas Resources and activities and transactions that are not significant enough on a stand-alone basis to warrant treatment as an operating segment, and that do not fit into one of our four operating segments, are aggregated as “Other Activities” in the Operating Segment Financial Information presented below. Results for other activities primarily relate to external costs associated with the planned merger with AltaGas.

As a result of the adoption of ASU 2015-03 and ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost and Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, prior period total assets have been recast to conform to current quarter presentation.

The following tables present operating segment information for the three and nine months ended June 30, 2017 and 2016.

Operating Segment Financial Information
(In thousands)	Operating Revenues(a)			Depreciation and Amortization			Equity in Earnings of Unconsolidated Affiliates		EBIT			Total Assets			Capital Expenditures			Equity Method Investments
Three Months Ended June 30, 2017
Regulated utility	$	203,186		$	33,217		$	—	$	11,226		$	4,780,169		$	72,750		$	—
Retail energy-marketing	250,025			281			—		4,335			522,496			(125		)	—
Commercial energy systems(b)	25,645			5,585			2,355		14,354			987,827			13,062			76,341
Midstream energy services	4,540			2			5,153		7,651			650,204			—			348,963
Other activities	—			—			—		(1,622		)	354,465			—			—
Eliminations(c)	(9,032		)	9			—		(138		)	(921,668		)	—			—
Total consolidated	$	474,364		$	39,094		$	7,508	$	35,806		$	6,373,493		$	85,687		$	425,304
Three Months Ended June 30, 2016
Regulated utility	$	187,077		$	29,632		$	—	$	(20,458	)	$	4,462,946		$	106,773		$	—
Retail energy-marketing	266,214			233			—		49,544			473,766			768			—
Commercial energy systems	20,842			3,900			2,162		8,286			779,516			34,125			65,289
Midstream energy services	(17,989		)	26			2,365		(16,908		)	433,384			—			217,491
Other activities	—			—			—		(517		)	198,905			—			—
Eliminations(c)	(15,557		)	(5		)	—		178			(612,656		)	—			—
Total consolidated	$	440,587		$	33,786		$	4,527	$	20,125		$	5,735,861		$	141,666		$	282,780
Nine Months Ended June 30, 2017
Regulated utility	$	1,012,193		$	97,349		$	—	$	279,114		$	4,780,169		$	281,043		$	—
Retail energy-marketing	873,625			859			—		42,775			522,496			609			—
Commercial energy systems(b)	61,482			15,210			7,185		27,564			987,827			70,580			76,341
Midstream energy services	18,173			21			7,932		21,160			650,204			—			348,963
Other activities	—			—			—		(17,887		)	354,465			—			—
Eliminations(c)	(39,872		)	48			—		(502		)	(921,668		)	—			—
Total consolidated	$	1,925,601		$	113,487		$	15,117	$	352,224		$	6,373,493		$	352,232		$	425,304
Nine Months Ended June 30, 2016
Regulated utility	$	934,347		$	86,318		$	—	$	243,102		$	4,462,946		$	267,230		$	—
Retail energy-marketing	925,180			872			—		52,055			473,766			7,595			—
Commercial energy systems	57,066			11,105			5,554		10,251			779,516			73,769			65,289
Midstream energy services	16,223			97			5,004		17,631			433,384			—			217,491
Other activities	—			—			—		(2,773		)	198,905			—			—
Eliminations(c)	(43,156		)	(24		)	—		(416		)	(612,656		)	—			—
Total consolidated	$	1,889,660		$	98,368		$	10,558	$	319,850		$	5,735,861		$	348,594		$	282,780

34

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

(a) Operating revenues are reported gross of revenue taxes. Revenue taxes of both the regulated utility and the retail energy-marketing segments include gross receipt taxes. Revenue taxes of the regulated utility segment also include public service commission fees, franchise fees and energy taxes. Operating revenue amounts in the “Eliminations” row represent total intersegment revenues associated with sales from the regulated utility segment to the retail energy-marketing segment. Midstream Energy Services’ cost of energy related sales is netted with its gross revenues.

(b) Commercial energy systems' operating revenues include revenues from non-controlling interest. Commercial energy systems' EBIT is adjusted for the effects of non-controlling interest.

(c) Intersegment eliminations include any mark-to market valuations associated with trading activities between WGL Midstream and WGL Energy Services, intercompany loans and a timing difference between Commercial Energy Systems’ recognition of revenue for the sale of Renewable Energy Credits (RECs) to Retail Energy-Marketing and Retail Energy-Marketing’s recognition of the associated expense. Retail Energy-Marketing has recorded a portion of the RECs purchased as inventory to be used in future periods at which time they will be expensed.

The following table provides a reconciliation from EBIT to net income applicable to common stock.

	Three Months Ended June 30,				Nine Months Ended June 30,
(In thousands)	2017		2016		2017		2016
Total consolidated EBIT	$	35,806	$	20,125	$	352,224	$	319,850
Interest expense	25,062		12,998		55,552		38,757
Income tax expense	2,149		4,772		106,381		103,619
Dividends on Washington Gas Light Company preferred stock	330		330		990		990
Net income applicable to common stock	$	8,265	$	2,025	$	189,301	$	176,484

NOTE 11. OTHER INVESTMENTS

WGL has both solar and pipeline investments and accounts for its interests in legal entities as either a: (i) variable interest entity (VIE) or a (ii) voting interest entity (non-VIE). A VIE is a legal entity with the following characteristics: (i) has insufficient at-risk equity to fund its activities without additional subordinated financial support from any other party or parties; (ii) whose at-risk equity holders as a group do not have the power through voting or similar rights to direct the entity’s activities that most significantly affect its economic performance; or (iii) whose at-risk equity holders do not have the right to receive the expected residual returns.

The determination of whether or not to consolidate a VIE under GAAP requires a significant amount of judgment. This includes, but is not limited to, consideration of our contractual relationship with the entity, the legal structure of the entity, whether or not the entity has enough equity to finance its activities without additional financial support, the voting power of the equity holders, the obligation of the equity holders to absorb losses of the entity and their rights to receive any expected residual returns. 

We have investments in both consolidated and unconsolidated VIEs which are described in detail below. The unconsolidated investments are accounted for under the equity method of accounting with profits and losses included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statements of Income.

Under the VIE model, we have a controlling financial interest in a VIE (i.e. are the primary beneficiary) when we have current or potential rights that give us the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance combined with a variable interest that gives us the right to receive potentially significant benefits or the obligation to absorb potentially significant losses. When changes occur to the design of an entity, we reconsider whether it is subject to the VIE model. We continuously evaluate whether we have a controlling financial interest in a VIE.

Under the voting interest model, we generally have a controlling financial interest in an entity where we currently hold, directly or indirectly, more than 50% of the voting rights or where we exercise control through substantive participating rights. However, we consider substantive rights held by other partners in determining if we hold a controlling financial interest, and in some cases, despite owning more than 50% of the common stock of an investee, an evaluation of our rights may result in the determination that we do not have a controlling financial interest. We reevaluate whether we have a controlling financial interest in these entities when our voting or substantive participating rights change. Where we do not have significant influence, the affiliates are accounted for under the cost method. Investments in, and advances to, affiliated companies are presented in the caption “Investments in unconsolidated affiliates” in the accompanying Consolidated Balance Sheets.

WGL uses the Hypothetical Liquidation at Book Value (HLBV) methodology for certain equity method investments when the governing structuring agreement over the equity investment results in different liquidation rights and priorities than what is reflected by the underlying ownership interest percentage. For investments accounted for under the HLBV method, simply applying the percentage ownership interest to GAAP net income in order to determine earnings or losses does not accurately

35

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

represent the income allocation and cash flow distributions that will ultimately be received by the investors. The calculation may vary in its complexity depending on the capital structure and the tax considerations for the investments.

When applying HLBV, WGL determines the amount that it would receive if an equity investment entity were to liquidate all of its assets at book value (as valued in accordance with GAAP) and distribute that cash to the investors based on the contractually defined liquidation priorities. The change in WGL's claim on the investee's book value at the beginning and end of the reporting period (adjusted for contributions and distributions) is WGL’s share of the earnings or losses from the equity investment for the period.

Consolidated Investments

Variable Interest Entities

At June 30, 2017, WGL's subsidiary, WGSW, Inc. was the primary beneficiary of SFGF, SFRC and SFGF II, as a result of its ability to direct the activities most significant to the economic performance of those entities. Accordingly, we have consolidated those VIE entities.

SFGF

On August 24, 2016, WGSW and a tax equity partner formed SFGF to acquire distributed generation solar projects in the State of Georgia that were developed by WGL Energy Systems. WGSW is the managing member and contributed cash equity equal to the purchase price of the solar projects less any contributions from the tax-equity partner. As of June 30, 2017, WGSW has contributed $16.8 million into the tax equity partnership.

WGL Energy Systems is the operations and maintenance provider and was the developer of the projects. Profits and losses are allocated between the partners under the HLBV method of accounting and the portion allocated to the tax equity partner is included in "Net income (loss) attributable to non-controlling interest" on the consolidated statements of income and is recorded to "Non-controlling interest" on the consolidated balance sheets.

SFRC

On October 28, 2016, WGSW and a tax equity partner formed SFRC to acquire distributed generation solar projects in the State of Minnesota that are developed by WGL Energy Systems. WGSW is the managing member and will provide cash equity equal to the purchase price of the solar projects less any contributions from the tax-equity partner. As of June 30, 2017, WGSW has contributed $13.5 million into the tax equity partnership.

WGL Energy Systems is the operations and maintenance provider, and the developer of the projects. Profits and losses are allocated between the partners under the HLBV method of accounting and the portion allocated to the tax equity partner is included in "Net income (loss) attributable to non-controlling interest" on the consolidated statement of income and is recorded to "Non-controlling interest" on the consolidated balance sheets.

SFGF II

On June 30, 2017, WGSW and a tax equity partner formed SFGF II to acquire distributed generation solar projects in the United States of America that are expected to be developed by WGL Energy Systems. WGSW is the managing member and will provide cash equity equal to the purchase price of the solar projects less any contributions from the tax-equity partner. As of June 30, 2017, no contributions have been made into the tax equity partnership.

WGL Energy Systems will be the operations and maintenance provider and the developer of the projects. Profits and losses are allocated between the partners under the HLBV method of accounting and the portion allocated to the tax equity partner is included in "Net income (loss) attributable to non-controlling interest" on the consolidated statements of income and is recorded to "Non-controlling interest" on the consolidated balance sheets.

The carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in our condensed consolidated balance sheet at June 30, 2017 and September 30, 2016 are as follows:

WGL Holdings, Inc.

Balance Sheet Location of Consolidated Investments

36

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

(in millions)	June 30, 2017		September 30, 2016
Current assets	$	2.1	$	—
Non-current assets	56.9		13.2
Total assets	$	59.0	$	13.2
Current liabilities	0.4		0.6
Non-current liabilities	0.3		—
Total liabilities	$	0.7	$	0.6

Unconsolidated Investments

Variable Interest Entities

WGL has a variable interest in two investments which are considered unconsolidated VIEs:

• Meade and

• ASD.

At June 30, 2017, these VIEs were not consolidated because WGL and its subsidiaries were not the primary beneficiaries. The nature of WGL’s involvement with these investments lacks the characteristics of a controlling financial interest. WGL either does not have control over any of the non-consolidated VIEs’ activities that are economically significant to the VIEs and/or WGL does not have the obligation to absorb expected losses or the right to receive expected gains that could be significant to the VIE.

Our maximum financial exposure to loss as a result of our involvement with the VIEs includes (a) the amount invested in, and advanced to, the VIE as of the reporting date and (b) any legal or contractual obligation to provide financing in the future, such as liquidity arrangements, guarantees, and other contractual commitments. Any such arrangements, if applicable, are included below.

Meade

In 2014, WGL through its subsidiary WGL Midstream, entered into a limited liability company agreement and formed Meade Pipeline Co LLC (Meade), a Delaware limited liability company with Transcontinental Gas Pipe Line Company, LLC (Williams) to invest in a regulated pipeline, a segment of Transco's Atlantic Sunrise project, called Central Penn Pipeline (Central Penn). Central Penn will be an approximately 185-mile pipeline originating in Susquehanna County, Pennsylvania and extending to Lancaster County, Pennsylvania that will have the capacity to transport and deliver up to approximately 1.7 million dekatherms per day of natural gas.

WGL Midstream plans to invest an estimated $410 million for a 55% interest in Meade. Although WGL Midstream holds greater than a 50% interest in Meade, Meade is accounted for under the equity method of accounting because WGL Midstream does not have the power to direct the activities most significant to the economic performance of Meade. Profits and losses are allocated under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance. At June 30, 2017 and September 30, 2016, WGL Midstream held a $121.0 million and $80.8 million, respectively, equity method investment in Meade.

ASD

WGSW is a limited partner in ASD Solar LP (ASD), a limited partnership formed to own and operate a portfolio of residential solar projects, primarily rooftop photovoltaic power generation systems. As a limited partner, WGSW provided funding to the partnership but did not have power to direct the activities that most significantly affect the operations and economic performance of the entity. In January 2014, the funding commitment period ended for the partnership. As of June 30, 2017, ASD is being consolidated by the general partner, Solar Direct LLC (Solar Direct). Solar Direct is a wholly owned subsidiary of American Solar Direct Inc. (ASDI).

Our investment in ASD is accounted for under the HLBV equity method of accounting; any profits and losses are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGSW’s investment balance. At June 30, 2017 and September 30, 2016, WGSW held a $66.7 million and $66.1 million, respectively, equity method investment in ASD. At June 30, 2017, the carrying amount of

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Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

WGSW’s investment in ASD exceeded the amount of the underlying equity in net assets by $35.8 million due to WGSW recording additions to its investment in ASD’s net assets at fair value of contributions in accordance with GAAP. This basis difference is being amortized over the life of the assets.

In June 2017, ASDI filed for Chapter 7 bankruptcy as a result of financial difficulties. To ensure continuing operations of the partnership and minimal disruptions to the customers, WGSW petitioned the Bankruptcy Court to remove Solar Direct as manager of ASD operations and to approve the appointment of SF ASD LLC (SF ASD), a subsidiary of WGSW, which was formed to take over the management and operations of the partnership, as manager of ASD operations. On July 10, 2017, the Bankruptcy Court granted the bankruptcy trustee's emergency motion to assign management rights and control of ASD to SF ASD. This change in partnership control will result in the consolidation of the ASD partnership by WGL as of July 10, 2017. WGSW's equity method investment will be eliminated with its partnership interest with ASDI's non-controlling interest in ASD to be recognized at fair value. It is anticipated that an estimated gain of approximately $2.0 million will be recognized to other income based on the difference between WGSW's net investment in the partnership and WGSW's partnership interest measured at fair value. Associated with the financial difficulties of ASDI, in April 2017, WGL paid $2.1 million to satisfy a bank guarantee on behalf of ASDI.

The following table summarizes the preliminary fair value amounts of ASD assets and liabilities, as well as the non-controlling interest recorded at estimated fair value as of the date of control.

(in millions)	Preliminary Estimated Fair Value
Current assets	$	1.1
Other assets	0.8
Property, plant and equipment	76.4
Total assets	$	78.3
Current liabilities	0.9
Other liabilities	27.0
Total liabilities	$	27.9
Net assets	$	50.4
Non-controlling interest	$	0.5
WGSW equity interest	$	49.9

Property, plant and equipment represent residential solar assets that were measured at estimated fair value using the income derived from discounted cash flows while the other liabilities represent deferred income tax credits, treasury grants and state government grants. The fair values were determined based on significant estimates and assumptions that are judgmental in nature, including projected cash flows and discount rates reflecting inherent risk in the future cash flows. Accounting guidance provides that the business combination value may be modified for up to one year from the date of the transaction to the extent that additional information is obtained about the facts and circumstances which existed as of the consolidation date. The valuation performed to assess fair value is preliminary and is expected to be finalized by the end of fiscal year 2017.

SunEdison

As of June 30, 2017, WGSW ended its agreement with SunEdison, Inc. (SunEdison) by assigning the master purchase agreement and master lease agreement with SunEdison to its newly formed affiliate, SF Echo LLC.

In April 2017, EchoFirst Finance Company LLC (EchoFirst), the subsidiary of SunEdison that was party to our master purchase and lease agreements filed a voluntary petition with the United States Bankruptcy Court for relief under Title 11 of the United States Code. In April 2016, SunEdison filed a voluntary bankruptcy petition with the United States Bankruptcy Court for relief under Title 11 of the United States Code.

In April 2017, we executed an assignment of the master lease agreement, master purchase agreement and the EchoFirst customer leases from SunEdison, allowing SunEdison to divest the WGSW lease arrangement. SF Echo, a wholly-owned subsidiary of WGSW, will operate and maintain the assets and be entitled to all cash flows from the assets for the remainder of their lease terms. The master lease between SF Echo and WGSW will be accounted for as a direct financing lease. SF Echo accounts for the customer leases as operating leases. The fair value of the assets did not result in any adjustments during the period. Our maximum financial exposure is limited to lease payment receivables from retail residential solar customers, future maintenance and performance payments and customer non-payments. On a quarterly basis, we will evaluate our lease receivables for credit losses.

SF Echo will record lease income in the accompanying condensed consolidated statements of income. WGSW did not hold an investment in SunEdison at June 30, 2017. Additionally, we had balances of $9.4 million of unamortized tax credits related

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Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

to the leased assets in "Unamortized investment tax credits" on the accompanying condensed consolidated balance sheets at June 30, 2017.

Non-VIE Investments

Constitution

In 2013, Constitution Pipeline Company, LLC (Constitution) was formed, with WGL Midstream as an investor. At June 30, 2017, WGL Midstream's share of the total forecasted cash contributions over the term of the construction agreement for Constitution is $95.5 million, reflecting a 10% share in the pipeline venture. This natural gas pipeline will transport natural gas from the Marcellus region in northern Pennsylvania to major northeastern markets. Constitution is accounted for under the equity method of accounting; any profits and losses are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance. The equity method is considered appropriate because Constitution is an LLC with specific ownership accounts and ownership between five and fifty percent resulting in WGL Midstream maintaining a more than minor influence over the partnership operating and financing policies.

On April 22, 2016, the New York State Department of Environmental Conservation (NYSDEC) denied Constitution's application for a Section 401 Water Quality Certification (Section 401 Certification) for the pipeline, which is necessary for the construction and operation of the pipeline. Constitution has stated that it remains committed to pursuing the project and that it intends to pursue all available options to challenge the legality and appropriateness of NYSDEC’s decision. In May, 2016, Constitution filed actions in the U.S. Circuit Court of Appeals for the Second Circuit and the U.S. District Court for the Northern District of New York, respectively, appealing the decision and seeking declaratory judgment that the State of New York’s permitting authority is preempted by federal law. On March 16, 2017, the U.S. District Court for the Northern District of New York issued an order ruling, without prejudice, that it lacked subject matter jurisdiction to hear Constitution's complaint.

In light of the forgoing matters, Constitution has revised its target in-service date to as early as the first half of 2019, which assumes the timely receipt of a Notice to Proceed from the FERC. We can give no assurance, however, that Constitution’s efforts to obtain the Section 401 Certification will be successful. At June 30, 2017 and September 30, 2016, we held a $38.5 million and $38.6 million equity method investment in Constitution, respectively. We have evaluated our investment in Constitution for other than temporary impairment as of June 30, 2017. Our impairment assessment used income and market approaches in determining the fair value of our investment in Constitution, including consideration of the severity and duration of any decline in fair value of our investment in the project. Our key inputs included, but are not limited to, significant management judgments and estimates, including projections of the project’s cash flows, selection of a discount rate, market multipliers and probability weighting of potential outcomes of legal and regulatory proceedings. At this time, we do not have an other than temporary impairment and have not recorded any impairment charge to reduce the carrying value of our investment. If Constitution is ultimately unable to obtain the Section 401 Certification or other future developments or indicators of an unfavorable resolution arise subsequently, an impairment charge of up to substantially all of our investment in the capitalized project costs may be required. It is also possible that Constitution could incur certain supplier-related costs in the event of a prolonged delay or termination of the project. We will continue to monitor and update our impairment analysis as required.

Mountain Valley Pipeline

In March 2015, WGL Midstream acquired a 7% equity interest in Mountain Valley Pipeline, LLC (Mountain Valley). On October 24, 2016, WGL Midstream acquired an additional 3% equity interest in Mountain Valley by assuming all of Vega Midstream MVP LLC's (Vega Energy) interest in the joint venture. WGL Midstream now owns a 10% interest in Mountain Valley.

The proposed pipeline to be developed, constructed, owned and operated by Mountain Valley, will transport approximately 2.0 million dekatherms of natural gas per day from interconnects with EQT Corporation's Equitrans system in Wetzel County, West Virginia to Transcontinental Gas Pipe Line Company LLC's Station 165 in Pittsylvania County, Virginia. The pipeline is scheduled to be in service in the fourth quarter of calendar year 2018.

WGL Midstream expects to invest in scheduled capital contributions through the in-service date of the pipeline, its pro rata share (based on its 10% equity interest) of project costs, an estimated aggregate amount of approximately $327.6 million. At June 30, 2017 and September 30, 2016, WGL Midstream held a $52.3 million and $22.5 million equity method investment in Mountain Valley, respectively. The equity method is considered appropriate because Mountain Valley is an LLC with specific ownership accounts and ownership between five and fifty percent resulting in WGL Midstream maintaining a more than minor influence over the partnership operating and financing policies.

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Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

The carrying amount of WGL Midstream's investment in MVP exceeded the amount of the underlying equity in net assets by $0.5 million, which will be amortized over the life of the assets when it is put in production. Profits and losses are allocated under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance.

Stonewall System

WGL Midstream has a 30% equity interest in an entity that owns and operates certain assets known as the Stonewall Gas Gathering System (the Stonewall System). WGL Midstream paid $89.4 million to acquire the equity interest pursuant to an option that WGL Midstream previously acquired. During the nine months ended June 30, 2017, WGL Midstream contributed an additional $45.5 million related to retiring debt at the entity level. The Stonewall System has the capacity to gather up to 1.4 billion cubic feet of natural gas per day from the Marcellus production region in West Virginia, and connects with an interstate pipeline system that serves markets in the mid-Atlantic region.

WGL Midstream held a $137.2 million and $95.5 million equity method investment in the Stonewall System at June 30, 2017 and September 30, 2016, respectively. The equity method is considered appropriate because the Stonewall System is an LLC with specific ownership accounts and ownership between five and fifty percent resulting in WGL Midstream maintaining a more than minor influence over the partnership operating and financing policies.

The carrying amount of WGL Midstream's investment in the Stonewall System exceeded the amount of the underlying equity in net assets by $8.9 million, which is being amortized over the life of the assets. Profits and losses are allocated under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance.

Nextility-Lease Settlement and Assignment

During the nine months ended June 30, 2017, WGSW terminated its sale/leaseback agreement with Nextility and entered into a new lease agreement with another unrelated third party, with significantly reduced payments and lease terms. Based on the lease classification criteria per ASC Topic 840, it was determined that the new lease is an operating lease. As a result, the net investment of $5.4 million on the consolidated balance sheet was eliminated. The solar assets were recorded at present fair value using the income approach as $4.0 million to "Property, plant and equipment" and $1.4 million was recorded as a receivable. The unamortized investment tax credits (ITC) balance associated with these assets continue to be deferred and amortized over the assets' useful life. As of June 30, 2017, the deferred net ITC receivable related to these assets is $3.0 million. In May 2017, Nextility informed WGSW that it was unable to finalize a financing arrangement and is in the process of winding down its business. A $1.0 million reserve was recorded for the receivable due from Nextility as part of the settlement to terminate the sale/leaseback agreement.

SFEE

During the nine months ended June 30, 2017, WGSW and a tax equity partner formed SFEE to acquire distributed generation solar projects that are developed by a third-party developer or WGL Energy Systems. New projects will be designed and constructed under long-term power purchase agreements. As of June 30, 2017, WGSW has contributed $6.5 million and held an $9.6 million interest in SFEE.

SFEE is not considered a VIE and is not consolidated under the voting interest model for limited partnerships. WGSW is the managing member of SFEE. WGSW is also the operations and maintenance provider for SFEE. In addition, WGL Energy Systems has the option to sell its own distributed generation solar projects to the developer for sale to SFEE and these assets remain on WGL Energy System's books until we no longer have continuing involvement. The equity method is considered appropriate because WGSW has significant influence over the operating and financial policies of SFEE. Profits and losses are allocated between the partners under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGSW’s investment balance. For SFEE, WGL has also provided a guarantee that could require additional future payments of $13.0 million.

The following tables present summary information about our unconsolidated VIEs and non-VIEs:

WGL Holdings, Inc.

Balance Sheet Location of Unconsolidated Investments

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Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

	Solar Investments				Pipelines
(in millions)	VIEs(a)		Non-VIEs(b)		VIEs(c)		Non-VIEs(d)		Total
June 30, 2017
Assets
Investments in unconsolidated affiliates	$	66.7	$	9.6	$	121.0	$	228.0	$	425.3
Total assets	$	66.7	$	9.6	$	121.0	$	228.0	$	425.3
September 30, 2016
Assets
Investments in unconsolidated affiliates	$	66.1	$	—	$	80.8	$	156.6	$	303.5
Investments in direct financing leases, capital leases(e)	29.8		—		—		—		29.8
Accounts receivable(e)	1.1		—		—		9.2		10.3
Total assets	$	97.0	$	—	$	80.8	$	165.8	$	343.6

(a) "Investments in unconsolidated affiliates" balance relates to equity method investment in ASD.

(b) Balance relates to interest held in SFEE.

(c) Balance relates to equity method investment in Meade.

(d) Balance relates to equity method investments in Constitution, Mountain Valley Pipeline and Stonewall System.

(e) Prior year balances relate to direct financing leases in Nextility and SunEdison.

NOTE 12. RELATED PARTY TRANSACTIONS

WGL and its subsidiaries engage in inter-company transactions in the ordinary course of business. Inter-company transactions and balances have been eliminated from the consolidated financial statements of WGL, except as described below. Washington Gas provides accounting, treasury, legal and other administrative and general support to affiliates, and files consolidated tax returns that include affiliated taxable transactions. Washington Gas bills its affiliates in accordance with regulatory requirements for the actual cost of providing these services, which approximates their market value. To the extent such billings are outstanding, they are reflected in “Receivables from associated companies” on Washington Gas’ balance sheets. Washington Gas assigns or allocates these costs directly to its affiliates and, therefore, does not recognize revenues or expenses associated with providing these services. Washington Gas believes that allocations based on broad measures of business activity are appropriate for allocating expenses resulting from common services. Affiliate entities are allocated a portion of common services based on a formula driven by appropriate indicators of activity, as approved by management.

In connection with billing on behalf of unregulated third party marketers, including WGL Energy Services and with other miscellaneous billing processes, Washington Gas collects cash on behalf of affiliates and transfers the cash in a reasonable time period. Cash collected by Washington Gas on behalf of its affiliates but not yet transferred is recorded in “Payables to associated companies” on Washington Gas’ balance sheets.

Washington Gas has obtained third-party project financing on behalf of the Federal government to provide funds during the construction of certain energy management services projects entered into under Washington Gas' area- wide contract. In connection with work completed under the area-wide contract, the construction work is performed by WGL Energy Systems on behalf of Washington Gas and an amount is recorded in "Payables to associated companies" for work performed by WGL Energy Systems for which cash has not been transferred. Refer to Note 3—Short-Term Debt for further discussion of the project financing.

The following table presents the receivables from and payables to associated companies as of June 30, 2017 and September 30, 2016.

Washington Gas Receivables From / Payables To Associated Companies
(In millions)	June 30, 2017		September 30, 2016
Receivables from Associated Companies	$	16.1	$	13.8
Payables to Associated Companies	$	91.5	$	65.8

Washington Gas provides gas balancing services related to storage, injections, withdrawals and deliveries to all energy marketers participating in the sale of natural gas on an unregulated basis through the customer choice programs that operate in

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Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

its service territory. These balancing services include the sale of natural gas supply commodities related to various peaking arrangements contractually supplied to Washington Gas and then partially allocated and assigned by Washington Gas to the energy marketers, including WGL Energy Services. Washington Gas records revenues for these balancing services pursuant to tariffs approved by the appropriate regulatory bodies. These related party amounts related to balancing services provided to WGL Energy Services have been eliminated in the consolidated financial statements of WGL. The following table shows the amounts Washington Gas charged WGL Energy Services for balancing services.

Washington Gas - Gas Balancing Service Charges
	Three Months Ended June 30,				Nine Months Ended June 30,
(In millions)	2017		2016		2017		2016
Gas balancing service charge	$	4.2	$	5.5	$	19.9	$	21.7

As a result of these balancing services, an imbalance is created for volumes of natural gas received by Washington Gas that are not equal to the volumes of natural gas delivered to customers of the energy marketers. At June 30, 2017, WGL Energy Services recognized accounts receivable from Washington Gas of $3.0 million related to an imbalance in gas volumes. At September 30, 2016, WGL Energy Services recognized accounts payable to Washington Gas of $0.8 million related to an imbalance in gas volumes. Due to regulatory treatment, these payables and receivables are not eliminated in the consolidated financial statements of WGL. Refer to Note 1—Accounting Policies of the Notes to Consolidated Financial Statements of the combined Annual Report on Form 10-K for the fiscal year ended September 30, 2016 for further discussion of these imbalance transactions.

Washington Gas participates in a purchase of receivables (POR) program as approved by the Maryland Public Service Commission (PSC of MD), whereby it purchases receivables from participating energy marketers at approved discount rates. In addition, WGL Energy Services participates in POR programs with certain Maryland and Pennsylvania utilities, whereby it sells its receivables to various utilities, including Washington Gas, at approved discount rates. The receivables purchased by Washington Gas are included in “Accounts receivable” in the accompanying balance sheet. Any activity between Washington Gas and WGL Energy Services related to the POR program has been eliminated in the accompanying financial statements for WGL. At June 30, 2017 and September 30, 2016, Washington Gas had balances of $3.9 million and $4.2 million, respectively, of purchased receivables from WGL Energy Services.

NOTE 13. COMMITMENTS AND CONTINGENCIES

REGULATORY CONTINGENCIES

Certain legal and administrative proceedings incidental to our business, including regulatory contingencies, involve WGL and/or its subsidiaries. In our opinion, we have recorded an adequate provision for probable losses or refunds to customers for regulatory contingencies related to these proceedings.

District of Columbia Jurisdiction

Investigation into Washington Gas’ Cash Reimbursement to Competitive Service Providers (CSPs). On August 5, 2014, the Office of the People’s Counsel’s (OPC) of DC filed a complaint with The Public Service Commission of the District of Columbia (PSC of DC) requesting that the Commission open an investigation into Washington Gas’ payments to CSPs to cash-out over-deliveries of natural gas supplies during the 2008-2009 winter heating season. OPC asserted that Washington Gas made excess payments in the amount of $2.4 million to CSPs. On December 19, 2014, the PSC of DC granted the OPC of DC’s request and opened a formal investigation. On October 27, 2015, the PSC of DC issued an order finding that Washington Gas, in performing the cash-out, had violated D.C. Code 34-1101’s requirement that no service shall be provided without Commission approval. The PSC of DC directed Washington Gas to provide calculations showing what the impact would have been had Washington Gas made volumetric adjustments to CSP deliveries as of April 2009, which Washington Gas calculates would result in a refund of approximately $2.4 million, which was recognized by WGL in fiscal year 2015. On February 3, 2016, the PSC of DC issued an order denying OPC’s application for reconsideration and granting in part, and denying in part, Washington Gas’ application for reconsideration.  Washington Gas and OPC filed initial briefs on February 18, 2016, and reply briefs on February 29, 2016, on the issue of whether there is a more reasonable way to reconcile the over-deliveries by CSPs such as through volumetric adjustments or through cash payments. On August 11, 2016, the PSC of DC issued an order requiring Washington Gas to refund approximately $2.4 million through the Actual Cost Adjustment ("ACA"). On August 26,

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Notes to Condensed Consolidated Financial Statements (Unaudited)

2016, Washington Gas filed its plan for implementing the $2.4 million refund within a 12-month period. The PSC of DC issued an Order on October 7, 2016, clarifying Washington Gas' refunding and reporting requirements.

Virginia Jurisdiction

Virginia Rate Case. On June 30, 2016, Washington Gas filed an application with the Commonwealth of Virginia State Corporation Commission (SCC of VA) to increase its base rates for natural gas service by $45.6 million, which includes $22.3 million of revenue associated with natural gas pipeline replacement initiatives previously approved by the Commission and paid by customers through a monthly rider. Additionally, the proposed rate increase includes provisions designed to deliver the benefits of natural gas to more customers that include: (i) facilitating conversion to natural gas in locations already served by Washington Gas; (ii) expanding the natural gas system to high-growth communities in Virginia and (iii) research and development that we believe will enable innovations to enhance service for our customers.

Interim rates went into effect, subject to refund, in the December 2016 billing cycle. Intervenors filed testimony on January 31, 2017, Staff of the SCC of VA filed testimony on February 28, 2017 and Washington Gas filed its rebuttal testimony on March 28, 2017. On April 17, 2017, Washington Gas filed with the SCC of VA a unanimous settlement as to a specific annual revenue increase, but not as to a specific return on equity, specific accounting adjustments, or specific ratemaking methodologies, except as otherwise set forth therein. The Stipulation sets forth, for purposes of settlement, a base rate increase of $34 million ($14.1 million net of Washington Gas' Steps to Advance Virginia’s Energy (SAVE) Plan costs which are currently recovered through monthly surcharges). For purposes of the settlement, the mid-point of the return on equity range of 9.0-10.0% will be used in any application or filing, other than a change in base rates, effective December 1, 2016. On June 30, 2017, the Chief Hearing Examiner issued a report recommending that the Commission approve the Stipulation. The Stipulation is pending review and approval by the SCC of VA. Refunds to customers, which have been accrued by Washington Gas at June 30, 2017, will be made related to the interim billings based on the SCC of VA approval of the Stipulation and rates.

FINANCIAL GUARANTEES

WGL has guaranteed payments primarily for certain commitments on behalf of certain subsidiaries. At June 30, 2017, these guarantees totaled $30.7 million, $168.8 million, $114.0 million and $404.3 million for Washington Gas, WGL Energy Services, WGL Energy Systems and WGL Midstream, respectively. At June 30, 2017, WGL also had guarantees on behalf of other subsidiaries totaling $2.2 million. The amount of such guarantees is periodically adjusted to reflect changes in the level of WGL's financial exposure related to these commitments. For all of our financial guarantees, WGL may cancel any or all future obligations upon written notice to the counterparty, but WGL would continue to be responsible for the obligations created under the guarantees prior to the effective date of the cancellation. WGL has also guaranteed payments for certain of our external partners. At June 30, 2017, the maximum potential amount of future payments under the guarantees for external parties totaled $13.6 million.

ANTERO CONTRACT

Washington Gas and WGL Midstream contracted in June 2014 with Antero Resources Corporation (Antero) to buy gas from Antero at invoiced prices based on an index, and at a delivery point, specified in the contracts.  Since deliveries began, however, the index price paid has been more than the fair market value at the same physical delivery point, resulting in losses to date of $23.0 million. Accordingly, Washington Gas and WGL Midstream notified Antero that it sought to apply a provision of the contracts that would permit a new index to be established.  Antero objected, claiming that the contract provisions permitting re-pricing did not apply, unless Antero itself chose to sell gas at cheaper prices at the delivery point (which Antero claimed it had not).  The dispute was arbitrated in January 2017, and the arbitral tribunal ruled in favor of Antero on the applicability of the re-pricing mechanism.  However, the tribunal ruled that it lacked authority to determine whether Antero was in breach of its obligation to deliver gas to Washington Gas and WGL Midstream at a point where they could obtain the higher pricing. Accordingly, Washington Gas and WGL Midstream have filed suit in state court in Colorado for a determination of this issue. Antero moved to dismiss the suit and its motion to dismiss has been denied. Washington Gas and WGL Midstream have filed a motion for partial summary judgment, seeking the Court to declare that Antero is in breach of its obligation to deliver gas at the TCO Pool, leaving for trial only the issue of damages.  Antero has opposed the motion, and the motion is pending before the court for ruling. Antero has filed a counterclaim alleging breach of contract. Antero alleges that Washington Gas and WGL Midstream failed to purchase specified daily quantities of gas, and refused to pay invoiced cover damages and that Washington

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Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Gas and WGL Midstream are in continuing breach of their obligations in this respect. Antero seeks unspecified damages in an amount to be proved at trial. Washington Gas and WGL Midstream have filed an answer opposing this counterclaim.

SILVER SPRING, MARYLAND INCIDENT

Washington Gas continues to support the investigation by the NTSB into the August 10, 2016 explosion and fire at an apartment complex on Arliss Street in Silver Spring, Maryland, the cause of which has not been determined.  Additional information will be made available by the NTSB at the appropriate time. On November 2, 2016, two civil actions were filed in the District of Columbia Superior Court against WGL and Washington Gas (as well as a property management company that is not affiliated with WGL or Washington Gas), by residents of the apartment complex. In one lawsuit, twenty-nine plaintiffs seek unspecified damages for, among others, wrongful death and personal injury. The other action is a class action suit seeking total damages stated to be less than $5 million for, among others, property damage and various counts relating to the loss of the use of the premises. Both actions allege causes of action for negligence, product liability, and declaratory relief. Thirty-two civil actions have been filed in the Circuit Court for Montgomery County, Maryland seeking unspecified damages for personal injury and property damage. We maintain excess liability insurance coverage from highly-rated insurers, subject to a nominal self-insured retention. We believe that this coverage will be sufficient to cover any significant liability to it that may result from this incident. Management is unable to determine a range of potential losses that are reasonably possible of occurring and therefore we have not recorded a reserve associated with this incident. Washington Gas was invited by the NTSB to be a party to the investigation and in that capacity continues to work closely with the NTSB to help determine the cause of this incident.

NOTE 14. PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS

The following table shows the components of net periodic benefit costs (income) recognized in our financial statements during the three and nine months ended June 30, 2017 and 2016.

Components of Net Periodic Benefit Costs (Income)
	Three Months Ended June 30,
	2017						2016
(In millions)	Pension Benefits			Health and Life Benefits			Pension Benefits			Health and Life Benefits
Service cost	$	4.1		$	1.4		$	3.6		$	1.2
Interest cost	9.6			2.9			10.3			3.2
Expected return on plan assets	(10.3		)	(5.5		)	(10.2		)	(5.1		)
Amortization of prior service cost (credit)	0.1			(4.4		)	—			(4.4		)
Amortization of net actuarial loss	5.5			0.2			4.3			0.3
Net periodic benefit cost (income)	9.0			(5.4		)	8.0			(4.8		)
Amount allocated to construction projects	(1.6		)	1.1			(1.5		)	1.1
Amount deferred as regulatory asset/liability—net	1.8			—			1.8			(0.1		)
Amount charged (credited) to expense	$	9.2		$	(4.3	)	$	8.3		$	(3.8	)
	Nine Months Ended June 30,
	2017						2016
Service cost	$	12.3		$	4.3		$	10.7		$	3.4
Interest cost	28.8			8.7			31.0			9.8
Expected return on plan assets	(30.8		)	(16.6		)	(30.7		)	(15.3		)
Amortization of prior service cost (credit)	0.3			(13.2		)	0.2			(13.2		)
Amortization of net actuarial loss	16.5			0.6			12.7			0.9
Net periodic benefit cost (income)	27.1			(16.2		)	23.9			(14.4		)
Amount allocated to construction projects	(4.9		)	3.5			(4.1		)	3.0
Amount deferred as regulatory asset/liability—net	5.3			(0.1		)	5.3			(0.2		)
Amount charged (credited) to expense	$	27.5		$	(12.8	)	$	25.1		$	(11.6	)

Amounts included in the line item “Amount deferred as regulatory asset/liability-net,” as shown in the table above, represent the amortization of previously unrecovered costs of the applicable pension benefits or the health and life benefits as approved in the District of Columbia. We expect the balances to be fully amortized by October 2019.

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables show the changes in accumulated other comprehensive income (loss) for WGL and Washington Gas by component for the three and nine months ended June 30, 2017 and 2016.

WGL Holdings, Inc. Changes in Accumulated Other Comprehensive Loss by Component
(In thousands)	Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2017			2016
Beginning Balance	$	(8,874	)	$	(24,258	)	$	(38,539	)	$	(14,236	)
Qualified cash flow hedging instruments(a)	51			(16,995		)	49,556			(34,545		)
Change in prior service credit(b)	(217		)	(216		)	(651		)	(644		)
Amortization of actuarial loss(b)	588			420			1,763			1,258
Current-period other comprehensive income (loss)	422			(16,791		)	50,668			(33,931		)
Income tax expense (benefit) related to other comprehensive income (loss)	235			(6,969		)	20,816			(14,087		)
Ending Balance	$	(8,687	)	$	(34,080	)	$	(8,687	)	$	(34,080	)

^(a)  Cash flow hedging instruments represent interest rate swap agreements related to debt issuances. Refer to Note 8- Derivative and Weather-related Instruments for further discussion of the interest rate swap agreements.

^(b)  These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14- Pension and other post-retirement benefit plans for additional details.

Washington Gas Light Company Changes in Accumulated Other Comprehensive Loss by Component
(In thousands)	Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2017			2016
Beginning Balance	$	(7,383	)	$	(6,464	)	$	(7,830	)	$	(6,712	)
Change in prior service credit(a)	(217		)	(216		)	(651		)	(644		)
Amortization of actuarial loss(a)	588			420			1,763			1,258
Current-period other comprehensive income	371			204			1,112			614
Income tax expense related to other comprehensive income	145			82			439			244
Ending Balance	$	(7,157	)	$	(6,342	)	$	(7,157	)	$	(6,342	)

^(a)  These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14-Pension and other post-retirement benefit plans for additional details.

NOTE 16. PLANNED MERGER WITH ALTAGAS LTD.

On January 25, 2017, WGL entered into an agreement and plan of merger (Merger Agreement) to combine with AltaGas in an all cash transaction valued at approximately $6.4 billion. The Merger Agreement provides for the merger of a newly formed indirect wholly-owned subsidiary of AltaGas with and into WGL, with WGL continuing as the surviving corporation in the merger (the Merger) and becoming an indirect wholly-owned subsidiary of AltaGas. Subject to the terms and conditions set forth in the Merger Agreement, at the Effective Time (as defined in the Merger Agreement) of the Merger, WGL shareholders will receive $88.25 in cash, without interest, for each share of WGL common stock issued and outstanding immediately prior to the Effective Time (as defined in the Merger Agreement). The Boards of Directors of each of WGL and AltaGas have unanimously approved the Merger, which is expected to close in the second quarter of 2018.

Consummation of the Merger is subject to the satisfaction or waiver of specified closing conditions, including, among others, the approval of the Merger by the holders of more than two-thirds of the outstanding shares of WGL common stock, which approval occurred on May 10, 2017, and approvals required from the PSC of DC, the PSC of MD and the SCC of VA. WGL and AltaGas have also submitted the transaction for review by the Committee on Foreign Investment in the United States

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

(CFIUS). The Merger Agreement is also subject to FERC approval, which was obtained on July 6, 2017, and expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which occurred on July 17, 2017. The Merger Agreement also contains customary representations, warranties and covenants of both WGL and AltaGas. These covenants include, among others, an obligation on behalf of WGL to operate its business in the ordinary course until the Merger is consummated, subject to certain exceptions.

The Merger Agreement may be terminated by each of WGL and AltaGas under certain circumstances, including if the Merger is not consummated by January 25, 2018 (subject to a 180 day extension by either party subject to certain conditions being met). The Merger Agreement also contains certain additional termination rights for both AltaGas and WGL, and provides that, upon termination of the Merger Agreement under specified circumstances, AltaGas would be required to pay a termination fee of $205 million, $182 million, or $68 million (depending on the specific circumstances of termination) to WGL, and WGL would be required to pay AltaGas a termination fee of $136 million, only under specific circumstances as outlined in the Merger Agreement.

In connection with entering into the Merger Agreement, WGL entered into a subscription agreement with AltaGas, in which WGL agreed, upon the occurrence of certain conditions, to issue and sell to AltaGas up to an aggregate of 15,000 shares of Series A Non-Voting Non-Convertible Perpetual Preferred Stock (Non-Voting Preferred Stock) for a purchase price of $10,000 per share. If the consolidated debt to total capitalization ratio is forecasted to be in excess of 62% at December 31, 2017 or any quarterly period thereafter, AltaGas will purchase a number of shares of Non-Voting Preferred Stock to produce a forecasted ratio equal to 62%, but not more than 5,000 shares in any single quarter or more than 15,000 shares in the aggregate. If the Merger Agreement is terminated or the Outside Date (as defined in the Merger Agreement) expires, no subscription will be made after the date of termination or expiration, and WGL will have six months thereafter to redeem any Non-Voting Preferred Stock previously issued.

Merger Approval Proceedings

District of Columbia

On April 24, 2017, AltaGas, WGL and Washington Gas filed an application with the PSC of DC seeking approval of the Merger Agreement. In an order issued on April 25, 2017, the PSC of DC scheduled a procedural conference on May 18, 2017 with the Staff of the PSC of DC and interested parties to consider the factors to be considered in the case to determine whether the Merger is in the public interest, identify factual issues in dispute and consider a procedural schedule for the proceeding. To approve the Merger Agreement, the PSC of DC must find that the Merger taken as a whole is in the public interest. In the April 25, 2017 order, the PSC of DC stated that in making this determination, it has balanced the interests of shareholders and investors with ratepayers and the community; determined that benefits to shareholders must not come at the expense of ratepayers; and found that to be approved, the transaction must produce a direct and tangible benefit to ratepayers. It stated further that in determining whether the public interest requirements are met, the PSC of DC has in past merger cases identified seven factors it has considered in reviewing each transaction, including the effects of the transaction on (i) ratepayers, shareholders, the financial health of the utilities standing alone and as merged, and the economy of the District; (ii) utility management and administrative operations; (iii) public safety and the safety and reliability of services; (iv) risks associated with all of the applicants' affiliated non-jurisdictional business operations; (v) the PSC of DC's ability to regulate Washington Gas effectively; (vi) competition in the local retail and wholesale markets that impact the District and District ratepayers; and (vii) conservation of natural resources and preservation of environmental quality. The law of the District of Columbia does not impose any time limit on the PSC of DC’s review of the Merger.

Maryland

On April 24, 2017, AltaGas, WGL and Washington Gas filed an application with the PSC of MD seeking approval of the Merger Agreement. On April 26, 2017, the PSC of MD issued an order scheduling a pre-hearing conference on May 30, 2017, to set a procedural schedule for the proceeding, to consider any petition to intervene that have been filed, and to consider any other preliminary matters requested by the parties. Maryland law requires the PSC of MD to approve a merger subject to its review if it finds that the merger agreement is consistent with the public interest, convenience and necessity, including benefits and no harm to consumers. In making this determination, the PSC of MD is required to consider the following criteria: (i) the potential impact of the acquisition on rates and charges paid by customers and on the services and conditions of operation of the public service company; (ii) the potential impact of the acquisition on continuing investment needs for the maintenance of

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 1—Financial Statements (concluded)

Notes to Condensed Consolidated Financial Statements (Unaudited)

utility services, plant, and related infrastructure; (iii) the proposed capital structure that will result from the acquisition, including allocation of earnings from Washington Gas; (iv) the potential effects on employment; (v) the projected allocation of any savings that are expected between stockholders and rate payers; (vi) issues of reliability, quality of service, and quality of customer service; (vii) the potential impact of the acquisition on community investment; (viii) affiliate and cross-subsidization issues; (ix) the use or pledge of utility assets for the benefit of an affiliate; (x) jurisdictional and choice-of-law issues; (xi) whether it is necessary to revise the PSC of MD's ring-fencing and code of conduct regulations in light of the acquisition; and (xii) any other issues the PSC of MD considers relevant to the assessment of the acquisition in relation to the public interest, convenience, and necessity. The PSC of MD is required to issue an order within 180 days of the date the application was filed, but may extend the date by 45 days for good cause. An order is expected by December 5, 2017.

Virginia

On April 24, 2017, AltaGas and WGL and Washington Gas, filed a petition with the SCC of VA seeking approval of the Merger Agreement. Virginia law provides that, if the SCC of VA determines, with or without hearing, that adequate service to the public at just and reasonable rates will not be impaired or jeopardized by granting the petition for approval, then the SCC of VA shall approve a merger with such conditions that the SCC of VA deems to be appropriate in order to satisfy this standard. The SCC of VA is required to issue an order within 60 days from the date of filing of the petition, but may extend the review period for up to 120 additional days. An order is expected to be issued by October 20, 2017.

Committee on Foreign Investment in the United States

On April 24, 2017, AltaGas, WGL and Washington Gas, filed a joint voluntary notice with the CFIUS.

HSR

On June 15, 2017, AltaGas and WGL submitted to the Federal Trade Commission and the Antitrust Division of the Department of Justice completed Premerger Notification and Report Forms with respect to the proposed acquisition by AltaGas Ltd. of certain voting securities of WGL. The waiting period required by Section 7A(b)(1) of the Clayton Act, 15 U.S.C. Section 18a(b)(1) (aka the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended) expired on July 17, 2017.  The expiration of the Clayton Act’s waiting period deems the Merger approved by the Federal Trade Commission and the Department of Justice.

FERC

On April 24, 2017, AltaGas and WGL Energy Services submitted to FERC a Joint Application for Authorization of Disposition of Jurisdictional Assets and Merger under Section 203 of the Federal Power Act. Under that section, FERC shall approve a merger if it finds that the proposed transaction will be consistent with the public interest. In making this determination, the FERC will consider the following criteria: (i) horizontal competition analysis; (ii) vertical competition issues; (iii) no adverse effect on rates; (iv) no adverse effect on regulation; and (v) no improper cross-subsidization. On July 6, 2017, the FERC issued an order authorizing the Merger, concluding that the proposed transaction is consistent with the public interest.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

This Management’sDiscussion and Analysis of Financial Condition and Results of Operations (Management’s Discussion) analyzes the financial condition, results of operations and cash flows of WGL and its subsidiaries. It also includes management’s analysis of past financial results and potential factors that may affect future results, potential future risks and approaches that may be used to manage them. Except where the content clearly indicates otherwise, “WGL,” “we,” “us” or “our” refers to the holding company or the consolidated entity of WGL Holdings, Inc. and all of its subsidiaries.

Management’s Discussion is divided into the following two major sections:

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

• WGL—This section describes the financial condition and results of operations of WGL Holdings, Inc. and its subsidiaries on a consolidated basis. It includes discussions of our regulated operations, including Washington Gas and Hampshire Gas Company (Hampshire), and our non-utility operations.

• Washington Gas—This section describes the financial condition and results of operations of Washington Gas, a subsidiary of WGL, which comprises the majority of the regulated utility segment.

Both sections of Management’s Discussion—WGL and Washington Gas—are designed to provide an understanding of our operations and financial performance and should be read in conjunction with the respective company’s financial statements and the combined Notes to Condensed Consolidated Financial Statements in this quarterly report as well as our combined Annual Report on Form 10-K for WGL and Washington Gas for the fiscal year ended September 30, 2016 (2016 Annual Report).

Unless otherwise noted, earnings per share amounts are presented on a diluted basis, and are based on weighted average common and common equivalent shares outstanding. Our operations are seasonal and, accordingly, our operating results for the interim periods presented are not indicative of the results to be expected for the full fiscal year.

EXECUTIVE OVERVIEW

Introduction

WGL, through its subsidiaries, sells and delivers natural gas and provides a variety of energy-related products and services to customers primarily in the District of Columbia and the surrounding metropolitan areas in Maryland and Virginia. In addition to our primary markets, WGL’s non-utility subsidiaries provide customized energy solutions across a much wider footprint, with business activities across the United States.

WGL has four operating segments:

• regulated utility;

• retail energy-marketing;

• commercial energy systems and

• midstream energy services.

Regulated Utility Operating Segment

The regulated utility operating segment is composed of our core subsidiary, Washington Gas. Washington Gas engages in the delivery and sale of natural gas that is regulated by regulatory commissions in the District of Columbia, Maryland and Virginia. During the third quarter, our utility earnings showed improved results primarily due to (i) higher unrealized margins associated with our asset optimization program (ii) new base rates in Virginia and the District of Columbia, (iii) increased customer growth of approximately 12,000 and (iv) lower operation and maintenance expenses. Partially offsetting these favorable variances were higher depreciation and amortization expenses.

Retail Energy-Marketing Operating Segment

We offer competitively priced natural gas, electricity and energy from renewable sources to customers through WGL Energy Services, our non-utility retail energy-marketing subsidiary.This quarter, this segment saw lower earnings due tolower natural gas margins resulting from (i) lower portfolio optimization, (ii) unfavorable weather and price conditions and (iii) lower realized and unrealized margins. Electricity margins were lower due to higher capacity charges from the regional power grid operator (PJM) associated with fixed-price retail contracts.

Commercial Energy Systems Operating Segment

Through WGL Energy Systems and WGSW, we offer efficient and sustainable commercial energy solutions focused on owning and operating distributed generation assets such as Solar Photovoltaic (Solar PV) systems and upgrading energy related systems of large government and commercial facilities. During the quarter this segment continued to deliver improved results. Growth is attributed to increasedgrowth in distributed generation assets in service, including increased solar renewable energy credit sales and higher earnings from alternative energy investments, including tax equity ventures.

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Partially offsetting these favorable variances were lower revenues from the energy-efficiency contracting business due to the completion of certain projects and higher expenses related to business development costs.

Midstream Energy Services Operating Segment

WGL Midstream specializes in the investment, management, development and optimization of natural gas storage and transportation midstream infrastructure projects. Improved results for the quarter primarily reflects: (i) higher valuations and realized margins related to storage inventory and the associated economic hedging transactions, (ii) higher realized margins on our transportation strategies, and (iii) higher income related to our pipeline investments. Partially offsetting these increases are lower valuations on our derivative contracts associated with our long-term transportation strategies.

Other Activities

Activities and transactions that are not significant enough on a stand-alone basis to warrant treatment as an operating segment, and that do not fit into one of our four operating segments, are aggregated as “Other Activities” and are included as part of non-utility operations. Administrative and business development costs associated with WGL and Washington Gas Resources are also included in “Other Activities.” Results for Other Activities primarily relate to external costs associated with the planned merger with AltaGas.

Planned Merger with AltaGas

On January 25, 2017, WGL entered into the Merger Agreement to combine with AltaGas in an all cash transaction valued at approximately $6.4 billion. The Boards of Directors of each of WGL and AltaGas have unanimously approved the Merger, which is expected to close in the second quarter of 2018. Subject to the conditions in the Merger Agreement, at the effective time of the Merger, WGL's shareholders will receive $88.25 in cash, without interest, for each share of WGL common stock issued and outstanding prior to the Effective Time (as defined in the Merger Agreement).

Consummation of the Merger is subject to the satisfaction or waiver of specified closing conditions, including, among others, the approval of the Merger by the holders of more than two-thirds of the outstanding shares of WGL common stock, which occurred on May 10, 2017 and approvals required from certain antitrust and other regulatory bodies. Should WGL terminate the Merger Agreement under specified circumstances, WGL may be obligated to pay AltaGas a termination fee of $136 million.

On April 24, 2017, joint applications for approval of the Merger were filed with the PSC of DC and with the PSC of MD. A joint petition for approval of the Merger was also filed with the SCC of VA, FERC, and CFIUS.

On June 15, 2017, AltaGas and WGL submitted to the Federal Trade Commission and the Antitrust Division of the Department of Justice completed Premerger Notification and Report Forms with respect to the proposed acquisition by AltaGas Ltd. of certain voting securities of WGL Holdings, Inc. The waiting period expired on July 17, 2017.  The expiration of the Clayton Act’s waiting period deems the Merger approved by the Federal Trade Commission and the Department of Justice.

On July 6, 2017, the FERC issued an order authorizing the Merger, concluding that the proposed transaction is consistent with the public interest.

For further information on the Merger, see "Safe Harbor and Forward Looking Statements" in the Introduction, Item I, Note 16 — Planned Merger with AltaGas Ltd. to the condensed consolidated financial statements and Part II, Item 1A. Risk Factors, in this Form 10-Q.

CRITICAL ACCOUNTING POLICIES

Preparation of financial statements and related disclosures in compliance with Generally Accepted Accounting Principles in the United States of America requires the selection and the application of appropriate technical accounting guidance to the relevant facts and circumstances of our operations, as well as our use of estimates to compile the consolidated financial statements. The application of these accounting policies involves judgment regarding estimates and projected outcomes of future events, including the likelihood of success of particular regulatory initiatives, the likelihood of realizing estimates for legal and environmental contingencies, and the probability of recovering costs and investments in both the regulated utility and non-regulated business segments.

We have identified the following critical accounting policies that require our judgment and estimation, where the resulting estimates may have a material effect on the consolidated financial statements:

• accounting for unbilled revenue;

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

• accounting for regulatory operations — regulatory assets and liabilities;

• accounting for income taxes;

• accounting for contingencies;

• accounting for derivatives;

• accounting for fair value instruments;

• accounting for investments;

• principles of consolidation and non-controlling interests and

• accounting for pension and other post-retirement benefit plans.

For a description of these critical accounting policies, refer to Management’s Discussion within the 2016 Annual Report. There were no new critical accounting policies or changes to our critical accounting policies during the nine month period ended June 30, 2017.

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

WGL HOLDINGS, INC.

RESULTS OF OPERATIONS—Three Months Ended June 30, 2017 vs. June 30, 2016

Our chief operating decision maker utilizes earnings before interest and tax (EBIT) as the primary measure of profit and loss in assessing the results of each segment’s operations. EBIT includes operating income, other income (expense) and earnings from unconsolidated affiliates and is adjusted by amounts attributable to non-controlling interests. We believe that our use of EBIT enhances the ability to evaluate segment performance because it excludes interest and income tax expense, which are affected by corporate-wide strategies such as capital financing and tax sharing allocations.

EBIT should not be considered an alternative to, or a more meaningful indicator of our operating performance than, net income. Refer to summary results below for a reconciliation of EBIT to net income applicable to common stock.

Summary Results

For the three months ended June 30, 2017, WGL reported net income applicable to common stock of $8.3 million, or $0.16 per share, compared to net income of $2.0 million, or $0.04 per share, reported for the three months ended June 30, 2016. For the twelve month periods ended June 30, 2017 and 2016, we earned a return on average common equity of 12.3% and 13.3%, respectively.

The following table summarizes our EBIT by operating segment for the three months ended June 30, 2017 and 2016.

Analysis of Consolidated Results
	Three Months Ended June 30,						Increase/
(In millions)	2017			2016			(Decrease)
EBIT:
Regulated utility	$	11.2		$	(20.5	)	$	31.7
Retail energy-marketing	4.3			49.5			(45.2		)
Commercial energy systems	14.4			8.3			6.1
Midstream energy services	7.7			(16.9		)	24.6
Other activities	(1.6		)	(0.5		)	(1.1		)
Intersegment eliminations	(0.2		)	0.2			(0.4		)
Total	$	35.8		$	20.1		$	15.7
Interest expense	25.1			13.0			12.1
Income tax expense	2.1			4.8			(2.7		)
Dividends on Washington Gas preferred stock	0.3			0.3			—
Net income applicable to common stock	$	8.3		$	2.0		$	6.3
EARNINGS PER AVERAGE COMMON SHARE
Basic	$	0.16		$	0.04		$	0.12
Diluted	$	0.16		$	0.04		$	0.12

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Regulated Utility Operating Results

The following table summarizes the regulated utility segment’s financial data for the three months ended June 30, 2017 and 2016.

Regulated Utility Financial Data
	Three Months Ended June 30,					Increase/
(In millions)	2017		2016			(Decrease)
Utility net revenues(1):
Operating revenues	$	203.2	$	187.1		$	16.1
Less: Cost of gas	54.1		71.3			(17.2		)
Revenue taxes	13.6		14.2			(0.6		)
Total utility net revenues	135.5		101.6			33.9
Operation and maintenance	76.2		78.3			(2.1		)
Depreciation and amortization	33.2		29.6			3.6
General taxes and other assessments	13.9		13.8			0.1
Other expenses—net	1.0		0.4			0.6
EBIT	$	11.2	$	(20.5	)	$	31.7

⁽¹⁾We utilizeutility net revenues, calculated as revenues less the associated cost of energy and applicable revenue taxes,toassist in the analysis ofprofitabilityfor the regulated utility segment. The cost of the natural gas commodity and revenue taxes are generally included in the rates that Washington Gas charges to customers as reflected in operating revenues. Accordingly, changes in the cost of gas and revenue taxes associated with sales made to customers generally have no direct effect on utility net revenues, operating income or net income.Utility net revenues should not be considered an alternative to, or a more meaningful indicator of our operating performance than operating income. Additionally, utility net revenues may not be comparable to similarly titled measures of other companies.

The comparison in EBIT primarily reflects the following:

• new base rates in Virginia and the District of Columbia;

• increased customer growth;

• higher unrealized margins associated with our asset optimization program and

• lower operation and maintenance expenses.

Partially offsetting these favorable variances were:

• unfavorable effects of warmer weather in the District of Columbia and

• higher depreciation and amortization expense related to our new billing system as well as the growth in our utility plant.

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Utility Net Revenues. The following table provides the key factors contributing to the changes in the utility net revenues of the regulated utility segment between the three months ended June 30, 2017 and 2016.

Composition of Changes in Utility Net Revenues
(In millions)	Increase/ (Decrease)
Customer growth	$	2.6
Estimated effects of weather and consumption patterns	(1.1		)
Impact of rate case	8.4
Accelerated pipe replacement programs	(2.8		)
Asset optimization:
Unrealized mark-to-market valuations	28.4
Other	(1.6		)
Total	$	33.9

Customer growth — Average active customer meters increased by approximately 12,000 for the three months ended June 30, 2017, compared to the same period of the prior fiscal year.

Estimated effects of weather and consumption patterns — Weather, when measured by heating degree days (HDDs), was 31.7% warmer and 33.8% colder than normal for the three months ended June 30, 2017 and 2016, respectively. In the District of Columbia, where Washington Gas does not have a billing mechanism or hedges to offset the effects of weather, the warmer weather for the three months ended June 30, 2017, resulted in a negative variance to net revenues. In addition, natural gas consumption patterns may also be affected by non-weather related factors such as customer conservation. Refer to the section entitled "Weather Risk" for a discussion of billing mechanisms in Maryland and Virginia, which are designed to eliminate the net revenue effects of variations in customer usage caused by weather and other factors such as conservation.

Impact of rate case - The increase in revenue reflects interim base rate billings, subject to refund, in Virginia, effective December 2016, as well as new rates in the District of Columbia, effective March 24, 2017. Refer to "Rates and Regulatory Matters" for further discussion of these matters. The increase in base rates for Virginia reflects approximately $3.6 million of revenue for plant expenditures that had been previously collected through the accelerated pipe replacement surcharge.

Accelerated pipe replacement programs — Project costs that had previously been collected through the accelerated replacement surcharge in Virginia have been transferred to base rates and are now reflected in the new interim base rate billings. New project costs in Virginia continue to be collected through this surcharge.

Asset optimization — We recorded unrealized gains of $3.2 million associated with our energy-related derivatives for the three months ended June 30, 2017, compared to an unrealized loss of $25.2 million reported for the same period of the prior fiscal year. When these derivatives settle, any unrealized amounts will ultimately reverse and Washington Gas will realize margins in combination with related transactions that these derivatives economically hedge. The change in the valuations is partially due to movements in unobservable inputs used in the valuation of long-dated forward contracts. We believe that these values are not reflective of our ultimate cash flows as these purchases are utilized in the optimization of our long-term natural gas transportation and storage capacity resources, the value of which is not reflected at fair value. Refer to the section entitled “Market Risk—Price Risk Related to the Regulated Utility Segment” for further discussion of our asset optimization program.

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WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Operation and Maintenance Expenses. The following table provides the key factors contributing to the changes in operation and maintenance expenses of the regulated utility segment for the three months ended June 30, 2017 and 2016.

Composition of Changes in Operation and Maintenance Expenses
(In millions)	Increase/ (Decrease)
Employee incentives, direct labor costs and benefits	$	(2.0	)
System safety and integrity	(1.0		)
Uncollectible accounts	1.2
Other	(0.3		)
Total	$	(2.1	)

Employee incentives and direct labor costs — Washington Gas incurred less employee incentives and labor costs, net, for the three months ended June 30, 2017, over the same period of the previous fiscal year, as a result of a medical policy update which had the effect of decreasing the liability.

System safety and integrity — Washington Gas incurred lower utility operations costs, partially offset by the amortization of Distribution Integrity Management Program costs in Virginia. These costs are included in the new interim Virginia base rates.

Uncollectible Accounts — The increase in uncollectible accounts is primarily due to higher delinquencies in customer accounts receivable balances.

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Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Retail Energy-Marketing

The following table depicts the retail energy-marketing segment’s financial data along with selected statistical data for the three months ended June 30, 2017 and 2016.

Retail Energy-Marketing Financial and Statistical Data
	Three Months Ended June 30,						Increase/
(In millions)	2017			2016			(Decrease)
Operating Results
Gross margins(1):
Operating revenues	$	250.0		$	266.2		$	(16.2	)
Less: Cost of energy	229.4			200.8			28.6
Revenue taxes	2.8			2.7			0.1
Total gross margins	17.8			62.7			(44.9		)
Operation expenses	11.7			11.8			(0.1		)
Depreciation and amortization	0.3			0.2			0.1
General taxes and other assessments	1.5			1.1			0.4
Other income (expenses) — net	—			(0.1		)	0.1
EBIT	$	4.3		$	49.5		$	(45.2	)
Analysis of gross margins (In millions)
Natural gas
Realized margins	$	9.8		$	17.7		$	(7.9	)
Unrealized mark-to-market gains (losses)	(6.1		)	21.5			(27.6		)
Total gross margins—natural gas	$	3.7		$	39.2		$	(35.5	)
Electricity
Realized margins	$	9.8		$	11.8		$	(2.0	)
Unrealized mark-to-market gains	4.3			11.7			(7.4		)
Total gross margins—electricity	$	14.1		$	23.5		$	(9.4	)
Total gross margins	$	17.8		$	62.7		$	(44.9	)
Other Retail Energy-Marketing Statistics
Natural gas
Therm sales (millions of therms)	113.5			144.3			(30.8		)
Number of customers (end of period)	119,100			136,500			(17,400		)
Electricity
Electricity sales (millions of kWhs)	3,048.4			3,201.9			(153.5		)
Number of accounts (end of period)	117,100			130,200			(13,100		)

⁽¹⁾  We utilize gross margins to assist with the analysis of profitability for the retail energy-marketing segment. Gross margins are calculated as revenues less the associated cost of energy and applicable revenue taxes. We consider gross margins to be a better reflection of performance than gross revenues or gross energy costs for our retail energy-marketing segment because gross margins are a direct measure of the success of our core strategy for the sale of natural gas and electricity. Gross margins should not be considered an alternative to, or a more meaningful indicator of our operating performance than operating income. Additionally, gross margins may not be comparable to similarly titled measures of other companies.

The decrease in EBIT reflects lower realized natural gas margins primarily due to lower firm sales volumes and lower portfolio optimization. In addition, gas and electricity margins were lower due to less favorable prices this quarter when compared to the same quarter in the prior fiscal year. Period-to-period comparisons of quarterly gross margins for this segment can vary significantly and are not necessarily representative of expected annualized results.

55

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Commercial Energy Systems

The table below represents the financial results of the commercial energy systems segment for the three months ended June 30, 2017 and 2016.

Commercial Energy Systems Segment Financial Information
	Three Months Ended June 30,					Increase/
(In millions)	2017			2016		(Decrease)
Operating revenues	$	25.6		$	20.8	$	4.8
Operating expenses:
Cost of sales	8.2			7.4		0.8
Operations	6.1			5.5		0.6
Depreciation and amortization	5.6			3.9		1.7
General taxes and other assessments	0.1			0.1		—
Operating expenses	$	20.0		$	16.9	$	3.1
Equity earnings	2.4			2.2		0.2
Other income	1.8			2.2		(0.4		)
Less: Non-controlling interest	(4.6		)	—		(4.6		)
EBIT	$	14.4		$	8.3	$	6.1
EBIT by division:
Energy-efficiency contracting	$	—		$	—	$	—
Commercial distributed generation	7.5			6.5		1.0
Investments in distributed generation	6.9			1.8		5.1
Total	$	14.4		$	8.3	$	6.1

The increase in EBIT reflectsthe growth in distributed generation assets in service, including increased solar renewable energy credit sales and higher earnings from alternative energy investments, including tax equity ventures. These improvements were partially offset bylower revenues from the energy-efficiency contracting business and higher expenses related to business development costs.

Additionally, not reflected in EBIT is the amortization of investment tax credits related to our distributed generation assets which were $1.8 million and $1.4 million for the three months ended June 30, 2017 and 2016, respectively.

56

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Midstream Energy Services

The table below represents the financial results of the midstream energy services segment for the three months ended June 30, 2017 and 2016.

Midstream Energy Services Segment Financial Information
	Three Months Ended June 30,					Increase/
(In millions)	2017		2016			(Decrease)
Operating revenues (a)	$	4.5	$	(18.0	)	$	22.5
Operating expenses	$	2.0	$	1.3		$	0.7
Equity earnings	5.2		2.4			2.8
EBIT	$	7.7	$	(16.9	)	$	24.6

^(a) The trading margins of Midstream Energy Services, including unrealized gains and losses on derivative instruments, are netted within operating revenues.

The increase in EBIT primarily reflects: (i) higher valuations and realized margins related to storage inventory and the associated economic hedging transactions, (ii) higher realized margins on our transportation strategies, and (iii) higher income related to our pipeline investments. Partially offsetting these increases are lower valuations on our derivative contracts associated with our long-term transportation strategies.

Other Non-Utility Activities

Transactions that are not significant enough on a stand-alone basis to warrant treatment as an operating segment, and that do not fit into one of our four operating segments, are aggregated as “Other Activities” and included as part of non-utility operations. Our other non-utility activities reflect EBIT of $(1.6) million and $(0.5) million for the three months ended June 30, 2017 and 2016, respectively. The decrease in EBIT primarily relates to external costs associated with the planned merger with AltaGas.

Intersegment Eliminations

Intersegment eliminations include any mark-to-market valuations associated with trading activities between WGL Midstream and WGL Energy Services, and timing differences between Commercial Energy Systems’ recognition of revenue for the sale of REC's to Retail Energy-Marketing and Retail Energy-Marketing’s recognition of the associated expense.

For further discussion of our financial performance by operating segment, refer to Note 10 - Operating Segment Reporting of the Notes to Condensed Consolidated Financial Statements.

Consolidated Interest Expense and Income Taxes

Please refer to the nine months ended June 30, 2017, for information about WGL's consolidated interest expense, income tax expense and effective income tax rate.

RESULTS OF OPERATIONS—Nine Months Ended June 30, 2017 vs. June 30, 2016

Summary Results

For the nine months ended June 30, 2017, WGL reported net income applicable to common stock of $189.3 million, or $3.68 per share, compared to net income of $176.5 million, or $3.50 per share, reported for the nine months ended June 30, 2016.

The following table summarizes our EBIT by operating segment for the nine months ended June 30, 2017 and 2016.

57

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Analysis of Consolidated Results
	Nine Months Ended June 30,						Increase/
(In millions)	2017			2016			(Decrease)
EBIT:
Regulated utility	$	279.1		$	243.1		$	36.0
Retail energy-marketing	42.8			52.1			(9.3		)
Commercial energy systems	27.6			10.3			17.3
Midstream energy services	21.2			17.6			3.6
Other activities	(17.9		)	(2.8		)	(15.1		)
Intersegment eliminations	(0.6		)	(0.4		)	(0.2		)
Total	$	352.2		$	319.9		$	32.3
Interest expense	55.5			38.8			16.7
Income tax expense	106.4			103.6			2.8
Dividends on Washington Gas preferred stock	1.0			1.0			—
Net income applicable to common stock	$	189.3		$	176.5		$	12.8
EARNINGS PER AVERAGE COMMON SHARE
Basic	$	3.70		$	3.52		$	0.18
Diluted	$	3.68		$	3.50		$	0.18

58

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Regulated Utility Operating Results

The following table summarizes the regulated utility segment’s financial data for the nine months ended June 30, 2017 and 2016.

Regulated Utility Financial Data
	Nine Months Ended June 30,				Increase/
(In millions)	2017		2016		(Decrease)
Utility net revenues(1):
Operating revenues	$	1,012.2	$	934.3	$	77.9
Less: Cost of gas	279.7		258.6		21.1
Revenue taxes	63.1		63.0		0.1
Total utility net revenues	669.4		612.7		56.7
Operation and maintenance	243.0		236.9		6.1
Depreciation and amortization	97.3		86.3		11.0
General taxes and other assessments	46.9		45.4		1.5
Other expenses—net	3.1		1.0		2.1
EBIT	$	279.1	$	243.1	$	36.0

⁽¹⁾We utilizeutility net revenues, calculated as revenues less the associated cost of energy and applicable revenue taxes,toassist in the analysis ofprofitabilityfor the regulated utility segment. The cost of the natural gas commodity and revenue taxes are generally included in the rates that Washington Gas charges to customers as reflected in operating revenues. Accordingly, changes in the cost of gas and revenue taxes associated with sales made to customers generally have no direct effect on utility net revenues, operating income or net income.Utility net revenues should not be considered an alternative to, or a more meaningful indicator of our operating performance than operating income. Additionally, utility net revenues may not be comparable to similarly titled measures of other companies.

The comparison in EBIT primarily reflects the following:

• new base rates in Virginia and the District of Columbia;

• higher customer growth; and

• higher unrealized margins associated with our asset optimization program.

Partially offsetting these favorable variances were:

• unfavorable effects of warmer weather in the District of Columbia;

• higher depreciation and amortization expense; and

• higher operation and maintenance expenses.

59

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Utility Net Revenues. The following table provides the key factors contributing to the changes in the utility net revenues of the regulated utility segment between the nine months ended June 30, 2017 and 2016.

Composition of Changes in Utility Net Revenues
(In millions)	Increase/ (Decrease)
Customer growth	$	6.1
Estimated effects of weather and consumption patterns	(2.1		)
Impact of rate case	27.2
Accelerated pipe replacement programs	(2.6		)
Asset optimization:
Realized margins	0.4
Unrealized mark-to-market valuations	31.8
Other	(4.1		)
Total	$	56.7

Customer growth — Average active customer meters increased by approximately 12,000 for the nine months ended June 30, 2017, compared to the same period of the prior fiscal year.

Estimated effects of weather and consumption patterns — Represents changes due to weather and natural gas consumption in the District of Columbia where Washington Gas does not have billing mechanisms or hedges to offset these effects. Weather, when measured by HDDs, was 15.8% and 10.2% warmer than normal for the nine months ended June 30, 2017 and 2016, respectively.

Impact of rate case - The increase in revenue reflects interim base rate billings, subject to refund, in Virginia, effective December 2016 as well as in the District of Columbia, effective March 24, 2017. Refer to "Rates and Regulatory Matters" for further discussion of this matter. The increase in base rates reflects approximately $14.7 million of revenue for plant expenditures that had been previously been collected through the accelerated pipe replacement surcharge.    

Accelerated pipe replacement programs — In Virginia, project costs that were being collected through the accelerated replacement surcharge revenues were transferred to base rates, and are reflected in the new interim base rate billings effective December 2016.

Asset optimization — We recorded unrealized gains of $39.7 million associated with our energy-related derivatives for the nine months ended June 30, 2017, compared to unrealized gains of $8.0 million reported for the same period of the prior fiscal year. When these derivatives settle, any unrealized amounts will ultimately reverse and Washington Gas expects to realize margins in combination with related transactions that these derivatives economically hedge. The change in the valuations is partially due to movements in unobservable inputs used in the valuation of long-dated forward contracts. We believe that these values are not reflective of our ultimate cash flows as these purchases are utilized in the optimization of our long-term natural gas transportation and storage capacity resources, the value of which is not reflected at fair value. Refer to the section entitled “Market Risk—Price Risk Related to the Regulated Utility Segment” for further discussion of our asset optimization program.

60

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Operation and Maintenance Expenses. The following table provides the key factors contributing to the changes in operation and maintenance expenses of the regulated utility segment for the nine months ended June 30, 2017 and 2016.

Composition of Changes in Operation and Maintenance Expenses
(In millions)	Increase/ (Decrease)
System safety and integrity	$	1.2
Uncollectible accounts	3.3
Support services	1.3
Other	0.3
Total	$	6.1

System safety and integrity — Washington Gas incurred higher costs, partially related to the amortization of Distribution Integrity Management Program costs in Virginia. These costs are included in the new interim Virginia base rates.

Uncollectible accounts - The increase in uncollectible accounts is due to higher delinquencies in customer accounts receivable balances coupled with higher utility revenues.

Support services - The increase for the nine months ended June 30, 2017 over the same period of the prior fiscal year reflects increased infrastructure support costs.

61

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Retail Energy-Marketing

The following table depicts the retail energy-marketing segment’s financial data along with selected statistical data for the nine months ended June 30, 2017 and 2016.

Retail Energy-Marketing Financial and Statistical Data
	Nine Months Ended June 30,				Increase/
(In millions)	2017		2016		(Decrease)
Operating Results
Gross margins(1):
Operating revenues	$	873.6	$	925.2	$	(51.6	)
Less: Cost of energy	782.4		825.2		(42.8		)
Revenue taxes	8.3		7.9		0.4
Total gross margins	82.9		92.1		(9.2		)
Operation expenses	35.3		36.2		(0.9		)
Depreciation and amortization	0.8		0.9		(0.1		)
General taxes and other assessments	4.0		3.1		0.9
Other income — net	—		0.2		(0.2		)
EBIT	$	42.8	$	52.1	$	(9.3	)
Analysis of gross margins (In millions)
Natural gas
Realized margins	$	31.5	$	37.0	$	(5.5	)
Unrealized mark-to-market gains	4.8		19.6		(14.8		)
Total gross margins—natural gas	$	36.3	$	56.6	$	(20.3	)
Electricity
Realized margins	$	37.8	$	33.0	$	4.8
Unrealized mark-to-market gains	8.8		2.5		6.3
Total gross margins—electricity	$	46.6	$	35.5	$	11.1
Total gross margins	$	82.9	$	92.1	$	(9.2	)
Other Retail Energy-Marketing Statistics
Natural gas
Therm sales (millions of therms)	603.1		649.8		(46.7		)
Number of customers (end of period)	119,100		136,500		(17,400		)
Electricity
Electricity sales (millions of kWhs)	9,199.9		9,321.1		(121.2		)
Number of accounts (end of period)	117,100		130,200		(13,100		)

⁽¹⁾  We utilize gross margins to assist with the analysis of profitability for the retail energy-marketing segment. Gross margins are calculated as revenues less the associated cost of energy and applicable revenue taxes. We consider gross margins to be a better reflection of performance than gross revenues or gross energy costs for our retail energy-marketing segment because gross margins are a direct measure of the success of our core strategy for the sale of natural gas and electricity. Gross margins should not be considered an alternative to, or a more meaningful indicator of our operating performance than operating income. Additionally, gross margins may not be comparable to similarly titled measures of other companies.

The decrease in EBIT reflects lower realized natural gas margins primarily due to lower volumes, lower portfolio optimization and less favorable prices this quarter when compared to the same period in the prior fiscal year. Realized margins from electricity were favorable due to lower capacity charges from the regional power grid operator (PJM) associated with fixed-price retail contracts, partially offset by lower volumes this year compared to the prior period. Period-to-period comparisons of gross margins for this segment can vary significantly and are not necessarily representative of expected annualized results.

62

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Commercial Energy Systems

The table below represents the financial results of the commercial energy systems segment for the nine months ended June 30, 2017 and 2016.

Commercial Energy Systems Segment Financial Information
	Nine Months Ended June 30,					Increase/
(In millions)	2017			2016		(Decrease)
Operating revenues	$	61.5		$	57.1	$	4.4
Operating expenses:
Cost of sales	24.5			27.9		(3.4		)
Operations	18.0			17.5		0.5
Depreciation and amortization	15.2			11.1		4.1
General taxes and other assessments	0.3			0.3		—
Operating expenses	$	58.0		$	56.8	$	1.2
Equity earnings	7.2			5.6		1.6
Other income	4.4			4.4		—
Less: Non-controlling interest	(12.5		)	—		(12.5		)
EBIT	$	27.6		$	10.3	$	17.3
EBIT by division:
Energy-efficiency contracting	$	(0.9	)	$	1.7	$	(2.6	)
Commercial distributed generation	10.1			6.5		3.6
Investments in distributed generation	18.4			2.1		16.3
Total	$	27.6		$	10.3	$	17.3

The increase in EBIT primarily reflectsthe growth in distributed generation assets in service, including increased solar renewable energy credit sales and higher earnings from alternative energy investments, including tax equity ventures as well as lower expenses this year compared to the prior year due to a $3.0 million dollar impairment recorded in the prior year. These improvements were partially offset bylower revenues from the energy-efficiency contracting business and higher expenses related to business development costs.

Additionally, not reflected in EBIT is the amortization of investment tax credits related to our distributed generation assets which were $5.0 million and $3.9 million for the nine months ended June 30, 2017 and 2016, respectively.

63

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Midstream Energy Services

The table below represents the financial results of the midstream energy services segment for the nine months ended June 30, 2017 and 2016.

Midstream Energy Services Segment Financial Information
	Nine Months Ended June 30,				Increase/
(In millions)	2017		2016		(Decrease)
Operating revenues (a)	$	18.2	$	16.2	$	2.0
Operating expenses:
Operations	4.7		3.4		1.3
Depreciation and amortization	—		0.1		(0.1		)
General taxes and other assessments	0.2		0.2		—
Operating expenses	$	4.9	$	3.7	$	1.2
Equity earnings	7.9		5.0		2.9
Other Income	—		0.1		(0.1		)
EBIT	$	21.2	$	17.6	$	3.6

^(a) The trading margins of Midstream Energy Services, including unrealized gains and losses on derivative instruments, are netted within operating revenues.

The increase in EBIT primarily reflects higher valuations and realized margins related to storage inventory and the associated economic hedging transactions and higher realized margins on our transportation strategies, partially offset by lower valuations on our derivative contracts associated with our long-term transportation strategies. Additionally, the increase in EBIT reflects higher income related to our pipeline investments.

Although realized margins on our transportation strategies have increased year-over-year, both years reflect losses associated with certain gas purchases from Antero Resources Corporation (Antero) beginning in January 2016. The index price used to invoice these purchases had been the subject of an arbitration proceeding; however, in February 2017, the arbitral tribunal ruled in favor of Antero. Losses realized during the nine months ended June 30, 2017 and 2016 were $7.7 million and $8.8 million, respectively, associated with this purchase contract. Accumulated losses from the inception of the contract are $23.0 million. In March 2017, we filed suit in state court in Colorado related to the delivery point to which the gas is being delivered by Antero. Antero moved to dismiss the suit and its motion to dismiss has been denied. Washington Gas and WGL Midstream have filed a motion for partial summary judgment, seeking the Court to declare that Antero is in breach of its obligation to deliver gas at the TCO Pool, leaving for trial only the issue of damages.  Antero has opposed the motion, and the motion is pending before the court for ruling. Antero has filed a counterclaim alleging breach of contract. Antero alleges that Washington Gas and WGL Midstream failed to purchase specified daily quantities of gas, and refused to pay invoiced cover damages. Antero seeks unspecified damages in an amount to be proved at trial. Washington Gas and WGL Midstream have filed an answer opposing this counterclaim.

Other Non-Utility Activities

Transactions that are not significant enough on a stand-alone basis to warrant treatment as an operating segment, and that do not fit into one of our four operating segments, are aggregated as “Other Activities” and included as part of non-utility operations. Our other non-utility activities reflect EBIT of $(17.9) million and $(2.8) million for the nine months ended June 30, 2017 and 2016, respectively. The decrease in EBIT primarily relates to external costs associated with the planned merger with AltaGas.

Intersegment Eliminations

Intersegment eliminations include any mark-to-market valuations associated with trading activities between WGL Midstream and WGL Energy Services, and timing differences between Commercial Energy Systems’ recognition of revenue for the sale of REC's to Retail Energy-Marketing and Retail Energy-Marketing’s recognition of the associated expense.

64

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

For further discussion of our financial performance by operating segment, refer to Note 10 - Operating Segment Reporting of the Notes to Condensed Consolidated Financial Statements.

Consolidated Interest Expense

The following table shows the components of WGL’s consolidated interest expense for the nine months ended June 30, 2017 and 2016. The increase in interest on long-term debt primarily reflects the issuance of additional notes by Washington Gas and term loans by WGL. In addition, we recognized unrealized losses of $5.2 million on forward starting interest rate swaps. We had elected hedge accounting for these swaps; however, due to certain covenants in the Merger Agreement with AltaGas, it is no longer probable that the 30-year debt issuance that the swaps were originally intended to hedge will occur and, therefore, these hedges were de-designated in January 2017. We do believe, however, that financing will continue to be required. The increase in other interest is primarily due to increased interest rates associated with our short-term borrowings.

Composition of Consolidated Interest Expense
	Nine Months Ended June 30,						Increase/
(In millions)	2017			2016			(Decrease)
Interest on long-term debt	$	48.1		$	38.4		$	9.7
Interest on derivative hedge swap	5.2			0.4			4.8
Other Interest	2.5			0.4			2.1
Allowance for funds used during construction and other- net	(0.3		)	(0.4		)	0.1
Total	$	55.5		$	38.8		$	16.7

Consolidated Income Taxes

The following table shows WGL’s consolidated income tax expense and effective income tax rate for the nine months ended June 30, 2017 and 2016.

Consolidated Income Taxes
	Nine Months Ended June 30,						Increase/
(In millions)	2017			2016			(Decrease)
Income before income taxes	$	284.1		$	281.1		$	3.0
Income tax expense	106.4			103.6			2.8
Effective income tax rate	37.5		%	36.9		%	0.6		%

The increase in the effective tax rate is primarily due to earnings attributable to WGL from

non-controlling interests.

LIQUIDITY AND CAPITAL RESOURCES

General Factors Affecting Liquidity

Access to short-term debt markets is necessary for funding our short-term liquidity requirements, the most significant of which include buying natural gas, electricity and pipeline capacity, and financing accounts receivable and storage gas inventory. We have accessed long-term capital markets primarily to fund capital expenditures, investment activities and to retire long-term debt.

During the nine months ended June 30, 2017, WGL met its liquidity and capital needs through cash on hand, retained earnings, reduced cash outflows resulting from deferred income taxes and the issuance of commercial paper. Washington Gas met its liquidity and capital needs through cash on hand, including the proceeds of long-term debt issued in the fourth calendar quarter of 2016, retained earnings, reduced cash outflows resulting from deferred income taxes and the issuance of commercial paper.

65

WGL Holdings, Inc.

Washington Gas Light Company

Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Our ability to access capital markets depends on our credit ratings, general market liquidity, and investor demand for our securities. The Merger Agreement has placed certain restrictions on WGL’s ability to access the capital markets. Our credit ratings depend largely on the financial performance of our subsidiaries, and a ratings downgrade could both increase our borrowing costs and trigger the need for us to post additional collateral with our wholesale counterparties or other creditors. In support of our credit ratings, we have a goal to maintain our long-term average common equity ratio in the 50% range of total consolidated capital over the long term. As of June 30, 2017, total consolidated capitalization, including current maturities of long-term debt and notes payable and project financing, comprised 42.5% common equity, 0.1% non-controlling interest, 0.8% preferred stock and 56.6% long- and short-term debt. This ratio varies during the fiscal year primarily due to the seasonal nature of Washington Gas' business. This seasonality also affects our short-term debt balances, which are typically higher in the fall and winter months and substantially lower in the spring when a significant portion of Washington Gas' current assets are converted into cash at the end of the heating season. Our cash flow requirements and our ability to provide satisfactory resources to meet those requirements are primarily influenced by the activities of all of WGL’s operating segments.

Our plans provide for sufficient liquidity to satisfy our financial obligations. At June 30, 2017, we had no significant restrictions on our cash balances or retained earnings that would affect the payment of common or preferred stock dividends by either WGL or Washington Gas. Please see Note 16 — Planned Merger with AltaGas Ltd. for a discussion of the proposed merger.

Short-Term Cash Requirements and Related Financing

Washington Gas has seasonal short-term cash requirements to fund the purchase of storage gas inventory in advance of the winter heating season. At June 30, 2017 and September 30, 2016, Washington Gas had balances in gas storage of $67.2 million and $82.5 million, respectively. Washington Gas collects the cost of gas under cost recovery mechanisms approved by its regulators. Additionally, Washington Gas may be required to post cash collateral for certain purchases.

During the first six months of each fiscal year, Washington Gas’ large sales volumes cause its cash requirements to peak when combined storage inventory, accounts receivable and unbilled revenues are at their highest levels. During the last six months of each fiscal year, after the heating season, Washington Gas typically experiences a seasonal net loss due to reduced demand for natural gas. During this period, large amounts of Washington Gas’ current assets are converted to cash, which Washington Gas generally uses to reduce and usually eliminate short-term debt and acquire storage gas for the next heating season.

Variations in the timing of collections under Washington Gas’ gas cost recovery mechanisms can significantly affect its short-term cash requirements. At June 30, 2017 and September 30, 2016, Washington Gas had $0.7 million and $3.3 million in net over-collections, respectively, of gas costs reflected in current liabilities as gas costs due to customers. Amounts under-collected or over-collected that are generated during the current gas cost recovery cycle are deferred as a regulatory asset or liability on the balance sheet until September 1 of each year, at which time the accumulated amount is transferred to gas costs due from/to customers as appropriate. At June 30, 2017 and September 30, 2016, Washington Gas had net a net regulatory liability and a net regulatory asset of $4.6 million and $5.7 million, respectively, related to the current gas recovery cycle.

WGL Energy Services and WGL Midstream have seasonal short-term cash requirements to fund the purchase of storage gas inventory in advance of the winter heating season. At June 30, 2017 and September 30, 2016, WGL Energy Services had balances in gas storage of $20.9 million and $31.5 million, respectively. WGL Energy Services collects revenues that are designed to reimburse commodity costs used to supply their retail customer contracts and wholesale counterparty contracts. At June 30, 2017 and September 30, 2016, WGL Midstream had balances in gas storage of $122.4 million and $93.1 million, respectively. As market opportunities arise, WGL Midstream collects revenues in excess of its commodity costs through its wholesale counterparty contracts. WGL Energy Services and WGL Midstream derive funding to finance these activities from short-term debt issued by WGL, which is made available through the money pool as discussed below. Additionally, WGL Energy Services and WGL Midstream may be required to post cash collateral for certain transactions. WGL Energy Services and WGL Midstream may be required to provide parent guarantees from WGL for certain transactions.

In addition to storage gas, WGL Midstream also has cash requirements to fund the capital requirements of its various infrastructure investments. At June 30, 2017 and September 30, 2016, WGL Midstream had investments of $349.0 million and $237.4 million related to these investments, respectively. WGL Midstream initially funds capital calls related to these investments from short-term debt issued by WGL.

WGL Energy Systems has cash requirements to fund the construction and purchase of residential and commercial distributed generation systems. WGL Energy Systems initially finances these activities through short-term debt issued by WGL.

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Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

WGL and Washington Gas use short-term debt in the form of commercial paper or unsecured short-term bank loans to fund seasonal cash requirements. Our policy is to maintain back-up bank credit facilities in an amount equal to or greater than our expected maximum commercial paper position.

WGL and Washington Gas each have credit facilities. The credit facility for WGL permits it to borrow up to $650.0 million. The credit facility for Washington Gas permits it to borrow up to $350.0 million, and further permits, with the banks’ approval, additional borrowings of $100.0 million for a maximum potential total of $450.0 million. The interest rate on loans made under each of the credit facilities is a fluctuating rate per annum that is set using certain parameters at the time each loan is made. WGL and Washington Gas incur credit facility fees, which in some cases are based on the long-term debt ratings of WGL and Washington Gas. In the event that the long-term debt ratings are downgraded below certain levels, WGL and Washington Gas would be required to pay higher fees. There are five different levels of fees. For WGL, under the terms of the credit facilities, the lowest level facility fee is 0.075% and the highest is 0.225%. For Washington Gas, under the terms of the credit facilities, the lowest level facility fee is 0.06% and the highest is 0.175%. The facilities have a maturity date of December 19, 2019, and the credit agreements each provide WGL or Washington Gas with the right, as applicable to request two additional one-year extensions, with the banks’ approval. Bank credit balances available to WGL and Washington Gas, net of commercial paper balances, were $325.0 million and $189.0 million at June 30, 2017 and $223.0 million and $308.0 million at September 30, 2016, respectively.

In January 2017, WGL entered into a credit agreement providing for a $50.0 million term loan. The credit agreement provides for a maturity date of two years, with a one-year extension option with the lender's approval. WGL used the loan proceeds to pay down commercial paper. Similar to the existing revolving credit facility, the credit agreement has a financial covenant where the ratio of its consolidated financial indebtedness to its consolidated total capitalization cannot exceed 65% at any time.

To manage credit risk, Washington Gas may require certain customers and suppliers to provide deposits, including collateral from wholesale counterparties, which are reported as current liabilities in “Customer deposits and advance payments,” in the accompanying balance sheets. At June 30, 2017 and September 30, 2016, “Customer deposits and advance payments” totaled $60.8 million and $80.9 million, respectively. For Washington Gas, deposits from customers may be refunded at various times throughout the year based on the customer’s payment habits. At the same time, other customers make new deposits that cause the balance of customer deposits to remain relatively steady. There are no restrictions on Washington Gas’ use of these customer deposits. Washington Gas pays interest to its customers on these deposits in accordance with the requirements of its regulatory commissions.

For WGL Energy Services and WGL Midstream, deposits typically represent collateral for transactions with wholesale counterparties. These deposits may be reduced, repaid or increased at any time based on the current value of WGL Energy Services’ or WGL Midstream’s net position with the counterparty. Currently, there are no restrictions on the use of deposited funds and interest is paid to the counterparty on these deposits in accordance with its contractual obligations. Refer to the section entitled "Credit Risk" for further discussion of our management of credit risk.

Project Financing

Washington Gas has obtained third-party project financing on behalf of the Federal government to provide funds during the construction of certain energy management services projects entered into under Washington Gas' area-wide contract. In connection with work completed under the area-wide contract, the construction work is performed by WGL Energy Systems on behalf of Washington Gas and an inter-company payable is recorded for work provided by WGL Energy Systems. As work is performed, Washington Gas establishes a receivable representing the government's obligation to remit principal and interest. The payable and receivable are equal to each other at the end of the construction period, but there may be timing differences in the recognition of the project related payable and receivable during the construction period. When these projects are formally “accepted” by the government and deemed complete, Washington Gas assigns the ownership of the receivable to the third party lender in satisfaction of the obligation and removes both the receivable and the obligation related to the financing from its financial statements.

In December 2016, WGL Energy Systems entered into an agreement to obtain third-party financing and receive funds directly from the third party lender during the construction period associated with the related energy management service projects. As a result, Washington Gas will no longer be liable under future third party financing arrangements, for projects entered into under the area-wide contract. The general terms of the financing agreement are the same as the prior financing arrangements between Washington Gas and the third party lender mentioned above. Washington Gas will continue to record a

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receivable representing the government’s obligation, and will record an inter-company payable to WGL Energy Systems for the construction work performed for the same amount.

As of June 30, 2017, WGL and Washington Gas recorded $70.9 million and $65.2 million, respectively, in "Unbilled revenues" on the balance sheet, and $52.9 million and $41.8 million, respectively, in a corresponding short-term obligation to third party lenders in "Notes payable and project financing", for energy management services projects that were not complete. As of September 30, 2016, WGL and Washington Gas recorded $73.3 million in "Unbilled revenues" on the balance sheet and a $62.4 million corresponding short-term obligation to third party lenders in "Notes payable and project financing" for energy management services projects that were not complete. WGL Energy Systems did not obtain any third-party project financing on behalf of the Federal Government for the fiscal year ended September 30, 2016. Because these projects are financed for government agencies which have minimal credit risk, and with which we have previous collection experience, neither WGL nor Washington Gas recorded a corresponding reserve for bad debts related to these receivables at June 30, 2017 or September 30, 2016.

Long-Term Cash Requirements and Related Financing

The primary drivers of our long-term cash requirements include capital expenditures, non-utility investments and long-term debt maturities. For the regulated utility segment, our capital expenditures primarily relate to adding new utility customers and system supply as well as maintaining the safety and reliability of Washington Gas’ distribution system. For our non-utility segments, our long-term cash requirements primarily depend on the level of investments and capital expenditures. For WGL Midstream, our investments primarily relate to providing capital for construction of the infrastructure investments. For WGL Energy Systems and WGSW, our investments primarily relate to providing capital for construction of distributed generation and commercial solar projects.

In connection with entering into the Merger Agreement, WGL Holdings, Inc. will not raise capital using common equity issuances or using debt longer than two years in duration.

Refer to the section entitled “Capital Investments” for a discussion of our capital expenditures forecast.

Security Ratings

The table below reflects the current credit ratings for the outstanding debt instruments of WGL and Washington Gas. Changes in credit ratings may affect WGL’s and Washington Gas’ cost of short-term and long-term debt and our access to the capital markets. A security rating is not a recommendation to buy, sell or hold securities. Credit ratings are subject to revision or withdrawal at any time by the assigning rating organization and each rating should be evaluated independently of any other rating.

	WGL		Washington Gas
Rating Service	Senior Unsecured	Commercial Paper	Senior Unsecured	Commercial Paper
Fitch Ratings(a)	A-	F2	A+	F1
Moody’s Investors Service(b)	A3	P-2	A1	P-1
Standard & Poor’s Ratings Services(c)	A-	A-1	A	A-1

(a) The long-term debt ratings outlook issued by Fitch Ratings for WGL and Washington Gas was adjusted to negative on October 13, 2016.

(b) The long-term debt ratings outlook issued by Moody’s Investors Service for WGL and Washington Gas was adjusted to negative on February 1, 2017.

(c) The long-term debt ratings outlook issued by Standard & Poor’s Rating Services for WGL and Washington Gas was adjusted to negative on January 26, 2017.

Ratings Triggers and Certain Debt Covenants

WGL and Washington Gas pay credit facility fees, which in some cases are based on the long-term debt ratings of Washington Gas. Under the terms of WGL’s and Washington Gas' revolving credit agreements, term loan facility and private placement notes, the ratio of consolidated financial indebtedness to consolidated total capitalization cannot exceed 0.65 to 1.0 (65.0%). As of June 30, 2017, WGL's and Washington Gas' ratios of consolidated financial indebtedness to consolidated total capitalization were 57% and 48%, respectively. In addition, WGL and Washington Gas are required to inform lenders of changes in corporate existence, financial conditions, litigation and environmental warranties that might have a material effect on debt ratings. The failure to inform the lenders’ agent of material changes in these areas might constitute default under the agreements. Additionally, failure to pay principal or interest on any other indebtedness may be deemed a default under our credit agreements. A default, if not remedied, may lead to a suspension of further loans and/or acceleration in which obligations become immediately due and payable. At June 30, 2017, we were in compliance with all of the covenants under our revolving credit facilities.

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Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

For certain of Washington Gas’ natural gas purchase and pipeline capacity agreements, if the long-term debt of Washington Gas is downgraded below the lower of a BBB- rating by Standard & Poor’s or a Baa3 rating by Moody’s Investors Service, or if Washington Gas is deemed by a counterparty not to be creditworthy, then the counterparty may withhold service or deliveries, or may require additional credit support. For certain other agreements, if the counterparty’s credit exposure to Washington Gas exceeds a contractually defined threshold amount, or if Washington Gas’ credit rating declines by a certain rating level, then the counterparty may require additional credit support. At June 30, 2017, Washington Gas would not be required to provide additional credit support for these arrangements if its long-term credit rating was to be downgraded by one rating level.

WGL guarantees payments for certain purchases of natural gas and electricity on behalf of WGL Energy Services and WGL Midstream (refer to “Contractual Obligations, Off-Balance Sheet Arrangements and Other Commercial Commitments” for further discussion of these guarantees). If the credit rating of WGL declines, WGL Energy Services and WGL Midstream may be required to provide additional credit support and credit enhancements for these purchase contracts. At June 30, 2017, WGL Energy Services would not be required to provide additional credit support for these arrangements if WGL's credit ratings were to decline by one rating level. At June 30, 2017, WGL Midstream would be required to provide $1.2 million of additional credit support for these arrangements if WGL's credit ratings were to decline by one rating level.

Historical Cash Flows

The following table summarizes WGL’s net cash provided by (used in) operating, investing and financing activities for the nine months ended June 30, 2017 and 2016:

	Nine Months Ended June 30,
(In millions)	2017			2016			Variance
Cash provided by (used in):
Operating activities	$	224.8		$	235.4		$	(10.6	)
Financing activities	$	229.3		$	238.2		$	(8.9	)
Investing activities	$	(450.1	)	$	(463.9	)	$	13.8

Cash Flows Provided by Operating Activities

The regulated utility’s cash flows from operating activities principally reflect gas sales and deliveries and the cost of operations. The volume of gas sales and deliveries is dependent primarily on factors external to the utility, such as growth of customer demand, weather, market prices for energy, economic conditions and measures that promote energy efficiency. Under revenue and weather normalization, ratemaking adjustments and decoupling mechanisms in place, changes in delivery volumes from levels assumed when rates were approved may affect the timing of cash flows but not net income. The price at which the utility provides energy to customers is determined in accordance with regulatory-approved tariffs. In general, changes in the utility’s cost of gas may affect the timing of cash flows but not net income because the costs are recovered in accordance with tariff provisions. In addition, the regulated utility’s cash flow is impacted by the timing of derivative settlements.

The non-utility cash flows from operating activities primarily reflect: (i) the timing of receipts related to distributed generation and federal projects in the commercial energy systems segment; (ii) the timing of receipts related to electric and gas bills and the timing of payments for the cost of the commodity for WGL Energy Services and (iii) the timing of gas purchases and sales resulting from trading activities at WGL Midstream. Both WGL Energy Services' and WGL Midstream's cash flows are impacted by the timing of derivative settlements.

Net income is the result of cash and non-cash (or accrual) transactions. Only cash transactions affect WGL’s cash flows from operating activities. Principal non-cash charges include depreciation, accrued or deferred pension and other post-retirement benefit costs and deferred income tax expense. Non-cash charges or credits may also be accrued under the revenue decoupling and cost reconciliation mechanisms in the utilities' rate plans.

Net cash flows provided by operating activities for the nine months ended June 30, 2017 was $224.8 million compared to net cash flows provided by operating activities of $235.4 million for the nine months ended June 30, 2016.

Cash Flows Provided by Financing Activities

Cash flows provided by financing activities totaled $229.3 million for the nine months ended June 30, 2017, compared to cash flows provided by financing activities of $238.2 million for the same period of the prior year. This decrease in cash

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Financial Condition and Results of Operations (continued)

flows primarily reflects a decrease in common stock issued of $77.8 million, a reduction in long term debt financing of $200 million and an increase of $6.7 million of dividends paid in common stock, offset primarily by short term financing.

Cash Flows Used in Investing Activities

During the nine months ended June 30, 2017, cash flows used in investing activities totaled $450.1 million compared to $463.9 million used in the nine months ended June 30, 2016. This decrease in cash used is primarily due to the investment in the Stonewall Gas Gathering System (Stonewall System) in the prior year of $89.4 million, partially offset by an additional investment this year of $45.5 million in the same system related to the retirement of debt at the entity level and by additional expenditures this year for Washington Gas' accelerated pipe replacement programs.

Capital Investments

The following table depicts our projected capital investments for fiscal years 2017 through 2021. Our capital outlays include expenditures to extend service to new areas to improve service for our utility customers and to grow our non-utility investments.

	Projected
(In millions)	2017		2018		2019		2020		2021		Total
New business(a)	$	129.8	$	148.9	$	153.8	$	166.6	$	189.5	$	788.6
Replacements:
Regulatory plans(b)	128.6		139.0		149.8		167.1		173.1		757.6
Other(c)	71.2		53.7		54.1		55.7		57.3		292.0
Customer information system	28.1		—		—		—		—		28.1
Other utility	46.2		74.1		53.4		57.5		71.3		302.5
Total utility(d)	403.9		415.7		411.1		446.9		491.2		2,168.8
Pipeline investments	208.2		483.9		37.2		3.9		—		733.2
Distributed generation	83.2		100.1		100.1		100.1		100.1		483.6
Other non-utility	1.5		0.2		0.1		0.1		0.1		2.0
Total investments	$	696.8	$	999.9	$	548.5	$	551.0	$	591.4	$	3,387.6

(a) Includes certain projects that support the existing distribution system.

(b) Represents capital expenditures (excluding cost of removal), both approved and expected to be approved, under our Accelerated Pipeline

Replacement Programs in all jurisdictions.

(c) Includes all other replacement activity that is not under our Accelerated Pipeline Replacement Programs.

(d) Excludes Allowance for Funds Used During Construction and cost of removal. Includes capital expenditures accrued and capital expenditure adjustments recorded in the fiscal year.

Pipeline Investments

Constitution Pipeline

In 2013, Constitution was formed with WGL Midstream as an investor. At June 30, 2017, WGL Midstream's total estimated share of the cash contributions for Constitution is estimated to be $95.5 million over the term of the agreement, reflecting a 10% share in the pipeline venture. The pipeline project is designed to transport at least 650,000 dekatherms of natural gas per day from the Marcellus region in northern Pennsylvania to major northeastern markets. Fully contracted with long-term commitments from established natural gas producers currently operating in Pennsylvania, the pipeline is designed to originate from the Marcellus production areas in Susquehanna County, Pennsylvania, and interconnect with the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, New York.

On December 2, 2014, the FERC issued an order granting a certificate of public convenience and necessity.

On April 22, 2016, the New York State Department of Environmental Conservation (NYSDEC) denied Constitution’s application for a Section 401 Certification for the pipeline, which is necessary for the construction and operation of the pipeline. Constitution has stated that it remains committed to pursuing the project and that it intends to pursue all available options to challenge the legality and appropriateness of NYSDEC’s decision. In May, 2016, Constitution filed actions in both the U.S.

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Circuit Court of Appeals for the Second Circuit and the U.S. District Court for the Northern District of New York, appealing the decision and seeking declaratory judgment that the State of New York’s permitting authority is preempted by federal law. On March 16, 2017, the U.S. District Court for the Northern District of New York issued an order ruling, without prejudice, that it lacked subject matter jurisdiction to hear Constitution’s complaint. WGL is awaiting a ruling from the Second Circuit.

WGL Midstream held a $38.5 million equity method investment in Constitution at June 30, 2017. Refer to Note 11, OtherInvestments of the Notes to the Consolidated Financial Statements for further discussion of this matter.

Constitution has revised its target in-service date to as early as the first half of 2019 a target in-service date, which is reflected in our capital expenditure projections for fiscal year 2017 and beyond.

Meade

In February 2014, WGL Midstream and certain venture partners formed, and WGL Midstream acquired a 55% interest in Meade Pipeline Co LLC (Meade). Meade was formed to develop and own, jointly with Transcontinental Gas Pipe Line Company, LLC (Transco), an approximately 185-mile pipeline originating in Susquehanna County, Pennsylvania and extending to Lancaster County, Pennsylvania (Central Penn) that will have the capacity to transport and deliver up to approximately 1.7 million dekatherms per day of natural gas.

Central Penn will be an integral part of Transco’s “Atlantic Sunrise” project. WGL Midstream will invest an estimated $410 million for its interest in Meade, and Meade will invest an estimated $746 million in Central Penn for an approximate 39% interest in Central Penn. Transco will hold the remaining ownership interests in Central Penn. Central Penn currently has a projected in-service date of mid-2018. On February 3, 2017, the FERC issued an order granting Transco's certificate of public convenience and necessity, subject to certain conditions.  On February 6, 2016 Transco accepted the certificate of public convenience and necessity.

Additionally, in February 2014, WGL Midstream entered into an agreement with Cabot Oil & Gas Corporation (Cabot) whereby WGL Midstream will purchase 500,000 dekatherms per day of natural gas from Cabot over a 15 year term. As part of this agreement, Cabot will acquire 500,000 dekatherms per day of firm gas transportation capacity on Transco’s Atlantic Sunrise project of which Central Penn is a part. This capacity will be released to WGL Midstream.

Mountain Valley Pipeline

In March 2015, WGL Midstream acquired a 7% equity interest in Mountain Valley Pipeline, LLC (Mountain Valley). On October 24, 2016, WGL Midstream acquired an additional 3% equity interest in Mountain Valley by assuming all of Vega Midstream MVP LLC's (Vega Energy) interest in the joint venture. WGL Midstream now owns a 10% interest in Mountain Valley.

The proposed pipeline to be developed, constructed, owned and operated by Mountain Valley, will transport approximately 2.0 million dekatherms of natural gas per day from interconnects with EQT Corporation's Equitrans system in Wetzel County, West Virginia to Transcontinental Gas Pipe Line Company LLC's Station 165 in Pittsylvania County, Virginia. The pipeline is scheduled to be in service by December 2018.

WGL Midstream expects to invest in scheduled capital contributions through the in-service date of the pipeline, its pro rata share (based on its 10% equity interest) of project costs, an estimated aggregate amount of approximately $327.6 million. In addition, WGL Midstream entered into a gas purchase commitment to buy 500,000 dekatherms of natural gas per day, at index-based prices, for a 20 year term, and will also be a shipper on the proposed pipeline.

Stonewall System

WGL Midstream has a 30% equity interest in an entity that owns and operates certain assets known as the Stonewall System. WGL Midstream paid $89.4 million to acquire the equity interest. The Stonewall System has the capacity to gather up to 1.4 billion cubic feet of natural gas per day from the Marcellus production region in West Virginia, and connects with an interstate pipeline system that serves markets in the mid-Atlantic region. During the nine months ended June 30, 2017, WGL Midstream contributed an additional $45.5 million related to retiring debt at the entity level.

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Financial Condition and Results of Operations (continued)

CONTRACTUAL OBLIGATIONS, OFF-BALANCE SHEET ARRANGEMENTS, AND OTHER COMMERCIAL COMMITMENTS

Contractual Obligations

WGL and Washington Gas have certain contractual obligations incurred in the normal course of business that require fixed and determinable payments in the future. These commitments include long-term debt, lease obligations, unconditional purchase obligations for pipeline capacity, transportation and storage services, certain natural gas and electricity commodity commitments and our commitments related to the business process outsourcing program.

Reference is made to the "Contractual Obligations, Off-Balance Sheet Arrangements and Other Commercial Commitments" section of Management's Discussion in our 2016 Annual Report. Note 5 to the Consolidated Financial Statements in our 2016 Annual Report includes a discussion of long-term debt, including debt maturities. Note 13 to the Consolidated Financial Statements in our 2016 Annual Report reflects information about the various contracts of Washington Gas, WGL Energy Services and WGL Midstream.

There were no significant changes to contractual obligations during the three and nine months ended June 30, 2017. Refer to Note 16 — Planned Merger with AltaGas Ltd. for information regarding the Merger Agreement.

Financial Guarantees

WGL has guaranteed payments primarily for certain commitments on behalf of certain subsidiaries. At June 30, 2017, these guarantees totaled $30.7 million, $168.8 million, $114.0 million and $404.3 million for Washington Gas, WGL Energy Services, WGL Energy Systems and WGL Midstream, respectively. At June 30, 2017, WGL also had guarantees on behalf of other subsidiaries totaling $2.2 million. The amount of such guarantees is periodically adjusted to reflect changes in the level of WGL's financial exposure related to these commitments. For all of our financial guarantees, WGL may cancel any or all future obligations upon written notice to the counterparty, but WGL would continue to be responsible for the obligations created under the guarantees prior to the effective date of the cancellation. WGL has also guaranteed payments for certain of our external partners. At June 30, 2017, the maximum potential amount of future payments under the guarantees for external parties totaled $13.6 million.

CREDIT RISK

Wholesale Credit Risk

Certain wholesale suppliers that sell natural gas to any or all of Washington Gas, WGL Energy Services, and WGL Midstream and electricity to WGL Energy Services, may have relatively low credit ratings or may not be rated by major credit rating agencies.

Washington Gas enters into transactions with wholesale counterparties for the purpose of meeting firm ratepayer commitments, to optimize the value of its long-term capacity assets, and for hedging natural gas costs. In the event of a counterparty’s failure to deliver contracted volumes of gas or fulfill its payment obligations, Washington Gas may incur losses that would typically be passed through to its sales customers under the purchased gas cost adjustment mechanisms; however, Washington Gas may be at risk for financial loss to the extent these losses are not passed through to its customers.

For WGL Energy Services, any failure of wholesale counterparties to deliver natural gas or electricity under existing contracts could cause financial exposure for the difference between the price at which WGL Energy Services has contracted to buy these commodities and their replacement cost from another supplier. To the extent that WGL Energy Services sells natural gas to these wholesale counterparties, WGL Energy Services may be exposed to payment risk if WGL Energy Services is in a net receivable position. Additionally, WGL Energy Services enters into contracts with counterparties to hedge the costs of natural gas and electricity. Depending on the ability of the counterparties to fulfill their commitments, WGL Energy Services could be at risk for financial loss.

WGL Midstream enters into transactions with wholesale counterparties to hedge and optimize its portfolio of owned and managed natural gas assets. Any failure of wholesale counterparties to deliver natural gas under existing contracts could cause financial exposure for the difference between the price at which WGL Midstream has contracted to buy these commodities and their replacement cost. To the extent that WGL Midstream sells natural gas to these wholesale counterparties, WGL Midstream may be exposed to payment risk if it is in a net receivable position. In addition, WGL Midstream enters into contracts with

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counterparties to hedge the costs of natural gas. Depending on the ability of the counterparties to fulfill their commitments, WGL Midstream could be at risk for financial loss.

Washington Gas, WGL Energy Services, and WGL Midstream operate under an existing wholesale counterparty credit policy that is designed to mitigate credit risks through requirements for credit enhancements including, but not limited to, letters of credit, parent guarantees and cash collateral when deemed necessary. In accordance with this policy, Washington Gas, WGL Energy Services, and WGL Midstream have each obtained credit enhancements from certain of their counterparties. If certain counterparties or their guarantors meet the policy’s creditworthiness criteria, Washington Gas, WGL Energy Services, and WGL Midstream may grant unsecured credit to those counterparties or their guarantors. The creditworthiness of all counterparties is continuously monitored.

Washington Gas, WGL Energy Services and WGL Midstream are also subject to the collateral requirements of their counterparties. At June 30, 2017, Washington Gas, WGL Energy Services and WGL Midstream provided $4.9 million, $25.1 million and $34.4 million in cash collateral to counterparties, respectively.

The following table provides information on our credit exposure, net of collateral, to wholesale counterparties as of June 30, 2017 for Washington Gas, WGL Energy Services and WGL Midstream, separately.

Credit Exposure to Wholesale Counterparties(In millions)
Rating(a)	Exposure Before Credit Collateral(b)		Offsetting Credit Collateral Held(c)		Net Exposure		Number of Counterparties Greater Than 10%(d)	Net Exposure of Counterparties Greater Than 10%
Washington Gas
Investment Grade	$	42.3	$	0.3	$	42.0	2	$	30.7
Non-Investment Grade	3.2		3.2		—		—	—
No External Ratings	7.6		1.9		5.7		—	—
WGL Energy Services
Investment Grade	$	0.5	$	—	$	0.5	2	$	0.4
Non-Investment Grade	—		—		—		—	—
No External Ratings	1.0		—		1.0		2	0.8
WGL Midstream
Investment Grade	$	51.5	$	2.8	$	48.7	1	$	17.1
Non-Investment Grade	2.5		2.5		—		—	—
No External Ratings	9.5		2.4		7.1		—	—

^(a)  Investment grade is primarily determined using publicly available credit ratings of the counterparty. If the counterparty has provided a guarantee by a higher-rated entity (e.g., its parent), it is determined based upon the rating of it guarantor. Included in “Investment grade” are counterparties with a minimum Standard & Poor’s or Moody’s Investor Service rating of BBB- or Baa3, respectively.

^(b)  Includes the net of all open positions on energy-related derivatives subject to mark-to-market accounting requirements and the net receivable/payable for the realized transactions. Amounts due from counterparties are offset by liabilities payable to those counterparties to the extent that contractual netting arrangements are in place.

^(c)  Represents cash deposits and letters of credit received from counterparties, not adjusted for probability of default.

^(d)  Using a percentage of the net exposure.

Retail Credit Risk

Washington Gas is exposed to the risk of non-payment of utility bills by certain of its customers. To manage this customer credit risk, Washington Gas may require cash deposits from its high risk customers to cover payment of their bills until the requirements for the deposit refunds are met. In addition, Washington Gas has a POR program in Maryland, whereby it purchases receivables from participating energy marketers at approved discount rates. Under the program, Washington Gas is exposed to the risk of non-payment by the retail customers for these receivables. This risk is factored into the approved discount rate at which Washington Gas purchases the receivables.

WGL Energy Services is also exposed to the risk of non-payment by its retail customers. WGL Energy Services manages this risk by evaluating the credit quality of certain new customers as well as by monitoring collections from existing customers. To the extent necessary, WGL Energy Services can obtain collateral from, or terminate service to, its existing customers based on credit quality criteria. In addition, WGL Energy Services participates in POR programs with certain Maryland, District of Columbia and Pennsylvania utilities, whereby it sells its receivables to various utilities at approved discount rates. Under the POR programs, WGL Energy Services is exposed to the risk of non-payment by its retail customers for delivered commodities that have not yet been billed. Once the invoices are billed, however, the associated credit risk is assumed by the purchasing utilities that sponsor POR programs. While participation in POR programs reduces the risk of collection and fixes a discount

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Financial Condition and Results of Operations (continued)

rate on the receivables, there is a risk that the discount rate paid to participate in the POR program will exceed the actual bad debt expense and billing fees associated with these receivables.

WGL Energy Systems is subject to retail credit risk associated with customers who purchase electricity under long term agreements from distributed generation assets owned by the company. The customers undergo credit evaluation prior to contract execution and are monitored periodically during the contract term for payment performance and credit quality. These steps mitigate credit risk associated with the distributed generation asset customers.

At June 30, 2017, WGSW was indirectly subject to retail credit risk associated with non-payment by customers who lease distributed energy equipment or maintain energy service agreements through ASD, Nextility, SunEdison, SFEE, SFGF and SFRC. This credit risk was mitigated through minimum credit quality criteria established in each of WGSW’s agreements for customer agreements. These criteria were satisfied to enable WGSW to participate in the project financing arrangement or partnership interest. Refer to Note 11, Other Investments of the Notes to Condensed Consolidated Financial Statements for a further discussion of these investments.

WGL Midstream is not subject to retail credit risk.

MARKET RISK

We are exposed to various forms of market risk including commodity price risk, weather risk and interest-rate risk. The following discussion describes these risks and our management of them.

Price Risk Related to the Regulated Utility Segment

Washington Gas faces price risk associated with the purchase and sale of natural gas. Washington Gas generally recovers the cost of the natural gas to serve customers through gas cost recovery mechanisms as approved in jurisdictional tariffs; therefore, a change in the price of natural gas generally has no direct effect on Washington Gas’ net income. However, Washington Gas is responsible for following competitive and reasonable practices in purchasing natural gas for its customers.

To manage price risk associated with its natural gas supply to its firm customers, Washington Gas: (i) actively manages its gas supply portfolio to balance sales and delivery obligations; (ii) injects natural gas into storage during the summer months when prices are generally lower, and withdraws that gas during the winter heating season when prices are generally higher and (iii) enters into hedging contracts and other contracts that may qualify as derivative instruments related to the sale and purchase of natural gas.

Washington Gas executes commodity-related physical and financial contracts in the form of forward, futures and option contracts as part of an asset optimization program that is managed by its internal staff. Under this program, Washington Gas realizes value from its long-term natural gas transportation and storage capacity resources when they are not being fully used to serve utility customers. Regulatory sharing mechanisms in all three jurisdictions allow the profit from these transactions to be shared between Washington Gas’ customers and shareholders.

The following two tables summarize the changes in the fair value of our net assets (liabilities) associated with the Regulated Utility segment’s energy-related derivatives during the nine months ended June 30, 2017:

Regulated Utility Segment Changes in Fair Value of Energy-Related Derivatives
(In millions)
Net assets (liabilities) at September 30, 2016	$	(257.4	)
Net fair value of contracts entered into during the period	8.9
Other changes in net fair value	93.7
Realized net settlement of derivatives	6.9
Net assets (liabilities) at June 30, 2017	$	(147.9	)

Regulated Utility Segment Roll Forward of Energy-Related Derivatives
(In millions)
Net assets (liabilities) at September 30, 2016	$	(257.4	)
Recorded to income	40.0
Recorded to regulatory assets/liabilities	62.6
Realized net settlement of derivatives	6.9
Net assets (liabilities) at June 30, 2017	$	(147.9	)

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Financial Condition and Results of Operations (continued)

The maturity dates of our net assets (liabilities) associated with the regulated utility segment’s energy-related derivatives recorded at fair value at June 30, 2017, is summarized in the following table based on the level of the fair value calculation under ASC Topic 820:

Regulated Utility Segment Maturity of Net Assets (Liabilities) Associated with our Energy-Related Derivatives
(In millions)	Remainder of 2017			2018			2019			2020			2021			Thereafter			Total
Level 1 — Quoted prices in active markets	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Level 2 — Significant other observable inputs	1.8			0.6			0.4			—			—			—			2.8
Level 3 — Significant unobservable inputs	(2.0		)	(20.4		)	(12.3		)	(11.4		)	(13.8		)	(90.8		)	(150.7		)
Total net assets (liabilities) associated with our energy-related derivatives	$	(0.2	)	$	(19.8	)	$	(11.9	)	$	(11.4	)	$	(13.8	)	$	(90.8	)	$	(147.9	)

Refer to Note 8, Derivative and Weather-Related Instruments and Note 9, Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements for a further discussion of our derivative activities and fair value measurements.

Price Risk Related to the Non-Utility Segments

Retail Energy-Marketing. Our retail energy-marketing subsidiary, WGL Energy Services, sells natural gas and electricity to retail customers at both fixed and indexed prices. WGL Energy Services must manage daily and seasonal demand fluctuations for these products with its suppliers. Price risk may exist to the extent WGL Energy Services does not closely match the timing and volume of natural gas and electricity it purchases with the related fixed price or indexed sales commitments. WGL Energy Services’ risk management policies and procedures are designed to minimize this risk.

A portion of WGL Energy Services’ annual natural gas sales volumes is subject to variations in customer demand associated with fluctuations in weather and other factors. Purchases of natural gas to fulfill retail sales commitments are generally made under fixed-volume contracts based on certain weather assumptions. If there is significant deviation from normal weather or from other factors that affect customer usage or utility delivery requirements, purchase commitments may differ significantly from actual customer usage. To the extent that WGL Energy Services cannot match its customer requirements and supply commitments, it may be exposed to commodity price and volume variances, which could negatively impact expected gross margins (refer to the section entitled “Weather Risk” for further discussion of our management of weather risk). WGL Energy Services manages these risks through the use of derivative instruments, including financial products.

WGL Energy Services procures electricity supply under contract structures in which WGL Energy Services assumes the responsibility of matching its customer requirements with its supply purchases. WGL Energy Services assembles the various components of supply, including electric energy from various suppliers, and capacity, ancillary services and transmission service from the PJM Interconnection, a regional transmission organization, in matching its customer requirements obligations. While the capacity and transmission costs within PJM are generally stable and identifiable several years into the future, the cost of ancillary services which support the reliable operation of the transmission system does fluctuate as changes occur in the balance between generation and the consumption mix within the electric system. WGL Energy Services could be exposed to price risk associated with changes in ancillary costs due to lack of available forward market products to sufficiently hedge those risks. Commercial retail contracts for larger customers often include terms which permit WGL Energy Services to pass through regulatory approved changes in capacity and transmission costs, as well as some changes in ancillary costs. These terms reduce the price risk exposure related to these changes for WGL Energy Services.

To the extent WGL Energy Services has not sufficiently matched its customer requirements with its supply commitments, it could be exposed to electricity commodity price risk. WGL Energy Services manages this risk through the use of derivative instruments, including financial products.

WGL Energy Services’ electric business is also exposed to fluctuations in weather and varying customer usage. Purchases generally are made under fixed-price, fixed-volume contracts that are based on certain weather assumptions. If there are significant deviations in weather or usage from these assumptions, WGL Energy Services may incur price and volume variances that could negatively impact expected gross margins (refer to the section entitled “Weather Risk” for further discussion of our management of weather risk).

The following two tables summarize the changes in the fair value of our net assets (liabilities) associated with the Retail Energy-Marketing segment’s energy-related derivatives during the nine months ended June 30, 2017:

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Financial Condition and Results of Operations (continued)

Retail Energy-Marketing Segment Changes in Fair Value of Energy-Related Derivatives
(In millions)
Net assets (liabilities) at September 30, 2016	$	(17.1	)
Net fair value of contracts entered into during the period	1.4
Other changes in net fair value	9.7
Realized net settlement of derivatives	(2.3		)
Net assets (liabilities) at June 30, 2017	$	(8.3	)

Retail Energy-Marketing Segment Roll Forward of Energy-Related Derivatives
(In millions)
Net assets (liabilities) at September 30, 2016	$	(17.1	)
Recorded to income	16.0
Recorded to accounts payable	(5.0		)
Realized net settlement of derivatives	(2.2		)
Net assets (liabilities) at June 30, 2017	$	(8.3	)

The maturity dates of our net assets (liabilities) associated with the Retail Energy-Marketing segments’ energy-related derivatives recorded at fair value at June 30, 2017 is summarized in the following table based on the level of the fair value calculation under ASC Topic 820:

Retail Energy-Marketing Segment Maturity of Net Assets (Liabilities) Associated with our Energy-Related Derivatives
(In millions)	Remainder of 2017			2018			2019			2020			2021			Thereafter		Total
Level 1 — Quoted prices in active markets	$	—		$	—		$	—		$	—		$	—		$	—	$	—
Level 2 — Significant other observable inputs	(1.2		)	(0.4		)	(1.4		)	(0.8		)	—			—		(3.8		)
Level 3 — Significant unobservable inputs	0.8			(1.6		)	(2.5		)	(0.9		)	(0.3		)	—		(4.5		)
Total net assets (liabilities) associated with our energy-related derivatives	$	(0.4	)	$	(2.0	)	$	(3.9	)	$	(1.7	)	$	(0.3	)	$	—	$	(8.3	)

Refer to Note 8, Derivative and Weather-Related Instruments and Note 9, Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements for a further discussion of our derivative activities and fair value measurements.

Commercial Energy Systems. WGL Energy Systems sells energy (both electricity and thermal) and RECs from distributed generation assets. The sale of energy is under long term power purchase agreements (PPAs) with a general duration of 20 years, while the sale of RECs are usually under shorter term or immediate delivery contracts. Weather patterns have an effect on WGL Energy Systems solar generation assets to the extent that output is reduced. WGL Energy Systems may also be exposed to REC price risk. The REC market has limited visibility to forward market prices. WGL Energy Systems seeks to mitigate this price risk by entering into bundled energy and REC long-term purchase agreements and independent forward REC sale agreements, when possible.

WGL Energy Systems also earns revenues by providing energy efficiency and sustainability solutions to governmental agencies pursuant to various contractual vehicles, including the area wide contract. WGL Energy Systems earns margins between the price at which the solutions are sold and the cost to design and build them. Margins may be eroded by an underestimation of costs. WGL Energy Systems also conducts business with government agencies and faces future revenue risks relating to such government agencies not receiving appropriations funding or projects being unfunded by Congress.

WGSW holds project financing arrangements, whereby it holds an interest in a limited partnership that acquires distributed generation solar assets at fair market value and leases back those assets to counterparties, with a fixed target rates of return over terms between 6-20 years. WGSW also enters into arrangements in which investment partners purchase solar assets and lease them to retail customers. In these cases, the purchased solar assets are expected to achieve a target rate of return from the lease payments that are collected from the retail customers. WGSW manages this price risk through its investment agreements and evaluation of the asset purchase in conjunction with the inception of the lease.

Midstream Energy Services. WGL Midstream engages in wholesale commodity transactions to optimize its owned and managed natural gas assets. Price risk exists to the extent WGL Midstream does not closely match the volume of physical

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natural gas in storage with the related forward sales entered into as hedges. WGL Midstream seeks to mitigate this risk by actively managing and hedging these assets in accordance with corporate risk management policies and procedures. Depending upon the nature of its forward hedges, WGL Midstream may also be exposed to fluctuations in mark-to-market valuations based on changes in forward price curves. WGL Midstream pays fixed, fair market prices for its owned storage assets and is subject to variations in annual summer-winter price differentials associated with weather and other market factors. To the extent there are significant variations in weather, WGL Midstream may incur price variances that negatively impact expected gross margins (refer to the section entitled “Weather Risk” for further discussion of our management of weather risk). WGL Midstream manages this risk through the use of derivative instruments, including financial products.

The following two tables summarize the changes in the fair value of our net assets (liabilities) associated with the Midstream Energy Services segments’ energy-related derivatives during the nine months ended June 30, 2017:

Midstream Energy Services Segment Changes in Fair Value of Energy-Related Derivatives
(In millions)
Net assets (liabilities) at September 30, 2016	$	(19.8	)
Net fair value of contracts entered into during the period	34.9
Other changes in net fair value	0.8
Realized net settlement of derivatives	(16.5		)
Net assets (liabilities) at June 30, 2017	$	(0.6	)

Midstream Energy Services Segment Roll Forward of Energy-Related Derivatives
(In millions)
Net assets (liabilities) at September 30, 2016	$	(19.8	)
Recorded to income	35.7
Realized net settlement of derivatives	(16.5		)
Net assets (liabilities) at June 30, 2017	$	(0.6	)

The maturity dates of our net assets (liabilities) associated with the Midstream Energy Services segments’ energy-related derivatives recorded at fair value at June 30, 2017 is summarized in the following table based on the level of the fair value calculation under ASC Topic 820:

Midstream Energy Services Segment Maturity of Net Assets (Liabilities) Associated with our Energy-Related Derivatives
(In millions)	Remainder of 2017			2018			2019		2020		2021		Thereafter			Total
Level 1 — Quoted prices in active markets	$	—		$	—		$	—	$	—	$	—	$	—		$	—
Level 2 — Significant other observable inputs	0.5			(0.2		)	—		—		—		—			0.3
Level 3 — Significant unobservable inputs	(2.9		)	(1.7		)	2.0		1.5		0.3		(0.1		)	(0.9		)
Total net assets associated with our energy-related derivatives	$	(2.4	)	$	(1.9	)	$	2.0	$	1.5	$	0.3	$	(0.1	)	$	(0.6	)

Refer to Note 8, Derivative and Weather-Related Instruments and Note 9, Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements for a further discussion of our derivative activities and fair value measurements.

Value-at-Risk

WGL Energy Services measures the market risk of its energy commodity portfolio by determining its value-at-risk. Value-at-risk is an estimate of the maximum loss that can be expected at some level of probability if a portfolio is held for a given time period. The value-at-risk calculation for natural gas and electric portfolios include assumptions for normal weather, new customer additions and renewing customers for which supply commitments have been secured. Based on a 95% confidence interval for a one-day holding period, WGL Energy Services’ value-at-risk at June 30, 2017 was approximately $5,300 and $30,200, related to its natural gas and electric portfolios, respectively. The high, low and average value-at-risk for natural gas and electric portfolios between the period October 1, 2016 and June 30, 2017 are noted in the table below.

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Financial Condition and Results of Operations (continued)

WGL Energy Services Value-at-Risk
(In thousands)	High		Low		Average
Natural Gas Portfolio	$	102.3	$	4.5	$	40.3
Electric Portfolio	195.8		12.3		55.4
Total	$	298.1	$	16.8	$	95.7

Weather Risk

We are exposed to various forms of weather risk in both our regulated utility and non-utility business segments. Washington Gas’ operations are seasonal, with a significant portion of its revenues derived from the delivery of natural gas to residential and commercial heating customers during the winter heating season. Weather conditions directly influence the volume of natural gas delivered by Washington Gas. Weather patterns tend to be more volatile during “shoulder” months within our fiscal year in which Washington Gas is going into or coming out of the primary portion of its winter heating season. During the shoulder months within quarters ending December 31 (particularly in October and November) and June 30 (particularly in April and May), customer heating usage may not highly correlate with historical levels or with the level HDDs that occur, particularly when weather patterns experienced are not consistently cold or warm.

To the extent Washington Gas does not have weather related instruments or billing adjustment mechanisms in place, its revenues are volume driven and its current rates are based upon an assumption of normal weather. In the District of Columbia, without weather protection strategies, variations from normal weather will cause our earnings to increase or decrease depending on the weather pattern.

The financial results of our retail energy-marketing business, WGL Energy Services, are affected by variations from normal weather primarily in the winter relating to its natural gas sales, and throughout the fiscal year relating to its electricity sales. WGL Energy Services manages these weather risks with, among other things, weather related instruments.

Weather patterns have an effect on WGL Energy Systems solar generation assets to the extent that output is reduced. WGL Energy Systems seeks to mitigate weather risk by negotiating unit contingency and other measures to limit exposure in the PPAs.

Variations from normal weather may also affect the financial results of our wholesale energy business, WGL Midstream, primarily with regards to summer-winter price differentials between time periods and transportation delivery locations throughout the fiscal year. WGL Midstream manages these weather risks with, among other things, physical and financial hedging products.

Billing Adjustment Mechanisms. In Maryland, Washington Gas has a Revenue Normalization Adjustment (RNA) billing mechanism that is designed to stabilize the level of net revenues collected from Maryland customers by eliminating the effect of deviations in customer usage caused by variations in weather from normal levels and other factors such as conservation. In Virginia, Washington Gas has a Weather Normalization Adjustment (WNA) billing adjustment mechanism that is designed to eliminate the effect of variations in weather from normal levels on utility net revenues. Additionally, in Virginia, as part of the Conservation and Ratemaking Efficiency (CARE) plan, Washington Gas has a CARE Ratemaking Adjustment (CRA) mechanism that, in conjunction with the WNA, eliminates the effect of both weather and other factors such as conservation for residential, small commercial and industrial and group metered apartment customers.

For the RNA, WNA and CRA mechanisms, periods of colder-than-normal weather generally would cause Washington Gas to record a reduction to its revenues and establish a refund liability to customers, while the opposite would generally result during periods of warmer-than-normal weather. However, factors such as volatile weather patterns and customer conservation may cause the RNA and the CRA mechanisms to function conversely because they adjust billed revenues to provide a designed level of net revenue per meter.

Weather-Related Instruments. WGL Energy Services utilizes HDD instruments from time to time to manage weather risks related to its natural gas and electricity sales. WGL Energy Services also utilizes cooling degree day (CDD) instruments and other instruments to manage weather and price risks related to its electricity sales during the summer cooling season. These instruments cover a portion of estimated revenue or energy-related cost exposure to variations in HDDs or CDDs. Refer to Note 8—Derivative and Weather-Related Instruments of the Notes to Condensed Consolidated Financial Statements for further discussion of the accounting for these weather-related instruments.

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Financial Condition and Results of Operations (continued)

Interest-Rate Risk

We are exposed to interest-rate risk associated with our short-term and long-term financing. WGL and Washington Gas utilize derivative instruments from time to time in order to reduce their exposure to the risk of interest-rate volatility.

Short-Term Debt. At June 30, 2017 and September 30, 2016, WGL and its subsidiaries had outstanding notes payable and project financing of $538.9 million and $331.4 million, respectively. The carrying amount of our short-term debt approximates fair value. A change of 100 basis points in the underlying average interest rate for our short-term debt would have caused a change in interest expense of approximately $2.6 million for the quarter.

Long-Term Debt. At June 30, 2017 and September 30, 2016, WGL had outstanding fixed-rate and variable rate MTNs and other long-term debt of $1,235.6 million and $1,435.0 million, excluding current maturities. While fixed-rate debt does not expose us to earnings risk when market interest rates change, such debt is subject to changes in fair value. Fair value is defined as the present value of the debt securities’ future cash flows discounted at interest rates that reflect market conditions as of the measurement date. As of June 30, 2017, the fair value of WGL’s debt was $1,378.8 million. Our sensitivity analysis indicates that fair value would increase by approximately $61.3 million or decrease by approximately $56.6 million if interest rates were to decline or increase by 10%, respectively, from current market levels. At June 30, 2017, Washington Gas had outstanding fixed-rate MTNs and other long-term debt of $939.3 million, excluding current maturities. As of June 30, 2017, the fair value of Washington Gas’ fixed-rate debt was $1,073.2 million. Our sensitivity analysis indicates that fair value would increase by approximately $49.4 million or decrease by approximately $45.8 million if interest rates were to decline or increase by 10%, respectively, from current market levels. In general, such an increase or decrease in fair value would impact earnings and cash flows only if WGL or Washington Gas were to reacquire some or all of these instruments in the open market prior to their maturity.

A total of $1,052.5 million, or approximately 84.5% of the face amount of WGL’s outstanding long-term debt, excluding current maturities, have make-whole call options which, if exercised, would require us to pay a premium over the face amount.

A total of $802.5 million, or approximately 84.8% of the face amount of Washington Gas’ outstanding long-term debt, excluding current maturities, have make-whole call options which, if exercised, would require us to pay a premium over the face amount.

On October 1, 2016, WGL and Washington Gas adopted ASU 2015-03 and ASU 2015-15. This standard requires an entity to account for debt issuance costs as a valuation account presented as a deduction from the face amount of debt in the balance sheet. Prior period amounts related to long-term debt in the accompanying condensed balance sheets have been reclassified to conform to the current period presentation.

Derivative Instruments. WGL expected to issue 30-year debt in January 2018. In anticipation of the debt issuance, WGL entered into forward starting interest rate swaps with a total notional amount outstanding of $250.0 million, to hedge the variability in future interest payments. WGL designated these interest rate swaps as cash flow hedges. Through December 31, 2016, the effective portion of changes in fair value was reported as a component of other comprehensive income (loss). As a result of certain covenants related to the proposed merger with AltaGas, in January 2017, WGL de-designated these hedges and will record charges in their fair value in interest expense. The balance in accumulated other comprehensive income at June 30, 2017 was $6.4 million related to these hedges. Refer to Note 8 - Derivative and Weather-Related Instruments of the Notes to Condensed Consolidated Financial Statements for a further discussion of our interest-rate risk management activity.

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Financial Condition and Results of Operations (continued)

WASHINGTON GAS LIGHT COMPANY

This section of Management’s Discussion focuses on Washington Gas for the reported periods. In many cases, explanations and disclosures for both WGL and Washington Gas are substantially the same.

RESULTS OF OPERATIONS—Three Months Ended June 30, 2017 vs. June 30, 2016

The results of operations for the regulated utility segment and Washington Gas are substantially the same; therefore, this section primarily focuses on statistical information and other information that is not discussed in the results of operations for the regulated utility segment. Refer to the section entitled “Results of Operations—Regulated Utility Operating Results” for a detailed discussion of the results of operations for the regulated utility segment.

Key gas delivery, weather and meter statistics are shown in the table below for the three months ended June 30, 2017 and 2016.

Gas Deliveries, Weather and Meter Statistics
	Three Months Ended June 30,				Increase/
	2017		2016		(Decrease)
Gas Sales and Deliveries(millions of therms)
Firm
Gas sold and delivered	92.7		110.6		(17.9	)
Gas delivered for others	76.2		89.0		(12.8	)
Total firm	168.9		199.6		(30.7	)
Interruptible
Gas sold and delivered	0.3		0.3		—
Gas delivered for others	61.0		49.4		11.6
Total interruptible	61.3		49.7		11.6
Electric generation—delivered for others	22.5		65.9		(43.4	)
Total deliveries	252.7		315.2		(62.5	)
Degree Days
Actual	198		388		(190	)
Normal	290		290		—
Percent colder (warmer) than normal	(31.7	)%	33.8	%	n/a
Average active customer meters	1,157,000		1,145,000		12,000
New customer meters added	3,177		2,461		716

Gas Service to Firm Customers. The volume of gas delivered to firm customers is highly sensitive to weather variability as a large portion of the natural gas delivered by Washington Gas is used for space heating. Washington Gas’ rates are based on an assumption of normal weather. The tariffs in the Maryland and Virginia jurisdictions include provisions that consider the effects of the RNA and the WNA/CRA mechanisms, respectively, that are designed to, among other things, eliminate the effect on net revenues of variations in weather from normal levels (refer to the section entitled “Weather Risk” for further discussion of these mechanisms and other weather-related instruments included in our weather protection strategy). The comparison of firm volumes delivered for the current quarter compared to the prior quarter primarily reflects significantly warmer weather in the current quarter.

Gas Service to Interruptible Customers. Washington Gas must curtail or interrupt service to this class of customer when the demand by firm customers exceeds specified levels.

In the District of Columbia, the effect on net income of any changes in delivered volumes and prices to interruptible customers is limited by margin-sharing arrangements that are included in Washington Gas’ firm rate designs. Rates for interruptible customers in Maryland and Virginia are based on a traditional cost of service approach. In Virginia, Washington Gas retains a majority of the margins earned on interruptible gas and delivery sales. Washington Gas shares actual non-gas

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Financial Condition and Results of Operations (continued)

margins from interruptible sales service customers that are in excess of delivery service rates. In Maryland, Washington Gas retains a defined amount of revenues based on a set threshold.

Gas Service for Electric Generation. Washington Gas delivers natural gas for use at two electric generation facilities in Maryland that are each owned by companies independent of WGL. Washington Gas shares with firm customers a significant majority of the margins earned from natural gas deliveries to these customers. Therefore, changes in the volume of interruptible gas deliveries to these customers do not materially affect either net revenues or net income.

Interest Expense and Income Taxes

Please refer to the nine months ended June 30, 2017, for information about Washington Gas' interest expense, income tax expense and effective income tax rate.

RESULTS OF OPERATIONS—Nine Months Ended June 30, 2017 vs. June 30, 2016

The results of operations for the regulated utility segment and Washington Gas are substantially the same; therefore, this section primarily focuses on statistical information and other information that is not discussed in the results of operations for the regulated utility segment. Refer to the section entitled “Results of Operations—Regulated Utility Operating Results” for a detailed discussion of the results of operations for the regulated utility segment.

Key gas delivery, weather and meter statistics are shown in the table below for the nine months ended June 30, 2017 and 2016.

Gas Deliveries, Weather and Meter Statistics
	Nine Months Ended June 30,				Increase/
	2017		2016		(Decrease)
Gas Sales and Deliveries(millions of therms)
Firm
Gas sold and delivered	711.0		710.0		1.0
Gas delivered for others	420.5		441.0		(20.5	)
Total firm	1,131.5		1,151.0		(19.5	)
Interruptible
Gas sold and delivered	2.5		2.4		0.1
Gas delivered for others	200.8		194.9		5.9
Total interruptible	203.3		197.3		6.0
Electric generation—delivered for others	59.3		168.3		(109.0	)
Total deliveries	1,394.1		1,516.6		(122.5	)
Degree Days
Actual	3,121		3,340		(219	)
Normal	3,706		3,719		(13	)
Percent colder (warmer) than normal	(15.8	)%	(10.2	)%	n/a
Average active customer meters	1,153,200		1,141,200		12,000
New customer meters added	9,013		9,035		(22	)

Gas Service to Firm Customers. The comparison in natural gas deliveries to firm customers primarily reflects significantly warmer weather, partially offset by an increase of average active customer meters of 12,000 in the current period compared to the same period of the prior year.

Gas Service to Interruptible Customers. The increase in therm deliveries to interruptible customers reflects increased demand, partially offset by warmer weather.

Gas Service for Electric Generation. Washington Gas delivers natural gas for use at two electric generation facilities in Maryland that are each owned by companies independent of WGL. Washington Gas shares with firm customers a significant

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majority of the margins earned from natural gas deliveries to these customers. Therefore, changes in the volume of interruptible gas deliveries to these customers do not materially affect either net revenues or net income.

Interest Expense

Washington Gas' interest expense for the nine months ended June 30, 2017 and 2016 was $38.7 million and $30.8 million, respectively. The increase in interest on long-term debt primarily reflectsreflects the issuance of additional notes by Washington Gas during fiscal year 2017.

Income Taxes

The following table shows Washington Gas' income tax expense and effective income tax rate for the nine months ended June 30, 2017 and 2016.

Income Taxes
	Nine Months Ended June 30,						Increase/
(In millions)	2017			2016			(Decrease)
Income before income taxes	$	238.6		$	210.8		$	27.8
Income tax expense	91.2			80.3			10.9
Effective income tax rate	38.2		%	38.1		%	0.1		%

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and capital resources for Washington Gas are substantially the same as the liquidity and capital resources discussion included in the Management’s Discussion of WGL (except for certain items and transactions that pertain to WGL and its unregulated subsidiaries). Those explanations are incorporated by reference into this discussion.

RATES AND REGULATORY MATTERS

Washington Gas makes its requests to modify existing rates based on its determination of the level of net investment in plant and equipment, operating expenses, and a level of return on invested capital that is just and reasonable. The following is an update of significant current regulatory matters in Washington Gas’ jurisdictions. For a more detailed discussion of the matters below, refer to our combined Annual Report on Form 10-K for WGL and Washington Gas for the fiscal year ended September 30, 2016.

District of Columbia Jurisdiction

Investigation into Washington Gas’ Cash Reimbursement to CSPs. On August 5, 2014, the Office of the People’s Counsel’s (OPC) of DC filed a complaint with the PSC of DC requesting that the Commission open an investigation into Washington Gas’ payments to CSPs to cash-out over-deliveries of natural gas supplies during the 2008-2009 winter heating season. OPC asserted that Washington Gas made excess payments in the amount of $2.4 million to CSPs. On December 19, 2014, the PSC of DC granted the OPC of DC’s request and opened a formal investigation. On October 27, 2015, the PSC of DC issued an order finding that Washington Gas, in performing the cash-out, had violated D.C. Code 34-1101’s requirement that no service shall be provided without Commission approval. The PSC of DC directed Washington Gas to provide calculations showing what the impact would have been had Washington Gas made volumetric adjustments to CSP deliveries as of April 2009, which Washington Gas calculates would result in a refund of approximately $2.4 million, which was recognized by WGL in fiscal year 2015. On February 3, 2016, the PSC of DC issued an order denying OPC’s application for reconsideration and granting in part, and denying in part, Washington Gas’ application for reconsideration.  Washington Gas and OPC filed initial briefs on February 18, 2016, and reply briefs on February 29, 2016, on the issue of whether there is a more reasonable way to reconcile the over-deliveries by CSPs such as through volumetric adjustments, or through cash payments. On August 11, 2016, the PSC of DC issued an order requiring Washington Gas to refund approximately $2.4 million through the ACA. On August 26, 2016, Washington Gas filed its plan for implementing the $2.4 million refund within a 12-month period. The PSC of DC issued an Order on October 7, 2016, clarifying Washington Gas' refunding and reporting requirements.

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Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

District of Columbia Rate Case. On February 26, 2016, Washington Gas filed an application with the PSC of DC. The application, as amended, requested an increase of $17.3 million to base rates for natural gas delivery service. This request included $4.5 million associated with the transfer to base rates of revenue associated with natural gas system upgrades previously approved by the PSC of DC and currently recovered through monthly surcharges. The filing addressed rate relief necessary for Washington Gas to recover its costs and earn its allowed rate of return. The filing also satisfied the requirement for Washington Gas to file a new rate proposal by August 1, 2016, under a settlement agreement approved by the PSC of DC in 2015, which provides for the recovery through a surcharge mechanism of costs related to an accelerated pipe replacement program to upgrade the Washington Gas distribution system and enhance safety.

On March 3, 2017, the PSC of DC issued an Order approving an overall increase in rates for Washington Gas of $8.5 million effective for services rendered on and after March 24, 2017. This increase is based on a hypothetical 55.7% equity component of Washington Gas' capital structure and an overall return of 7.57%, which retained the current return on equity of 9.25%. Washington Gas had requested an increase of $17.3 million, assuming a 57.8% equity component and a 10.25% return on equity. The PSC of DC denied Washington Gas’ request for approval of an RNA and Combined Heat and Power (CHP) tariffs; however, the PSC of DC approved a two-year pilot incentive program for developers of multi-family housing projects to bring the benefits of natural gas, including lower energy bills and reduced carbon emissions to more residents in the District of Columbia. On April 3, 2017, the Apartment and Office Building Association of Metropolitan Washington (AOBA) and DC Climate Action filed applications for reconsideration of portions of the Opinion and Order. On May 12, 2017, the PSC of DC denied the application for reconsideration filed by AOBA and denied, in part, the application for reconsideration of DC Climate Action. Further, the PSC of DC directed its staff to develop proposed criteria to facilitate the PSC of DC’s review of the economic benefits of the Multifamily Piping Program and submit the criteria for public comment.

Maryland Jurisdiction

Proposed Line Extension Tariff Revisions. On December 7, 2016, Washington Gas filed a petition with the PSC of MD for approval of proposed tariff revisions to facilitate access to natural gas in areas within Washington Gas' Maryland franchise area that are currently without natural gas service. Specifically, the petition requests approval of tariff provisions which would: (i) allow new customers to pay required contributions for extension of gas facilities over up to 20 years at the overall cost of capital, with the payment obligation remaining with the service address; (ii) authorize Washington Gas to perform a project assessment of anticipated life cycle revenues to convert an area to natural gas service once Washington Gas secures service commitments from 20% of the target market in an unserved or underserved market; and (iii) authorize Washington Gas to establish a regulatory asset to defer for future collection in rates, upon approval by the PSC of MD, the property taxes, earnings and depreciation on qualifying transmission and main expenditures installed in identified growth areas. The petition has been docketed, with a final order expected in August 2017.

Termination Notice Inquiry. On March 28, 2017, the PSC of MD initiated an investigation into the service termination notices sent by Washington Gas to its customers between December 1, 2013 and December 31, 2016. The case will investigate whether the service termination notices complied with Code of Maryland Regulations (COMAR). The PSC of MD’s investigation of this matter shall also consider whether fines and or a civil penalty should be assessed. A procedural schedule has been adopted in the case for the filing of testimony, establishing the dates for evidentiary hearings on October 18-20, 2017 and for the filing of briefs and reply briefs on November 20, 2017 and December 11, 2017, respectively. A decision could issue in the latter part of December 2017 or during the first calendar quarter of 2018.

Virginia Jurisdiction

Virginia Rate Case. On June 30, 2016, Washington Gas filed an application with the SCC of VA to increase its base rates for natural gas service by $45.6 million, which includes $22.3 million of revenue associated with natural gas pipeline replacement initiatives previously approved by the Commission and paid by customers through a monthly rider. Additionally, the proposed rate increase includes provisions designed to deliver the benefits of natural gas to more customers that include: (i) facilitating conversion to natural gas in locations already served by Washington Gas; (ii) expanding the natural gas system to high-growth communities in Virginia and (iii) research and development that we believe will enable innovations to enhance service for our customers.

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Part I—Financial Information

Item 2—Management’s Discussion and Analysis of

Financial Condition and Results of Operations (continued)

Interim rates went into effect, subject to refund, in the December 2016 billing cycle. Intervenors filed testimony on January 31, 2017, Staff of the SCC of VA filed testimony on February 28, 2017, and Washington Gas filed its rebuttal testimony on March 28, 2017. On April 17, 2017, Washington Gas filed with the SCC of VA a unanimous settlement as to a specific annual revenue increase, but not as to a specific return on equity, specific accounting adjustments, or specific ratemaking methodologies, except as otherwise set forth therein. The Stipulation sets forth, for purposes of settlement, a base rate increase of $34 million ($14.1 million net of SAVE Plan costs which are currently recovered through monthly surcharges). For purposes of the settlement, the mid-point of the return on equity range of 9.0-10.0% will be used in any application or filing, other than a change in base rates, effective December 1, 2016. On June 30, 2017, the Chief Hearing Examiner issued a report recommending that the Commission approve the Stipulation. The Stipulation is pending review and approval by the SCC of VA. Refunds to customers, which have been accrued by Washington Gas at June 30, 2017, will be made related to the interim billings based on the SCC of VA approval of the Stipulation and rates.

Affiliate Transactions. On December 30, 2016, Washington Gas filed an application for approval to permanently release its contracts with Transcontinental Gas Pipe Line Company LLC’ (“Transco”) for MarketLink and Leidy East interstate pipeline transportation capacity to WGL Midstream, Inc. Washington Gas has not used the MarketLink and Leidy East interstate pipeline transportation capacity to provide gas utility service since 2013 and will not use these resources for system supply in the future. On March 29, 2017, the SCC of VA issued an order approving the transfer of MarketLink and Leidy East interstate pipeline transportation capacity to WGL Midstream. On March 29, 2017, the SCC of VA issued an Order approving the transfer of the MarketLink and Leidy East capacity contracts to WGL Midstream, Inc. The transfer of the contracts occurred on May 1, 2017.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following issues related to our market risks are included under Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and are incorporated by reference into this discussion.

• Price Risk Related to the Regulated Utility Segment

• Price Risk Related to the Non-Utility Segments

• Value-At-Risk

• Weather Risk

• Interest-Rate Risk

ITEM 4. CONTROLS AND PROCEDURES—WGL Holdings, Inc.

Senior management, including the Chairman and Chief Executive Officer and the Senior Vice President and Chief Financial Officer of WGL, evaluated the effectiveness of WGL’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of June 30, 2017. Based on this evaluation process, the Chairman and Chief Executive Officer and the Senior Vice President and Chief Financial Officer have concluded that disclosure controls and procedures of WGL were effective as of June 30, 2017. There have been no changes in the internal control over financial reporting of WGL during the quarter ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting of WGL.

ITEM 4. CONTROLS AND PROCEDURES—Washington Gas Light Company

Senior management, including the Chairman and Chief Executive Officer and the Senior Vice President and Chief Financial Officer of Washington Gas, evaluated the effectiveness of Washington Gas' disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of June 30, 2017. Based on this evaluation process, the Chairman and Chief Executive Officer and the Senior Vice President and Chief Financial Officer have concluded that disclosure controls and procedures of Washington Gas were effective as of June 30, 2017. There have been no changes in the internal control over financial reporting of Washington Gas during the quarter ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting of Washington Gas.

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WGL Holdings, Inc.

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Part II—Other Information

ITEM 1. LEGAL PROCEEDINGS

The nature of our business ordinarily results in periodic regulatory proceedings before various state and federal authorities. For information regarding pending federal and state regulatory matters, see Note 13—Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements.

Silver Spring, Maryland Incident

Washington Gas continues to support the investigation by the NTSB into the August 10, 2016 explosion and fire at an apartment complex on Arliss Street in Silver Spring, Maryland, the cause of which has not been determined.  Additional information will be made available by the NTSB at the appropriate time.  On November 2, 2016, two civil actions were filed in the District of Columbia Superior Court against WGL and Washington Gas (as well as a property management company that is not affiliated with WGL or Washington Gas), by residents of the apartment complex.  In one lawsuit, twenty-nine plaintiffs seek unspecified damages for, among others, wrongful death and personal injury. The other action is a class action suit seeking total damages stated to be less than $5 million for, among others, property damage and various counts relating to the loss of the use of the premises. Both actions allege causes of action for negligence, product liability, and declaratory relief. Thirty-two civil actions have been filed in the Circuit Court for Montgomery County, Maryland seeking unspecified damages for personal injury and property damage.  We maintain excess liability insurance coverage from highly-rated insurers, subject to a nominal self-insured retention. We believe that this coverage will be sufficient to cover any significant liability to it that may result from this incident. Management is unable to determine a range of potential losses that are reasonably possible of occurring and therefore we have not recorded a reserve associated with this incident.  Washington Gas was invited by the NTSB to be a party to the investigation and in that capacity continues to work closely with the NTSB to help determine the cause of this incident.

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Part II—Other Information

ITEM 1A. RISK FACTORS

Risks Relating to the Proposed Merger with AltaGas

The proposed merger with AltaGas is subject to shareholder and regulatory approval.

On January 25, 2017, WGL and AltaGas entered into a Merger Agreement for WGL to be combined with AltaGas in an all cash transaction valued at approximately $6.4 billion. Consummation of the Merger is subject to the satisfaction or waiver of specified closing conditions, including (i) the approval of the Merger by the holders of more than two-thirds of the outstanding shares of WGL common stock, which was obtained on May 10, 2017, (ii) the receipt of regulatory approvals required to consummate the Merger, including approval from the Public Service Commission of the District of Columbia, the Public Service Commission of Maryland, the State Corporation Commission of Virginia, the Federal Energy Regulatory Commission and the CFIUS, (iii) the expiration or termination of the applicable waiting period under HSR, which occurred on July 17, 2017, (iv) the absence of any order of any governmental authority and the absence of the enactment of any law, in each case that enjoins, prohibits or makes illegal the consummation of the Merger, and (v) other customary closing conditions, including (a) the accuracy of each party’s representations and warranties (subject to customary materiality qualifiers), and (b) each party’s compliance in all material respects with its obligations and covenants contained in the Merger Agreement. In addition, the obligations of AltaGas and its merger subsidiary to consummate the Merger are subject to (a) the absence of a Company Material Adverse Effect (as defined in the Merger Agreement) and (b) the required regulatory approvals and any law not imposing or requiring any undertakings, terms, conditions, obligations, commitments, sanctions or remedial actions that constitute a Burdensome Condition (as defined in the Merger Agreement).

WGL may not receive the remaining required statutory approvals and other clearances for the Merger, or they may not be received in a timely manner. If such approvals are received, they may impose terms, conditions or restrictions (i) that cause a failure of the closing conditions set forth in the Merger Agreement, or (ii) could have a detrimental impact on the combined company following completion of the Merger. A substantial delay in obtaining the required authorizations, approvals or consents or the imposition of unfavorable terms, conditions or restrictions could prevent the completion of the Merger. Even though the waiting period under HSR has expired, government authorities could seek to block or challenge the Merger as they deem necessary or desirable in the public interest.

Failure to complete the Merger could adversely affect WGL’s stock price and future business operations and financial results.

If WGL is unable to consummate the Merger, holders of WGL common stock will not receive any payment for their shares pursuant to the Merger Agreement. WGL’s ongoing business may be adversely affected and would be subject to a number of risks, including the following:

• WGL would have paid significant transaction costs, and may in certain circumstances be obligated to pay a termination fee to AltaGas of $136 million;

• the attention of management may have been diverted to the Merger rather than to operations and the pursuit of other opportunities;

• though the merger terms contemplate management and employees remaining to operate WGL, there is the chance of the potential loss of key personnel, as personnel may feel uncertain about their future with the combined company;

• WGL will have been subject to certain restrictions on the conduct of business, which may prevent the Company from making certain acquisitions or dispositions or pursuing other business opportunities; and

• the trading price of WGL’s stock may decline if the market believes the Merger may not be completed.

Failure to complete the Merger may result in negative publicity, additional litigation against WGL or its directors and officers, and a negative impression of WGL in the investment community. The occurrence of these events, individually or in the aggregate, could have a material adverse effect on the results of operations or the price of WGL’s common stock.

The business of WGL and Washington Gas will be impacted by the terms and conditions of the Merger Agreement.

The Merger Agreement restricts WGL, without AltaGas’s consent (which will not be unreasonably withheld), from undertaking certain specified actions until the Merger occurs or the Merger Agreement terminates. These restrictions may prevent WGL from pursuing otherwise attractive business opportunities and making other changes to its business prior to completion of the Merger or termination of the Merger Agreement. For example, the Merger Agreement prohibits WGL from raising common

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equity capital.  Given that Washington Gas is solely dependent on WGL to raise new common equity capital and to contribute that common equity to Washington Gas, WGL’s inability to raise common equity could adversely affect both WGL's and Washington Gas’ credit ratings and coverage ratios.

WGL will incur significant costs associated with the Merger.

WGL expects to incur significant costs associated with the Merger for financial advisory services, legal services, re-evaluation of share-based compensation and acceleration of executive compensation. Some of these costs will be incurred even if the Merger is not completed.

WGL’s business will be subject to uncertainties while the Merger is pending.

Uncertainty about the effect of the Merger on employees, suppliers and customers may have an adverse effect on WGL. Although WGL intends to take steps to reduce any adverse effects, these uncertainties may impair WGL’s abilities to attract, retain and motivate employees until the Merger is completed and for a period of time thereafter.

Potential future actions against WGL and its directors and officers challenging the Merger may prevent the Merger from being completed within the anticipated time frame.

WGL and/or its directors and officers may potentially be named as defendants in class action lawsuits filed on behalf of public shareholders challenging the Merger and potentially seeking to enjoin the defendants from consummating the Merger on the agreed-upon terms.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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WGL Holdings, Inc.

Washington Gas Light Company

Part II—Other Information

ITEM 6. EXHIBITS

Exhibits:

Schedule/ Exhibit	Description
(a)(3)	Exhibits
	Exhibits Incorporated by Reference:
10.1	Second Amendment to Credit Agreement and Commitment Increase, dated as of June 23, 2017, among WGL Holdings, Inc., and Wells Fargo Bank, National Association, as administrative agent for the Lenders (incorporated by reference to Exhibit 10.1 to WGL Holdings, Inc. Current Report on Form 8-K filed June 29, 2017).
10.2	Second Amendment to Credit Agreement, dated as of June 23, 2017, among Washington Light Company, and Wells Fargo Bank, National Association, as administrative agent for the Lenders (incorporated by reference to Exhibit 10.2 to Washington Gas Light Company Current Report on Form 8-K filed June 29, 2017).
	Exhibits Filed Herewith:
31.1	Certification of Terry D. McCallister, the Chairman and Chief Executive Officer of WGL Holdings, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Vincent L. Ammann, Jr., the Senior Vice President and Chief Financial Officer of WGL Holdings, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3	Certification of Terry D. McCallister, the Chairman and Chief Executive Officer of Washington Gas Light Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.4	Certification of Vincent L. Ammann, Jr., the Senior Vice President and Chief Financial Officer of Washington Gas Light Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Terry D. McCallister, the Chairman and Chief Executive Officer of the Registrants, and Vincent L. Ammann, Jr., the Senior Vice President and Chief Financial Officer of the Registrants, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Labels Linkbase Document
101.PRE	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

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WGL Holdings, Inc.

Washington Gas Light Company

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

	WGL HOLDINGS, INC. and WASHINGTON GAS LIGHT COMPANY (Co-registrants)
Date: August 3, 2017	/s/ William R. Ford
	William R. Ford
	Vice President and Chief Accounting Officer (signing on behalf of the Registrants and as Principal Accounting Officer of the Registrants)

90

EX-31.1

WGL Holdings, Inc.

Washington Gas Light Company

Exhibit 31.1

CERTIFICATION OF WGL HOLDINGS, INC.

I, Terry D. McCallister, certify that:

1. I have reviewed this quarterly report on Form 10-Q of WGL Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2017

/s/ Terry D. McCallister

Terry D. McCallister

Chairman and Chief Executive Officer

EX-31.2

WGL Holdings, Inc.

Washington Gas Light Company

Exhibit 31.2

CERTIFICATION OF WGL HOLDINGS, INC.

I, Vincent L. Ammann, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of WGL Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2017

/s/ Vincent L. Ammann, Jr.

Vincent L. Ammann, Jr.

Senior Vice President and Chief Financial Officer

EX-31.3

WGL Holdings, Inc.

Washington Gas Light Company

Exhibit 31.3

CERTIFICATION OF WASHINGTON GAS LIGHT COMPANY

I, Terry D. McCallister, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Washington Gas Light Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2017

/s/ Terry D. McCallister

Terry D. McCallister

Chairman and Chief Executive Officer

EX-31.4

WGL Holdings, Inc.

Washington Gas Light Company

Exhibit 31.4

CERTIFICATION OF WASHINGTON GAS LIGHT COMPANY

I, Vincent L. Ammann, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Washington Gas Light Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2017

/s/ Vincent L. Ammann, Jr.

Vincent L. Ammann, Jr.

Senior Vice President and Chief Financial Officer

EX-32

WGL Holdings, Inc.

Washington Gas Light Company

Exhibit 32

CERTIFICATION OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

AND THE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the combined Quarterly Report of WGL Holdings, Inc. and Washington Gas Light Company (the “Companies”) on Form 10-Q for the quarterly period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Terry D. McCallister, Chairman and Chief Executive Officer of the Companies, and Vincent L. Ammann, Jr., Senior Vice President and Chief Financial Officer of the Companies, each hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of their knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.

This certification is being made for the exclusive purpose of compliance by the Chairman and Chief Executive Officer and the Senior Vice President and Chief Financial Officer of the Companies with the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, and may not be disclosed, distributed, or used by any person for any reason other than as specifically required by law.

/s/ Terry D. McCallister

Terry D. McCallister

Chairman and Chief Executive Officer

/s/ Vincent L. Ammann, Jr.

Vincent L. Ammann, Jr.

Senior Vice President and Chief Financial Officer

August 3, 2017

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Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2017	Jul. 31, 2017
Document Information [Line Items]
Entity Registrant Name	WGL Holdings Inc.
Entity Central Index Key	0001103601
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		51,219,000
Washington Gas Light Company
Document Information [Line Items]
Entity Registrant Name	Washington Gas Light Company
Entity Central Index Key	0000104819
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		46,479,536

XML

Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2017	Sep. 30, 2016
Property, Plant and Equipment
At original cost	$ 5,856,655	$ 5,542,916
Accumulated depreciation and amortization	(1,509,869)	(1,415,679)
Net property, plant and equipment	4,346,786	4,127,237
Current Assets
Cash and cash equivalents	9,570	5,573
Receivables
Accounts receivable	412,590	329,989
Gas costs and other regulatory assets	34,258	15,294
Unbilled revenues	156,041	173,076
Allowance for doubtful accounts	(28,876)	(27,339)
Net receivables	574,013	491,020
Materials and supplies—principally at average cost	17,741	18,414
Storage gas	210,531	207,132
Prepaid taxes	22,088	33,397
Other prepayments	77,135	42,626
Derivatives	23,842	18,510
Other	27,375	26,802
Total current assets	962,295	843,474
Regulatory assets
Gas costs	96,964	179,856
Pension and other post-retirement benefits	200,648	223,242
Other	101,910	98,592
Prepaid post-retirement benefits	191,491	180,686
Derivatives	36,219	55,020
Investments in direct financing leases, capital leases	0	29,780
Investments in unconsolidated affiliates	425,304	303,491
Other	11,876	8,072
Total deferred charges and other assets	1,064,412	1,078,739
Total Assets	6,373,493	6,049,450
Capitalization
WGL Holdings common shareholders’ equity	1,521,283	1,375,561
Non-controlling interest	5,234	409
Washington Gas Light Company preferred stock	28,173	28,173
Total equity	1,554,690	1,404,143
Long-term debt	1,235,623	1,435,045
Total capitalization	2,790,313	2,839,188
Current Liabilities
Current maturities of long-term debt	250,000	0
Notes payable and project financing	538,854	331,385
Accounts payable and other accrued liabilities	377,133	405,351
Wages payable	21,160	17,908
Accrued interest	15,030	7,645
Dividends declared	26,452	25,283
Customer deposits and advance payments	61,476	86,384
Gas costs and other regulatory liabilities	20,652	12,973
Accrued taxes	20,659	15,672
Derivatives	45,898	82,334
Other	56,579	41,991
Total current liabilities	1,433,893	1,026,926
Deferred Credits
Unamortized investment tax credits	175,263	163,493
Deferred income taxes	845,109	726,763
Accrued pensions and benefits	235,050	228,377
Asset retirement obligations	209,612	203,105
Regulatory liabilities
Accrued asset removal costs	290,476	310,788
Other post-retirement benefits	103,352	113,875
Other	7,300	14,450
Derivatives	162,941	304,198
Other	120,184	118,287
Total deferred credits	2,149,287	2,183,336
Commitments and Contingencies (Note 13)
Total Capitalization and Liabilities	6,373,493	6,049,450
Washington Gas Light Company
Property, Plant and Equipment
At original cost	5,119,662	4,874,905
Accumulated depreciation and amortization	(1,425,689)	(1,348,173)
Net property, plant and equipment	3,693,973	3,526,732
Current Assets
Cash and cash equivalents	1	1
Receivables
Accounts receivable	207,833	140,457
Gas costs and other regulatory assets	34,258	15,294
Unbilled revenues	93,869	89,945
Allowance for doubtful accounts	(21,648)	(20,220)
Net receivables	314,312	225,476
Materials and supplies—principally at average cost	17,695	18,368
Storage gas	67,203	82,473
Prepaid taxes	11,699	16,826
Other prepayments	16,491	10,924
Receivables from associated companies	16,094	13,799
Derivatives	6,979	7,285
Other	102	51
Total current assets	450,576	375,203
Regulatory assets
Gas costs	96,964	179,856
Pension and other post-retirement benefits	199,473	221,971
Other	101,849	98,527
Prepaid post-retirement benefits	190,458	179,675
Derivatives	15,127	25,590
Other	3,903	2,001
Total deferred charges and other assets	607,774	707,620
Total Assets	4,752,323	4,609,555
Capitalization
WGL Holdings common shareholders’ equity	1,198,173	1,113,446
Washington Gas Light Company preferred stock	28,173	28,173
Long-term debt	939,317	939,015
Total capitalization	2,165,663	2,080,634
Current Liabilities
Notes payable and project financing	202,782	104,385
Accounts payable and other accrued liabilities	187,193	204,980
Wages payable	19,225	16,235
Accrued interest	13,493	3,758
Dividends declared	22,098	21,453
Customer deposits and advance payments	60,829	80,936
Gas costs and other regulatory liabilities	20,652	12,973
Accrued taxes	20,567	17,639
Payables to associated companies	91,483	65,770
Derivatives	26,227	58,295
Other	7,230	7,193
Total current liabilities	671,779	593,617
Deferred Credits
Unamortized investment tax credits	4,283	4,851
Deferred income taxes	851,410	763,720
Accrued pensions and benefits	232,962	226,339
Asset retirement obligations	204,977	199,377
Regulatory liabilities
Accrued asset removal costs	290,476	310,788
Other post-retirement benefits	102,730	113,169
Other	7,300	14,450
Derivatives	143,810	232,040
Other	76,933	70,570
Total deferred credits	1,914,881	1,935,304
Commitments and Contingencies (Note 13)
Total Capitalization and Liabilities	$ 4,752,323	$ 4,609,555

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Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
OPERATING REVENUES
Utility		$ 198,968	$ 181,622	$ 992,301	$ 912,612
Non-utility		275,396	258,965	933,300	977,048
Total Operating Revenues	[1]	474,364	440,587	1,925,601	1,889,660
OPERATING EXPENSES
Utility cost of gas		49,881	65,739	259,839	236,819
Non-utility cost of energy-related sales		233,025	197,880	787,691	832,087
Operation and maintenance		97,477	97,461	316,455	296,813
Depreciation and Amortization		39,094	33,786	113,487	98,368
General taxes and other assessments		32,032	32,038	122,964	119,970
Total Operating Expenses		451,509	426,904	1,600,436	1,584,057
OPERATING INCOME (LOSS)		22,855	13,683	325,165	305,603
Equity in earnings of unconsolidated affiliates		7,508	4,527	15,117	10,558
Other income (expenses) — net		884	1,915	(591)	3,689
Interest expense		25,062	12,998	55,552	38,757
INCOME (LOSS) BEFORE INCOME TAXES		6,185	7,127	284,139	281,093
INCOME TAX EXPENSE (BENEFIT)		2,149	4,772	106,381	103,619
NET INCOME (LOSS)		4,036	2,355	177,758	177,474
Non-controlling interest		(4,559)	0	(12,533)	0
Dividends on Washington Gas Light Company preferred stock		330	330	990	990
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK		$ 8,265	$ 2,025	$ 189,301	$ 176,484
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic (in shares)		51,219	50,622	51,200	50,158
Diluted (in shares)		51,493	50,905	51,469	50,418
EARNINGS PER AVERAGE COMMON SHARE
Basic (in dollars per share)		$ 0.16	$ 0.04	$ 3.70	$ 3.52
Diluted (in dollars per share)		0.16	0.04	3.68	3.50
DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share)		$ 0.51	$ 0.4875	$ 1.5075	$ 1.4375
Washington Gas Light Company
OPERATING REVENUES
Utility		$ 203,186	$ 187,077	$ 1,012,193	$ 934,347
OPERATING EXPENSES
Utility cost of gas		54,093	71,194	279,713	258,554
Operation and maintenance		77,370	79,178	246,290	239,696
Depreciation and Amortization		32,761	29,232	96,003	85,194
General taxes and other assessments		27,498	28,001	109,857	108,228
Total Operating Expenses		191,722	207,605	731,863	691,672
OPERATING INCOME (LOSS)		11,464	(20,528)	280,330	242,675
Other income (expenses) — net		(908)	(358)	(3,044)	(1,079)
Interest expense		12,960	10,067	38,727	30,785
INCOME (LOSS) BEFORE INCOME TAXES		(2,404)	(30,953)	238,559	210,811
INCOME TAX EXPENSE (BENEFIT)		(733)	(12,434)	91,159	80,285
NET INCOME (LOSS)		(1,671)	(18,519)	147,400	130,526
Dividends on Washington Gas Light Company preferred stock		330	330	990	990
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK		$ (2,001)	$ (18,849)	$ 146,410	$ 129,536

[1] Operating revenues are reported gross of revenue taxes. Revenue taxes of both the regulated utility and the retail energy-marketing segments include gross receipt taxes. Revenue taxes of the regulated utility segment also include public service commission fees, franchise fees and energy taxes. Operating revenue amounts in the “Eliminations” row represent total intersegment revenues associated with sales from the regulated utility segment to the retail energy-marketing segment. Midstream Energy Services’ cost of energy related sales is netted with its gross revenues.

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net income (loss)		$ 4,036	$ 2,355	$ 177,758	$ 177,474
OTHER COMPREHENSIVE INCOME, BEFORE INCOME TAXES:
Qualified cash flow hedging instruments	[1]	51	(16,995)	49,556	(34,545)
Pension and other post-retirement benefit plans
Change in net prior service credit	[2]	(217)	(216)	(651)	(644)
Change in actuarial net loss	[2]	588	420	1,763	1,258
INCOME TAX EXPENSE (BENEFIT) RELATED TO OTHER COMPREHENSIVE INCOME		235	(6,969)	20,816	(14,087)
OTHER COMPREHENSIVE INCOME (LOSS)		187	(9,822)	29,852	(19,844)
COMPREHENSIVE INCOME (LOSS)		4,223	(7,467)	207,610	157,630
Non-controlling interest		(4,559)	0	(12,533)	0
Total other comprehensive income (loss) before taxes		422	(16,791)	50,668	(33,931)
Dividends on Washington Gas Light Company preferred stock		330	330	990	990
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO WGL HOLDINGS		8,452	(7,797)	219,153	156,640
Washington Gas Light Company
Net income (loss)		(1,671)	(18,519)	147,400	130,526
Pension and other post-retirement benefit plans
Change in net prior service credit	[3]	(217)	(216)	(651)	(644)
Change in actuarial net loss	[3]	588	420	1,763	1,258
Total pension and other post-retirement benefit plans		371	204	1,112	614
INCOME TAX EXPENSE (BENEFIT) RELATED TO OTHER COMPREHENSIVE INCOME		145	82	439	244
OTHER COMPREHENSIVE INCOME (LOSS)		226	122	673	370
COMPREHENSIVE INCOME (LOSS)		(1,445)	(18,397)	148,073	130,896
Total other comprehensive income (loss) before taxes		371	204	1,112	614
Dividends on Washington Gas Light Company preferred stock		$ 330	$ 330	$ 990	$ 990

[1] Cash flow hedging instruments represent interest rate swap agreements related to debt issuances. Refer to Note 8- Derivative and Weather-related Instruments for further discussion of the interest rate swap agreements.

[2] These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14- Pension and other post-retirement benefit plans for additional details.

[3] These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14-Pension and other post-retirement benefit plans for additional details.

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Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
OPERATING ACTIVITIES
Net income (loss)	$ 177,758	$ 177,474
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation and Amortization	113,487	98,368
Amortization of:
Other regulatory assets and liabilities—net	2,567	1,113
Debt related costs	1,307	967
Deferred income taxes	81,839	131,494
Dividends received from equity method investments	10,864	0
Accrued/deferred pension and other post-retirement benefit cost	16,227	14,832
Earnings in equity interest	(15,117)	(11,491)
Compensation expense related to stock-based awards	12,114	9,745
Provision for doubtful accounts	11,601	8,752
Impairment loss	0	3,000
Other non-cash credits—net	(584)	(1,449)
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable and unbilled revenues—net	(112,725)	(68,380)
Gas costs and other regulatory assets/liabilities—net	(11,285)	(31,109)
Storage gas	(3,399)	38,725
Prepaid taxes	11,309	(63,795)
Other prepayments	(34,509)	(11,429)
Accounts payable and other accrued liabilities	17,945	(19)
Customer deposits and advance payments	(24,908)	(8,125)
Unamortized investment tax credits	11,770	21,527
Accrued taxes	4,987	19,827
Accrued interest	7,385	5,283
Other current assets	100	(6,032)
Other current liabilities	10,987	(15,472)
Deferred gas costs—net	82,892	37,601
Deferred assets—other	(15,917)	(34,010)
Deferred liabilities—other	(19,627)	(12,721)
Derivatives	(114,666)	(71,078)
Other—net	2,380	1,838
Net Cash Provided by Operating Activities	224,782	235,436
FINANCING ACTIVITIES
Common stock issued	295	78,050
Long-term debt issued	50,000	250,000
Long-term debt retired	0	(25,000)
Debt issuance costs	(404)	(284)
Notes payable issued —net	217,000	(26,000)
Contributions from non-controlling interest	17,358	0
Project financing	18,396	28,425
Dividends on common stock and preferred stock	(75,672)	(68,970)
Other financing activities—net	2,305	1,998
Net Cash Provided by Financing Activities	229,278	238,219
INVESTING ACTIVITIES
Capital expenditures (excluding Allowance for Funds Used During Construction)	(352,232)	(348,594)
Investments in non-utility interests	(110,952)	(137,105)
Distributions and receipts from non-utility interests	4,126	4,739
Proceeds from the sale of assets	9,858	19,749
Loans to external parties	863	2,643
Net Cash Used in Investing Activities	(450,063)	(463,854)
INCREASE IN CASH AND CASH EQUIVALENTS	3,997	9,801
Cash and Cash Equivalents at Beginning of Year	5,573	6,733
Cash and Cash Equivalents at End of Period	9,570	16,534
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid (refunded)—net	(3,890)	3,032
Interest paid	53,027	33,080
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Project financing activities	(27,927)	0
Capital expenditure accruals included in accounts payable and other accrued liabilities	38,101	51,814
Dividends Paid in Common Stock	1,362	2,661
Stock issued related to compensation	6,564	6,742
Transfer of investments to property, plant and equipment	30,114	0
Transfer of accounts receivable to investments	10,031	0
Washington Gas Light Company
OPERATING ACTIVITIES
Net income (loss)	147,400	130,526
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation and Amortization	96,003	85,194
Amortization of:
Other regulatory assets and liabilities—net	2,567	1,113
Debt related costs	1,031	898
Deferred income taxes	64,040	90,032
Accrued/deferred pension and other post-retirement benefit cost	16,187	3,221
Compensation expense related to stock-based awards	11,185	8,431
Provision for doubtful accounts	9,333	7,094
Other non-cash credits—net	(1,151)	318
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable and unbilled revenues—net	(109,427)	(75,427)
Gas costs and other regulatory assets/liabilities—net	(11,285)	(31,109)
Storage gas	15,270	38,546
Prepaid taxes	5,127	(9,753)
Other prepayments	(5,567)	(9,755)
Accounts payable and other accrued liabilities	22,989	18,288
Customer deposits and advance payments	(20,107)	(10,125)
Accrued taxes	2,928	12,047
Accrued interest	9,735	7,484
Other current assets	622	2,696
Other current liabilities	(3,437)	(4,656)
Deferred gas costs—net	82,892	37,601
Deferred assets—other	(12,554)	(22,216)
Deferred liabilities—other	(1,663)	(14,436)
Derivatives	(109,529)	(24,797)
Other—net	2,550	(399)
Net Cash Provided by Operating Activities	215,139	240,816
FINANCING ACTIVITIES
Long-term debt retired	0	(25,000)
Debt issuance costs	(399)	(171)
Notes payable issued —net	119,000	61,000
Project financing	7,324	28,425
Dividends on common stock and preferred stock	(65,020)	(61,669)
Other financing activities—net	2,248	2,891
Net Cash Provided by Financing Activities	63,153	5,476
INVESTING ACTIVITIES
Capital expenditures (excluding Allowance for Funds Used During Construction)	(278,292)	(266,041)
Proceeds from the sale of assets	0	19,749
Net Cash Used in Investing Activities	(278,292)	(246,292)
INCREASE IN CASH AND CASH EQUIVALENTS	0	0
Cash and Cash Equivalents at Beginning of Year	1	1
Cash and Cash Equivalents at End of Period	1	1
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid (refunded)—net	0	21
Interest paid	36,202	25,108
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Project financing activities	(27,927)	0
Capital expenditure accruals included in accounts payable and other accrued liabilities	$ 28,666	$ 41,264

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Accounting Policies

9 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Accounting Policies

ACCOUNTING POLICIES

Basis of Presentation

WGL Holdings, Inc. (WGL) is a holding company that owns all of the shares of common stock of Washington Gas Light Company (Washington Gas), a regulated natural gas utility, and all of the shares of common stock of Washington Gas Resources Corporation (Washington Gas Resources) and Hampshire Gas Company (Hampshire). Washington Gas Resources owns all of the shares of common stock of four non-utility subsidiaries that include WGL Energy Services, Inc. (WGL Energy Services), WGL Energy Systems, Inc. (WGL Energy Systems), WGL Midstream, Inc. (WGL Midstream) and WGSW, Inc. (WGSW). Except where the content clearly indicates otherwise, “WGL,” “we,” “us” or “our” refers to the holding company or the consolidated entity of WGL Holdings, Inc. and all of its subsidiaries. Unless otherwise noted, these notes apply equally to WGL and Washington Gas.

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Therefore, certain financial information and note disclosures accompanying annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) are omitted in this interim report. The interim consolidated financial statements and accompanying notes should be read in conjunction with the combined Annual Report on Form 10-K for WGL and Washington Gas for the fiscal year ended September 30, 2016. Due to the seasonal nature of our businesses, the results of operations for the periods presented in this report are not necessarily indicative of actual results for the full fiscal years ending September 30, 2017 and 2016 of either WGL or Washington Gas.

The accompanying unaudited condensed financial statements for WGL and Washington Gas reflect all normal recurring adjustments that are necessary, in our opinion, to present fairly the results of operations in accordance with GAAP. On October 1, 2016, WGL and Washington Gas adopted Accounting Standards Update (ASU) 2015-03 and ASU 2015-15. These standards require an entity to account for debt issuance costs as a deduction from the carrying amount of debt in the balance sheet and the amortization of debt issuance costs presented as interest expense, consistent with debt discounts. Prior period amounts related to other deferred charges and other assets and long-term debt in the accompanying condensed balance sheets have been reclassified to conform to the current period presentation.

For a complete description of our accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements of the combined Annual Report on Form 10-K for WGL and Washington Gas for the fiscal year ended September 30, 2016.

Storage Gas Valuation

For Washington Gas and WGL Energy Services, storage gas inventories are accounted for using the first-in, first-out method. For WGL Midstream, storage gas inventory is accounted for using the weighted average cost method. Our inventory is stated at the lower-of-cost or market. Interim period inventory losses attributable to lower-of-cost or market adjustments may be reversed if the market value of the inventory is recovered by the end of the same fiscal year.

For the three and nine months ended June 30, 2017, WGL and Washington Gas did not record any lower-of-cost or market adjustments. For the three and nine months ended June 30, 2016, WGL recorded an increase to non-utility operating revenues due to a lower-of-cost or market adjustment of $0.7 million and recorded a decrease to non-utility operating revenues due to a lower-of-cost or market adjustment of $0.4 million, respectively. For the three and nine months ended June 30, 2016, Washington Gas did not record any lower-of-cost market adjustments.

ACCOUNTING STANDARDS ADOPTED IN FISCAL YEAR 2017
Standard	Description	Date of adoption	Effect on the financial statements or other significant matters
ASU 2015-03 and ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost and Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements	The standard requires an entity to present debt issuance costs in the balance sheet as a direct deduction of the debt liability and the amortization of debt issuance costs be presented as interest expense in a manner consistent with its accounting treatment of debt discounts. The standard requires retrospective application. An entity can defer and present debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The new guidance does not change the recognition and measurement guidance for debt issuance costs.	October 1, 2016	Implementation of these standards resulted in a reduction of other deferred assets and long-term debt in our Consolidated Balance Sheets. The amounts that were reclassified at September 30, 2016 for WGL and Washington Gas were $9.3 million and $6.8 million, respectively.
ASU 2015-02 and ASU 2016-17, Consolidation (Topic 810): Amendments to the Consolidation Analysis and Interests Held through Related Parties that are Under Common Control	The standards changed the analysis to be performed in determining whether certain types of legal entities should be consolidated, specifically the analysis of limited partnerships and similar entities, fee arrangements and related party relationships. The standard permits prospective or retrospective application for different parts. The consolidation guidance was also amended as to how a reporting entity, that is the single decision maker of a VIE, should treat indirect interests in the entity held through related parties that are under common control with the reporting entity, when determining whether it is the primary beneficiary of that VIE.	October 1, 2016	The amendments to the consolidation guidance under these standards were applied and did not have an impact on the financial statements.

ASU 2015-05, Intangibles-Goodwill and Other -Internal-Use Software (Subtopic 350-40)-Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
The standard clarifies that a cloud computing customer may account for the arrangement as a software license when (1) the customer has a contractual right to take possession of the software at any time during the hosting period without significant penalty, and (2) it is feasible for the customer to either operate the software on its own hardware or contract with another party unrelated to the vendor to host the software. If the arrangement does not meet these criteria, it would be accounted for as a service contract and accounted for as an operating expense in the period incurred. October 1, 2016 WGL elected to apply the standard on a prospective basis, which did not have a material impact on the financial statements.

OTHER NEWLY ISSUED ACCOUNTING STANDARDS
Standard	Description	Required date of adoption	Effect on the financial statements or other significant matters
ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting	This standard simplifies several aspects of the accounting for share-based payment transactions, including accounting for income taxes, forfeitures, and statutory tax withholding requirements.	October 1, 2017	We are finalizing our evaluation of this standard but do not expect the adoption of this standard to have a material impact on the financial statements.
ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost	This standard requires entities to report the service cost component in the same financial statement line item as other compensation costs arising from services rendered by the pertinent employees during the period.  The other components of net benefit cost are to be presented separately from service cost and outside of operating income.  In addition, only the service cost component of net benefit cost is eligible for capitalization.  Changes to the presentation of service costs and other components of net benefit cost should be applied retrospectively. Changes in capitalization practices should be implemented prospectively.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.
ASU 2016-15, Statement of Cash Flows (Topic 230)—Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)	This update provides guidance on the classification of certain cash receipts and payments in the statement of cash flows.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.

ASU 2014-09, Revenue from Contracts with Customers (Topic 606), including subsequent ASUs clarifying the guidance.	ASU 2014-09 establishes a comprehensive revenue recognition model clarifying the method used to determine the timing and requirements for revenue recognition from contracts with customers. The disclosure requirements under the new standard will enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	An implementation team is currently evaluating all revenue streams and reviewing contracts with customers, as well as, related financial statement disclosures to determine the impact the adoption of this standard will have on our financial statements. WGL is also monitoring unresolved industry specific implementation issues that could impact the timing of revenue recognition for our regulated utility tariff based sales, including the evaluation of collectability from customers if a utility has regulatory mechanisms to help assure recovery of uncollected accounts from ratepayers and accounting for contributions in aid of construction (CIAC). WGL will adopt using the modified retrospective approach.
ASU 2016-01, Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities	The new standard amends certain disclosure requirements associated with the fair value of financial instruments, and significantly revises an entity’s accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	We performed a preliminary evaluation and the adoption of this standard will primarily impact the disclosure of our financial instruments in our Fair Value Measurements Footnote.
ASU 2016-02, Leases (Topic 842)	This standard requires recognition of a right-to-use asset and lease liability on the statement of financial position and disclosure of key information about leasing arrangements. The standard requires application using a modified retrospective approach.	October 1, 2019 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	For credit losses on financial instruments, this standard changes the current incurred loss impairment methodology to an expected loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.	October 1, 2020 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.

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Accounts Payable and Other Accrued Liabilities

9 Months Ended

Jun. 30, 2017

Accounts Payable and Accrued Liabilities [Abstract]

Accounts Payable and Other Accrued Liabilities

ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

The tables below provide details for the amounts included in “Accounts payable and other accrued liabilities” on the balance sheets for both WGL and Washington Gas.

WGL Holdings, Inc.
(In millions)	June 30, 2017		September 30, 2016
Accounts payable—trade	$	329.5	$	353.0
Employee benefits and payroll accruals	28.0		34.4
Other accrued liabilities	19.6		18.0
Total	$	377.1	$	405.4

Washington Gas Light Company
(In millions)	June 30, 2017		September 30, 2016
Accounts payable—trade	$	151.1	$	161.0
Employee benefits and payroll accruals	26.3		32.2
Other accrued liabilities	9.8		11.8
Total	$	187.2	$	205.0

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Short-Term Debt

9 Months Ended

Jun. 30, 2017

Short-term Debt [Abstract]

Short-Term Debt

SHORT-TERM DEBT

WGL and Washington Gas satisfy their short-term financing requirements through the sale of commercial paper, financing arrangements with third-party lenders, or through bank borrowings. Due to the seasonal nature of the regulated utility and retail energy-marketing segments, short-term financing requirements can vary significantly during the year. Revolving credit agreements are maintained to support outstanding commercial paper and to permit short-term borrowing flexibility. The policy of each of WGL and Washington Gas is to maintain bank credit facilities in amounts equal to or greater than their expected maximum commercial paper position. The following is a summary of committed credit available at June 30, 2017 and September 30, 2016.

Committed Credit Available($ In millions)
June 30, 2017	WGL(b)			Washington Gas			Total Consolidated
Committed credit agreements
Unsecured revolving credit facility, expires December 19, 2019(a)	$	650.0		$	350.0		$	1,000.0
Less: Commercial Paper	325.0			161.0			486.0
Net committed credit available	$	325.0		$	189.0		$	514.0
Weighted average interest rate	1.42		%	1.16		%	1.33		%
September 30, 2016
Committed credit agreements
Unsecured revolving credit facility, expires December 19, 2019(a)	$	450.0		$	350.0		$	800.0
Less: Commercial Paper	227.0			42.0			269.0
Net committed credit available	$	223.0		$	308.0		$	531.0
Weighted average interest rate	0.73		%	0.46		%	0.69		%

^(a)  Washington Gas has the right to request extensions with the banks’ approval. Washington Gas’ revolving credit facility permits it to borrow an additional $100 million, with the banks’ approval, for a total of $450 million.

^(b)  WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

At June 30, 2017 and September 30, 2016, there were no outstanding bank loans from WGL’s or Washington Gas’ revolving credit facilities.

PROJECT FINANCING

Washington Gas has obtained third-party project financing on behalf of the Federal government to provide funds during the construction of certain energy management services projects entered into under Washington Gas' area-wide contract. In connection with work completed under the area-wide contract, the construction work is performed by WGL Energy Systems on behalf of Washington Gas and an inter-company payable is recorded for work provided by WGL Energy Systems. As work is performed, Washington Gas establishes a receivable representing the government's obligation to remit principal and interest. The payable and receivable are equal to each other at the end of the construction period, but there may be timing differences in the recognition of the project related payable and receivable during the construction period. When these projects are formally “accepted” by the government and deemed complete, Washington Gas assigns the ownership of the receivable to the third party lender in satisfaction of the obligation and removes both the receivable and the obligation related to the financing from its financial statements.

In December 2016, WGL Energy Systems entered into an agreement to obtain third-party financing and receive funds directly from the third party lender during the construction period associated with the related energy management service projects. As a result, Washington Gas will no longer be liable under future third party financing arrangements, for projects entered into under the area-wide contract. The general terms of the financing agreement are the same as the prior financing arrangements between Washington Gas and the third party lender mentioned above. Washington Gas will continue to record a receivable representing the government’s obligation, and will record an inter-company payable to WGL Energy Systems for the construction work performed for the same amount.

As of June 30, 2017, WGL and Washington Gas recorded $70.9 million and $65.2 million, respectively, in "Unbilled revenues" on the balance sheet, and $52.9 million and $41.8 million, respectively, in a corresponding short-term obligation to third party lenders in "Notes payable and project financing", for energy management services projects that were not complete. As of September 30, 2016, WGL and Washington Gas recorded $73.3 million in "Unbilled revenues" on the balance sheet and a $62.4 million corresponding short-term obligation to third party lenders in "Notes payable and project financing" for energy management services projects that were not complete. WGL Energy Systems did not obtain any third-party project financing on behalf of the Federal Government for the fiscal year ended September 30, 2016. Because these projects are financed for government agencies that have minimal credit risk, and with which we have previous collection experience, neither WGL nor Washington Gas recorded a corresponding reserve for bad debts related to these receivables at June 30, 2017 or September 30, 2016.

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Long-Term Debt

9 Months Ended

Jun. 30, 2017

Long-term Debt, by Current and Noncurrent [Abstract]

Long-Term Debt

LONG-TERM DEBT

UNSECURED NOTES

WGL and Washington Gas issue long-term notes with individual terms regarding interest rates, maturities and call or put options. These notes can have maturity dates of one or more years from the date of issuance.

At June 30, 2017 and September 30, 2016, WGL had the capacity under a shelf registration to issue an unspecified amount of long-term debt securities. As a result of certain covenants included in the Merger Agreement among WGL, AltaGas and Wrangler, Inc., WGL is limited to the length of term that we may issue debt. Refer to Note 16 — Planned Merger with AltaGas Ltd. for a discussion of the proposed merger.

At June 30, 2017 and September 30, 2016 Washington Gas had the capacity under a shelf registration statement to issue up to $350.0 million of additional Medium-Term Notes (MTNs).

The following tables show the outstanding notes as of June 30, 2017 and September 30, 2016.

Long-Term Debt Outstanding
($ In millions)	WGL(a)			Washington Gas			Total Consolidated
June 30, 2017
Long-term debt (b)	$	550.0		$	946.0		$	1,496.0
Unamortized discount	(1.5		)	(0.1		)	(1.6		)
Unamortized debt expense	(2.2		)	(6.6		)	(8.8		)
Total Long-Term Debt	$	546.3		$	939.3		$	1,485.6
Weighted average interest rate	2.81		%	5.12		%	4.27		%
September 30, 2016
Long-term debt (b)	$	500.0		$	946.0		$	1,446.0
Unamortized discount	(1.6		)	(0.1		)	(1.7		)
Unamortized debt expense	(2.4		)	(6.9		)	(9.3		)
Total Long-Term Debt	$	496.0		$	939.0		$	1,435.0
Weighted average interest rate	2.50		%	5.12		%	4.21		%

^(a)  WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

^(b)  Includes Senior Notes and term loans for WGL and both MTNs and private placement notes for Washington Gas. Represents face value including current maturities.

The following tables show long-term debt issuances and retirements for the nine months ended June 30, 2017 and 2016.

Long-Term Debt Issuances and Retirements
($ In millions)	Principal(b)		Interest Rate			Effective Cost(d)		Nominal Maturity Date
Nine Months Ended June 30, 2017
WGL(a)
Issuances:
1/26/2017	$	50.0	1.57	%	(c)	1.57	%	1/26/2019
Total consolidated issuances	$	50.0
Nine Months Ended June 30, 2016
WGL (a)
Issuances:
2/18/2016	250.0		2.10	%	(c)	2.10	%	2/18/2018
Total	$	250.0
Washington Gas
Retirements:	$	25.0	5.17	%		n/a		1/18/2016
Total	$	25.0

(a)WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

(b)Represents face amount of Senior Notes and term loans for WGL and both MTNs and private placement notes for Washington Gas.

(c)Floating rate per annum that will be determined from time to time based on parameters set forth in the credit agreement.

(d)The estimated effective cost of the issued notes.

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Common Shareholders' Equity

9 Months Ended

Jun. 30, 2017

Equity [Abstract]

Common Shareholders' Equity

COMMON SHAREHOLDERS’ EQUITY

The tables below reflect the components of “Common shareholders’ equity” for WGL and “Common shareholder’s equity” for Washington Gas for the nine months ended June 30, 2017 and 2016.

WGL Holdings, Inc. Components of Common Shareholders’ Equity
(In thousands, except shares)	Common Stock			Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Taxes			WGL Holdings Common Shareholders' Equity			Non-controlling Interest			Washington Gas Light Company Preferred Stock			Total Equity
	Shares	Amount
Balance at September 30, 2016	51,080,612	$	574,496	$	12,519		$	827,085		$	(38,539	)	$	1,375,561		$	409		$	28,173		$	1,404,143
Net income (loss)	—	—		—			189,301			—			189,301			(12,533		)	990			177,758
Contributions from non-controlling interest	—	—		—			—			—			—			17,358			—			17,358
Other comprehensive income	—	—		—			—			29,852			29,852			—			—			29,852
Stock-based compensation(a)	112,146	6,564		(3,971		)	(468		)	—			2,125			—			—			2,125
Issuance of common stock(b)	26,242	1,657		—			—			—			1,657			—			—			1,657
Dividends declared:
Common stock	—	—		—			(77,213		)	—			(77,213		)	—			—			(77,213		)
Preferred stock	—	—		—			—			—			—			—			(990		)	(990		)
Balance at June 30, 2017	51,219,000	$	582,717	$	8,548		$	938,705		$	(8,687	)	$	1,521,283		$	5,234		$	28,173		$	1,554,690
Balance at September 30, 2015	49,728,662	$	485,456	$	14,934		$	757,093		$	(14,236	)	$	1,243,247		$	—		$	28,173		$	1,271,420
Net income	—	—		—			176,484			—			176,484			—			990			177,474
Other comprehensive income	—	—		—			—			(19,844		)	(19,844		)	—			—			(19,844		)
Stock-based compensation(a)	115,974	6,742		(3,652		)	(122		)	—			2,968			—			—			2,968
Issuance of common stock(c)	1,213,373	80,711		—			—			—			80,711			—			—			80,711
Dividends declared:
Common stock	—	—		—			(72,485		)	—			(72,485		)	—			—			(72,485		)
Preferred stock	—	—		—			—			—			—			—			(990		)	(990		)
Balance at June 30, 2016	51,058,009	$	572,909	$	11,282		$	860,970		$	(34,080	)	$	1,411,081		$	—		$	28,173		$	1,439,254

(a) Includes dividend equivalents related to our performance shares.

(b) Includes dividend reinvestment and common stock purchase plans.

(c) Includes shares issued under the ATM program and the dividend reinvestment and common stock purchase plans.

Washington Gas Light Company Components of Common Shareholder’s Equity
(In thousands, except shares)	Common Stock			Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Taxes			Total
	Shares	Amount
Balance at September 30, 2016	46,479,536	$	46,479	$	488,135	$	586,662		$	(7,830	)	$	1,113,446
Net income	—	—		—		147,400			—			147,400
Other comprehensive income	—	—		—		—			673			673
Stock-based compensation(a)	—	—		2,319		—			—			2,319
Dividends declared:
Common stock	—	—		—		(64,675		)	—			(64,675		)
Preferred stock	—	—		—		(990		)	—			(990		)
Balance at June 30, 2017	46,479,536	$	46,479	$	490,454	$	668,397		$	(7,157	)	$	1,198,173

(a) Stock-based compensation is based on the stock awards of WGL that are allocated to Washington Gas Light Company for its pro-rata share.

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Earnings Per Share

9 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

Basic earnings per share (EPS) of WGL is computed by dividing net income by the weighted average number of common shares outstanding during the reported period. Diluted EPS assumes the issuance of common shares pursuant to stock-based compensation plans at the beginning of the applicable period unless the effect of such issuance would be anti-dilutive. The following table reflects the computation of our basic and diluted EPS for the three and nine months ended June 30, 2017 and 2016.

Basic and Diluted EPS
(In thousands, except per share data)	Net Income Applicable to Common Stock		Shares	Per Share Amount
Three Months Ended June 30, 2017
Basic EPS	$	8,265	51,219	$	0.16
Stock-based compensation plans	—		274
Diluted EPS	$	8,265	51,493	$	0.16
Three Months Ended June 30, 2016
Basic EPS	$	2,025	50,622	$	0.04
Stock-based compensation plans	—		283
Diluted EPS	$	2,025	50,905	$	0.04
Nine Months Ended June 30, 2017
Basic EPS	$	189,301	51,200	$	3.70
Stock-based compensation plans	—		269
Diluted EPS	$	189,301	51,469	$	3.68
Nine Months Ended June 30, 2016
Basic EPS	$	176,484	50,158	$	3.52
Stock-based compensation plans	—		260
Diluted EPS	$	176,484	50,418	$	3.50

There were no anti-dilutive shares for the three or nine months ended June 30, 2017 and 2016.

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Income Taxes

9 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

As of June 30, 2017 and September 30, 2016, our uncertain tax positions were approximately $46.6 million and $42.3 million, respectively, primarily due to the change in tax accounting for repairs. If the amounts of unrecognized tax benefits are eventually realized, it would not materially impact the effective tax rate. It is reasonably possible that the amount of the unrecognized tax benefit with respect to some of WGL’s and Washington Gas’ uncertain tax positions will significantly increase or decrease in the next 12 months. At this time, however, an estimate of the range of reasonably possible outcomes cannot be determined.

Under Accounting Standards Codification (ASC) Topic 740, Income Taxes, Washington Gas recognizes any accrued interest associated with uncertain tax positions in interest expense and recognizes any accrued penalties associated with uncertain tax positions in other expenses in the statements of income. At June 30, 2017 and September 30, 2016, we did not have an accrual of interest expense related to uncertain tax positions.

WGL files a consolidated federal tax return and various other state returns. We are no longer subject to income tax examinations by the Internal Revenue Service for years ended prior to September 30, 2013. Substantially all state income tax years in major jurisdictions are closed for years ended prior to September 30, 2013.

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Derivative and Weather Related Instruments

9 Months Ended

Jun. 30, 2017

Derivative Instrument Detail [Abstract]

Derivative and Weather-Related Instruments

DERIVATIVE AND WEATHER-RELATED INSTRUMENTS

DERIVATIVE INSTRUMENTS

Regulated Utility Operations

Washington Gas enters into contracts that qualify as derivative instruments and are accounted for under ASC Topic 815. These derivative instruments are recorded at fair value on our balance sheets and Washington Gas does not currently designate any derivatives as hedges under ASC Topic 815. Washington Gas’ derivative instruments relate to: (i) Washington Gas’ asset optimization program; (ii) managing price risk associated with the purchase of gas to serve utility customers and (iii) managing interest rate risk.

Asset Optimization. Washington Gas optimizes the value of its long-term natural gas transportation and storage capacity resources during periods when these resources are not being used to physically serve utility customers. Specifically, Washington Gas utilizes its transportation capacity assets to benefit from favorable natural gas prices between different geographic locations and utilizes its storage capacity assets to benefit from favorable natural gas prices between different time periods. As part of this asset optimization program, Washington Gas enters into physical and financial derivative transactions in the form of forward, futures and option contracts with the primary objective of securing operating margins that Washington Gas will ultimately realize. The derivative transactions entered into under this program are subject to mark-to-market accounting treatment under ASC 820.

Regulatory sharing mechanisms provide for the annual realized profit from these transactions to be shared between Washington Gas' shareholders and customers; therefore, changes in fair value are recorded through earnings, or as regulatory assets or liabilities to the extent that it is probable that realized gains and losses associated with these derivative transactions will be included in the rates charged to customers when they are realized. Unrealized gains and losses recorded to earnings may cause significant period-to-period volatility; this volatility does not change the operating margins that Washington Gas expects to ultimately realize from these transactions through the use of its storage and transportation capacity resources.

All physically and financially settled contracts under our asset optimization program are reported on a net basis in the statements of income in “Utility cost of gas.” Total net margins recorded to “Utility cost of gas” after sharing and management fees associated with all asset optimization transactions for the three months ended June 30, 2017 was a net gain of $9.1 million, including an unrealized gain of $3.2 million. During the three months ended June 30, 2016 we recorded a net loss of $19.0 million, including an unrealized loss of $25.2 million. Total net margins recorded for the nine months ended June 30, 2017 was a net gain of $62.5 million, including an unrealized gain of $39.7 million. During the nine months ended June 30, 2016, we recorded a net gain of $30.3 million, including an unrealized gain of $8.0 million.

Managing Price Risk. To manage price risk associated with acquiring natural gas supply for utility customers, Washington Gas enters into physical and financial derivative transactions in the form of forward, option and other contracts, as authorized by its regulators. Any gains and losses associated with these derivatives are recorded as regulatory liabilities or assets, respectively, to reflect the rate treatment for these economic hedging activities.

Managing Interest-Rate Risk. Washington Gas may utilize derivative instruments that are designed to minimize the risk of interest-rate volatility associated with planned issuances of debt securities. Any gains and losses associated with these types of derivatives are recorded as regulatory liabilities or assets, respectively, and amortized in accordance with regulatory requirements, typically over the life of the related debt.

Non-Utility Operations

Trading Activities. WGL Midstream enters into derivative contracts for the purpose of optimizing its storage and transportation capacity as well as managing the transportation and storage assets on behalf of third parties. WGL Midstream does not designate these derivatives as hedges under ASC Topic 815; therefore, changes in the fair value of these derivative instruments are reflected in the earnings of our non-utility operations and may cause significant period-to-period volatility in earnings.

Managing Price Risk. WGL Energy Services enters into certain derivative contracts as part of its strategy to manage the price risk associated with the sale and purchase of natural gas and electricity. WGL Energy Services elects "normal purchases and normal sales" treatment for a portion of these physical contracts related to the purchase of natural gas and electricity to serve its customers and therefore, they are not subject to the fair value accounting requirements of ASC Topic 815. Derivative instruments not designated as ''normal purchases and normal sales" are recorded at fair value on our consolidated balance sheets, and changes in the fair value of these derivative instruments are reflected in the earnings of our non-utility operations, which may cause significant period-to-period volatility in earnings. WGL Energy Services does not designate derivatives as hedges under ASC Topic 815.

Managing Interest-Rate Risk. WGL utilizes derivative instruments that are designed to limit the risk of interest-rate volatility associated with future debt issuances.

At June 30, 2017, WGL had $250 million of 30-year forward starting interest rate swaps which settle in January 2018. Through December 2016, WGL had designated these interest rate swaps as cash flow hedges in anticipation of a 30-year debt issuance in January 2018, and reported the effective portion of changes in fair value as a component of other comprehensive income (loss). As a result of certain covenants related to the proposed merger with AltaGas, in January 2017, WGL de-designated these hedges and any further changes in the fair value of the interest rate swaps will be recorded to interest expense. The remaining balance in accumulated other comprehensive income at June 30, 2017 is $6.4 million related to these hedges. Refer to Note 16 — Planned Merger with AltaGas Ltd. for a discussion of the proposed merger. 

WGL also has amounts recorded within other comprehensive income (loss) for settled hedges related to prior debt issuances, which are being amortized to income over the life of the outstanding debt. The amortization was minimal for the nine months ended June 30, 2017 and 2016.

Consolidated Operations

Reflected in the tables below is information for WGL as well as Washington Gas. The information for WGL includes derivative instruments for both utility and non-utility operations.

At June 30, 2017 and September 30, 2016, respectively, the absolute notional amounts of our derivatives were as follows:

Absolute Notional Amounts of Open Positions on Derivative Instruments
Derivative transactions	WGL Holdings, Inc.		Washington Gas
June 30, 2017	Notional Amounts
Natural Gas(In millions of therms)
Asset optimization & trading	23,019.0		11,614.0
Retail sales	12.5		—
Other risk-management activities	1,546.6		1,201.0
Electricity(In millions of kWhs)
Retail sales	10,728.9		—
Other risk-management activities(a)	24,878.5		—
Interest Rate Swaps(In millions of dollars)	$	250.0	—
September 30, 2016
Natural Gas(In millions of therms)
Asset optimization & trading	21,084.5		12,725.0
Retail sales	50.2		—
Other risk-management activities	1,789.0		1,309.0
Electricity(In millions of kWhs)
Retail sales	4,377.5		—
Other risk-management activities(a)	21,070.4		—
Interest Rate Swaps(In millions of dollars)	$	250.0	—

(a) Comprised primarily of financial swaps, financial transmission rights and physical forward purchases.

The following tables present the balance sheet classification for all derivative instruments as of June 30, 2017 and September 30, 2016.

WGL Holdings, Inc. Balance Sheet Classification of Derivative Instruments
(In millions)	Derivative Instruments Not Designated as Hedging Instruments					Derivative Instruments Designated as Hedging Instruments
As of June 30, 2017	Gross Derivative Assets		Gross Derivative Liabilities			Gross Derivative Assets		Gross Derivative Liabilities			Netting of Collateral		Total(a)
Current Assets—Derivatives	$	32.6	$	(8.8	)	$	—	$	—		$	—	$	23.8
Deferred Charges and Other Assets—Derivatives	37.0		(0.8		)	—		—			—		36.2
Accounts payable and other accrued liabilities	0.5		—			—		—			—		0.5
Current Liabilities—Derivatives	11.9		(58.6		)	—		—			0.8		(45.9		)
Deferred Credits—Derivatives	14.2		(183.5		)	—		—			6.4		(162.9		)
Total	$	96.2	$	(251.7	)	$	—	$	—		$	7.2	$	(148.3	)
As of September 30, 2016
Current Assets—Derivatives	$	24.0	$	(5.5	)	$	—	$	—		$	—	$	18.5
Deferred Charges and Other Assets—Derivatives	55.6		(0.6		)	—		—			—		55.0
Current Liabilities—Derivatives	18.3		(113.2		)	—		—			12.6		(82.3		)
Deferred Credits—Derivatives	6.4		(279.3		)	0.2		(43.1		)	11.6		(304.2		)
Total	$	104.3	$	(398.6	)	$	0.2	$	(43.1	)	$	24.2	$	(313.0	)

Washington Gas Light Company Balance Sheet Classification of Derivative Instruments(b)
(In millions)
As of June 30, 2017	Gross Derivative Assets		Gross Derivative Liabilities			Netting of Collateral		Total(a)
Current Assets—Derivatives	$	10.7	$	(3.7	)	$	—	$	7.0
Deferred Charges and Other Assets—Derivatives	15.5		(0.4		)	—		15.1
Current Liabilities—Derivatives	0.1		(26.3		)	—		(26.2		)
Deferred Credits—Derivatives	—		(143.8		)	—		(143.8		)
Total	$	26.3	$	(174.2	)	$	—	$	(147.9	)
As of September 30, 2016
Current Assets—Derivatives	$	11.7	$	(4.4	)	$	—	$	7.3
Deferred Charges and Other Assets—Derivatives	26.2		(0.6		)	—		25.6
Current Liabilities—Derivatives	1.9		(60.2		)	—		(58.3		)
Deferred Credits—Derivatives	—		(232.0		)	—		(232.0		)
Total	$	39.8	$	(297.2	)	$	—	$	(257.4	)

(a) WGL has elected to offset the fair value of recognized derivative instruments against the right to reclaim or the obligation to return collateral for derivative instruments executed under the same master netting arrangement in accordance with ASC 815. All recognized derivative contracts and associated financial collateral subject to a master netting arrangement or similar that is eligible for offset under ASC 815 have been presented net in the balance sheet.

(b) Washington Gas did not have any derivative instruments outstanding that were designated as hedging instruments at June 30, 2017 or September 30, 2016.

The following table presents all gains and losses associated with derivative instruments for the three and nine months ended June 30, 2017 and 2016.

Gains and Losses on Derivative Instruments
(In millions)	WGL Holdings, Inc.						Washington Gas
Three Months Ended June 30,	2017			2016			2017		2016
Recorded to income
Operating revenues—non-utility	$	8.3		$	(39.0	)	$	—	$	—
Utility cost of gas	5.5			(24.9		)	5.5		(24.9		)
Non-utility cost of energy-related sales	(0.8		)	48.4			—		—
Interest expense	(7.9		)	(0.1		)	—		—
Recorded to regulatory assets
Gas costs	6.4			(29.4		)	6.4		(29.4		)
Other	—			(8.8		)	—		(8.8		)
Recorded to other comprehensive income	0.1			(16.9		)	—		—
Total	$	11.6		$	(70.7	)	$	11.9	$	(63.1	)
Nine Months Ended June 30,	2017			2016			2017		2016
Recorded to income
Operating revenues—non-utility	$	25.8		$	7.6		$	—	$	—
Utility cost of gas	40.0			9.2			40.0		9.2
Non-utility cost of energy-related sales	25.9			50.6			—		—
Interest expense	(5.4		)	(0.2		)	—		—
Recorded to regulatory assets
Gas costs	62.6			24.9			62.6		24.9
Other	—			(8.8		)	—		(8.8		)
Recorded to other comprehensive income	49.6			(34.5		)	—		—
Total	$	198.5		$	48.8		$	102.6	$	25.3

Collateral

WGL utilizes standardized master netting agreements, which facilitate the netting of cash flows into a single net exposure for a given counterparty. As part of these master netting agreements, cash, letters of credit and parental guarantees may be required to be posted or obtained from counterparties in order to mitigate credit risk related to both derivatives and non-derivative positions. Under WGL’s offsetting policy, collateral balances are offset against the related counterparties’ derivative positions to the extent the application would not result in the over-collateralization of those derivative positions on the balance sheet.

The table below presents collateral not offset against derivative assets and liabilities at June 30, 2017 and September 30, 2016, respectively.

Collateral Not Offset Against Derivative Assets and Liabilities (In millions)
June 30, 2017	Collateral deposits posted with counterparties		Cash collateral held representing an obligation
Washington Gas	$	4.9	$	0.1
WGL Energy Services	18.5		—
WGL Midstream	33.6		0.6
September 30, 2016
Washington Gas	$	4.3	$	0.1
WGL Energy Services	9.1		—
WGL Midstream	18.5		5.4

Any collateral posted that is not offset against derivative assets and liabilities is included in “Other prepayments” in the accompanying balance sheets. Collateral received and not offset against derivative assets and liabilities is included in “Customer deposits and advance payments” in the accompanying balance sheets.

Certain derivative instruments of WGL, Washington Gas, WGL Energy Services and WGL Midstream contain contract provisions that require collateral to be posted if the credit rating of Washington Gas or WGL falls below certain levels or if counterparty exposure to WGL, Washington Gas, WGL Energy Services or WGL Midstream exceeds a certain level (credit-related contingent features). Due to counterparty exposure levels, at June 30, 2017, WGL Energy Services posted $6.5 million of collateral related to its derivative liabilities that contained credit-related contingent features. At September 30, 2016, WGL Energy Services posted $5.5 million of collateral related to these aforementioned derivative liabilities. At June 30, 2017, WGL was not required to post collateral related to a derivative liability that contained a credit-related contingent feature. At September 30, 2016, WGL was required to post $6.5 million of collateral related to its derivative liabilities that contained credit-related contingent features. At both June 30, 2017 and September 30, 2016, Washington Gas and WGL Midstream were not required to post any collateral related to their respective derivative liabilities that contained credit-related contingent features. The following table shows the aggregate fair value of all derivative instruments with credit-related contingent features that are in a liability position, as well as the maximum amount of collateral that would be required if the most intrusive credit-risk-related contingent features underlying these agreements were triggered on June 30, 2017 and September 30, 2016, respectively.

Potential Collateral Requirements for Derivative Liabilities with Credit-Risk-Contingent Features
(In millions)	WGL Holdings, Inc.		Washington Gas
June 30, 2017
Derivative liabilities with credit-risk-contingent features	$	26.0	$	2.4
Maximum potential collateral requirements	$	23.4	$	2.4
September 30, 2016
Derivative liabilities with credit-risk-contingent features	$	53.9	$	11.3
Maximum potential collateral requirements	$	41.4	$	11.3

We do not enter into derivative contracts for speculative purposes.

Concentration of Credit Risk

We are exposed to credit risk from derivative instruments with wholesale counterparties, which is represented by the fair value of these instruments at the reporting date. We actively monitor and work to minimize counterparty concentration risk through various practices. At June 30, 2017, two counterparties each represented over 10% of Washington Gas’ credit exposure to wholesale derivative counterparties for a total credit risk of $30.7 million; four counterparties each represented over 10% of WGL Energy Services’ credit exposure to wholesale counterparties for a total credit risk of $1.2 million; and one counterparty represented over 10% of WGL Midstream’s credit exposure to wholesale counterparties for a total credit risk of $17.1 million.

WEATHER-RELATED INSTRUMENTS

WGL Energy Services utilizes weather-related instruments for managing the financial effects of weather risks. These instruments cover a portion of WGL Energy Services’ estimated revenue or energy-related cost exposure to variations in heating or cooling degree days. These contracts provide for payment to WGL Energy Services of a fixed-dollar amount for every degree day over or under specific levels during the calculation period depending upon the type of contract executed. For the three months ended June 30, 2017 and 2016, WGL Energy Services recorded a pre-tax loss of $0.3 million and $0.5 million, respectively. During the nine months ended June 30, 2017 and 2016, WGL Energy Services recorded pre-tax gains of $1.4 million and $3.8 million, respectively, related to these instruments included in "Non-utility cost of energy related sales" in the accompanying condensed consolidated statements of income.

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Fair Value Measurements

9 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Recurring Basis

We measure the fair value of our financial assets and liabilities using a combination of the income and market approaches in accordance with ASC Topic 820. These financial assets and liabilities primarily consist of derivatives recorded on our balance sheet under ASC Topic 815 and short-term investments, commercial paper and long-term debt outstanding required to be disclosed at fair value. Under ASC Topic 820, fair value is defined as the exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To value our financial instruments, we use market data or assumptions that market participants would use, including assumptions about credit risk (both our own credit risk and the counterparty’s credit risk) and the risks inherent in the inputs to valuation.

We enter into derivative contracts in the futures and over-the-counter (OTC) wholesale and retail markets. These markets are the principal markets for the respective wholesale and retail contracts. Our relevant market participants are our existing counterparties and others who have participated in energy transactions at our delivery points. These participants have access to the same market data as WGL. We value our derivative contracts based on an “in-exchange” premise, and valuations are generally based on pricing service data or indicative broker quotes depending on the market location. We measure the net credit exposure at the counterparty level where the right to set-off exists. The net exposure is determined using the mark-to-market exposure adjusted for collateral, letters of credit and parent guarantees. We use published default rates from Standard & Poor’s Ratings Services and Moody’s Investors Service as inputs for determining credit adjustments.

ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy under ASC Topic 820 are described below:

Level 1.Level 1 of the fair value hierarchy consists of assets or liabilities that are valued using observable inputs based upon unadjusted quoted prices in active markets for identical assets or liabilities at the reporting date. WGL did not have any Level 1 derivatives at June 30, 2017 or September 30, 2016.

Level 2.Level 2 of the fair value hierarchy consists of assets or liabilities that are valued using directly or indirectly observable inputs either corroborated with market data or based on exchange traded market data. Level 2 includes fair values based on industry-standard valuation techniques that consider various assumptions: (i) quoted forward prices, including the use of mid-market pricing within a bid/ask spread; (ii) discount rates; (iii) implied volatility and (iv) other economic factors. Substantially all of these assumptions are observable throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the relevant market. At June 30, 2017 and September 30, 2016, Level 2 financial assets and liabilities included energy-related physical and financial derivative transactions such as forward, option and other contracts for deliveries at active market locations, as well as our interest rate swaps.

Level 3.Level 3 of the fair value hierarchy consists of assets or liabilities that are valued using significant unobservable inputs at the reporting date. These unobservable assumptions reflect our assumptions about estimates that market participants would use in pricing the asset or liability, including natural gas basis prices, annualized volatilities of natural gas prices, and electricity congestion prices. A significant change to any one of these inputs in isolation could result in a significant upward or downward fluctuation in the fair value measurement. These inputs may be used with industry standard valuation methodologies that result in our best estimate of fair value for the assets or liabilities at the reporting date.

Our Risk Analysis and Mitigation (RA&M) Group determines the valuation policies and procedures. The RA&M Group reports to WGL’s Chief Financial Officer. In accordance with WGL’s valuation policy, we may utilize a variety of valuation methodologies to determine the fair value of Level 3 derivative contracts, including internally developed valuation inputs and pricing models. The prices used in our valuations are corroborated using multiple pricing sources, and we periodically conduct assessments to determine whether each valuation model is appropriate for its intended purpose. The RA&M Group also evaluates changes in fair value measurements on a daily basis.

At June 30, 2017 and September 30, 2016, Level 3 derivative assets and liabilities included: (i) physical contracts valued at illiquid market locations with no observable market data; (ii) long-dated positions where observable pricing is not available over the majority of the life of the contract; (iii) contracts valued using historical spot price volatility assumptions and (iv) valuations using indicative broker quotes for inactive market locations.

The following tables set forth financial instruments recorded at fair value as of June 30, 2017 and September 30, 2016, respectively. A financial instrument’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy.

WGL Holdings, Inc. Fair Value Measurements Under the Fair Value Hierarchy
(In millions)	Level 1		Level 2			Level 3			Total
At June 30, 2017
Assets
Natural gas related derivatives	$	—	$	20.4		$	46.7		$	67.1
Electricity related derivatives	—		—			19.3			19.3
Interest rate derivatives	—		9.8			—			9.8
Total Assets	$	—	$	30.2		$	66.0		$	96.2
Liabilities
Natural gas related derivatives	$	—	$	(16.5	)	$	(199.0	)	$	(215.5	)
Electricity related derivatives	—		(4.6		)	(23.1		)	(27.7		)
Interest rate derivatives	—		(8.5		)	—			(8.5		)
Total Liabilities	$	—	$	(29.6	)	$	(222.1	)	$	(251.7	)
At September 30, 2016
Assets
Natural gas related derivatives	$	—	$	28.8		$	54.0		$	82.8
Electricity related derivatives	—		0.6			20.9			21.5
Interest rate derivatives	—		0.2			—			0.2
Total Assets	$	—	$	29.6		$	74.9		$	104.5
Liabilities
Natural gas related derivatives	$	—	$	(46.7	)	$	(318.2	)	$	(364.9	)
Electricity related derivatives	—		(3.8		)	(29.9		)	(33.7		)
Interest rate derivatives	—		(43.1		)	—			(43.1		)
Total Liabilities	$	—	$	(93.6	)	$	(348.1	)	$	(441.7	)

Washington Gas Light Company Fair Value Measurements Under the Fair Value Hierarchy
(In millions)	Level 1		Level 2			Level 3			Total
At June 30, 2017
Assets
Natural gas related derivatives	$	—	$	8.7		$	17.6		$	26.3
Total Assets	$	—	$	8.7		$	17.6		$	26.3
Liabilities
Natural gas related derivatives	$	—	$	(5.9	)	$	(168.3	)	$	(174.2	)
Total Liabilities	$	—	$	(5.9	)	$	(168.3	)	$	(174.2	)
At September 30, 2016
Assets
Natural gas related derivatives	$	—	$	15.4		$	24.4		$	39.8
Total Assets	$	—	$	15.4		$	24.4		$	39.8
Liabilities
Natural gas related derivatives	$	—	$	(21.2	)	$	(276.0	)	$	(297.2	)
Total Liabilities	$	—	$	(21.2	)	$	(276.0	)	$	(297.2	)

The following table includes quantitative information about the significant unobservable inputs used in the fair value measurement of our Level 3 financial instruments and the respective fair values of the net derivative asset and liability positions, by contract type, as of June 30, 2017 and September 30, 2016.

Quantitative Information about Level 3 Fair Value Measurements
(In millions)	Net Fair Value June 30, 2017	Valuation Techniques	Unobservable Inputs	Range
WGL Holdings, Inc.
Natural gas related derivatives	$(152.3)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($1.300) - $2.898
		Option Model	Natural Gas Basis Price (per dekatherm)	($1.468) - $2.543
			Annualized Volatility of Spot Market Natural Gas	25.5% - 566.8%
Electricity related derivatives	$(3.8)	Discounted Cash Flow	Electricity Congestion Price (per megawatt hour)	($4.154) - $60.000
Washington Gas Light Company
Natural gas related derivatives	$(150.7)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($1.300) - $2.898
(In millions)	Net Fair Value September 30, 2016
WGL Holdings, Inc.
Natural gas related derivatives	$(264.1)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($2.021) - $3.290
		Option Model	Natural Gas Basis Price (per dekatherm)	($2.105) - $3.310
	$(0.1)		Annualized Volatility of Spot Market Natural Gas	25.5% - 869.9%
Electricity related derivatives	$(9.1)	Discounted Cash Flow	Electricity Congestion Price (per megawatt hour)	($6.199) - $68.700
Washington Gas Light Company
Natural gas related derivatives	$(251.6)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($2.021) - $3.290

The following tables are a summary of the changes in the fair value of our derivative instruments that are measured at net fair value on a recurring basis in accordance with ASC Topic 820 using significant Level 3 inputs during the three and nine months ended June 30, 2017 and 2016, respectively.

Reconciliation of Fair Value Measurements Using Significant Level 3 Inputs
	WGL Holdings, Inc.									Washington Gas Light Company
(In millions)	Natural Gas Related Derivatives			Electricity Related Derivatives			Total			Total - Natural Gas Related Derivatives
Three Months Ended June 30, 2017
Balance at April 1, 2017	$	(150.2	)	$	(8.4	)	$	(158.6	)	$	(155.4	)
Realized and unrealized gains (losses)
Recorded to income	(6.0		)	1.7			(4.3		)	2.9
Recorded to regulatory assets—gas costs	3.0			—			3.0			3.0
Transfers into Level 3	0.1			—			0.1			—
Purchases	—			2.0			2.0			—
Settlements	0.8			0.9			1.7			(1.2		)
Balance at June 30, 2017	$	(152.3	)	$	(3.8	)	$	(156.1	)	$	(150.7	)
Three Months Ended June 30, 2016
Balance at April 1, 2016	$	(204.3	)	$	(30.5	)	$	(234.8	)	$	(194.3	)
Realized and unrealized gains (losses)
Recorded to income	(8.9		)	22.5			13.6			(21.6		)
Recorded to regulatory assets—gas costs	(27.6		)	—			(27.6		)	(27.6		)
Transfers into Level 3	0.1			—			0.1			—
Transfers out of Level 3	(0.2		)	—			(0.2		)	—
Purchases	—			(10.7		)	(10.7		)	—
Settlements	0.4			8.0			8.4			0.2
Balance at June 30, 2016	$	(240.5	)	$	(10.7	)	$	(251.2	)	$	(243.3	)
Nine Months Ended June 30, 2017
Balance at October 1, 2016	$	(264.1	)	$	(9.1	)	$	(273.2	)	$	(251.6	)
Realized and unrealized gains (losses)
Recorded to income	46.6			(2.5		)	44.1			34.7
Recorded to regulatory assets—gas costs	55.4			—			55.4			55.4
Transfers into Level 3	(0.7		)	—			(0.7		)	(0.4		)
Transfers out of Level 3	(0.5		)	—			(0.5		)	(0.3		)
Purchases	—			(1.0		)	(1.0		)	—
Settlements	11.0			8.8			19.8			11.5
Balance at June 30, 2017	$	(152.3	)	$	(3.8	)	$	(156.1	)	$	(150.7	)
Nine Months Ended June 30, 2016
Balance at October 1, 2015	$	(309.7	)	$	(16.0	)	$	(325.7	)	$	(281.1	)
Realized and unrealized gains (losses)
Recorded to income	34.6			(14.2		)	20.4			3.3
Recorded to regulatory assets—gas costs	15.9			—			15.9			15.9
Transfers into Level 3	(0.8		)	—			(0.8		)	(0.2		)
Transfers out of Level 3	8.7			—			8.7			8.8
Purchases	—			(4.4		)	(4.4		)	—
Settlements	10.8			23.9			34.7			10.0
Balance at June 30, 2016	$	(240.5	)	$	(10.7	)	$	(251.2	)	$	(243.3	)

Transfers between different levels of the fair value hierarchy may occur based on fluctuations in the valuation and on the level of observable inputs used to value the instruments from period to period. It is our policy to show both transfers into and out of the different levels of the fair value hierarchy at the fair value as of the beginning of the period. Transfers out of Level 3 for the periods presented were due to an increase in observable market inputs, primarily reflecting a decrease in the duration of the contracts being valued. Transfers into Level 3 for the periods presented were due to an increase in unobservable market inputs, primarily pricing points.

The table below sets forth the line items on the statements of income to which amounts are recorded for the three and nine months ended June 30, 2017 and 2016, respectively, related to fair value measurements using significant Level 3 inputs.

Realized and Unrealized Gains (Losses) Recorded to Income for Level 3 Measurements
	WGL Holdings, Inc.									Washington Gas Light Company
(In millions)	Natural Gas Related Derivatives			Electricity Related Derivatives			Total			Total - Natural Gas Related Derivatives
Three Months Ended June 30, 2017
Operating revenues—non-utility	$	(8.9	)	$	(1.1	)	$	(10.0	)	$	—
Utility cost of gas	2.9			—			2.9			2.9
Non-utility cost of energy-related sales	—			2.8			2.8			—
Total	$	(6.0	)	$	1.7		$	(4.3	)	$	2.9
Three Months Ended June 30, 2016
Operating revenues—non-utility	$	6.5		$	(17.4	)	$	(10.9	)	$	—
Utility cost of gas	(21.6		)	—			(21.6		)	(21.6		)
Non-utility cost of energy-related sales	6.2			39.9			46.1			—
Total	$	(8.9	)	$	22.5		$	13.6		$	(21.6	)
Nine Months Ended June 30, 2017
Operating revenues—non-utility	$	6.3		$	(9.6	)	$	(3.3	)	$	—
Utility cost of gas	34.7			—			34.7			34.7
Non-utility cost of energy-related sales	5.6			7.1			12.7			—
Total	$	46.6		$	(2.5	)	$	44.1		$	34.7
Nine Months Ended June 30, 2016
Operating revenues—non-utility	$	22.5		$	(25.9	)	$	(3.4	)	$	—
Utility cost of gas	3.3			—			3.3			3.3
Non-utility cost of energy-related sales	8.8			11.7			20.5			—
Total	$	34.6		$	(14.2	)	$	20.4		$	3.3

Unrealized gains (losses) attributable to derivative assets and liabilities measured using significant Level 3 inputs were recorded as follows, for the three and nine months ended June 30, 2017 and 2016, respectively.

Unrealized Gains (Losses) Recorded for Level 3 Measurements
	WGL Holdings, Inc.									Washington Gas Light Company
(In millions)	Natural Gas Related Derivatives			Electricity Related Derivatives			Total			Total - Natural Gas Related Derivatives
Three Months Ended June 30, 2017
Recorded to income
Operating revenues—non-utility	$	(7.1	)	$	5.1		$	(2.0	)	$	—
Utility cost of gas	2.6			—			2.6			2.6
Non-utility cost of energy-related sales	(0.2		)	2.0			1.8			—
Recorded to regulatory assets—gas costs	2.7			—			2.7			2.7
Total	$	(2.0	)	$	7.1		$	5.1		$	5.3
Three Months Ended June 30, 2016
Recorded to income
Operating revenues—non-utility	$	6.7		$	(10.3	)	$	(3.6	)	$	—
Utility cost of gas	(22.2		)	—			(22.2		)	(22.2		)
Non-utility cost of energy-related sales	5.2			33.2			38.4			—
Recorded to regulatory assets—gas costs	(28.9		)	—			(28.9		)	(28.9		)
Total	$	(39.2	)	$	22.9		$	(16.3	)	$	(51.1	)
Nine Months Ended June 30, 2017
Recorded to income
Operating revenues—non-utility	$	5.2		$	4.0		$	9.2		$	—
Utility cost of gas	22.4			—			22.4			22.4
Non-utility cost of energy-related sales	(0.1		)	8.4			8.3			—
Recorded to regulatory assets—gas costs	38.0			—			38.0			38.0
Total	$	65.5		$	12.4		$	77.9		$	60.4
Nine Months Ended June 30, 2016
Recorded to income
Operating revenues—non-utility	$	26.1		$	(6.7	)	$	19.4		$	—
Utility cost of gas	(0.2		)	—			(0.2		)	(0.2		)
Non-utility cost of energy-related sales	2.6			15.1			17.7			—
Recorded to regulatory assets—gas costs	9.2			—			9.2			9.2
Total	$	37.7		$	8.4		$	46.1		$	9.0

The following table presents the carrying amounts and estimated fair values of our financial instruments at June 30, 2017 and September 30, 2016.

WGL Holdings, Inc. Fair Value of Financial Instruments
	June 30, 2017				September 30, 2016
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Money market funds(a)	$	15.4	$	15.4	$	10.6	$	10.6
Other short-term investments(a)	$	0.1	$	0.1	$	1.4	$	1.4
Commercial paper (b)	$	486.0	$	486.0	$	269.0	$	269.0
Project financing (b)	$	52.9	$	52.9	$	62.4	$	62.4
Long-term debt(c)	$	1,235.6	$	1,378.8	$	1,435.0	$	1,641.9

Washington Gas Light Company Fair Value of Financial Instruments
	June 30, 2017				September 30, 2016
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Money market funds (a)	$	8.7	$	8.7	$	5.0	$	5.0
Other short-term investments (a)	$	0.1	$	0.1	$	1.4	$	1.4
Commercial paper (b)	$	161.0	$	161.0	$	42.0	$	42.0
Project financing (b)	$	41.8	$	41.8	$	62.4	$	62.4
Long-term debt (c)	$	939.3	$	1,073.2	$	939.0	$	1,126.4

^(a)  Balance is located in cash and cash equivalents in the accompanying balance sheets. These amounts may be offset by outstanding checks.

^(b)  Balance is located in notes payable in the accompanying balance sheets.

^(c)  Excludes current maturities. On October 1, 2016, WGL and Washington Gas adopted ASU 2015-03 and ASU 2015-15. This standard requires an entity to account for debt issuance costs as a valuation account presented as a deduction from the face amount of debt in the balance sheet. Prior period amounts related to other deferred charges and other assets and long-term debt in the accompanying condensed balance sheets have been recast to conform to the current period presentation.

Our money market funds are Level 1 valuations and their carrying amount approximates fair value. Other short-term investments are primarily overnight investment accounts; their carrying amount approximates fair value based on Level 2 inputs. The maturity of our commercial paper outstanding at both June 30, 2017 and September 30, 2016 is under 30 days. Due to the short-term nature of these notes, the carrying cost of our commercial paper approximates fair value using Level 2 inputs. Due to the nature of our project financing arrangements, the carrying cost approximates fair value using Level 2 inputs. Neither WGL’s nor Washington Gas’ long-term debt is actively traded. The fair value of long-term debt was estimated based on the quoted market prices of the U.S. Treasury issues having a similar term to maturity, adjusted for the credit quality of the debt issuer, WGL or Washington Gas. Our long-term debt fair value measurement is classified as Level 3.

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Operating Segment Reporting

9 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Operating Segment Reporting

OPERATING SEGMENT REPORTING

We have four reportable operating segments: regulated utility, retail energy-marketing, commercial energy systems and midstream energy services. The division of these segments into separate revenue generating components is based upon regulation, products and services. Our chief operating decision maker is our Chief Executive Officer and we evaluate segment performance based on Earnings Before Interest and Taxes (EBIT). EBIT is defined as earnings before interest and taxes net of amounts attributable to non-controlling interests. Items we do not include in EBIT are interest expense, intercompany financing activity, dividends on Washington Gas preferred stock, and income taxes. EBIT includes transactions between reportable segments. We also evaluate our operating segments based on other relevant factors, such as penetration into their respective markets and return on equity.

Our four segments are summarized below.

• Regulated Utility – The regulated utility segment is our core business. It consists of Washington Gas and Hampshire. Washington Gas provides regulated gas distribution services (including the sale and delivery of natural gas) to end use customers and natural gas transportation services to an unaffiliated natural gas distribution company in West Virginia under a Federal Energy Regulatory Commission (FERC) approved interstate transportation service operating agreement. Hampshire provides regulated interstate natural gas storage services to Washington Gas under a FERC approved interstate storage service tariff.

• Retail Energy-Marketing – The retail energy-marketing segment consists of WGL Energy Services, which sells natural gas and electricity directly to retail customers in competition with regulated utilities and unregulated gas and electricity marketers.

• Commercial Energy Systems – The commercial energy systems segment consists of WGL Energy Systems which provides clean and energy efficient solutions including commercial solar, energy efficiency and combined heat and power projects and other distributed generation solutions to government and commercial clients. In addition, this segment comprises the operations of WGSW, a holding company formed to invest in alternative energy assets.

• Midstream Energy Services – The midstream energy services segment consists of WGL Midstream, which specializes in the investment, management, development and optimization of natural gas storage and transportation midstream infrastructure projects.

Administrative and business development activity costs associated with WGL and Washington Gas Resources and activities and transactions that are not significant enough on a stand-alone basis to warrant treatment as an operating segment, and that do not fit into one of our four operating segments, are aggregated as “Other Activities” in the Operating Segment Financial Information presented below. Results for other activities primarily relate to external costs associated with the planned merger with AltaGas.

As a result of the adoption of ASU 2015-03 and ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost and Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, prior period total assets have been recast to conform to current quarter presentation.

The following tables present operating segment information for the three and nine months ended June 30, 2017 and 2016.

Operating Segment Financial Information
(In thousands)	Operating Revenues(a)			Depreciation and Amortization			Equity in Earnings of Unconsolidated Affiliates		EBIT			Total Assets			Capital Expenditures			Equity Method Investments
Three Months Ended June 30, 2017
Regulated utility	$	203,186		$	33,217		$	—	$	11,226		$	4,780,169		$	72,750		$	—
Retail energy-marketing	250,025			281			—		4,335			522,496			(125		)	—
Commercial energy systems(b)	25,645			5,585			2,355		14,354			987,827			13,062			76,341
Midstream energy services	4,540			2			5,153		7,651			650,204			—			348,963
Other activities	—			—			—		(1,622		)	354,465			—			—
Eliminations(c)	(9,032		)	9			—		(138		)	(921,668		)	—			—
Total consolidated	$	474,364		$	39,094		$	7,508	$	35,806		$	6,373,493		$	85,687		$	425,304
Three Months Ended June 30, 2016
Regulated utility	$	187,077		$	29,632		$	—	$	(20,458	)	$	4,462,946		$	106,773		$	—
Retail energy-marketing	266,214			233			—		49,544			473,766			768			—
Commercial energy systems	20,842			3,900			2,162		8,286			779,516			34,125			65,289
Midstream energy services	(17,989		)	26			2,365		(16,908		)	433,384			—			217,491
Other activities	—			—			—		(517		)	198,905			—			—
Eliminations(c)	(15,557		)	(5		)	—		178			(612,656		)	—			—
Total consolidated	$	440,587		$	33,786		$	4,527	$	20,125		$	5,735,861		$	141,666		$	282,780
Nine Months Ended June 30, 2017
Regulated utility	$	1,012,193		$	97,349		$	—	$	279,114		$	4,780,169		$	281,043		$	—
Retail energy-marketing	873,625			859			—		42,775			522,496			609			—
Commercial energy systems(b)	61,482			15,210			7,185		27,564			987,827			70,580			76,341
Midstream energy services	18,173			21			7,932		21,160			650,204			—			348,963
Other activities	—			—			—		(17,887		)	354,465			—			—
Eliminations(c)	(39,872		)	48			—		(502		)	(921,668		)	—			—
Total consolidated	$	1,925,601		$	113,487		$	15,117	$	352,224		$	6,373,493		$	352,232		$	425,304
Nine Months Ended June 30, 2016
Regulated utility	$	934,347		$	86,318		$	—	$	243,102		$	4,462,946		$	267,230		$	—
Retail energy-marketing	925,180			872			—		52,055			473,766			7,595			—
Commercial energy systems	57,066			11,105			5,554		10,251			779,516			73,769			65,289
Midstream energy services	16,223			97			5,004		17,631			433,384			—			217,491
Other activities	—			—			—		(2,773		)	198,905			—			—
Eliminations(c)	(43,156		)	(24		)	—		(416		)	(612,656		)	—			—
Total consolidated	$	1,889,660		$	98,368		$	10,558	$	319,850		$	5,735,861		$	348,594		$	282,780

(a) Operating revenues are reported gross of revenue taxes. Revenue taxes of both the regulated utility and the retail energy-marketing segments include gross receipt taxes. Revenue taxes of the regulated utility segment also include public service commission fees, franchise fees and energy taxes. Operating revenue amounts in the “Eliminations” row represent total intersegment revenues associated with sales from the regulated utility segment to the retail energy-marketing segment. Midstream Energy Services’ cost of energy related sales is netted with its gross revenues.

(b) Commercial energy systems' operating revenues include revenues from non-controlling interest. Commercial energy systems' EBIT is adjusted for the effects of non-controlling interest.

(c) Intersegment eliminations include any mark-to market valuations associated with trading activities between WGL Midstream and WGL Energy Services, intercompany loans and a timing difference between Commercial Energy Systems’ recognition of revenue for the sale of Renewable Energy Credits (RECs) to Retail Energy-Marketing and Retail Energy-Marketing’s recognition of the associated expense. Retail Energy-Marketing has recorded a portion of the RECs purchased as inventory to be used in future periods at which time they will be expensed.

The following table provides a reconciliation from EBIT to net income applicable to common stock.

	Three Months Ended June 30,				Nine Months Ended June 30,
(In thousands)	2017		2016		2017		2016
Total consolidated EBIT	$	35,806	$	20,125	$	352,224	$	319,850
Interest expense	25,062		12,998		55,552		38,757
Income tax expense	2,149		4,772		106,381		103,619
Dividends on Washington Gas Light Company preferred stock	330		330		990		990
Net income applicable to common stock	$	8,265	$	2,025	$	189,301	$	176,484

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Other Investments

9 Months Ended

Jun. 30, 2017

Other Investments [Abstract]

Other Investments

OTHER INVESTMENTS

WGL has both solar and pipeline investments and accounts for its interests in legal entities as either a: (i) variable interest entity (VIE) or a (ii) voting interest entity (non-VIE). A VIE is a legal entity with the following characteristics: (i) has insufficient at-risk equity to fund its activities without additional subordinated financial support from any other party or parties; (ii) whose at-risk equity holders as a group do not have the power through voting or similar rights to direct the entity’s activities that most significantly affect its economic performance; or (iii) whose at-risk equity holders do not have the right to receive the expected residual returns.

The determination of whether or not to consolidate a VIE under GAAP requires a significant amount of judgment. This includes, but is not limited to, consideration of our contractual relationship with the entity, the legal structure of the entity, whether or not the entity has enough equity to finance its activities without additional financial support, the voting power of the equity holders, the obligation of the equity holders to absorb losses of the entity and their rights to receive any expected residual returns. 

We have investments in both consolidated and unconsolidated VIEs which are described in detail below. The unconsolidated investments are accounted for under the equity method of accounting with profits and losses included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statements of Income.

Under the VIE model, we have a controlling financial interest in a VIE (i.e. are the primary beneficiary) when we have current or potential rights that give us the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance combined with a variable interest that gives us the right to receive potentially significant benefits or the obligation to absorb potentially significant losses. When changes occur to the design of an entity, we reconsider whether it is subject to the VIE model. We continuously evaluate whether we have a controlling financial interest in a VIE.

Under the voting interest model, we generally have a controlling financial interest in an entity where we currently hold, directly or indirectly, more than 50% of the voting rights or where we exercise control through substantive participating rights. However, we consider substantive rights held by other partners in determining if we hold a controlling financial interest, and in some cases, despite owning more than 50% of the common stock of an investee, an evaluation of our rights may result in the determination that we do not have a controlling financial interest. We reevaluate whether we have a controlling financial interest in these entities when our voting or substantive participating rights change. Where we do not have significant influence, the affiliates are accounted for under the cost method. Investments in, and advances to, affiliated companies are presented in the caption “Investments in unconsolidated affiliates” in the accompanying Consolidated Balance Sheets.

WGL uses the Hypothetical Liquidation at Book Value (HLBV) methodology for certain equity method investments when the governing structuring agreement over the equity investment results in different liquidation rights and priorities than what is reflected by the underlying ownership interest percentage. For investments accounted for under the HLBV method, simply applying the percentage ownership interest to GAAP net income in order to determine earnings or losses does not accurately represent the income allocation and cash flow distributions that will ultimately be received by the investors. The calculation may vary in its complexity depending on the capital structure and the tax considerations for the investments.

When applying HLBV, WGL determines the amount that it would receive if an equity investment entity were to liquidate all of its assets at book value (as valued in accordance with GAAP) and distribute that cash to the investors based on the contractually defined liquidation priorities. The change in WGL's claim on the investee's book value at the beginning and end of the reporting period (adjusted for contributions and distributions) is WGL’s share of the earnings or losses from the equity investment for the period.

Consolidated Investments

Variable Interest Entities

At June 30, 2017, WGL's subsidiary, WGSW, Inc. was the primary beneficiary of SFGF, SFRC and SFGF II, as a result of its ability to direct the activities most significant to the economic performance of those entities. Accordingly, we have consolidated those VIE entities.

SFGF

On August 24, 2016, WGSW and a tax equity partner formed SFGF to acquire distributed generation solar projects in the State of Georgia that were developed by WGL Energy Systems. WGSW is the managing member and contributed cash equity equal to the purchase price of the solar projects less any contributions from the tax-equity partner. As of June 30, 2017, WGSW has contributed $16.8 million into the tax equity partnership.

WGL Energy Systems is the operations and maintenance provider and was the developer of the projects. Profits and losses are allocated between the partners under the HLBV method of accounting and the portion allocated to the tax equity partner is included in "Net income (loss) attributable to non-controlling interest" on the consolidated statements of income and is recorded to "Non-controlling interest" on the consolidated balance sheets.

SFRC

On October 28, 2016, WGSW and a tax equity partner formed SFRC to acquire distributed generation solar projects in the State of Minnesota that are developed by WGL Energy Systems. WGSW is the managing member and will provide cash equity equal to the purchase price of the solar projects less any contributions from the tax-equity partner. As of June 30, 2017, WGSW has contributed $13.5 million into the tax equity partnership.

WGL Energy Systems is the operations and maintenance provider, and the developer of the projects. Profits and losses are allocated between the partners under the HLBV method of accounting and the portion allocated to the tax equity partner is included in "Net income (loss) attributable to non-controlling interest" on the consolidated statement of income and is recorded to "Non-controlling interest" on the consolidated balance sheets.

SFGF II

On June 30, 2017, WGSW and a tax equity partner formed SFGF II to acquire distributed generation solar projects in the United States of America that are expected to be developed by WGL Energy Systems. WGSW is the managing member and will provide cash equity equal to the purchase price of the solar projects less any contributions from the tax-equity partner. As of June 30, 2017, no contributions have been made into the tax equity partnership.

WGL Energy Systems will be the operations and maintenance provider and the developer of the projects. Profits and losses are allocated between the partners under the HLBV method of accounting and the portion allocated to the tax equity partner is included in "Net income (loss) attributable to non-controlling interest" on the consolidated statements of income and is recorded to "Non-controlling interest" on the consolidated balance sheets.

The carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in our condensed consolidated balance sheet at June 30, 2017 and September 30, 2016 are as follows:

WGL Holdings, Inc.

Balance Sheet Location of Consolidated Investments

(in millions)	June 30, 2017		September 30, 2016
Current assets	$	2.1	$	—
Non-current assets	56.9		13.2
Total assets	$	59.0	$	13.2
Current liabilities	0.4		0.6
Non-current liabilities	0.3		—
Total liabilities	$	0.7	$	0.6

Unconsolidated Investments

Variable Interest Entities

WGL has a variable interest in two investments which are considered unconsolidated VIEs:

• Meade and

• ASD.

At June 30, 2017, these VIEs were not consolidated because WGL and its subsidiaries were not the primary beneficiaries. The nature of WGL’s involvement with these investments lacks the characteristics of a controlling financial interest. WGL either does not have control over any of the non-consolidated VIEs’ activities that are economically significant to the VIEs and/or WGL does not have the obligation to absorb expected losses or the right to receive expected gains that could be significant to the VIE.

Our maximum financial exposure to loss as a result of our involvement with the VIEs includes (a) the amount invested in, and advanced to, the VIE as of the reporting date and (b) any legal or contractual obligation to provide financing in the future, such as liquidity arrangements, guarantees, and other contractual commitments. Any such arrangements, if applicable, are included below.

Meade

In 2014, WGL through its subsidiary WGL Midstream, entered into a limited liability company agreement and formed Meade Pipeline Co LLC (Meade), a Delaware limited liability company with Transcontinental Gas Pipe Line Company, LLC (Williams) to invest in a regulated pipeline, a segment of Transco's Atlantic Sunrise project, called Central Penn Pipeline (Central Penn). Central Penn will be an approximately 185-mile pipeline originating in Susquehanna County, Pennsylvania and extending to Lancaster County, Pennsylvania that will have the capacity to transport and deliver up to approximately 1.7 million dekatherms per day of natural gas.

WGL Midstream plans to invest an estimated $410 million for a 55% interest in Meade. Although WGL Midstream holds greater than a 50% interest in Meade, Meade is accounted for under the equity method of accounting because WGL Midstream does not have the power to direct the activities most significant to the economic performance of Meade. Profits and losses are allocated under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance. At June 30, 2017 and September 30, 2016, WGL Midstream held a $121.0 million and $80.8 million, respectively, equity method investment in Meade.

ASD

WGSW is a limited partner in ASD Solar LP (ASD), a limited partnership formed to own and operate a portfolio of residential solar projects, primarily rooftop photovoltaic power generation systems. As a limited partner, WGSW provided funding to the partnership but did not have power to direct the activities that most significantly affect the operations and economic performance of the entity. In January 2014, the funding commitment period ended for the partnership. As of June 30, 2017, ASD is being consolidated by the general partner, Solar Direct LLC (Solar Direct). Solar Direct is a wholly owned subsidiary of American Solar Direct Inc. (ASDI).

Our investment in ASD is accounted for under the HLBV equity method of accounting; any profits and losses are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGSW’s investment balance. At June 30, 2017 and September 30, 2016, WGSW held a $66.7 million and $66.1 million, respectively, equity method investment in ASD. At June 30, 2017, the carrying amount of WGSW’s investment in ASD exceeded the amount of the underlying equity in net assets by $35.8 million due to WGSW recording additions to its investment in ASD’s net assets at fair value of contributions in accordance with GAAP. This basis difference is being amortized over the life of the assets.

In June 2017, ASDI filed for Chapter 7 bankruptcy as a result of financial difficulties. To ensure continuing operations of the partnership and minimal disruptions to the customers, WGSW petitioned the Bankruptcy Court to remove Solar Direct as manager of ASD operations and to approve the appointment of SF ASD LLC (SF ASD), a subsidiary of WGSW, which was formed to take over the management and operations of the partnership, as manager of ASD operations. On July 10, 2017, the Bankruptcy Court granted the bankruptcy trustee's emergency motion to assign management rights and control of ASD to SF ASD. This change in partnership control will result in the consolidation of the ASD partnership by WGL as of July 10, 2017. WGSW's equity method investment will be eliminated with its partnership interest with ASDI's non-controlling interest in ASD to be recognized at fair value. It is anticipated that an estimated gain of approximately $2.0 million will be recognized to other income based on the difference between WGSW's net investment in the partnership and WGSW's partnership interest measured at fair value. Associated with the financial difficulties of ASDI, in April 2017, WGL paid $2.1 million to satisfy a bank guarantee on behalf of ASDI.

The following table summarizes the preliminary fair value amounts of ASD assets and liabilities, as well as the non-controlling interest recorded at estimated fair value as of the date of control.

(in millions)	Preliminary Estimated Fair Value
Current assets	$	1.1
Other assets	0.8
Property, plant and equipment	76.4
Total assets	$	78.3
Current liabilities	0.9
Other liabilities	27.0
Total liabilities	$	27.9
Net assets	$	50.4
Non-controlling interest	$	0.5
WGSW equity interest	$	49.9

Property, plant and equipment represent residential solar assets that were measured at estimated fair value using the income derived from discounted cash flows while the other liabilities represent deferred income tax credits, treasury grants and state government grants. The fair values were determined based on significant estimates and assumptions that are judgmental in nature, including projected cash flows and discount rates reflecting inherent risk in the future cash flows. Accounting guidance provides that the business combination value may be modified for up to one year from the date of the transaction to the extent that additional information is obtained about the facts and circumstances which existed as of the consolidation date. The valuation performed to assess fair value is preliminary and is expected to be finalized by the end of fiscal year 2017.

SunEdison

As of June 30, 2017, WGSW ended its agreement with SunEdison, Inc. (SunEdison) by assigning the master purchase agreement and master lease agreement with SunEdison to its newly formed affiliate, SF Echo LLC.

In April 2017, EchoFirst Finance Company LLC (EchoFirst), the subsidiary of SunEdison that was party to our master purchase and lease agreements filed a voluntary petition with the United States Bankruptcy Court for relief under Title 11 of the United States Code. In April 2016, SunEdison filed a voluntary bankruptcy petition with the United States Bankruptcy Court for relief under Title 11 of the United States Code.

In April 2017, we executed an assignment of the master lease agreement, master purchase agreement and the EchoFirst customer leases from SunEdison, allowing SunEdison to divest the WGSW lease arrangement. SF Echo, a wholly-owned subsidiary of WGSW, will operate and maintain the assets and be entitled to all cash flows from the assets for the remainder of their lease terms. The master lease between SF Echo and WGSW will be accounted for as a direct financing lease. SF Echo accounts for the customer leases as operating leases. The fair value of the assets did not result in any adjustments during the period. Our maximum financial exposure is limited to lease payment receivables from retail residential solar customers, future maintenance and performance payments and customer non-payments. On a quarterly basis, we will evaluate our lease receivables for credit losses.

SF Echo will record lease income in the accompanying condensed consolidated statements of income. WGSW did not hold an investment in SunEdison at June 30, 2017. Additionally, we had balances of $9.4 million of unamortized tax credits related to the leased assets in "Unamortized investment tax credits" on the accompanying condensed consolidated balance sheets at June 30, 2017.

Non-VIE Investments

Constitution

In 2013, Constitution Pipeline Company, LLC (Constitution) was formed, with WGL Midstream as an investor. At June 30, 2017, WGL Midstream's share of the total forecasted cash contributions over the term of the construction agreement for Constitution is $95.5 million, reflecting a 10% share in the pipeline venture. This natural gas pipeline will transport natural gas from the Marcellus region in northern Pennsylvania to major northeastern markets. Constitution is accounted for under the equity method of accounting; any profits and losses are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance. The equity method is considered appropriate because Constitution is an LLC with specific ownership accounts and ownership between five and fifty percent resulting in WGL Midstream maintaining a more than minor influence over the partnership operating and financing policies.

On April 22, 2016, the New York State Department of Environmental Conservation (NYSDEC) denied Constitution's application for a Section 401 Water Quality Certification (Section 401 Certification) for the pipeline, which is necessary for the construction and operation of the pipeline. Constitution has stated that it remains committed to pursuing the project and that it intends to pursue all available options to challenge the legality and appropriateness of NYSDEC’s decision. In May, 2016, Constitution filed actions in the U.S. Circuit Court of Appeals for the Second Circuit and the U.S. District Court for the Northern District of New York, respectively, appealing the decision and seeking declaratory judgment that the State of New York’s permitting authority is preempted by federal law. On March 16, 2017, the U.S. District Court for the Northern District of New York issued an order ruling, without prejudice, that it lacked subject matter jurisdiction to hear Constitution's complaint.

In light of the forgoing matters, Constitution has revised its target in-service date to as early as the first half of 2019, which assumes the timely receipt of a Notice to Proceed from the FERC. We can give no assurance, however, that Constitution’s efforts to obtain the Section 401 Certification will be successful. At June 30, 2017 and September 30, 2016, we held a $38.5 million and $38.6 million equity method investment in Constitution, respectively. We have evaluated our investment in Constitution for other than temporary impairment as of June 30, 2017. Our impairment assessment used income and market approaches in determining the fair value of our investment in Constitution, including consideration of the severity and duration of any decline in fair value of our investment in the project. Our key inputs included, but are not limited to, significant management judgments and estimates, including projections of the project’s cash flows, selection of a discount rate, market multipliers and probability weighting of potential outcomes of legal and regulatory proceedings. At this time, we do not have an other than temporary impairment and have not recorded any impairment charge to reduce the carrying value of our investment. If Constitution is ultimately unable to obtain the Section 401 Certification or other future developments or indicators of an unfavorable resolution arise subsequently, an impairment charge of up to substantially all of our investment in the capitalized project costs may be required. It is also possible that Constitution could incur certain supplier-related costs in the event of a prolonged delay or termination of the project. We will continue to monitor and update our impairment analysis as required.

Mountain Valley Pipeline

In March 2015, WGL Midstream acquired a 7% equity interest in Mountain Valley Pipeline, LLC (Mountain Valley). On October 24, 2016, WGL Midstream acquired an additional 3% equity interest in Mountain Valley by assuming all of Vega Midstream MVP LLC's (Vega Energy) interest in the joint venture. WGL Midstream now owns a 10% interest in Mountain Valley.

The proposed pipeline to be developed, constructed, owned and operated by Mountain Valley, will transport approximately 2.0 million dekatherms of natural gas per day from interconnects with EQT Corporation's Equitrans system in Wetzel County, West Virginia to Transcontinental Gas Pipe Line Company LLC's Station 165 in Pittsylvania County, Virginia. The pipeline is scheduled to be in service in the fourth quarter of calendar year 2018.

WGL Midstream expects to invest in scheduled capital contributions through the in-service date of the pipeline, its pro rata share (based on its 10% equity interest) of project costs, an estimated aggregate amount of approximately $327.6 million. At June 30, 2017 and September 30, 2016, WGL Midstream held a $52.3 million and $22.5 million equity method investment in Mountain Valley, respectively. The equity method is considered appropriate because Mountain Valley is an LLC with specific ownership accounts and ownership between five and fifty percent resulting in WGL Midstream maintaining a more than minor influence over the partnership operating and financing policies.

The carrying amount of WGL Midstream's investment in MVP exceeded the amount of the underlying equity in net assets by $0.5 million, which will be amortized over the life of the assets when it is put in production. Profits and losses are allocated under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance.

Stonewall System

WGL Midstream has a 30% equity interest in an entity that owns and operates certain assets known as the Stonewall Gas Gathering System (the Stonewall System). WGL Midstream paid $89.4 million to acquire the equity interest pursuant to an option that WGL Midstream previously acquired. During the nine months ended June 30, 2017, WGL Midstream contributed an additional $45.5 million related to retiring debt at the entity level. The Stonewall System has the capacity to gather up to 1.4 billion cubic feet of natural gas per day from the Marcellus production region in West Virginia, and connects with an interstate pipeline system that serves markets in the mid-Atlantic region.

WGL Midstream held a $137.2 million and $95.5 million equity method investment in the Stonewall System at June 30, 2017 and September 30, 2016, respectively. The equity method is considered appropriate because the Stonewall System is an LLC with specific ownership accounts and ownership between five and fifty percent resulting in WGL Midstream maintaining a more than minor influence over the partnership operating and financing policies.

The carrying amount of WGL Midstream's investment in the Stonewall System exceeded the amount of the underlying equity in net assets by $8.9 million, which is being amortized over the life of the assets. Profits and losses are allocated under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance.

Nextility-Lease Settlement and Assignment

During the nine months ended June 30, 2017, WGSW terminated its sale/leaseback agreement with Nextility and entered into a new lease agreement with another unrelated third party, with significantly reduced payments and lease terms. Based on the lease classification criteria per ASC Topic 840, it was determined that the new lease is an operating lease. As a result, the net investment of $5.4 million on the consolidated balance sheet was eliminated. The solar assets were recorded at present fair value using the income approach as $4.0 million to "Property, plant and equipment" and $1.4 million was recorded as a receivable. The unamortized investment tax credits (ITC) balance associated with these assets continue to be deferred and amortized over the assets' useful life. As of June 30, 2017, the deferred net ITC receivable related to these assets is $3.0 million. In May 2017, Nextility informed WGSW that it was unable to finalize a financing arrangement and is in the process of winding down its business. A $1.0 million reserve was recorded for the receivable due from Nextility as part of the settlement to terminate the sale/leaseback agreement.

SFEE

During the nine months ended June 30, 2017, WGSW and a tax equity partner formed SFEE to acquire distributed generation solar projects that are developed by a third-party developer or WGL Energy Systems. New projects will be designed and constructed under long-term power purchase agreements. As of June 30, 2017, WGSW has contributed $6.5 million and held an $9.6 million interest in SFEE.

SFEE is not considered a VIE and is not consolidated under the voting interest model for limited partnerships. WGSW is the managing member of SFEE. WGSW is also the operations and maintenance provider for SFEE. In addition, WGL Energy Systems has the option to sell its own distributed generation solar projects to the developer for sale to SFEE and these assets remain on WGL Energy System's books until we no longer have continuing involvement. The equity method is considered appropriate because WGSW has significant influence over the operating and financial policies of SFEE. Profits and losses are allocated between the partners under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGSW’s investment balance. For SFEE, WGL has also provided a guarantee that could require additional future payments of $13.0 million.

The following tables present summary information about our unconsolidated VIEs and non-VIEs:

WGL Holdings, Inc.

Balance Sheet Location of Unconsolidated Investments

	Solar Investments				Pipelines
(in millions)	VIEs(a)		Non-VIEs(b)		VIEs(c)		Non-VIEs(d)		Total
June 30, 2017
Assets
Investments in unconsolidated affiliates	$	66.7	$	9.6	$	121.0	$	228.0	$	425.3
Total assets	$	66.7	$	9.6	$	121.0	$	228.0	$	425.3
September 30, 2016
Assets
Investments in unconsolidated affiliates	$	66.1	$	—	$	80.8	$	156.6	$	303.5
Investments in direct financing leases, capital leases(e)	29.8		—		—		—		29.8
Accounts receivable(e)	1.1		—		—		9.2		10.3
Total assets	$	97.0	$	—	$	80.8	$	165.8	$	343.6

(a) "Investments in unconsolidated affiliates" balance relates to equity method investment in ASD.

(b) Balance relates to interest held in SFEE.

(c) Balance relates to equity method investment in Meade.

(d) Balance relates to equity method investments in Constitution, Mountain Valley Pipeline and Stonewall System.

(e) Prior year balances relate to direct financing leases in Nextility and SunEdison.

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Related Party Transactions

9 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

WGL and its subsidiaries engage in inter-company transactions in the ordinary course of business. Inter-company transactions and balances have been eliminated from the consolidated financial statements of WGL, except as described below. Washington Gas provides accounting, treasury, legal and other administrative and general support to affiliates, and files consolidated tax returns that include affiliated taxable transactions. Washington Gas bills its affiliates in accordance with regulatory requirements for the actual cost of providing these services, which approximates their market value. To the extent such billings are outstanding, they are reflected in “Receivables from associated companies” on Washington Gas’ balance sheets. Washington Gas assigns or allocates these costs directly to its affiliates and, therefore, does not recognize revenues or expenses associated with providing these services. Washington Gas believes that allocations based on broad measures of business activity are appropriate for allocating expenses resulting from common services. Affiliate entities are allocated a portion of common services based on a formula driven by appropriate indicators of activity, as approved by management.

In connection with billing on behalf of unregulated third party marketers, including WGL Energy Services and with other miscellaneous billing processes, Washington Gas collects cash on behalf of affiliates and transfers the cash in a reasonable time period. Cash collected by Washington Gas on behalf of its affiliates but not yet transferred is recorded in “Payables to associated companies” on Washington Gas’ balance sheets.

Washington Gas has obtained third-party project financing on behalf of the Federal government to provide funds during the construction of certain energy management services projects entered into under Washington Gas' area- wide contract. In connection with work completed under the area-wide contract, the construction work is performed by WGL Energy Systems on behalf of Washington Gas and an amount is recorded in "Payables to associated companies" for work performed by WGL Energy Systems for which cash has not been transferred. Refer to Note 3—Short-Term Debt for further discussion of the project financing.

The following table presents the receivables from and payables to associated companies as of June 30, 2017 and September 30, 2016.

Washington Gas Receivables From / Payables To Associated Companies
(In millions)	June 30, 2017		September 30, 2016
Receivables from Associated Companies	$	16.1	$	13.8
Payables to Associated Companies	$	91.5	$	65.8

Washington Gas provides gas balancing services related to storage, injections, withdrawals and deliveries to all energy marketers participating in the sale of natural gas on an unregulated basis through the customer choice programs that operate in its service territory. These balancing services include the sale of natural gas supply commodities related to various peaking arrangements contractually supplied to Washington Gas and then partially allocated and assigned by Washington Gas to the energy marketers, including WGL Energy Services. Washington Gas records revenues for these balancing services pursuant to tariffs approved by the appropriate regulatory bodies. These related party amounts related to balancing services provided to WGL Energy Services have been eliminated in the consolidated financial statements of WGL. The following table shows the amounts Washington Gas charged WGL Energy Services for balancing services.

Washington Gas - Gas Balancing Service Charges
	Three Months Ended June 30,				Nine Months Ended June 30,
(In millions)	2017		2016		2017		2016
Gas balancing service charge	$	4.2	$	5.5	$	19.9	$	21.7

As a result of these balancing services, an imbalance is created for volumes of natural gas received by Washington Gas that are not equal to the volumes of natural gas delivered to customers of the energy marketers. At June 30, 2017, WGL Energy Services recognized accounts receivable from Washington Gas of $3.0 million related to an imbalance in gas volumes. At September 30, 2016, WGL Energy Services recognized accounts payable to Washington Gas of $0.8 million related to an imbalance in gas volumes. Due to regulatory treatment, these payables and receivables are not eliminated in the consolidated financial statements of WGL. Refer to Note 1—Accounting Policies of the Notes to Consolidated Financial Statements of the combined Annual Report on Form 10-K for the fiscal year ended September 30, 2016 for further discussion of these imbalance transactions.

Washington Gas participates in a purchase of receivables (POR) program as approved by the Maryland Public Service Commission (PSC of MD), whereby it purchases receivables from participating energy marketers at approved discount rates. In addition, WGL Energy Services participates in POR programs with certain Maryland and Pennsylvania utilities, whereby it sells its receivables to various utilities, including Washington Gas, at approved discount rates. The receivables purchased by Washington Gas are included in “Accounts receivable” in the accompanying balance sheet. Any activity between Washington Gas and WGL Energy Services related to the POR program has been eliminated in the accompanying financial statements for WGL. At June 30, 2017 and September 30, 2016, Washington Gas had balances of $3.9 million and $4.2 million, respectively, of purchased receivables from WGL Energy Services.

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Commitments and Contingencies

9 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

REGULATORY CONTINGENCIES

Certain legal and administrative proceedings incidental to our business, including regulatory contingencies, involve WGL and/or its subsidiaries. In our opinion, we have recorded an adequate provision for probable losses or refunds to customers for regulatory contingencies related to these proceedings.

District of Columbia Jurisdiction

Investigation into Washington Gas’ Cash Reimbursement to Competitive Service Providers (CSPs). On August 5, 2014, the Office of the People’s Counsel’s (OPC) of DC filed a complaint with The Public Service Commission of the District of Columbia (PSC of DC) requesting that the Commission open an investigation into Washington Gas’ payments to CSPs to cash-out over-deliveries of natural gas supplies during the 2008-2009 winter heating season. OPC asserted that Washington Gas made excess payments in the amount of $2.4 million to CSPs. On December 19, 2014, the PSC of DC granted the OPC of DC’s request and opened a formal investigation. On October 27, 2015, the PSC of DC issued an order finding that Washington Gas, in performing the cash-out, had violated D.C. Code 34-1101’s requirement that no service shall be provided without Commission approval. The PSC of DC directed Washington Gas to provide calculations showing what the impact would have been had Washington Gas made volumetric adjustments to CSP deliveries as of April 2009, which Washington Gas calculates would result in a refund of approximately $2.4 million, which was recognized by WGL in fiscal year 2015. On February 3, 2016, the PSC of DC issued an order denying OPC’s application for reconsideration and granting in part, and denying in part, Washington Gas’ application for reconsideration.  Washington Gas and OPC filed initial briefs on February 18, 2016, and reply briefs on February 29, 2016, on the issue of whether there is a more reasonable way to reconcile the over-deliveries by CSPs such as through volumetric adjustments or through cash payments. On August 11, 2016, the PSC of DC issued an order requiring Washington Gas to refund approximately $2.4 million through the Actual Cost Adjustment ("ACA"). On August 26, 2016, Washington Gas filed its plan for implementing the $2.4 million refund within a 12-month period. The PSC of DC issued an Order on October 7, 2016, clarifying Washington Gas' refunding and reporting requirements.

Virginia Jurisdiction

Virginia Rate Case. On June 30, 2016, Washington Gas filed an application with the Commonwealth of Virginia State Corporation Commission (SCC of VA) to increase its base rates for natural gas service by $45.6 million, which includes $22.3 million of revenue associated with natural gas pipeline replacement initiatives previously approved by the Commission and paid by customers through a monthly rider. Additionally, the proposed rate increase includes provisions designed to deliver the benefits of natural gas to more customers that include: (i) facilitating conversion to natural gas in locations already served by Washington Gas; (ii) expanding the natural gas system to high-growth communities in Virginia and (iii) research and development that we believe will enable innovations to enhance service for our customers.

Interim rates went into effect, subject to refund, in the December 2016 billing cycle. Intervenors filed testimony on January 31, 2017, Staff of the SCC of VA filed testimony on February 28, 2017 and Washington Gas filed its rebuttal testimony on March 28, 2017. On April 17, 2017, Washington Gas filed with the SCC of VA a unanimous settlement as to a specific annual revenue increase, but not as to a specific return on equity, specific accounting adjustments, or specific ratemaking methodologies, except as otherwise set forth therein. The Stipulation sets forth, for purposes of settlement, a base rate increase of $34 million ($14.1 million net of Washington Gas' Steps to Advance Virginia’s Energy (SAVE) Plan costs which are currently recovered through monthly surcharges). For purposes of the settlement, the mid-point of the return on equity range of 9.0-10.0% will be used in any application or filing, other than a change in base rates, effective December 1, 2016. On June 30, 2017, the Chief Hearing Examiner issued a report recommending that the Commission approve the Stipulation. The Stipulation is pending review and approval by the SCC of VA. Refunds to customers, which have been accrued by Washington Gas at June 30, 2017, will be made related to the interim billings based on the SCC of VA approval of the Stipulation and rates.

FINANCIAL GUARANTEES

WGL has guaranteed payments primarily for certain commitments on behalf of certain subsidiaries. At June 30, 2017, these guarantees totaled $30.7 million, $168.8 million, $114.0 million and $404.3 million for Washington Gas, WGL Energy Services, WGL Energy Systems and WGL Midstream, respectively. At June 30, 2017, WGL also had guarantees on behalf of other subsidiaries totaling $2.2 million. The amount of such guarantees is periodically adjusted to reflect changes in the level of WGL's financial exposure related to these commitments. For all of our financial guarantees, WGL may cancel any or all future obligations upon written notice to the counterparty, but WGL would continue to be responsible for the obligations created under the guarantees prior to the effective date of the cancellation. WGL has also guaranteed payments for certain of our external partners. At June 30, 2017, the maximum potential amount of future payments under the guarantees for external parties totaled $13.6 million.

ANTERO CONTRACT

Washington Gas and WGL Midstream contracted in June 2014 with Antero Resources Corporation (Antero) to buy gas from Antero at invoiced prices based on an index, and at a delivery point, specified in the contracts.  Since deliveries began, however, the index price paid has been more than the fair market value at the same physical delivery point, resulting in losses to date of $23.0 million. Accordingly, Washington Gas and WGL Midstream notified Antero that it sought to apply a provision of the contracts that would permit a new index to be established.  Antero objected, claiming that the contract provisions permitting re-pricing did not apply, unless Antero itself chose to sell gas at cheaper prices at the delivery point (which Antero claimed it had not).  The dispute was arbitrated in January 2017, and the arbitral tribunal ruled in favor of Antero on the applicability of the re-pricing mechanism.  However, the tribunal ruled that it lacked authority to determine whether Antero was in breach of its obligation to deliver gas to Washington Gas and WGL Midstream at a point where they could obtain the higher pricing. Accordingly, Washington Gas and WGL Midstream have filed suit in state court in Colorado for a determination of this issue. Antero moved to dismiss the suit and its motion to dismiss has been denied. Washington Gas and WGL Midstream have filed a motion for partial summary judgment, seeking the Court to declare that Antero is in breach of its obligation to deliver gas at the TCO Pool, leaving for trial only the issue of damages.  Antero has opposed the motion, and the motion is pending before the court for ruling. Antero has filed a counterclaim alleging breach of contract. Antero alleges that Washington Gas and WGL Midstream failed to purchase specified daily quantities of gas, and refused to pay invoiced cover damages and that Washington Gas and WGL Midstream are in continuing breach of their obligations in this respect. Antero seeks unspecified damages in an amount to be proved at trial. Washington Gas and WGL Midstream have filed an answer opposing this counterclaim.

SILVER SPRING, MARYLAND INCIDENT

Washington Gas continues to support the investigation by the NTSB into the August 10, 2016 explosion and fire at an apartment complex on Arliss Street in Silver Spring, Maryland, the cause of which has not been determined.  Additional information will be made available by the NTSB at the appropriate time. On November 2, 2016, two civil actions were filed in the District of Columbia Superior Court against WGL and Washington Gas (as well as a property management company that is not affiliated with WGL or Washington Gas), by residents of the apartment complex. In one lawsuit, twenty-nine plaintiffs seek unspecified damages for, among others, wrongful death and personal injury. The other action is a class action suit seeking total damages stated to be less than $5 million for, among others, property damage and various counts relating to the loss of the use of the premises. Both actions allege causes of action for negligence, product liability, and declaratory relief. Thirty-two civil actions have been filed in the Circuit Court for Montgomery County, Maryland seeking unspecified damages for personal injury and property damage. We maintain excess liability insurance coverage from highly-rated insurers, subject to a nominal self-insured retention. We believe that this coverage will be sufficient to cover any significant liability to it that may result from this incident. Management is unable to determine a range of potential losses that are reasonably possible of occurring and therefore we have not recorded a reserve associated with this incident. Washington Gas was invited by the NTSB to be a party to the investigation and in that capacity continues to work closely with the NTSB to help determine the cause of this incident.

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Pension and Other Post-Retirement Benefit Plans

9 Months Ended

Jun. 30, 2017

Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]

Pension and Other Post-Retirement Benefit Plans

PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS

The following table shows the components of net periodic benefit costs (income) recognized in our financial statements during the three and nine months ended June 30, 2017 and 2016.

Components of Net Periodic Benefit Costs (Income)
	Three Months Ended June 30,
	2017						2016
(In millions)	Pension Benefits			Health and Life Benefits			Pension Benefits			Health and Life Benefits
Service cost	$	4.1		$	1.4		$	3.6		$	1.2
Interest cost	9.6			2.9			10.3			3.2
Expected return on plan assets	(10.3		)	(5.5		)	(10.2		)	(5.1		)
Amortization of prior service cost (credit)	0.1			(4.4		)	—			(4.4		)
Amortization of net actuarial loss	5.5			0.2			4.3			0.3
Net periodic benefit cost (income)	9.0			(5.4		)	8.0			(4.8		)
Amount allocated to construction projects	(1.6		)	1.1			(1.5		)	1.1
Amount deferred as regulatory asset/liability—net	1.8			—			1.8			(0.1		)
Amount charged (credited) to expense	$	9.2		$	(4.3	)	$	8.3		$	(3.8	)
	Nine Months Ended June 30,
	2017						2016
Service cost	$	12.3		$	4.3		$	10.7		$	3.4
Interest cost	28.8			8.7			31.0			9.8
Expected return on plan assets	(30.8		)	(16.6		)	(30.7		)	(15.3		)
Amortization of prior service cost (credit)	0.3			(13.2		)	0.2			(13.2		)
Amortization of net actuarial loss	16.5			0.6			12.7			0.9
Net periodic benefit cost (income)	27.1			(16.2		)	23.9			(14.4		)
Amount allocated to construction projects	(4.9		)	3.5			(4.1		)	3.0
Amount deferred as regulatory asset/liability—net	5.3			(0.1		)	5.3			(0.2		)
Amount charged (credited) to expense	$	27.5		$	(12.8	)	$	25.1		$	(11.6	)

Amounts included in the line item “Amount deferred as regulatory asset/liability-net,” as shown in the table above, represent the amortization of previously unrecovered costs of the applicable pension benefits or the health and life benefits as approved in the District of Columbia. We expect the balances to be fully amortized by October 2019.

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Income [Abstract]

Comprehensive Income (Loss)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables show the changes in accumulated other comprehensive income (loss) for WGL and Washington Gas by component for the three and nine months ended June 30, 2017 and 2016.

WGL Holdings, Inc. Changes in Accumulated Other Comprehensive Loss by Component
(In thousands)	Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2017			2016
Beginning Balance	$	(8,874	)	$	(24,258	)	$	(38,539	)	$	(14,236	)
Qualified cash flow hedging instruments(a)	51			(16,995		)	49,556			(34,545		)
Change in prior service credit(b)	(217		)	(216		)	(651		)	(644		)
Amortization of actuarial loss(b)	588			420			1,763			1,258
Current-period other comprehensive income (loss)	422			(16,791		)	50,668			(33,931		)
Income tax expense (benefit) related to other comprehensive income (loss)	235			(6,969		)	20,816			(14,087		)
Ending Balance	$	(8,687	)	$	(34,080	)	$	(8,687	)	$	(34,080	)

^(a)  Cash flow hedging instruments represent interest rate swap agreements related to debt issuances. Refer to Note 8- Derivative and Weather-related Instruments for further discussion of the interest rate swap agreements.

^(b)  These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14- Pension and other post-retirement benefit plans for additional details.

Washington Gas Light Company Changes in Accumulated Other Comprehensive Loss by Component
(In thousands)	Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2017			2016
Beginning Balance	$	(7,383	)	$	(6,464	)	$	(7,830	)	$	(6,712	)
Change in prior service credit(a)	(217		)	(216		)	(651		)	(644		)
Amortization of actuarial loss(a)	588			420			1,763			1,258
Current-period other comprehensive income	371			204			1,112			614
Income tax expense related to other comprehensive income	145			82			439			244
Ending Balance	$	(7,157	)	$	(6,342	)	$	(7,157	)	$	(6,342	)

^(a)  These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14-Pension and other post-retirement benefit plans for additional details.

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Planned Merger with AltaGas

9 Months Ended

Jun. 30, 2017

Business Combination, Description [Abstract]

Planned merger with AltaGas

PLANNED MERGER WITH ALTAGAS LTD.

On January 25, 2017, WGL entered into an agreement and plan of merger (Merger Agreement) to combine with AltaGas in an all cash transaction valued at approximately $6.4 billion. The Merger Agreement provides for the merger of a newly formed indirect wholly-owned subsidiary of AltaGas with and into WGL, with WGL continuing as the surviving corporation in the merger (the Merger) and becoming an indirect wholly-owned subsidiary of AltaGas. Subject to the terms and conditions set forth in the Merger Agreement, at the Effective Time (as defined in the Merger Agreement) of the Merger, WGL shareholders will receive $88.25 in cash, without interest, for each share of WGL common stock issued and outstanding immediately prior to the Effective Time (as defined in the Merger Agreement). The Boards of Directors of each of WGL and AltaGas have unanimously approved the Merger, which is expected to close in the second quarter of 2018.

Consummation of the Merger is subject to the satisfaction or waiver of specified closing conditions, including, among others, the approval of the Merger by the holders of more than two-thirds of the outstanding shares of WGL common stock, which approval occurred on May 10, 2017, and approvals required from the PSC of DC, the PSC of MD and the SCC of VA. WGL and AltaGas have also submitted the transaction for review by the Committee on Foreign Investment in the United States (CFIUS). The Merger Agreement is also subject to FERC approval, which was obtained on July 6, 2017, and expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which occurred on July 17, 2017. The Merger Agreement also contains customary representations, warranties and covenants of both WGL and AltaGas. These covenants include, among others, an obligation on behalf of WGL to operate its business in the ordinary course until the Merger is consummated, subject to certain exceptions.

The Merger Agreement may be terminated by each of WGL and AltaGas under certain circumstances, including if the Merger is not consummated by January 25, 2018 (subject to a 180 day extension by either party subject to certain conditions being met). The Merger Agreement also contains certain additional termination rights for both AltaGas and WGL, and provides that, upon termination of the Merger Agreement under specified circumstances, AltaGas would be required to pay a termination fee of $205 million, $182 million, or $68 million (depending on the specific circumstances of termination) to WGL, and WGL would be required to pay AltaGas a termination fee of $136 million, only under specific circumstances as outlined in the Merger Agreement.

In connection with entering into the Merger Agreement, WGL entered into a subscription agreement with AltaGas, in which WGL agreed, upon the occurrence of certain conditions, to issue and sell to AltaGas up to an aggregate of 15,000 shares of Series A Non-Voting Non-Convertible Perpetual Preferred Stock (Non-Voting Preferred Stock) for a purchase price of $10,000 per share. If the consolidated debt to total capitalization ratio is forecasted to be in excess of 62% at December 31, 2017 or any quarterly period thereafter, AltaGas will purchase a number of shares of Non-Voting Preferred Stock to produce a forecasted ratio equal to 62%, but not more than 5,000 shares in any single quarter or more than 15,000 shares in the aggregate. If the Merger Agreement is terminated or the Outside Date (as defined in the Merger Agreement) expires, no subscription will be made after the date of termination or expiration, and WGL will have six months thereafter to redeem any Non-Voting Preferred Stock previously issued.

Merger Approval Proceedings

District of Columbia

On April 24, 2017, AltaGas, WGL and Washington Gas filed an application with the PSC of DC seeking approval of the Merger Agreement. In an order issued on April 25, 2017, the PSC of DC scheduled a procedural conference on May 18, 2017 with the Staff of the PSC of DC and interested parties to consider the factors to be considered in the case to determine whether the Merger is in the public interest, identify factual issues in dispute and consider a procedural schedule for the proceeding. To approve the Merger Agreement, the PSC of DC must find that the Merger taken as a whole is in the public interest. In the April 25, 2017 order, the PSC of DC stated that in making this determination, it has balanced the interests of shareholders and investors with ratepayers and the community; determined that benefits to shareholders must not come at the expense of ratepayers; and found that to be approved, the transaction must produce a direct and tangible benefit to ratepayers. It stated further that in determining whether the public interest requirements are met, the PSC of DC has in past merger cases identified seven factors it has considered in reviewing each transaction, including the effects of the transaction on (i) ratepayers, shareholders, the financial health of the utilities standing alone and as merged, and the economy of the District; (ii) utility management and administrative operations; (iii) public safety and the safety and reliability of services; (iv) risks associated with all of the applicants' affiliated non-jurisdictional business operations; (v) the PSC of DC's ability to regulate Washington Gas effectively; (vi) competition in the local retail and wholesale markets that impact the District and District ratepayers; and (vii) conservation of natural resources and preservation of environmental quality. The law of the District of Columbia does not impose any time limit on the PSC of DC’s review of the Merger.

Maryland

On April 24, 2017, AltaGas, WGL and Washington Gas filed an application with the PSC of MD seeking approval of the Merger Agreement. On April 26, 2017, the PSC of MD issued an order scheduling a pre-hearing conference on May 30, 2017, to set a procedural schedule for the proceeding, to consider any petition to intervene that have been filed, and to consider any other preliminary matters requested by the parties. Maryland law requires the PSC of MD to approve a merger subject to its review if it finds that the merger agreement is consistent with the public interest, convenience and necessity, including benefits and no harm to consumers. In making this determination, the PSC of MD is required to consider the following criteria: (i) the potential impact of the acquisition on rates and charges paid by customers and on the services and conditions of operation of the public service company; (ii) the potential impact of the acquisition on continuing investment needs for the maintenance of utility services, plant, and related infrastructure; (iii) the proposed capital structure that will result from the acquisition, including allocation of earnings from Washington Gas; (iv) the potential effects on employment; (v) the projected allocation of any savings that are expected between stockholders and rate payers; (vi) issues of reliability, quality of service, and quality of customer service; (vii) the potential impact of the acquisition on community investment; (viii) affiliate and cross-subsidization issues; (ix) the use or pledge of utility assets for the benefit of an affiliate; (x) jurisdictional and choice-of-law issues; (xi) whether it is necessary to revise the PSC of MD's ring-fencing and code of conduct regulations in light of the acquisition; and (xii) any other issues the PSC of MD considers relevant to the assessment of the acquisition in relation to the public interest, convenience, and necessity. The PSC of MD is required to issue an order within 180 days of the date the application was filed, but may extend the date by 45 days for good cause. An order is expected by December 5, 2017.

Virginia

On April 24, 2017, AltaGas and WGL and Washington Gas, filed a petition with the SCC of VA seeking approval of the Merger Agreement. Virginia law provides that, if the SCC of VA determines, with or without hearing, that adequate service to the public at just and reasonable rates will not be impaired or jeopardized by granting the petition for approval, then the SCC of VA shall approve a merger with such conditions that the SCC of VA deems to be appropriate in order to satisfy this standard. The SCC of VA is required to issue an order within 60 days from the date of filing of the petition, but may extend the review period for up to 120 additional days. An order is expected to be issued by October 20, 2017.

Committee on Foreign Investment in the United States

On April 24, 2017, AltaGas, WGL and Washington Gas, filed a joint voluntary notice with the CFIUS.

HSR

On June 15, 2017, AltaGas and WGL submitted to the Federal Trade Commission and the Antitrust Division of the Department of Justice completed Premerger Notification and Report Forms with respect to the proposed acquisition by AltaGas Ltd. of certain voting securities of WGL. The waiting period required by Section 7A(b)(1) of the Clayton Act, 15 U.S.C. Section 18a(b)(1) (aka the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended) expired on July 17, 2017.  The expiration of the Clayton Act’s waiting period deems the Merger approved by the Federal Trade Commission and the Department of Justice.

FERC

On April 24, 2017, AltaGas and WGL Energy Services submitted to FERC a Joint Application for Authorization of Disposition of Jurisdictional Assets and Merger under Section 203 of the Federal Power Act. Under that section, FERC shall approve a merger if it finds that the proposed transaction will be consistent with the public interest. In making this determination, the FERC will consider the following criteria: (i) horizontal competition analysis; (ii) vertical competition issues; (iii) no adverse effect on rates; (iv) no adverse effect on regulation; and (v) no improper cross-subsidization. On July 6, 2017, the FERC issued an order authorizing the Merger, concluding that the proposed transaction is consistent with the public interest.

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Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

WGL Holdings, Inc. (WGL) is a holding company that owns all of the shares of common stock of Washington Gas Light Company (Washington Gas), a regulated natural gas utility, and all of the shares of common stock of Washington Gas Resources Corporation (Washington Gas Resources) and Hampshire Gas Company (Hampshire). Washington Gas Resources owns all of the shares of common stock of four non-utility subsidiaries that include WGL Energy Services, Inc. (WGL Energy Services), WGL Energy Systems, Inc. (WGL Energy Systems), WGL Midstream, Inc. (WGL Midstream) and WGSW, Inc. (WGSW). Except where the content clearly indicates otherwise, “WGL,” “we,” “us” or “our” refers to the holding company or the consolidated entity of WGL Holdings, Inc. and all of its subsidiaries. Unless otherwise noted, these notes apply equally to WGL and Washington Gas.

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Therefore, certain financial information and note disclosures accompanying annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) are omitted in this interim report. The interim consolidated financial statements and accompanying notes should be read in conjunction with the combined Annual Report on Form 10-K for WGL and Washington Gas for the fiscal year ended September 30, 2016. Due to the seasonal nature of our businesses, the results of operations for the periods presented in this report are not necessarily indicative of actual results for the full fiscal years ending September 30, 2017 and 2016 of either WGL or Washington Gas.

The accompanying unaudited condensed financial statements for WGL and Washington Gas reflect all normal recurring adjustments that are necessary, in our opinion, to present fairly the results of operations in accordance with GAAP. On October 1, 2016, WGL and Washington Gas adopted Accounting Standards Update (ASU) 2015-03 and ASU 2015-15. These standards require an entity to account for debt issuance costs as a deduction from the carrying amount of debt in the balance sheet and the amortization of debt issuance costs presented as interest expense, consistent with debt discounts. Prior period amounts related to other deferred charges and other assets and long-term debt in the accompanying condensed balance sheets have been reclassified to conform to the current period presentation.

For a complete description of our accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements of the combined Annual Report on Form 10-K for WGL and Washington Gas for the fiscal year ended September 30, 2016.

Storage Gas Valuation Methods

Storage Gas Valuation

For Washington Gas and WGL Energy Services, storage gas inventories are accounted for using the first-in, first-out method. For WGL Midstream, storage gas inventory is accounted for using the weighted average cost method. Our inventory is stated at the lower-of-cost or market. Interim period inventory losses attributable to lower-of-cost or market adjustments may be reversed if the market value of the inventory is recovered by the end of the same fiscal year.

Accounting Standards Adopted Current Fiscal Year

ACCOUNTING STANDARDS ADOPTED IN FISCAL YEAR 2017

ASU 2015-03 and ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost and Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements

The standard requires an entity to present debt issuance costs in the balance sheet as a direct deduction of the debt liability and the amortization of debt issuance costs be presented as interest expense in a manner consistent with its accounting treatment of debt discounts. The standard requires retrospective application.

An entity can defer and present debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.

The new guidance does not change the recognition and measurement guidance for debt issuance costs.

October 1, 2016

Implementation of these standards resulted in a reduction of other deferred assets and long-term debt in our Consolidated Balance Sheets. The amounts that were reclassified at September 30, 2016 for WGL and Washington Gas were $9.3 million and $6.8 million, respectively.

ASU 2015-02 and ASU 2016-17, Consolidation (Topic 810): Amendments to the Consolidation Analysis and Interests Held through Related Parties that are Under Common Control
The standards changed the analysis to be performed in determining whether certain types of legal entities should be consolidated, specifically the analysis of limited partnerships and similar entities, fee arrangements and related party relationships. The standard permits prospective or retrospective application for different parts.

The consolidation guidance was also amended as to how a reporting entity, that is the single decision maker of a VIE, should treat indirect interests in the entity held through related parties that are under common control with the reporting entity, when determining whether it is the primary beneficiary of that VIE.

October 1, 2016

The amendments to the consolidation guidance under these standards were applied and did not have an impact on the financial statements.

ASU 2015-05, Intangibles-Goodwill and Other -Internal-Use Software (Subtopic 350-40)-Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

The standard clarifies that a cloud computing customer may account for the arrangement as a software license when (1) the customer has a contractual right to take possession of the software at any time during the hosting period without significant penalty, and (2) it is feasible for the customer to either operate the software on its own hardware or contract with another party unrelated to the vendor to host the software. If the arrangement does not meet these criteria, it would be accounted for as a service contract and accounted for as an operating expense in the period incurred.

October 1, 2016

WGL elected to apply the standard on a prospective basis, which did not have a material impact on the financial statements.

New Accounting Pronouncements

OTHER NEWLY ISSUED ACCOUNTING STANDARDS

ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

This standard requires entities to report the service cost component in the same financial statement line item as other compensation costs arising from services rendered by the pertinent employees during the period.  The other components of net benefit cost are to be presented separately from service cost and outside of operating income.  In addition, only the service cost component of net benefit cost is eligible for capitalization.  Changes to the presentation of service costs and other components of net benefit cost should be applied retrospectively. Changes in capitalization practices should be implemented prospectively.

October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)

We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.

ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting

This standard simplifies several aspects of the accounting for share-based payment transactions, including accounting for income taxes, forfeitures, and statutory tax withholding requirements.

October 1, 2017

We are finalizing our evaluation of this standard but do not expect the adoption of this standard to have a material impact on the financial statements.

ASU 2016-15, Statement of Cash Flows (Topic 230)—Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)

This update provides guidance on the classification of certain cash receipts and payments in the statement of cash flows.

October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)

We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.

ASU 2014-09, Revenue from Contracts with Customers (Topic 606), including subsequent ASUs clarifying the guidance.

ASU 2014-09 establishes a comprehensive revenue recognition model clarifying the method used to determine the timing and requirements for revenue recognition from contracts with customers. The disclosure requirements under the new standard will enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)

An implementation team is currently evaluating all revenue streams and reviewing contracts with customers, as well as, related financial statement disclosures to determine the impact the adoption of this standard will have on our financial statements. WGL is also monitoring unresolved industry specific implementation issues that could impact the timing of revenue recognition for our regulated utility tariff based sales, including the evaluation of collectability from customers if a utility has regulatory mechanisms to help assure recovery of uncollected accounts from ratepayers and accounting for contributions in aid of construction (CIAC). WGL will adopt using the modified retrospective approach.

ASU 2016-01, Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

The new standard amends certain disclosure requirements associated with the fair value of financial instruments, and significantly revises an entity’s accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value.

October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)

We performed a preliminary evaluation and the adoption of this standard will primarily impact the disclosure of our financial instruments in our Fair Value Measurements Footnote.

ASU 2016-02, Leases (Topic 842)

This standard requires recognition of a right-to-use asset and lease liability on the statement of financial position and disclosure of key information about leasing arrangements. The standard requires application using a modified retrospective approach.

October 1, 2019 (subject to acceleration if the merger with AltaGas is consummated)

We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.

ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

For credit losses on financial instruments, this standard changes the current incurred loss impairment methodology to an expected loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.

October 1, 2020 (subject to acceleration if the merger with AltaGas is consummated)

We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.

Short and Long Term Debt

WGL and Washington Gas satisfy their short-term financing requirements through the sale of commercial paper, financing arrangements with third-party lenders, or through bank borrowings. Due to the seasonal nature of the regulated utility and retail energy-marketing segments, short-term financing requirements can vary significantly during the year. Revolving credit agreements are maintained to support outstanding commercial paper and to permit short-term borrowing flexibility. The policy of each of WGL and Washington Gas is to maintain bank credit facilities in amounts equal to or greater than their expected maximum commercial paper position.

WGL and Washington Gas issue long-term notes with individual terms regarding interest rates, maturities and call or put options. These notes can have maturity dates of one or more years from the date of issuance.

Income Tax Policy

Under Accounting Standards Codification (ASC) Topic 740, Income Taxes, Washington Gas recognizes any accrued interest associated with uncertain tax positions in interest expense and recognizes any accrued penalties associated with uncertain tax positions in other expenses in the statements of income.

Derivatives, Reporting Of Derivative Activity

Regulated Utility Operations

Washington Gas enters into contracts that qualify as derivative instruments and are accounted for under ASC Topic 815. These derivative instruments are recorded at fair value on our balance sheets and Washington Gas does not currently designate any derivatives as hedges under ASC Topic 815. Washington Gas’ derivative instruments relate to: (i) Washington Gas’ asset optimization program; (ii) managing price risk associated with the purchase of gas to serve utility customers and (iii) managing interest rate risk.

Collateral

WGL utilizes standardized master netting agreements, which facilitate the netting of cash flows into a single net exposure for a given counterparty. As part of these master netting agreements, cash, letters of credit and parental guarantees may be required to be posted or obtained from counterparties in order to mitigate credit risk related to both derivatives and non-derivative positions. Under WGL’s offsetting policy, collateral balances are offset against the related counterparties’ derivative positions to the extent the application would not result in the over-collateralization of those derivative positions on the balance sheet.

Asset Optimization. Washington Gas optimizes the value of its long-term natural gas transportation and storage capacity resources during periods when these resources are not being used to physically serve utility customers. Specifically, Washington Gas utilizes its transportation capacity assets to benefit from favorable natural gas prices between different geographic locations and utilizes its storage capacity assets to benefit from favorable natural gas prices between different time periods. As part of this asset optimization program, Washington Gas enters into physical and financial derivative transactions in the form of forward, futures and option contracts with the primary objective of securing operating margins that Washington Gas will ultimately realize. The derivative transactions entered into under this program are subject to mark-to-market accounting treatment under ASC 820.

Regulatory sharing mechanisms provide for the annual realized profit from these transactions to be shared between Washington Gas' shareholders and customers; therefore, changes in fair value are recorded through earnings, or as regulatory assets or liabilities to the extent that it is probable that realized gains and losses associated with these derivative transactions will be included in the rates charged to customers when they are realized. Unrealized gains and losses recorded to earnings may cause significant period-to-period volatility; this volatility does not change the operating margins that Washington Gas expects to ultimately realize from these transactions through the use of its storage and transportation capacity resources.

Managing Price Risk. To manage price risk associated with acquiring natural gas supply for utility customers, Washington Gas enters into physical and financial derivative transactions in the form of forward, option and other contracts, as authorized by its regulators. Any gains and losses associated with these derivatives are recorded as regulatory liabilities or assets, respectively, to reflect the rate treatment for these economic hedging activities.

Managing Interest-Rate Risk. Washington Gas may utilize derivative instruments that are designed to minimize the risk of interest-rate volatility associated with planned issuances of debt securities. Any gains and losses associated with these types of derivatives are recorded as regulatory liabilities or assets, respectively, and amortized in accordance with regulatory requirements, typically over the life of the related debt.

Non-Utility Operations

Trading Activities. WGL Midstream enters into derivative contracts for the purpose of optimizing its storage and transportation capacity as well as managing the transportation and storage assets on behalf of third parties. WGL Midstream does not designate these derivatives as hedges under ASC Topic 815; therefore, changes in the fair value of these derivative instruments are reflected in the earnings of our non-utility operations and may cause significant period-to-period volatility in earnings.

Managing Price Risk. WGL Energy Services enters into certain derivative contracts as part of its strategy to manage the price risk associated with the sale and purchase of natural gas and electricity. WGL Energy Services elects "normal purchases and normal sales" treatment for a portion of these physical contracts related to the purchase of natural gas and electricity to serve its customers and therefore, they are not subject to the fair value accounting requirements of ASC Topic 815. Derivative instruments not designated as ''normal purchases and normal sales" are recorded at fair value on our consolidated balance sheets, and changes in the fair value of these derivative instruments are reflected in the earnings of our non-utility operations, which may cause significant period-to-period volatility in earnings. WGL Energy Services does not designate derivatives as hedges under ASC Topic 815.

Managing Interest-Rate Risk. WGL utilizes derivative instruments that are designed to limit the risk of interest-rate volatility associated with future debt issuances.

Fair Value Measurement Policy

Our money market funds are Level 1 valuations and their carrying amount approximates fair value. Other short-term investments are primarily overnight investment accounts; their carrying amount approximates fair value based on Level 2 inputs. The maturity of our commercial paper outstanding at both June 30, 2017 and September 30, 2016 is under 30 days. Due to the short-term nature of these notes, the carrying cost of our commercial paper approximates fair value using Level 2 inputs. Due to the nature of our project financing arrangements, the carrying cost approximates fair value using Level 2 inputs. Neither WGL’s nor Washington Gas’ long-term debt is actively traded. The fair value of long-term debt was estimated based on the quoted market prices of the U.S. Treasury issues having a similar term to maturity, adjusted for the credit quality of the debt issuer, WGL or Washington Gas. Our long-term debt fair value measurement is classified as Level 3.

Recurring Basis

We measure the fair value of our financial assets and liabilities using a combination of the income and market approaches in accordance with ASC Topic 820. These financial assets and liabilities primarily consist of derivatives recorded on our balance sheet under ASC Topic 815 and short-term investments, commercial paper and long-term debt outstanding required to be disclosed at fair value. Under ASC Topic 820, fair value is defined as the exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To value our financial instruments, we use market data or assumptions that market participants would use, including assumptions about credit risk (both our own credit risk and the counterparty’s credit risk) and the risks inherent in the inputs to valuation.

We enter into derivative contracts in the futures and over-the-counter (OTC) wholesale and retail markets. These markets are the principal markets for the respective wholesale and retail contracts. Our relevant market participants are our existing counterparties and others who have participated in energy transactions at our delivery points. These participants have access to the same market data as WGL. We value our derivative contracts based on an “in-exchange” premise, and valuations are generally based on pricing service data or indicative broker quotes depending on the market location. We measure the net credit exposure at the counterparty level where the right to set-off exists. The net exposure is determined using the mark-to-market exposure adjusted for collateral, letters of credit and parent guarantees. We use published default rates from Standard & Poor’s Ratings Services and Moody’s Investors Service as inputs for determining credit adjustments.

Segment Reporting Policy

We have four reportable operating segments: regulated utility, retail energy-marketing, commercial energy systems and midstream energy services. The division of these segments into separate revenue generating components is based upon regulation, products and services. Our chief operating decision maker is our Chief Executive Officer and we evaluate segment performance based on Earnings Before Interest and Taxes (EBIT). EBIT is defined as earnings before interest and taxes net of amounts attributable to non-controlling interests. Items we do not include in EBIT are interest expense, intercompany financing activity, dividends on Washington Gas preferred stock, and income taxes. EBIT includes transactions between reportable segments. We also evaluate our operating segments based on other relevant factors, such as penetration into their respective markets and return on equity.

Investment Policy

The carrying amount of WGL Midstream's investment in MVP exceeded the amount of the underlying equity in net assets by $0.5 million, which will be amortized over the life of the assets when it is put in production. Profits and losses are allocated under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance.

When applying HLBV, WGL determines the amount that it would receive if an equity investment entity were to liquidate all of its assets at book value (as valued in accordance with GAAP) and distribute that cash to the investors based on the contractually defined liquidation priorities. The change in WGL's claim on the investee's book value at the beginning and end of the reporting period (adjusted for contributions and distributions) is WGL’s share of the earnings or losses from the equity investment for the period.

WGL uses the Hypothetical Liquidation at Book Value (HLBV) methodology for certain equity method investments when the governing structuring agreement over the equity investment results in different liquidation rights and priorities than what is reflected by the underlying ownership interest percentage.

The carrying amount of WGL Midstream's investment in the Stonewall System exceeded the amount of the underlying equity in net assets by $8.9 million, which is being amortized over the life of the assets. Profits and losses are allocated under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance.

Although WGL Midstream holds greater than a 50% interest in Meade, Meade is accounted for under the equity method of accounting because WGL Midstream does not have the power to direct the activities most significant to the economic performance of Meade. Profits and losses are allocated under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance.

Although WGL Midstream holds greater than a 50% interest in Meade, Meade is accounted for under the equity method of accounting because WGL Midstream does not have the power to direct the activities most significant to the economic performance of Meade. Profits and losses are allocated under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance.

Constitution is accounted for under the equity method of accounting; any profits and losses are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGL’s investment balance.

SFEE is not considered a VIE and is not consolidated under the voting interest model for limited partnerships. WGSW is the managing member of SFEE. WGSW is also the operations and maintenance provider for SFEE. In addition, WGL Energy Systems has the option to sell its own distributed generation solar projects to the developer for sale to SFEE and these assets remain on WGL Energy System's books until we no longer have continuing involvement. The equity method is considered appropriate because WGSW has significant influence over the operating and financial policies of SFEE. Profits and losses are allocated between the partners under the HLBV method of accounting and are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGSW’s investment balance.

WGL has both solar and pipeline investments and accounts for its interests in legal entities as either a: (i) variable interest entity (VIE) or a (ii) voting interest entity (non-VIE).

Our investment in ASD is accounted for under the HLBV equity method of accounting; any profits and losses are included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statement of Income and are added to or subtracted from the carrying amount of WGSW’s investment balance.

We have investments in both consolidated and unconsolidated VIEs which are described in detail below. The unconsolidated investments are accounted for under the equity method of accounting with profits and losses included in “Equity in earnings of unconsolidated affiliates” in the accompanying Consolidated Statements of Income.

Consolidation, Variable Interest Entity, Policy

WGSW and a tax equity partner formed SFRC to acquire distributed generation solar projects in the State of Minnesota that are developed by WGL Energy Systems. WGSW is the managing member and will provide cash equity equal to the purchase price of the solar projects less any contributions from the tax-equity partner.

WGL Energy Systems is the operations and maintenance provider, and the developer of the projects. Profits and losses are allocated between the partners under the HLBV method of accounting and the portion allocated to the tax equity partner is included in "Net income (loss) attributable to non-controlling interest" on the consolidated statement of income and is recorded to "Non-controlling interest" on the consolidated balance sheets.

WGL Energy Systems is the operations and maintenance provider and was the developer of the projects. Profits and losses are allocated between the partners under the HLBV method of accounting and the portion allocated to the tax equity partner is included in "Net income (loss) attributable to non-controlling interest" on the consolidated statements of income and is recorded to "Non-controlling interest" on the consolidated balance sheets.

WGSW and a tax equity partner formed SFGF to acquire distributed generation solar projects in the State of Georgia that were developed by WGL Energy Systems. WGSW is the managing member and contributed cash equity equal to the purchase price of the solar projects less any contributions from the tax-equity partner.

Consolidated Investments

Variable Interest Entities

At June 30, 2017, WGL's subsidiary, WGSW, Inc. was the primary beneficiary of SFGF, SFRC and SFGF II, as a result of its ability to direct the activities most significant to the economic performance of those entities. Accordingly, we have consolidated those VIE entities.

WGL Energy Systems will be the operations and maintenance provider and the developer of the projects. Profits and losses are allocated between the partners under the HLBV method of accounting and the portion allocated to the tax equity partner is included in "Net income (loss) attributable to non-controlling interest" on the consolidated statements of income and is recorded to "Non-controlling interest" on the consolidated balance sheets.

WGSW and a tax equity partner formed SFGF II to acquire distributed generation solar projects in the United States of America that are expected to be developed by WGL Energy Systems. WGSW is the managing member and will provide cash equity equal to the purchase price of the solar projects less any contributions from the tax-equity partner.

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Accounting Policies (Tables)

9 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Accounting Standards Adopted in Current Fiscal Year

ACCOUNTING STANDARDS ADOPTED IN FISCAL YEAR 2017
Standard	Description	Date of adoption	Effect on the financial statements or other significant matters
ASU 2015-03 and ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost and Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements	The standard requires an entity to present debt issuance costs in the balance sheet as a direct deduction of the debt liability and the amortization of debt issuance costs be presented as interest expense in a manner consistent with its accounting treatment of debt discounts. The standard requires retrospective application. An entity can defer and present debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The new guidance does not change the recognition and measurement guidance for debt issuance costs.	October 1, 2016	Implementation of these standards resulted in a reduction of other deferred assets and long-term debt in our Consolidated Balance Sheets. The amounts that were reclassified at September 30, 2016 for WGL and Washington Gas were $9.3 million and $6.8 million, respectively.
ASU 2015-02 and ASU 2016-17, Consolidation (Topic 810): Amendments to the Consolidation Analysis and Interests Held through Related Parties that are Under Common Control	The standards changed the analysis to be performed in determining whether certain types of legal entities should be consolidated, specifically the analysis of limited partnerships and similar entities, fee arrangements and related party relationships. The standard permits prospective or retrospective application for different parts. The consolidation guidance was also amended as to how a reporting entity, that is the single decision maker of a VIE, should treat indirect interests in the entity held through related parties that are under common control with the reporting entity, when determining whether it is the primary beneficiary of that VIE.	October 1, 2016	The amendments to the consolidation guidance under these standards were applied and did not have an impact on the financial statements.

ASU 2015-05, Intangibles-Goodwill and Other -Internal-Use Software (Subtopic 350-40)-Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
The standard clarifies that a cloud computing customer may account for the arrangement as a software license when (1) the customer has a contractual right to take possession of the software at any time during the hosting period without significant penalty, and (2) it is feasible for the customer to either operate the software on its own hardware or contract with another party unrelated to the vendor to host the software. If the arrangement does not meet these criteria, it would be accounted for as a service contract and accounted for as an operating expense in the period incurred. October 1, 2016 WGL elected to apply the standard on a prospective basis, which did not have a material impact on the financial statements.

Other Newly Issued Accounting Standards

OTHER NEWLY ISSUED ACCOUNTING STANDARDS
Standard	Description	Required date of adoption	Effect on the financial statements or other significant matters
ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting	This standard simplifies several aspects of the accounting for share-based payment transactions, including accounting for income taxes, forfeitures, and statutory tax withholding requirements.	October 1, 2017	We are finalizing our evaluation of this standard but do not expect the adoption of this standard to have a material impact on the financial statements.
ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost	This standard requires entities to report the service cost component in the same financial statement line item as other compensation costs arising from services rendered by the pertinent employees during the period.  The other components of net benefit cost are to be presented separately from service cost and outside of operating income.  In addition, only the service cost component of net benefit cost is eligible for capitalization.  Changes to the presentation of service costs and other components of net benefit cost should be applied retrospectively. Changes in capitalization practices should be implemented prospectively.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.
ASU 2016-15, Statement of Cash Flows (Topic 230)—Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)	This update provides guidance on the classification of certain cash receipts and payments in the statement of cash flows.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.

ASU 2014-09, Revenue from Contracts with Customers (Topic 606), including subsequent ASUs clarifying the guidance.	ASU 2014-09 establishes a comprehensive revenue recognition model clarifying the method used to determine the timing and requirements for revenue recognition from contracts with customers. The disclosure requirements under the new standard will enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	An implementation team is currently evaluating all revenue streams and reviewing contracts with customers, as well as, related financial statement disclosures to determine the impact the adoption of this standard will have on our financial statements. WGL is also monitoring unresolved industry specific implementation issues that could impact the timing of revenue recognition for our regulated utility tariff based sales, including the evaluation of collectability from customers if a utility has regulatory mechanisms to help assure recovery of uncollected accounts from ratepayers and accounting for contributions in aid of construction (CIAC). WGL will adopt using the modified retrospective approach.
ASU 2016-01, Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities	The new standard amends certain disclosure requirements associated with the fair value of financial instruments, and significantly revises an entity’s accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value.	October 1, 2018 (subject to acceleration if the merger with AltaGas is consummated)	We performed a preliminary evaluation and the adoption of this standard will primarily impact the disclosure of our financial instruments in our Fair Value Measurements Footnote.
ASU 2016-02, Leases (Topic 842)	This standard requires recognition of a right-to-use asset and lease liability on the statement of financial position and disclosure of key information about leasing arrangements. The standard requires application using a modified retrospective approach.	October 1, 2019 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	For credit losses on financial instruments, this standard changes the current incurred loss impairment methodology to an expected loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.	October 1, 2020 (subject to acceleration if the merger with AltaGas is consummated)	We are in the process of evaluating the impact the adoption of this standard will have on our financial statements.

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Accounts Payable and Other Accrued Liabilities (Tables)

9 Months Ended

Jun. 30, 2017

Accounts Payable and Other Accrued Liabilities [Line Items]

Accounts Payable and Other Accrued Liabilities

The tables below provide details for the amounts included in “Accounts payable and other accrued liabilities” on the balance sheets for both WGL and Washington Gas.

WGL Holdings, Inc.
(In millions)	June 30, 2017		September 30, 2016
Accounts payable—trade	$	329.5	$	353.0
Employee benefits and payroll accruals	28.0		34.4
Other accrued liabilities	19.6		18.0
Total	$	377.1	$	405.4

Washington Gas Light Company

Accounts Payable and Other Accrued Liabilities [Line Items]

Accounts Payable and Other Accrued Liabilities

Washington Gas Light Company
(In millions)	June 30, 2017		September 30, 2016
Accounts payable—trade	$	151.1	$	161.0
Employee benefits and payroll accruals	26.3		32.2
Other accrued liabilities	9.8		11.8
Total	$	187.2	$	205.0

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Short-Term Debt (Tables)

9 Months Ended

Jun. 30, 2017

Short-term Debt [Abstract]

Committed Credit Available

The following is a summary of committed credit available at June 30, 2017 and September 30, 2016.

Committed Credit Available($ In millions)
June 30, 2017	WGL(b)			Washington Gas			Total Consolidated
Committed credit agreements
Unsecured revolving credit facility, expires December 19, 2019(a)	$	650.0		$	350.0		$	1,000.0
Less: Commercial Paper	325.0			161.0			486.0
Net committed credit available	$	325.0		$	189.0		$	514.0
Weighted average interest rate	1.42		%	1.16		%	1.33		%
September 30, 2016
Committed credit agreements
Unsecured revolving credit facility, expires December 19, 2019(a)	$	450.0		$	350.0		$	800.0
Less: Commercial Paper	227.0			42.0			269.0
Net committed credit available	$	223.0		$	308.0		$	531.0
Weighted average interest rate	0.73		%	0.46		%	0.69		%

^(a)  Washington Gas has the right to request extensions with the banks’ approval. Washington Gas’ revolving credit facility permits it to borrow an additional $100 million, with the banks’ approval, for a total of $450 million.

^(b)  WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

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Long-Term Debt (Table)

9 Months Ended

Jun. 30, 2017

Long-Term Debt Outstanding

The following tables show the outstanding notes as of June 30, 2017 and September 30, 2016.

Long-Term Debt Outstanding
($ In millions)	WGL(a)			Washington Gas			Total Consolidated
June 30, 2017
Long-term debt (b)	$	550.0		$	946.0		$	1,496.0
Unamortized discount	(1.5		)	(0.1		)	(1.6		)
Unamortized debt expense	(2.2		)	(6.6		)	(8.8		)
Total Long-Term Debt	$	546.3		$	939.3		$	1,485.6
Weighted average interest rate	2.81		%	5.12		%	4.27		%
September 30, 2016
Long-term debt (b)	$	500.0		$	946.0		$	1,446.0
Unamortized discount	(1.6		)	(0.1		)	(1.7		)
Unamortized debt expense	(2.4		)	(6.9		)	(9.3		)
Total Long-Term Debt	$	496.0		$	939.0		$	1,435.0
Weighted average interest rate	2.50		%	5.12		%	4.21		%

^(a)  WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

^(b)  Includes Senior Notes and term loans for WGL and both MTNs and private placement notes for Washington Gas. Represents face value including current maturities.

Long-Term Debt Issuances and Retirements

The following tables show long-term debt issuances and retirements for the nine months ended June 30, 2017 and 2016.

Long-Term Debt Issuances and Retirements
($ In millions)	Principal(b)		Interest Rate			Effective Cost(d)		Nominal Maturity Date
Nine Months Ended June 30, 2017
WGL(a)
Issuances:
1/26/2017	$	50.0	1.57	%	(c)	1.57	%	1/26/2019
Total consolidated issuances	$	50.0
Nine Months Ended June 30, 2016
WGL (a)
Issuances:
2/18/2016	250.0		2.10	%	(c)	2.10	%	2/18/2018
Total	$	250.0
Washington Gas
Retirements:	$	25.0	5.17	%		n/a		1/18/2016
Total	$	25.0

(a)WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

(b)Represents face amount of Senior Notes and term loans for WGL and both MTNs and private placement notes for Washington Gas.

(c)Floating rate per annum that will be determined from time to time based on parameters set forth in the credit agreement.

(d)The estimated effective cost of the issued notes.

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Common Shareholders' Equity (Tables)

9 Months Ended

Jun. 30, 2017

Schedule of Capitalization, Equity [Line Items]

Components of Common Shareholders' Equity

The tables below reflect the components of “Common shareholders’ equity” for WGL and “Common shareholder’s equity” for Washington Gas for the nine months ended June 30, 2017 and 2016.

WGL Holdings, Inc. Components of Common Shareholders’ Equity
(In thousands, except shares)	Common Stock			Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Taxes			WGL Holdings Common Shareholders' Equity			Non-controlling Interest			Washington Gas Light Company Preferred Stock			Total Equity
	Shares	Amount
Balance at September 30, 2016	51,080,612	$	574,496	$	12,519		$	827,085		$	(38,539	)	$	1,375,561		$	409		$	28,173		$	1,404,143
Net income (loss)	—	—		—			189,301			—			189,301			(12,533		)	990			177,758
Contributions from non-controlling interest	—	—		—			—			—			—			17,358			—			17,358
Other comprehensive income	—	—		—			—			29,852			29,852			—			—			29,852
Stock-based compensation(a)	112,146	6,564		(3,971		)	(468		)	—			2,125			—			—			2,125
Issuance of common stock(b)	26,242	1,657		—			—			—			1,657			—			—			1,657
Dividends declared:
Common stock	—	—		—			(77,213		)	—			(77,213		)	—			—			(77,213		)
Preferred stock	—	—		—			—			—			—			—			(990		)	(990		)
Balance at June 30, 2017	51,219,000	$	582,717	$	8,548		$	938,705		$	(8,687	)	$	1,521,283		$	5,234		$	28,173		$	1,554,690
Balance at September 30, 2015	49,728,662	$	485,456	$	14,934		$	757,093		$	(14,236	)	$	1,243,247		$	—		$	28,173		$	1,271,420
Net income	—	—		—			176,484			—			176,484			—			990			177,474
Other comprehensive income	—	—		—			—			(19,844		)	(19,844		)	—			—			(19,844		)
Stock-based compensation(a)	115,974	6,742		(3,652		)	(122		)	—			2,968			—			—			2,968
Issuance of common stock(c)	1,213,373	80,711		—			—			—			80,711			—			—			80,711
Dividends declared:
Common stock	—	—		—			(72,485		)	—			(72,485		)	—			—			(72,485		)
Preferred stock	—	—		—			—			—			—			—			(990		)	(990		)
Balance at June 30, 2016	51,058,009	$	572,909	$	11,282		$	860,970		$	(34,080	)	$	1,411,081		$	—		$	28,173		$	1,439,254

(a) Includes dividend equivalents related to our performance shares.

(b) Includes dividend reinvestment and common stock purchase plans.

Washington Gas Light Company

Schedule of Capitalization, Equity [Line Items]

Components of Common Shareholders' Equity

Washington Gas Light Company Components of Common Shareholder’s Equity
(In thousands, except shares)	Common Stock			Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Taxes			Total
	Shares	Amount
Balance at September 30, 2016	46,479,536	$	46,479	$	488,135	$	586,662		$	(7,830	)	$	1,113,446
Net income	—	—		—		147,400			—			147,400
Other comprehensive income	—	—		—		—			673			673
Stock-based compensation(a)	—	—		2,319		—			—			2,319
Dividends declared:
Common stock	—	—		—		(64,675		)	—			(64,675		)
Preferred stock	—	—		—		(990		)	—			(990		)
Balance at June 30, 2017	46,479,536	$	46,479	$	490,454	$	668,397		$	(7,157	)	$	1,198,173

(a) Stock-based compensation is based on the stock awards of WGL that are allocated to Washington Gas Light Company for its pro-rata share.

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Earnings Per Share (Tables)

9 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings per Share

The following table reflects the computation of our basic and diluted EPS for the three and nine months ended June 30, 2017 and 2016.

Basic and Diluted EPS
(In thousands, except per share data)	Net Income Applicable to Common Stock		Shares	Per Share Amount
Three Months Ended June 30, 2017
Basic EPS	$	8,265	51,219	$	0.16
Stock-based compensation plans	—		274
Diluted EPS	$	8,265	51,493	$	0.16
Three Months Ended June 30, 2016
Basic EPS	$	2,025	50,622	$	0.04
Stock-based compensation plans	—		283
Diluted EPS	$	2,025	50,905	$	0.04
Nine Months Ended June 30, 2017
Basic EPS	$	189,301	51,200	$	3.70
Stock-based compensation plans	—		269
Diluted EPS	$	189,301	51,469	$	3.68
Nine Months Ended June 30, 2016
Basic EPS	$	176,484	50,158	$	3.52
Stock-based compensation plans	—		260
Diluted EPS	$	176,484	50,418	$	3.50

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Derivative and Weather Related Instruments (Tables)

9 Months Ended

Jun. 30, 2017

Derivative [Line Items]

Absolute Notional Amounts of Open Positions on Derivative Instruments

At June 30, 2017 and September 30, 2016, respectively, the absolute notional amounts of our derivatives were as follows:

Absolute Notional Amounts of Open Positions on Derivative Instruments
Derivative transactions	WGL Holdings, Inc.		Washington Gas
June 30, 2017	Notional Amounts
Natural Gas(In millions of therms)
Asset optimization & trading	23,019.0		11,614.0
Retail sales	12.5		—
Other risk-management activities	1,546.6		1,201.0
Electricity(In millions of kWhs)
Retail sales	10,728.9		—
Other risk-management activities(a)	24,878.5		—
Interest Rate Swaps(In millions of dollars)	$	250.0	—
September 30, 2016
Natural Gas(In millions of therms)
Asset optimization & trading	21,084.5		12,725.0
Retail sales	50.2		—
Other risk-management activities	1,789.0		1,309.0
Electricity(In millions of kWhs)
Retail sales	4,377.5		—
Other risk-management activities(a)	21,070.4		—
Interest Rate Swaps(In millions of dollars)	$	250.0	—

(a) Comprised primarily of financial swaps, financial transmission rights and physical forward purchases.

Balance Sheet Classification of Derivative Instruments

The following tables present the balance sheet classification for all derivative instruments as of June 30, 2017 and September 30, 2016.

WGL Holdings, Inc. Balance Sheet Classification of Derivative Instruments
(In millions)	Derivative Instruments Not Designated as Hedging Instruments					Derivative Instruments Designated as Hedging Instruments
As of June 30, 2017	Gross Derivative Assets		Gross Derivative Liabilities			Gross Derivative Assets		Gross Derivative Liabilities			Netting of Collateral		Total(a)
Current Assets—Derivatives	$	32.6	$	(8.8	)	$	—	$	—		$	—	$	23.8
Deferred Charges and Other Assets—Derivatives	37.0		(0.8		)	—		—			—		36.2
Accounts payable and other accrued liabilities	0.5		—			—		—			—		0.5
Current Liabilities—Derivatives	11.9		(58.6		)	—		—			0.8		(45.9		)
Deferred Credits—Derivatives	14.2		(183.5		)	—		—			6.4		(162.9		)
Total	$	96.2	$	(251.7	)	$	—	$	—		$	7.2	$	(148.3	)
As of September 30, 2016
Current Assets—Derivatives	$	24.0	$	(5.5	)	$	—	$	—		$	—	$	18.5
Deferred Charges and Other Assets—Derivatives	55.6		(0.6		)	—		—			—		55.0
Current Liabilities—Derivatives	18.3		(113.2		)	—		—			12.6		(82.3		)
Deferred Credits—Derivatives	6.4		(279.3		)	0.2		(43.1		)	11.6		(304.2		)
Total	$	104.3	$	(398.6	)	$	0.2	$	(43.1	)	$	24.2	$	(313.0	)

Gains and (Losses) on Derivative Instruments

The following table presents all gains and losses associated with derivative instruments for the three and nine months ended June 30, 2017 and 2016.

Gains and Losses on Derivative Instruments
(In millions)	WGL Holdings, Inc.						Washington Gas
Three Months Ended June 30,	2017			2016			2017		2016
Recorded to income
Operating revenues—non-utility	$	8.3		$	(39.0	)	$	—	$	—
Utility cost of gas	5.5			(24.9		)	5.5		(24.9		)
Non-utility cost of energy-related sales	(0.8		)	48.4			—		—
Interest expense	(7.9		)	(0.1		)	—		—
Recorded to regulatory assets
Gas costs	6.4			(29.4		)	6.4		(29.4		)
Other	—			(8.8		)	—		(8.8		)
Recorded to other comprehensive income	0.1			(16.9		)	—		—
Total	$	11.6		$	(70.7	)	$	11.9	$	(63.1	)
Nine Months Ended June 30,	2017			2016			2017		2016
Recorded to income
Operating revenues—non-utility	$	25.8		$	7.6		$	—	$	—
Utility cost of gas	40.0			9.2			40.0		9.2
Non-utility cost of energy-related sales	25.9			50.6			—		—
Interest expense	(5.4		)	(0.2		)	—		—
Recorded to regulatory assets
Gas costs	62.6			24.9			62.6		24.9
Other	—			(8.8		)	—		(8.8		)
Recorded to other comprehensive income	49.6			(34.5		)	—		—
Total	$	198.5		$	48.8		$	102.6	$	25.3

Collateral Not Offset Against Derivative Assets and Liabilities

The table below presents collateral not offset against derivative assets and liabilities at June 30, 2017 and September 30, 2016, respectively.

Collateral Not Offset Against Derivative Assets and Liabilities (In millions)
June 30, 2017	Collateral deposits posted with counterparties		Cash collateral held representing an obligation
Washington Gas	$	4.9	$	0.1
WGL Energy Services	18.5		—
WGL Midstream	33.6		0.6
September 30, 2016
Washington Gas	$	4.3	$	0.1
WGL Energy Services	9.1		—
WGL Midstream	18.5		5.4

Potential Collateral Requirements for Derivative Liabilities with Credit-risk-Contingent Features

The following table shows the aggregate fair value of all derivative instruments with credit-related contingent features that are in a liability position, as well as the maximum amount of collateral that would be required if the most intrusive credit-risk-related contingent features underlying these agreements were triggered on June 30, 2017 and September 30, 2016, respectively.

Potential Collateral Requirements for Derivative Liabilities with Credit-Risk-Contingent Features
(In millions)	WGL Holdings, Inc.		Washington Gas
June 30, 2017
Derivative liabilities with credit-risk-contingent features	$	26.0	$	2.4
Maximum potential collateral requirements	$	23.4	$	2.4
September 30, 2016
Derivative liabilities with credit-risk-contingent features	$	53.9	$	11.3
Maximum potential collateral requirements	$	41.4	$	11.3

Washington Gas Light Company

Derivative [Line Items]

Balance Sheet Classification of Derivative Instruments

Washington Gas Light Company Balance Sheet Classification of Derivative Instruments(b)
(In millions)
As of June 30, 2017	Gross Derivative Assets		Gross Derivative Liabilities			Netting of Collateral		Total(a)
Current Assets—Derivatives	$	10.7	$	(3.7	)	$	—	$	7.0
Deferred Charges and Other Assets—Derivatives	15.5		(0.4		)	—		15.1
Current Liabilities—Derivatives	0.1		(26.3		)	—		(26.2		)
Deferred Credits—Derivatives	—		(143.8		)	—		(143.8		)
Total	$	26.3	$	(174.2	)	$	—	$	(147.9	)
As of September 30, 2016
Current Assets—Derivatives	$	11.7	$	(4.4	)	$	—	$	7.3
Deferred Charges and Other Assets—Derivatives	26.2		(0.6		)	—		25.6
Current Liabilities—Derivatives	1.9		(60.2		)	—		(58.3		)
Deferred Credits—Derivatives	—		(232.0		)	—		(232.0		)
Total	$	39.8	$	(297.2	)	$	—	$	(257.4	)

(a) WGL has elected to offset the fair value of recognized derivative instruments against the right to reclaim or the obligation to return collateral for derivative instruments executed under the same master netting arrangement in accordance with ASC 815. All recognized derivative contracts and associated financial collateral subject to a master netting arrangement or similar that is eligible for offset under ASC 815 have been presented net in the balance sheet.

(b) Washington Gas did not have any derivative instruments outstanding that were designated as hedging instruments at June 30, 2017 or September 30, 2016.

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Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2017

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Measurements Under the Fair Value Hierarchy

The following tables set forth financial instruments recorded at fair value as of June 30, 2017 and September 30, 2016, respectively. A financial instrument’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy.

WGL Holdings, Inc. Fair Value Measurements Under the Fair Value Hierarchy
(In millions)	Level 1		Level 2			Level 3			Total
At June 30, 2017
Assets
Natural gas related derivatives	$	—	$	20.4		$	46.7		$	67.1
Electricity related derivatives	—		—			19.3			19.3
Interest rate derivatives	—		9.8			—			9.8
Total Assets	$	—	$	30.2		$	66.0		$	96.2
Liabilities
Natural gas related derivatives	$	—	$	(16.5	)	$	(199.0	)	$	(215.5	)
Electricity related derivatives	—		(4.6		)	(23.1		)	(27.7		)
Interest rate derivatives	—		(8.5		)	—			(8.5		)
Total Liabilities	$	—	$	(29.6	)	$	(222.1	)	$	(251.7	)
At September 30, 2016
Assets
Natural gas related derivatives	$	—	$	28.8		$	54.0		$	82.8
Electricity related derivatives	—		0.6			20.9			21.5
Interest rate derivatives	—		0.2			—			0.2
Total Assets	$	—	$	29.6		$	74.9		$	104.5
Liabilities
Natural gas related derivatives	$	—	$	(46.7	)	$	(318.2	)	$	(364.9	)
Electricity related derivatives	—		(3.8		)	(29.9		)	(33.7		)
Interest rate derivatives	—		(43.1		)	—			(43.1		)
Total Liabilities	$	—	$	(93.6	)	$	(348.1	)	$	(441.7	)

Quantitative Information about Level 3 Fair Value Measurements

The following table includes quantitative information about the significant unobservable inputs used in the fair value measurement of our Level 3 financial instruments and the respective fair values of the net derivative asset and liability positions, by contract type, as of June 30, 2017 and September 30, 2016.

Quantitative Information about Level 3 Fair Value Measurements
(In millions)	Net Fair Value June 30, 2017	Valuation Techniques	Unobservable Inputs	Range
WGL Holdings, Inc.
Natural gas related derivatives	$(152.3)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($1.300) - $2.898
		Option Model	Natural Gas Basis Price (per dekatherm)	($1.468) - $2.543
			Annualized Volatility of Spot Market Natural Gas	25.5% - 566.8%
Electricity related derivatives	$(3.8)	Discounted Cash Flow	Electricity Congestion Price (per megawatt hour)	($4.154) - $60.000
Washington Gas Light Company
Natural gas related derivatives	$(150.7)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($1.300) - $2.898
(In millions)	Net Fair Value September 30, 2016
WGL Holdings, Inc.
Natural gas related derivatives	$(264.1)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($2.021) - $3.290
		Option Model	Natural Gas Basis Price (per dekatherm)	($2.105) - $3.310
	$(0.1)		Annualized Volatility of Spot Market Natural Gas	25.5% - 869.9%
Electricity related derivatives	$(9.1)	Discounted Cash Flow	Electricity Congestion Price (per megawatt hour)	($6.199) - $68.700
Washington Gas Light Company
Natural gas related derivatives	$(251.6)	Discounted Cash Flow	Natural Gas Basis Price (per dekatherm)	($2.021) - $3.290

Reconciliation of Fair Value Measurements Using Significant Level 3 Inputs

The following tables are a summary of the changes in the fair value of our derivative instruments that are measured at net fair value on a recurring basis in accordance with ASC Topic 820 using significant Level 3 inputs during the three and nine months ended June 30, 2017 and 2016, respectively.

Reconciliation of Fair Value Measurements Using Significant Level 3 Inputs
	WGL Holdings, Inc.									Washington Gas Light Company
(In millions)	Natural Gas Related Derivatives			Electricity Related Derivatives			Total			Total - Natural Gas Related Derivatives
Three Months Ended June 30, 2017
Balance at April 1, 2017	$	(150.2	)	$	(8.4	)	$	(158.6	)	$	(155.4	)
Realized and unrealized gains (losses)
Recorded to income	(6.0		)	1.7			(4.3		)	2.9
Recorded to regulatory assets—gas costs	3.0			—			3.0			3.0
Transfers into Level 3	0.1			—			0.1			—
Purchases	—			2.0			2.0			—
Settlements	0.8			0.9			1.7			(1.2		)
Balance at June 30, 2017	$	(152.3	)	$	(3.8	)	$	(156.1	)	$	(150.7	)
Three Months Ended June 30, 2016
Balance at April 1, 2016	$	(204.3	)	$	(30.5	)	$	(234.8	)	$	(194.3	)
Realized and unrealized gains (losses)
Recorded to income	(8.9		)	22.5			13.6			(21.6		)
Recorded to regulatory assets—gas costs	(27.6		)	—			(27.6		)	(27.6		)
Transfers into Level 3	0.1			—			0.1			—
Transfers out of Level 3	(0.2		)	—			(0.2		)	—
Purchases	—			(10.7		)	(10.7		)	—
Settlements	0.4			8.0			8.4			0.2
Balance at June 30, 2016	$	(240.5	)	$	(10.7	)	$	(251.2	)	$	(243.3	)
Nine Months Ended June 30, 2017
Balance at October 1, 2016	$	(264.1	)	$	(9.1	)	$	(273.2	)	$	(251.6	)
Realized and unrealized gains (losses)
Recorded to income	46.6			(2.5		)	44.1			34.7
Recorded to regulatory assets—gas costs	55.4			—			55.4			55.4
Transfers into Level 3	(0.7		)	—			(0.7		)	(0.4		)
Transfers out of Level 3	(0.5		)	—			(0.5		)	(0.3		)
Purchases	—			(1.0		)	(1.0		)	—
Settlements	11.0			8.8			19.8			11.5
Balance at June 30, 2017	$	(152.3	)	$	(3.8	)	$	(156.1	)	$	(150.7	)
Nine Months Ended June 30, 2016
Balance at October 1, 2015	$	(309.7	)	$	(16.0	)	$	(325.7	)	$	(281.1	)
Realized and unrealized gains (losses)
Recorded to income	34.6			(14.2		)	20.4			3.3
Recorded to regulatory assets—gas costs	15.9			—			15.9			15.9
Transfers into Level 3	(0.8		)	—			(0.8		)	(0.2		)
Transfers out of Level 3	8.7			—			8.7			8.8
Purchases	—			(4.4		)	(4.4		)	—
Settlements	10.8			23.9			34.7			10.0
Balance at June 30, 2016	$	(240.5	)	$	(10.7	)	$	(251.2	)	$	(243.3	)

Realized and Unrealized Gains (Losses) Recorded to Income for Level 3 Measurements

The table below sets forth the line items on the statements of income to which amounts are recorded for the three and nine months ended June 30, 2017 and 2016, respectively, related to fair value measurements using significant Level 3 inputs.

Realized and Unrealized Gains (Losses) Recorded to Income for Level 3 Measurements
	WGL Holdings, Inc.									Washington Gas Light Company
(In millions)	Natural Gas Related Derivatives			Electricity Related Derivatives			Total			Total - Natural Gas Related Derivatives
Three Months Ended June 30, 2017
Operating revenues—non-utility	$	(8.9	)	$	(1.1	)	$	(10.0	)	$	—
Utility cost of gas	2.9			—			2.9			2.9
Non-utility cost of energy-related sales	—			2.8			2.8			—
Total	$	(6.0	)	$	1.7		$	(4.3	)	$	2.9
Three Months Ended June 30, 2016
Operating revenues—non-utility	$	6.5		$	(17.4	)	$	(10.9	)	$	—
Utility cost of gas	(21.6		)	—			(21.6		)	(21.6		)
Non-utility cost of energy-related sales	6.2			39.9			46.1			—
Total	$	(8.9	)	$	22.5		$	13.6		$	(21.6	)
Nine Months Ended June 30, 2017
Operating revenues—non-utility	$	6.3		$	(9.6	)	$	(3.3	)	$	—
Utility cost of gas	34.7			—			34.7			34.7
Non-utility cost of energy-related sales	5.6			7.1			12.7			—
Total	$	46.6		$	(2.5	)	$	44.1		$	34.7
Nine Months Ended June 30, 2016
Operating revenues—non-utility	$	22.5		$	(25.9	)	$	(3.4	)	$	—
Utility cost of gas	3.3			—			3.3			3.3
Non-utility cost of energy-related sales	8.8			11.7			20.5			—
Total	$	34.6		$	(14.2	)	$	20.4		$	3.3

Unrealized Gains (Losses) Recorded for Level 3 Measurements

Unrealized gains (losses) attributable to derivative assets and liabilities measured using significant Level 3 inputs were recorded as follows, for the three and nine months ended June 30, 2017 and 2016, respectively.

Unrealized Gains (Losses) Recorded for Level 3 Measurements
	WGL Holdings, Inc.									Washington Gas Light Company
(In millions)	Natural Gas Related Derivatives			Electricity Related Derivatives			Total			Total - Natural Gas Related Derivatives
Three Months Ended June 30, 2017
Recorded to income
Operating revenues—non-utility	$	(7.1	)	$	5.1		$	(2.0	)	$	—
Utility cost of gas	2.6			—			2.6			2.6
Non-utility cost of energy-related sales	(0.2		)	2.0			1.8			—
Recorded to regulatory assets—gas costs	2.7			—			2.7			2.7
Total	$	(2.0	)	$	7.1		$	5.1		$	5.3
Three Months Ended June 30, 2016
Recorded to income
Operating revenues—non-utility	$	6.7		$	(10.3	)	$	(3.6	)	$	—
Utility cost of gas	(22.2		)	—			(22.2		)	(22.2		)
Non-utility cost of energy-related sales	5.2			33.2			38.4			—
Recorded to regulatory assets—gas costs	(28.9		)	—			(28.9		)	(28.9		)
Total	$	(39.2	)	$	22.9		$	(16.3	)	$	(51.1	)
Nine Months Ended June 30, 2017
Recorded to income
Operating revenues—non-utility	$	5.2		$	4.0		$	9.2		$	—
Utility cost of gas	22.4			—			22.4			22.4
Non-utility cost of energy-related sales	(0.1		)	8.4			8.3			—
Recorded to regulatory assets—gas costs	38.0			—			38.0			38.0
Total	$	65.5		$	12.4		$	77.9		$	60.4
Nine Months Ended June 30, 2016
Recorded to income
Operating revenues—non-utility	$	26.1		$	(6.7	)	$	19.4		$	—
Utility cost of gas	(0.2		)	—			(0.2		)	(0.2		)
Non-utility cost of energy-related sales	2.6			15.1			17.7			—
Recorded to regulatory assets—gas costs	9.2			—			9.2			9.2
Total	$	37.7		$	8.4		$	46.1		$	9.0

Fair Value of Financial Instruments

The following table presents the carrying amounts and estimated fair values of our financial instruments at June 30, 2017 and September 30, 2016.

WGL Holdings, Inc. Fair Value of Financial Instruments
	June 30, 2017				September 30, 2016
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Money market funds(a)	$	15.4	$	15.4	$	10.6	$	10.6
Other short-term investments(a)	$	0.1	$	0.1	$	1.4	$	1.4
Commercial paper (b)	$	486.0	$	486.0	$	269.0	$	269.0
Project financing (b)	$	52.9	$	52.9	$	62.4	$	62.4
Long-term debt(c)	$	1,235.6	$	1,378.8	$	1,435.0	$	1,641.9

Washington Gas Light Company

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Measurements Under the Fair Value Hierarchy

Washington Gas Light Company Fair Value Measurements Under the Fair Value Hierarchy
(In millions)	Level 1		Level 2			Level 3			Total
At June 30, 2017
Assets
Natural gas related derivatives	$	—	$	8.7		$	17.6		$	26.3
Total Assets	$	—	$	8.7		$	17.6		$	26.3
Liabilities
Natural gas related derivatives	$	—	$	(5.9	)	$	(168.3	)	$	(174.2	)
Total Liabilities	$	—	$	(5.9	)	$	(168.3	)	$	(174.2	)
At September 30, 2016
Assets
Natural gas related derivatives	$	—	$	15.4		$	24.4		$	39.8
Total Assets	$	—	$	15.4		$	24.4		$	39.8
Liabilities
Natural gas related derivatives	$	—	$	(21.2	)	$	(276.0	)	$	(297.2	)
Total Liabilities	$	—	$	(21.2	)	$	(276.0	)	$	(297.2	)

Fair Value of Financial Instruments

Washington Gas Light Company Fair Value of Financial Instruments
	June 30, 2017				September 30, 2016
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Money market funds (a)	$	8.7	$	8.7	$	5.0	$	5.0
Other short-term investments (a)	$	0.1	$	0.1	$	1.4	$	1.4
Commercial paper (b)	$	161.0	$	161.0	$	42.0	$	42.0
Project financing (b)	$	41.8	$	41.8	$	62.4	$	62.4
Long-term debt (c)	$	939.3	$	1,073.2	$	939.0	$	1,126.4

^(a)  Balance is located in cash and cash equivalents in the accompanying balance sheets. These amounts may be offset by outstanding checks.

^(b)  Balance is located in notes payable in the accompanying balance sheets.

^(c)  Excludes current maturities. On October 1, 2016, WGL and Washington Gas adopted ASU 2015-03 and ASU 2015-15. This standard requires an entity to account for debt issuance costs as a valuation account presented as a deduction from the face amount of debt in the balance sheet. Prior period amounts related to other deferred charges and other assets and long-term debt in the accompanying condensed balance sheets have been recast to conform to the current period presentation.

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Operating Segment Reporting (Tables)

9 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Operating Segment Financial Information

The following tables present operating segment information for the three and nine months ended June 30, 2017 and 2016.

Operating Segment Financial Information
(In thousands)	Operating Revenues(a)			Depreciation and Amortization			Equity in Earnings of Unconsolidated Affiliates		EBIT			Total Assets			Capital Expenditures			Equity Method Investments
Three Months Ended June 30, 2017
Regulated utility	$	203,186		$	33,217		$	—	$	11,226		$	4,780,169		$	72,750		$	—
Retail energy-marketing	250,025			281			—		4,335			522,496			(125		)	—
Commercial energy systems(b)	25,645			5,585			2,355		14,354			987,827			13,062			76,341
Midstream energy services	4,540			2			5,153		7,651			650,204			—			348,963
Other activities	—			—			—		(1,622		)	354,465			—			—
Eliminations(c)	(9,032		)	9			—		(138		)	(921,668		)	—			—
Total consolidated	$	474,364		$	39,094		$	7,508	$	35,806		$	6,373,493		$	85,687		$	425,304
Three Months Ended June 30, 2016
Regulated utility	$	187,077		$	29,632		$	—	$	(20,458	)	$	4,462,946		$	106,773		$	—
Retail energy-marketing	266,214			233			—		49,544			473,766			768			—
Commercial energy systems	20,842			3,900			2,162		8,286			779,516			34,125			65,289
Midstream energy services	(17,989		)	26			2,365		(16,908		)	433,384			—			217,491
Other activities	—			—			—		(517		)	198,905			—			—
Eliminations(c)	(15,557		)	(5		)	—		178			(612,656		)	—			—
Total consolidated	$	440,587		$	33,786		$	4,527	$	20,125		$	5,735,861		$	141,666		$	282,780
Nine Months Ended June 30, 2017
Regulated utility	$	1,012,193		$	97,349		$	—	$	279,114		$	4,780,169		$	281,043		$	—
Retail energy-marketing	873,625			859			—		42,775			522,496			609			—
Commercial energy systems(b)	61,482			15,210			7,185		27,564			987,827			70,580			76,341
Midstream energy services	18,173			21			7,932		21,160			650,204			—			348,963
Other activities	—			—			—		(17,887		)	354,465			—			—
Eliminations(c)	(39,872		)	48			—		(502		)	(921,668		)	—			—
Total consolidated	$	1,925,601		$	113,487		$	15,117	$	352,224		$	6,373,493		$	352,232		$	425,304
Nine Months Ended June 30, 2016
Regulated utility	$	934,347		$	86,318		$	—	$	243,102		$	4,462,946		$	267,230		$	—
Retail energy-marketing	925,180			872			—		52,055			473,766			7,595			—
Commercial energy systems	57,066			11,105			5,554		10,251			779,516			73,769			65,289
Midstream energy services	16,223			97			5,004		17,631			433,384			—			217,491
Other activities	—			—			—		(2,773		)	198,905			—			—
Eliminations(c)	(43,156		)	(24		)	—		(416		)	(612,656		)	—			—
Total consolidated	$	1,889,660		$	98,368		$	10,558	$	319,850		$	5,735,861		$	348,594		$	282,780

(a) Operating revenues are reported gross of revenue taxes. Revenue taxes of both the regulated utility and the retail energy-marketing segments include gross receipt taxes. Revenue taxes of the regulated utility segment also include public service commission fees, franchise fees and energy taxes. Operating revenue amounts in the “Eliminations” row represent total intersegment revenues associated with sales from the regulated utility segment to the retail energy-marketing segment. Midstream Energy Services’ cost of energy related sales is netted with its gross revenues.

(b) Commercial energy systems' operating revenues include revenues from non-controlling interest. Commercial energy systems' EBIT is adjusted for the effects of non-controlling interest.

(c) Intersegment eliminations include any mark-to market valuations associated with trading activities between WGL Midstream and WGL Energy Services, intercompany loans and a timing difference between Commercial Energy Systems’ recognition of revenue for the sale of Renewable Energy Credits (RECs) to Retail Energy-Marketing and Retail Energy-Marketing’s recognition of the associated expense. Retail Energy-Marketing has recorded a portion of the RECs purchased as inventory to be used in future periods at which time they will be expensed.

Reconciliation from EBIT to net income applicable to common stock

The following table provides a reconciliation from EBIT to net income applicable to common stock.

	Three Months Ended June 30,				Nine Months Ended June 30,
(In thousands)	2017		2016		2017		2016
Total consolidated EBIT	$	35,806	$	20,125	$	352,224	$	319,850
Interest expense	25,062		12,998		55,552		38,757
Income tax expense	2,149		4,772		106,381		103,619
Dividends on Washington Gas Light Company preferred stock	330		330		990		990
Net income applicable to common stock	$	8,265	$	2,025	$	189,301	$	176,484

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Other Investment (Tables)

9 Months Ended

Jul. 10, 2017

Jun. 30, 2017

Consolidated VIE's

Variable Interest Entity [Line Items]

Location of Other Investments

The carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in our condensed consolidated balance sheet at June 30, 2017 and September 30, 2016 are as follows:

WGL Holdings, Inc.

Balance Sheet Location of Consolidated Investments

(in millions)	June 30, 2017		September 30, 2016
Current assets	$	2.1	$	—
Non-current assets	56.9		13.2
Total assets	$	59.0	$	13.2
Current liabilities	0.4		0.6
Non-current liabilities	0.3		—
Total liabilities	$	0.7	$	0.6

Unconsolidated and Non-consolidated VIE's

Variable Interest Entity [Line Items]

Location of Other Investments

The following tables present summary information about our unconsolidated VIEs and non-VIEs:

WGL Holdings, Inc.

Balance Sheet Location of Unconsolidated Investments

	Solar Investments				Pipelines
(in millions)	VIEs(a)		Non-VIEs(b)		VIEs(c)		Non-VIEs(d)		Total
June 30, 2017
Assets
Investments in unconsolidated affiliates	$	66.7	$	9.6	$	121.0	$	228.0	$	425.3
Total assets	$	66.7	$	9.6	$	121.0	$	228.0	$	425.3
September 30, 2016
Assets
Investments in unconsolidated affiliates	$	66.1	$	—	$	80.8	$	156.6	$	303.5
Investments in direct financing leases, capital leases(e)	29.8		—		—		—		29.8
Accounts receivable(e)	1.1		—		—		9.2		10.3
Total assets	$	97.0	$	—	$	80.8	$	165.8	$	343.6

(a) "Investments in unconsolidated affiliates" balance relates to equity method investment in ASD.

(b) Balance relates to interest held in SFEE.

(c) Balance relates to equity method investment in Meade.

(d) Balance relates to equity method investments in Constitution, Mountain Valley Pipeline and Stonewall System.

(e) Prior year balances relate to direct financing leases in Nextility and SunEdison.

Scenario, Estimated Fair Value

Variable Interest Entity [Line Items]

Location of Other Investments

The following table summarizes the preliminary fair value amounts of ASD assets and liabilities, as well as the non-controlling interest recorded at estimated fair value as of the date of control.

(in millions)	Preliminary Estimated Fair Value
Current assets	$	1.1
Other assets	0.8
Property, plant and equipment	76.4
Total assets	$	78.3
Current liabilities	0.9
Other liabilities	27.0
Total liabilities	$	27.9
Net assets	$	50.4
Non-controlling interest	$	0.5
WGSW equity interest	$	49.9

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Related Party Transactions (Tables)

9 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions

The following table shows the amounts Washington Gas charged WGL Energy Services for balancing services.

Washington Gas - Gas Balancing Service Charges
	Three Months Ended June 30,				Nine Months Ended June 30,
(In millions)	2017		2016		2017		2016
Gas balancing service charge	$	4.2	$	5.5	$	19.9	$	21.7

The following table presents the receivables from and payables to associated companies as of June 30, 2017 and September 30, 2016.

Washington Gas Receivables From / Payables To Associated Companies
(In millions)	June 30, 2017		September 30, 2016
Receivables from Associated Companies	$	16.1	$	13.8
Payables to Associated Companies	$	91.5	$	65.8

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Pension and Other Post-Retirement Benefit Plan (Tables)

9 Months Ended

Jun. 30, 2017

Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]

Components of Net Periodic Benefit Costs (Income)

The following table shows the components of net periodic benefit costs (income) recognized in our financial statements during the three and nine months ended June 30, 2017 and 2016.

Components of Net Periodic Benefit Costs (Income)
	Three Months Ended June 30,
	2017						2016
(In millions)	Pension Benefits			Health and Life Benefits			Pension Benefits			Health and Life Benefits
Service cost	$	4.1		$	1.4		$	3.6		$	1.2
Interest cost	9.6			2.9			10.3			3.2
Expected return on plan assets	(10.3		)	(5.5		)	(10.2		)	(5.1		)
Amortization of prior service cost (credit)	0.1			(4.4		)	—			(4.4		)
Amortization of net actuarial loss	5.5			0.2			4.3			0.3
Net periodic benefit cost (income)	9.0			(5.4		)	8.0			(4.8		)
Amount allocated to construction projects	(1.6		)	1.1			(1.5		)	1.1
Amount deferred as regulatory asset/liability—net	1.8			—			1.8			(0.1		)
Amount charged (credited) to expense	$	9.2		$	(4.3	)	$	8.3		$	(3.8	)
	Nine Months Ended June 30,
	2017						2016
Service cost	$	12.3		$	4.3		$	10.7		$	3.4
Interest cost	28.8			8.7			31.0			9.8
Expected return on plan assets	(30.8		)	(16.6		)	(30.7		)	(15.3		)
Amortization of prior service cost (credit)	0.3			(13.2		)	0.2			(13.2		)
Amortization of net actuarial loss	16.5			0.6			12.7			0.9
Net periodic benefit cost (income)	27.1			(16.2		)	23.9			(14.4		)
Amount allocated to construction projects	(4.9		)	3.5			(4.1		)	3.0
Amount deferred as regulatory asset/liability—net	5.3			(0.1		)	5.3			(0.2		)
Amount charged (credited) to expense	$	27.5		$	(12.8	)	$	25.1		$	(11.6	)

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Changes in Accumulated Other Comprehensive Income (Loss) by Component

The following tables show the changes in accumulated other comprehensive income (loss) for WGL and Washington Gas by component for the three and nine months ended June 30, 2017 and 2016.

WGL Holdings, Inc. Changes in Accumulated Other Comprehensive Loss by Component
(In thousands)	Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2017			2016
Beginning Balance	$	(8,874	)	$	(24,258	)	$	(38,539	)	$	(14,236	)
Qualified cash flow hedging instruments(a)	51			(16,995		)	49,556			(34,545		)
Change in prior service credit(b)	(217		)	(216		)	(651		)	(644		)
Amortization of actuarial loss(b)	588			420			1,763			1,258
Current-period other comprehensive income (loss)	422			(16,791		)	50,668			(33,931		)
Income tax expense (benefit) related to other comprehensive income (loss)	235			(6,969		)	20,816			(14,087		)
Ending Balance	$	(8,687	)	$	(34,080	)	$	(8,687	)	$	(34,080	)

^(a)  Cash flow hedging instruments represent interest rate swap agreements related to debt issuances. Refer to Note 8- Derivative and Weather-related Instruments for further discussion of the interest rate swap agreements.

^(b)  These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14- Pension and other post-retirement benefit plans for additional details.

Washington Gas Light Company Changes in Accumulated Other Comprehensive Loss by Component
(In thousands)	Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2017			2016
Beginning Balance	$	(7,383	)	$	(6,464	)	$	(7,830	)	$	(6,712	)
Change in prior service credit(a)	(217		)	(216		)	(651		)	(644		)
Amortization of actuarial loss(a)	588			420			1,763			1,258
Current-period other comprehensive income	371			204			1,112			614
Income tax expense related to other comprehensive income	145			82			439			244
Ending Balance	$	(7,157	)	$	(6,342	)	$	(7,157	)	$	(6,342	)

^(a)  These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14-Pension and other post-retirement benefit plans for additional details.

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Accounting Policies (Narrative) (Details) $ in Millions	Jun. 30, 2017 subsidiary	Sep. 30, 2016 USD ($)
Washington Gas Light Company
Accounting Policies [Table] [Line Items]
Carrying value of reclassified amounts		$ 6.8
WGL
Accounting Policies [Table] [Line Items]
Carrying value of reclassified amounts		$ 9.3
Washington Gas Resources
Accounting Policies [Table] [Line Items]
Number of subsidiaries | subsidiary	4

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Accounting Policies (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Washington Gas Light Company
Inventory [Line Items]
Lower of cost or market adjustment	$ 0.0	$ 0.0	$ 0.0	$ 0.0
WGL | Operating revenues - non-utility
Inventory [Line Items]
Lower of cost or market adjustment	$ 0.0	$ 0.7	$ 0.0	$ (0.4)

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Accounts Payable and Other Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Sep. 30, 2016
Accounts Payable and Other Accrued Liabilities [Line Items]
Accounts payable—trade	$ 329,500	$ 353,000
Employee benefits and payroll accruals	28,000	34,400
Other accrued liabilities	19,600	18,000
Total	377,133	405,351
Washington Gas Light Company
Accounts Payable and Other Accrued Liabilities [Line Items]
Accounts payable—trade	151,100	161,000
Employee benefits and payroll accruals	26,300	32,200
Other accrued liabilities	9,800	11,800
Total	$ 187,193	$ 204,980

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Short-Term Debt (Details) - USD ($)		Jun. 30, 2017	Sep. 30, 2016
Committed Credit
Short-term Debt [Line Items]
Unsecured revolving credit facility, expires December 19, 2019	[1]	$ 1,000,000,000	$ 800,000,000
Less: Commercial Paper		486,000,000	269,000,000
Net committed credit available		$ 514,000,000	$ 531,000,000
Weighted average interest rate		1.33%	0.69%
Washington Gas Light Company
Short-term Debt [Line Items]
Outstanding bank loans		$ 0	$ 0
Unbilled revenues		65,200,000	73,300,000
Notes payable and project financing		41,800,000	62,400,000
Reserve for bad debt		0	0
Washington Gas Light Company | Committed Credit
Short-term Debt [Line Items]
Unsecured revolving credit facility, expires December 19, 2019	[1]	350,000,000	350,000,000
Less: Commercial Paper		161,000,000	42,000,000
Net committed credit available		$ 189,000,000	$ 308,000,000
Weighted average interest rate		1.16%	0.46%
Revolving credit facility maximum borrowing capacity		$ 450,000,000
Revolving credit facility additional borrowings		100,000,000
WGL
Short-term Debt [Line Items]
Outstanding bank loans		0	$ 0
Unbilled revenues		70,900,000	73,300,000
Notes payable and project financing		52,900,000	62,400,000
Reserve for bad debt		0	0
WGL | Committed Credit
Short-term Debt [Line Items]
Unsecured revolving credit facility, expires December 19, 2019	[1],[2]	650,000,000	450,000,000
Less: Commercial Paper	[2]	325,000,000	227,000,000
Net committed credit available	[2]	$ 325,000,000	$ 223,000,000
Weighted average interest rate	[2]	1.42%	0.73%
WGL Energy Systems
Short-term Debt [Line Items]
Notes payable and project financing			$ 0

[1] Washington Gas has the right to request extensions with the banks’ approval. Washington Gas’ revolving credit facility permits it to borrow an additional $100 million, with the banks’ approval, for a total of $450 million.

[2] WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

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Long-Term Debt (Details) - USD ($) $ in Millions		9 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2016
Total Consolidated Outstanding
Debt Instrument [Line Items]
Long-term debt	[1]	$ 1,496.0		$ 1,446.0
Unamortized discount		(1.6)		(1.7)
Unamortized debt expense		(8.8)		(9.3)
Total Long-Term Debt		$ 1,485.6		$ 1,435.0
Weighted average interest rate		4.27%		4.21%
Washington Gas Light Company
Debt Instrument [Line Items]
Minimum time before maturity of long-term notes		1 year
Long-term debt	[1]	$ 946.0		$ 946.0
Unamortized discount		(0.1)		(0.1)
Unamortized debt expense		(6.6)		(6.9)
Total Long-Term Debt		$ 939.3		$ 939.0
Weighted average interest rate		5.12%		5.12%
Washington Gas Light Company | Medium-term Notes
Debt Instrument [Line Items]
Unused Borrowing Capacity, Amount		$ 350.0		$ 350.0
Washington Gas Light Company | Total Consolidated Retirements [Member]
Debt Instrument [Line Items]
Total Long-Term Debt			$ 25.0
WGL
Debt Instrument [Line Items]
Minimum time before maturity of long-term notes		1 year
Long-term debt	[1],[2]	$ 550.0		500.0
Unamortized discount	[2]	(1.5)		(1.6)
Unamortized debt expense	[2]	(2.2)		(2.4)
Total Long-Term Debt	[2]	$ 546.3		$ 496.0
Weighted average interest rate	[2]	2.81%		2.50%
WGL | Total Consolidated Issuances [Member]
Debt Instrument [Line Items]
Total Long-Term Debt	[3],[4]	$ 50.0	250.0
Maturities 2018 Notes | WGL | Issuances
Debt Instrument [Line Items]
Long-term debt	[3],[4]		$ 250.0
Weighted average interest rate	[4],[5]		2.10%
Effective Cost	[4],[6]		2.10%
Nominal Maturity Date	[4]		Feb. 18, 2018
2019 Notes | WGL | Issuances
Debt Instrument [Line Items]
Long-term debt	[3],[4]	$ 50.0
Weighted average interest rate	[4],[5]	1.57%
Effective Cost	[4],[6]	1.57%
Nominal Maturity Date	[4]	Jan. 26, 2019
Maturities 2016 Notes | Washington Gas Light Company | Retirements
Debt Instrument [Line Items]
Long-term debt			$ 25.0
Weighted average interest rate			5.17%
Nominal Maturity Date			Jan. 18, 2016

[1] Includes Senior Notes and term loans for WGL and both MTNs and private placement notes for Washington Gas. Represents face value including current maturities.

[2] WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

[3] Represents face amount of Senior Notes and term loans for WGL and both MTNs and private placement notes for Washington Gas.

[4] WGL includes WGL Holdings, Inc. and all subsidiaries other than Washington Gas.

[5] Floating rate per annum that will be determined from time to time based on parameters set forth in the credit agreement.

[6] The estimated effective cost of the issued notes.

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Common Shareholders' Equity (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017		Jun. 30, 2016		Jul. 31, 2017	Sep. 30, 2016	Sep. 30, 2015
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				$ 1,375,561
Net income (loss)		$ 4,036	$ 2,355	177,758		$ 177,474
Other comprehensive income (loss)		$ 187	$ (9,822)	$ 29,852		$ (19,844)
Stock-based compensation plans (in shares)		274,000	283,000	269,000		260,000
Common shareholders' equity, ending balance		$ 1,521,283		$ 1,521,283
Dividends declared:
Entity Common Stock, Shares Outstanding								51,219,000
Washington Gas Light Company
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				1,113,446
Net income (loss)		(1,671)	$ (18,519)	147,400		$ 130,526
Other comprehensive income (loss)		226	122	673		$ 370
Common shareholders' equity, ending balance		1,198,173		$ 1,198,173
Dividends declared:
Entity Common Stock, Shares Outstanding								46,479,536
Washington Gas Light Company | Common Stock
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Beginning Balance (in shares)				46,479,536
Common shareholders' equity, beginning balance				$ 46,479
Common shareholders' equity, ending balance		46,479		46,479
Washington Gas Light Company | Paid-In Capital
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				488,135
Stock-based compensation	[1]			2,319
Common shareholders' equity, ending balance		490,454		490,454
Washington Gas Light Company | Retained Earnings
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				586,662
Net income (loss)				147,400
Common shareholders' equity, ending balance		668,397		668,397
Dividends declared:
Common stock				(64,675)
Preferred stock				(990)
Washington Gas Light Company | Accumulated Other Comprehensive Income (Loss), Net of Taxes
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				(7,830)
Other comprehensive income (loss)				673
Common shareholders' equity, ending balance		(7,157)		(7,157)
Washington Gas Light Company | Total
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				1,113,446
Net income (loss)				147,400
Other comprehensive income (loss)				673
Stock-based compensation	[1]			2,319
Common shareholders' equity, ending balance		1,198,173		1,198,173
Dividends declared:
Common stock				(64,675)
Preferred stock				$ (990)
WGL | Common Stock
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Beginning Balance (in shares)				51,080,612		49,728,662
Common shareholders' equity, beginning balance				$ 574,496		$ 485,456
Stock-based compensation	[2]			$ 6,564		$ 6,742
Stock-based compensation plans (in shares)	[2]			112,146		115,974
Issuance of common stock				$ 1,657	[3]	$ 80,711	[4]
Issuance of Common Stock (in shares)				26,242	[3]	1,213,373	[4]
Common shareholders' equity, ending balance		$ 582,717	$ 572,909	$ 582,717		$ 572,909
Ending Balance (in shares)		51,219,000	51,058,009	51,219,000		51,058,009
WGL | Paid-In Capital
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				$ 12,519		$ 14,934
Stock-based compensation	[2]			(3,971)		(3,652)
Common shareholders' equity, ending balance		$ 8,548	$ 11,282	8,548		11,282
WGL | Retained Earnings
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				827,085		757,093
Net income (loss)				189,301		176,484
Stock-based compensation	[2]			(468)		(122)
Common shareholders' equity, ending balance		938,705	860,970	938,705		860,970
Dividends declared:
Common stock				(77,213)		(72,485)
WGL | Accumulated Other Comprehensive Income (Loss), Net of Taxes
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				(38,539)		(14,236)
Other comprehensive income (loss)				29,852		(19,844)
Common shareholders' equity, ending balance		(8,687)	(34,080)	(8,687)		(34,080)
WGL | WGL Holdings Common Shareholders' Equity
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				1,375,561		1,243,247
Net income (loss)				189,301		176,484
Other comprehensive income (loss)				29,852		(19,844)
Stock-based compensation	[2]			2,125		2,968
Issuance of common stock				1,657	[3]	80,711	[4]
Common shareholders' equity, ending balance		1,521,283	1,411,081	1,521,283		1,411,081
Dividends declared:
Common stock				(77,213)		(72,485)
WGL | Non-controlling Interest
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				409
Net Income				(12,533)
Contributions from non-controlling interest		17,358		17,358
Common shareholders' equity, ending balance		5,234		5,234
WGL | Washington Gas Light Company Preferred Stock [Member]
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Common shareholders' equity, beginning balance				28,173		28,173
Net Income				990		990
Common shareholders' equity, ending balance		28,173	28,173	28,173		28,173
Dividends declared:
Preferred stock				(990)		(990)
WGL | Total Equity
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		1,554,690	$ 1,439,254	1,554,690		1,439,254			$ 1,404,143	$ 1,271,420
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest				177,758		177,474
Contributions from non-controlling interest		$ 17,358		17,358
Other comprehensive income (loss)				29,852		(19,844)
Stock-based compensation	[2]			2,125		2,968
Issuance of common stock				1,657	[3]	80,711	[4]
Dividends declared:
Common stock				(77,213)		(72,485)
Preferred stock				$ (990)		$ (990)

[1] Stock-based compensation is based on the stock awards of WGL that are allocated to Washington Gas Light Company for its pro-rata share.

[2] Includes dividend equivalents related to our performance shares.

[3] Includes dividend reinvestment and common stock purchase plans.

[4] Includes shares issued under the ATM program and the dividend reinvestment and common stock purchase plans.

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Net Income applicable to common stock	$ 8,265	$ 2,025	$ 189,301	$ 176,484
Basic EPS (in shares)	51,219,000	50,622,000	51,200,000	50,158,000
Stock-based compensation plans (in shares)	274,000	283,000	269,000	260,000
Diluted EPS (in shares)	51,493,000	50,905,000	51,469,000	50,418,000
Basic EPS (in dollars per share)	$ 0.16	$ 0.04	$ 3.70	$ 3.52
Diluted EPS (in dollars per share)	$ 0.16	$ 0.04	$ 3.68	$ 3.50
Antidilutive securities excluded from computation of earnings per share	0	0	0	0

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Income Taxes-Balance Sheet (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Income Tax Expense Benefit Details [Line Items]
Unrecognized tax benefits	$ 46,600,000	$ 42,300,000
Washington Gas Light Company
Income Tax Expense Benefit Details [Line Items]
Accrued interest related to uncertain tax positions	$ 0	$ 0

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Derivative and Weather Related Instruments (Narrative) (Details) $ in Thousands		3 Months Ended		9 Months Ended
		Jun. 30, 2017 USD ($) Counterparties	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) Counterparties	Jun. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)
Derivative [Line Items]
Qualified cash flow hedging instruments	[1]	$ 51	$ (16,995)	$ 49,556	$ (34,545)
Derivative, Collateral [Abstract]
Collateral already posted, aggregate fair value						$ 6,500
Interest Rate Swap
Asset Optimization [Abstract]
Derivative notional amount		250,000		250,000		250,000
Washington Gas Light Company
Asset Optimization [Abstract]
Gain (loss) on asset optimization transactions, net pretax		9,100	(19,000)	62,500	30,300
Unrealized gain (loss) on asset optimization derivative instruments, net pretax		$ 3,200	(25,200)	$ 39,700	8,000
Concentration of Credit Risk
Number of counterparties | Counterparties		2		2
Percentage of credit exposure		10.00%		10.00%
Obligation to counterparties		$ 30,700		$ 30,700
WGL Energy Services
Derivative, Collateral [Abstract]
Collateral already posted, aggregate fair value		$ 6,500		$ 6,500		$ 5,500
Concentration of Credit Risk
Number of counterparties | Counterparties		4		4
Percentage of credit exposure		10.00%		10.00%
Obligation to counterparties		$ 1,200		$ 1,200
Gain (losses) on weather related instruments, pretax		$ 300	$ (500)	$ 1,400	$ 3,800
WGL Midstream
Concentration of Credit Risk
Number of counterparties | Counterparties		1		1
Percentage of credit exposure		10.00%		10.00%
Obligation to counterparties		$ 17,100		$ 17,100
WGL | Interest Rate Swap
Derivative [Line Items]
Qualified cash flow hedging instruments		$ 6,400

[1] Cash flow hedging instruments represent interest rate swap agreements related to debt issuances. Refer to Note 8- Derivative and Weather-related Instruments for further discussion of the interest rate swap agreements.

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Derivative and Weather Related Instruments (Details) kWh in Millions, MMBTU in Millions, $ in Millions		Jun. 30, 2017 USD ($) kWh MMBTU	Sep. 30, 2016 USD ($) kWh MMBTU
Balance Sheet Classification of Derivative Instruments
Netting of Collateral		$ 7.2	$ 24.2
Total	[1]	(148.3)	(313.0)
Derivative Instruments Not Designated as Hedging Instruments
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets		96.2	104.3
Gross Derivative Liabilities		(251.7)	(398.6)
Derivative Instruments Designated as Hedging Instruments
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets			0.2
Gross Derivative Liabilities			(43.1)
Current Assets—Derivatives
Balance Sheet Classification of Derivative Instruments
Total	[1]	23.8	18.5
Current Assets—Derivatives | Derivative Instruments Not Designated as Hedging Instruments
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets		32.6	24.0
Gross Derivative Liabilities		(8.8)	(5.5)
Deferred Charges and Other Assets—Derivatives
Balance Sheet Classification of Derivative Instruments
Total	[1]	36.2	55.0
Deferred Charges and Other Assets—Derivatives | Derivative Instruments Not Designated as Hedging Instruments
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets		37.0	55.6
Gross Derivative Liabilities		(0.8)	(0.6)
Accounts payable and other accrued liabilities
Balance Sheet Classification of Derivative Instruments
Total	[1]	0.5
Accounts payable and other accrued liabilities | Derivative Instruments Not Designated as Hedging Instruments
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets		(0.5)
Current Liabilities—Derivatives
Balance Sheet Classification of Derivative Instruments
Netting of Collateral		0.8	12.6
Total	[1]	(45.9)	(82.3)
Current Liabilities—Derivatives | Derivative Instruments Not Designated as Hedging Instruments
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets		11.9	18.3
Gross Derivative Liabilities		(58.6)	(113.2)
Deferred Credits—Derivatives
Balance Sheet Classification of Derivative Instruments
Netting of Collateral		6.4	11.6
Total	[1]	(162.9)	(304.2)
Deferred Credits—Derivatives | Derivative Instruments Not Designated as Hedging Instruments
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets		14.2	6.4
Gross Derivative Liabilities		$ (183.5)	(279.3)
Deferred Credits—Derivatives | Derivative Instruments Designated as Hedging Instruments
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets			0.2
Gross Derivative Liabilities			$ (43.1)
Asset optimization & trading
Absolute Notional Amounts of Open Positions on Derivative Instruments
Natural gas notional amounts (in mmbtu) | MMBTU		2,301,900,000	2,108,450,000
Retail sales
Absolute Notional Amounts of Open Positions on Derivative Instruments
Natural gas notional amounts (in mmbtu) | MMBTU		1,250,000	5,020,000
Electricity notional amounts (in kWhs) | kWh		10,728.9	4,377.5
Other risk-management activities
Absolute Notional Amounts of Open Positions on Derivative Instruments
Natural gas notional amounts (in mmbtu) | MMBTU		154,660,000	178,900,000
Electricity notional amounts (in kWhs) | kWh	[2]	24,878.5	21,070.4
Interest Rate Swap
Absolute Notional Amounts of Open Positions on Derivative Instruments
Derivative notional amount		$ 250.0	$ 250.0
Washington Gas Light Company
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets	[3]	26.3	39.8
Gross Derivative Liabilities	[3]	(174.2)	(297.2)
Total	[1],[3]	(147.9)	(257.4)
Derivative, Collateral [Abstract]
Collateral deposits posted with counterparties		4.9	4.3
Cash collateral held representing an obligation		0.1	0.1
Washington Gas Light Company | Current Assets—Derivatives
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets	[3]	10.7	11.7
Gross Derivative Liabilities	[3]	(3.7)	(4.4)
Total	[1],[3]	7.0	7.3
Washington Gas Light Company | Deferred Charges and Other Assets—Derivatives
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets	[3]	15.5	26.2
Gross Derivative Liabilities	[3]	(0.4)	(0.6)
Total	[1],[3]	15.1	25.6
Washington Gas Light Company | Current Liabilities—Derivatives
Balance Sheet Classification of Derivative Instruments
Gross Derivative Assets	[3]	0.1	1.9
Gross Derivative Liabilities	[3]	(26.3)	(60.2)
Total	[1],[3]	(26.2)	(58.3)
Washington Gas Light Company | Deferred Credits—Derivatives
Balance Sheet Classification of Derivative Instruments
Gross Derivative Liabilities	[3]	(143.8)	(232.0)
Total	[1],[3]	$ (143.8)	$ (232.0)
Washington Gas Light Company | Asset optimization & trading
Absolute Notional Amounts of Open Positions on Derivative Instruments
Natural gas notional amounts (in mmbtu) | MMBTU		1,161,400,000	1,272,500,000
Washington Gas Light Company | Other risk-management activities
Absolute Notional Amounts of Open Positions on Derivative Instruments
Natural gas notional amounts (in mmbtu) | MMBTU		120,100,000	130,900,000
WGL Energy Services
Derivative, Collateral [Abstract]
Collateral deposits posted with counterparties		$ 18.5	$ 9.1
WGL Midstream
Derivative, Collateral [Abstract]
Collateral deposits posted with counterparties		33.6	18.5
Cash collateral held representing an obligation		$ 0.6	$ 5.4

[1] WGL has elected to offset the fair value of recognized derivative instruments against the right to reclaim or the obligation to return collateral for derivative instruments executed under the same master netting arrangement in accordance with ASC 815. All recognized derivative contracts and associated financial collateral subject to a master netting arrangement or similar that is eligible for offset under ASC 815 have been presented net in the balance sheet.

[2] Comprised primarily of financial swaps, financial transmission rights and physical forward purchases

[3] Washington Gas did not have any derivative instruments outstanding that were designated as hedging instruments at June 30, 2017 or September 30, 2016.

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Derivative and Weather Related Instruments (Gains and Losses) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Gains and (Losses) on Derivative Instruments
Qualified cash flow hedging instruments	[1]	$ 51	$ (16,995)	$ 49,556	$ (34,545)
Total		11,600	(70,700)	198,500	48,800
Operating revenues—non-utility
Gains and (Losses) on Derivative Instruments
Recorded to income		8,300	(39,000)	25,800	7,600
Utility cost of gas
Gains and (Losses) on Derivative Instruments
Recorded to income		5,500	(24,900)	40,000	9,200
Non-utility cost of energy-related sales
Gains and (Losses) on Derivative Instruments
Recorded to income		(800)	48,400	25,900	50,600
Interest expense
Gains and (Losses) on Derivative Instruments
Recorded to income		(7,900)	(100)	(5,400)	(200)
Gas costs
Gains and (Losses) on Derivative Instruments
Recorded to regulatory assets		6,400	(29,400)	62,600	24,900
Recorded to other comprehensive income
Gains and (Losses) on Derivative Instruments
Qualified cash flow hedging instruments		100	(16,900)	49,600	(34,500)
Other
Gains and (Losses) on Derivative Instruments
Recorded to regulatory assets			(8,800)		(8,800)
Washington Gas Light Company
Gains and (Losses) on Derivative Instruments
Total		11,900	(63,100)	102,600	25,300
Washington Gas Light Company | Utility cost of gas
Gains and (Losses) on Derivative Instruments
Recorded to income		5,500	(24,900)	40,000	9,200
Washington Gas Light Company | Gas costs
Gains and (Losses) on Derivative Instruments
Recorded to regulatory assets		$ 6,400	(29,400)	$ 62,600	24,900
Washington Gas Light Company | Other
Gains and (Losses) on Derivative Instruments
Recorded to regulatory assets			$ (8,800)		$ (8,800)

[1] Cash flow hedging instruments represent interest rate swap agreements related to debt issuances. Refer to Note 8- Derivative and Weather-related Instruments for further discussion of the interest rate swap agreements.

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Derivative and Weather Related Instruments (Aggregate Fair Value) (Details) - USD ($) $ in Millions	Jun. 30, 2017	Sep. 30, 2016
Potential Collateral Requirements for Derivative Liabilities with Credit-risk-Contingent Features
Derivative liabilities with credit-risk-contingent features	$ 26.0	$ 53.9
Maximum potential collateral requirements	23.4	41.4
Washington Gas Light Company
Potential Collateral Requirements for Derivative Liabilities with Credit-risk-Contingent Features
Derivative liabilities with credit-risk-contingent features	2.4	11.3
Maximum potential collateral requirements	$ 2.4	$ 11.3

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Fair Value Measurements (Fair Value Hierarchy) (Details) - USD ($) $ in Millions	Jun. 30, 2017	Sep. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	$ 96.2	$ 104.5
Liabilities	(251.7)	(441.7)
Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	67.1	82.8
Liabilities	(215.5)	(364.9)
Electricity Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	19.3	21.5
Liabilities	(27.7)	(33.7)
Interest Rate derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	9.8	0.2
Liabilities	(8.5)	(43.1)
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	30.2	29.6
Liabilities	(29.6)	(93.6)
Level 2 | Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	20.4	28.8
Liabilities	(16.5)	(46.7)
Level 2 | Electricity Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	0.0	0.6
Liabilities	(4.6)	(3.8)
Level 2 | Interest Rate derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	9.8	0.2
Liabilities	(8.5)	(43.1)
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	66.0	74.9
Liabilities	(222.1)	(348.1)
Level 3 | Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	46.7	54.0
Liabilities	(199.0)	(318.2)
Level 3 | Electricity Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	19.3	20.9
Liabilities	(23.1)	(29.9)
Washington Gas Light Company
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	26.3	39.8
Liabilities	(174.2)	(297.2)
Washington Gas Light Company | Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	26.3	39.8
Liabilities	(174.2)	(297.2)
Washington Gas Light Company | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	8.7	15.4
Liabilities	(5.9)	(21.2)
Washington Gas Light Company | Level 2 | Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	8.7	15.4
Liabilities	(5.9)	(21.2)
Washington Gas Light Company | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	17.6	24.4
Liabilities	(168.3)	(276.0)
Washington Gas Light Company | Level 3 | Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets	17.6	24.4
Liabilities	$ (168.3)	$ (276.0)

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Fair Value Measurements (Quantitative information) (Details) $ in Millions	9 Months Ended	12 Months Ended
	Jun. 30, 2017 USD ($) $ / dekatherm $ / MwH	Sep. 30, 2016 USD ($) $ / dekatherm $ / MwH	Mar. 31, 2017 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Sep. 30, 2015 USD ($)
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Net Fair Value	$ (156.1)	$ (273.2)	$ (158.6)	$ (251.2)	$ (234.8)	$ (325.7)
Natural Gas Related Derivatives
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Net Fair Value	(152.3)	(264.1)	(150.2)	(240.5)	(204.3)	(309.7)
Natural Gas Related Derivatives | Discounted Cash Flow
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Net Fair Value	$ (152.3)	$ (264.1)
Natural Gas Related Derivatives | Discounted Cash Flow | Maximum | Natural Gas Basis Price
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Input price (usd per dekatherm/megawatt hour) | $ / dekatherm	2.898	3.290
Natural Gas Related Derivatives | Discounted Cash Flow | Minimum | Natural Gas Basis Price
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Input price (usd per dekatherm/megawatt hour) | $ / dekatherm	(1.300)	(2.021)
Natural Gas Related Derivatives | Option Model
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Net Fair Value		$ (0.1)
Natural Gas Related Derivatives | Option Model | Maximum | Natural Gas Basis Price
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Input price (usd per dekatherm/megawatt hour) | $ / dekatherm	2.543	3.310
Natural Gas Related Derivatives | Option Model | Maximum | Annualized Volatility Price
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Option Volatility Percentage	566.80%	869.90%
Natural Gas Related Derivatives | Option Model | Minimum | Natural Gas Basis Price
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Input price (usd per dekatherm/megawatt hour) | $ / dekatherm	(1.468)	(2.105)
Natural Gas Related Derivatives | Option Model | Minimum | Annualized Volatility Price
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Option Volatility Percentage	25.50%	25.50%
Electricity Related Derivatives
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Net Fair Value	$ (3.8)	$ (9.1)	(8.4)	(10.7)	(30.5)	(16.0)
Electricity Related Derivatives | Discounted Cash Flow
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Net Fair Value	$ (3.8)	$ (9.1)
Electricity Related Derivatives | Discounted Cash Flow | Maximum | Electricity Congestion Price
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Input price (usd per dekatherm/megawatt hour) | $ / MwH	60.000	68.700
Electricity Related Derivatives | Discounted Cash Flow | Minimum | Electricity Congestion Price
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Input price (usd per dekatherm/megawatt hour) | $ / MwH	(4.154)	(6.199)
Washington Gas Light Company | Natural Gas Related Derivatives
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Net Fair Value	$ (150.7)	$ (251.6)	$ (155.4)	$ (243.3)	$ (194.3)	$ (281.1)
Washington Gas Light Company | Natural Gas Related Derivatives | Discounted Cash Flow
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Net Fair Value	$ (150.7)	$ (251.6)
Washington Gas Light Company | Natural Gas Related Derivatives | Discounted Cash Flow | Maximum | Natural Gas Basis Price
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Input price (usd per dekatherm/megawatt hour) | $ / dekatherm	2.898	3.290
Washington Gas Light Company | Natural Gas Related Derivatives | Discounted Cash Flow | Minimum | Natural Gas Basis Price
Fair Value Inputs, Assets, Liabilities Quantitative Information [Line Items]
Input price (usd per dekatherm/megawatt hour) | $ / dekatherm	(1.300)	(2.021)

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Fair Value Measurements (Reconciliation with Level 3 Inputs) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning Balance	$ (158.6)	$ (234.8)	$ (273.2)	$ (325.7)
Recorded to income	(4.3)	13.6	44.1	20.4
Recorded to regulatory assets—gas costs	3.0	(27.6)	55.4	15.9
Transfers into Level 3	0.1	0.1	(0.7)	(0.8)
Transfers out of Level 3		(0.2)	(0.5)	8.7
Purchases	2.0	(10.7)	(1.0)	(4.4)
Settlements	1.7	8.4	19.8	34.7
Ending balance	(156.1)	(251.2)	(156.1)	(251.2)
Natural Gas Related Derivatives
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning Balance	(150.2)	(204.3)	(264.1)	(309.7)
Recorded to income	(6.0)	(8.9)	46.6	34.6
Recorded to regulatory assets—gas costs	3.0	(27.6)	55.4	15.9
Transfers into Level 3	0.1	0.1	(0.7)	(0.8)
Transfers out of Level 3		(0.2)	(0.5)	8.7
Settlements	0.8	0.4	11.0	10.8
Ending balance	(152.3)	(240.5)	(152.3)	(240.5)
Electricity Related Derivatives
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning Balance	(8.4)	(30.5)	(9.1)	(16.0)
Recorded to income	1.7	22.5	(2.5)	(14.2)
Purchases	2.0	(10.7)	(1.0)	(4.4)
Settlements	0.9	8.0	8.8	23.9
Ending balance	(3.8)	(10.7)	(3.8)	(10.7)
Washington Gas Light Company | Natural Gas Related Derivatives
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning Balance	(155.4)	(194.3)	(251.6)	(281.1)
Recorded to income	2.9	(21.6)	34.7	3.3
Recorded to regulatory assets—gas costs	3.0	(27.6)	55.4	15.9
Transfers into Level 3			(0.4)	(0.2)
Transfers out of Level 3			(0.3)	8.8
Settlements	(1.2)	0.2	11.5	10.0
Ending balance	$ (150.7)	$ (243.3)	$ (150.7)	$ (243.3)

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Fair Value Measurements (Realized and Unrealized Gains and Losses with Level 3 Measurements) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	$ (4.3)	$ 13.6	$ 44.1	$ 20.4
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Total	5.1	(16.3)	77.9	46.1
Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	(6.0)	(8.9)	46.6	34.6
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Total	(2.0)	(39.2)	65.5	37.7
Electricity Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	1.7	22.5	(2.5)	(14.2)
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Total	7.1	22.9	12.4	8.4
Operating revenues—non-utility
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	(10.0)	(10.9)	(3.3)	(3.4)
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to income	(2.0)	(3.6)	9.2	19.4
Operating revenues—non-utility | Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	(8.9)	6.5	6.3	22.5
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to income	(7.1)	6.7	5.2	26.1
Operating revenues—non-utility | Electricity Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	(1.1)	(17.4)	(9.6)	(25.9)
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to income	5.1	(10.3)	4.0	(6.7)
Utility cost of gas
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	2.9	(21.6)	34.7	3.3
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to income	2.6	(22.2)	22.4	(0.2)
Utility cost of gas | Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	2.9	(21.6)	34.7	3.3
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to income	2.6	(22.2)	22.4	(0.2)
Non-utility cost of energy-related sales
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	2.8	46.1	12.7	20.5
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to income	1.8	38.4	8.3	17.7
Non-utility cost of energy-related sales | Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements		6.2	5.6	8.8
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to income	(0.2)	5.2	(0.1)	2.6
Non-utility cost of energy-related sales | Electricity Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	2.8	39.9	7.1	11.7
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to income	2.0	33.2	8.4	15.1
Recorded to regulatory assets-gas costs
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to regulatory assets - gas costs	2.7	(28.9)	38.0	9.2
Recorded to regulatory assets-gas costs | Natural Gas Related Derivatives
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to regulatory assets - gas costs	2.7	(28.9)	38.0	9.2
Washington Gas Light Company | Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	2.9	(21.6)	34.7	3.3
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Total	5.3	(51.1)	60.4	9.0
Washington Gas Light Company | Utility cost of gas | Natural Gas Related Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Realized and unrealized gains (losses) recorded to income for Level 3 measurements	2.9	(21.6)	34.7	3.3
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to income	2.6	(22.2)	22.4	(0.2)
Washington Gas Light Company | Recorded to regulatory assets-gas costs | Natural Gas Related Derivatives
Unrealized Gains (Losses) Recorded for Level 3 Measurements
Recorded to regulatory assets - gas costs	$ 2.7	$ (28.9)	$ 38.0	$ 9.2

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Fair Value Measurements (Carrying Amounts and Estimated Fair Value) (Details) - USD ($) $ in Millions		Jun. 30, 2017	Sep. 30, 2016
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money Market Funds	[1]	$ 15.4	$ 10.6
Other Short-term Investments	[1]	0.1	1.4
Commercial Paper	[2]	486.0	269.0
Project financing	[2]	52.9	62.4
Long-term debt	[3]	1,235.6	1,435.0
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money Market Funds	[1]	15.4	10.6
Other Short-term Investments	[1]	0.1	1.4
Commercial Paper	[2]	486.0	269.0
Project financing	[2]	52.9	62.4
Long-term debt	[3]	1,378.8	1,641.9
Washington Gas Light Company | Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money Market Funds	[1]	8.7	5.0
Other Short-term Investments	[1]	0.1	1.4
Commercial Paper	[2]	161.0	42.0
Project financing	[2]	41.8	62.4
Long-term debt	[3]	939.3	939.0
Washington Gas Light Company | Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money Market Funds	[1]	8.7	5.0
Other Short-term Investments	[1]	0.1	1.4
Commercial Paper	[2]	161.0	42.0
Project financing	[2]	41.8	62.4
Long-term debt	[3]	$ 1,073.2	$ 1,126.4

[1] Balance is located in cash and cash equivalents in the accompanying balance sheets. These amounts may be offset by outstanding checks.

[2] Balance is located in notes payable in the accompanying balance sheets.

[3] Excludes current maturities. On October 1, 2016, WGL and Washington Gas adopted ASU 2015-03 and ASU 2015-15. This standard requires an entity to account for debt issuance costs as a valuation account presented as a deduction from the face amount of debt in the balance sheet. Prior period amounts related to other deferred charges and other assets and long-term debt in the accompanying condensed balance sheets have been recast to conform to the current period presentation.

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Operating Segment (Narrative) (Details)	9 Months Ended
	Jun. 30, 2017 segment
Segment Reporting [Abstract]
Number of operating segments	4

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Operating Segment Financial Information (Details) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
		Jun. 30, 2017		Jun. 30, 2016	Jun. 30, 2017		Jun. 30, 2016	Sep. 30, 2016
Operating Segment Financial Information [Line Items]
Operating Revenue, Regulated Utility		$ 198,968		$ 181,622	$ 992,301		$ 912,612
Operating Revenue, Non-Utility		275,396		258,965	933,300		977,048
Operating Revenues, Total consolidated	[1]	474,364		440,587	1,925,601		1,889,660
Depreciation and Amortization		39,094		33,786	113,487		98,368
Equity in earnings of unconsolidated affiliates		7,508		4,527	15,117		10,558
EBIT		35,806		20,125	352,224		319,850
Total Assets		6,373,493		5,735,861	6,373,493		5,735,861	$ 6,049,450
Capital Expenditures		85,687		141,666	352,232		348,594
Equity Method Investments		425,304		282,780	425,304		282,780
Eliminations
Operating Segment Financial Information [Line Items]
Operating Revenue, Non-Utility	[1],[2]	(9,032)		(15,557)	(39,872)		(43,156)
Depreciation and Amortization	[2]	9		(5)	48		(24)
EBIT	[2]	(138)		178	(502)		(416)
Total Assets	[2]	(921,668)		(612,656)	(921,668)		(612,656)
Regulated utility | Operating Segments
Operating Segment Financial Information [Line Items]
Operating Revenue, Regulated Utility	[1]	203,186		187,077	1,012,193		934,347
Depreciation and Amortization		33,217		29,632	97,349		86,318
EBIT		11,226		(20,458)	279,114		243,102
Total Assets		4,780,169		4,462,946	4,780,169		4,462,946
Capital Expenditures		72,750		106,773	281,043		267,230
Retail energy-marketing | Operating Segments
Operating Segment Financial Information [Line Items]
Operating Revenue, Non-Utility	[1]	250,025		266,214	873,625		925,180
Depreciation and Amortization		281		233	859		872
EBIT		4,335		49,544	42,775		52,055
Total Assets		522,496		473,766	522,496		473,766
Capital Expenditures		(125)		768	609		7,595
Commercial energy systems | Operating Segments
Operating Segment Financial Information [Line Items]
Operating Revenue, Non-Utility	[1]	25,645	[3]	20,842	61,482	[3]	57,066
Depreciation and Amortization		5,585	[3]	3,900	15,210	[3]	11,105
Equity in earnings of unconsolidated affiliates		2,355	[3]	2,162	7,185	[3]	5,554
EBIT		14,354	[3]	8,286	27,564	[3]	10,251
Total Assets		987,827	[3]	779,516	987,827	[3]	779,516
Capital Expenditures		13,062	[3]	34,125	70,580	[3]	73,769
Equity Method Investments		76,341	[3]	65,289	76,341	[3]	65,289
Midstream energy services | Operating Segments
Operating Segment Financial Information [Line Items]
Operating Revenue, Non-Utility	[1]	4,540		(17,989)	18,173		16,223
Depreciation and Amortization		2		26	21		97
Equity in earnings of unconsolidated affiliates		5,153		2,365	7,932		5,004
EBIT		7,651		(16,908)	21,160		17,631
Total Assets		650,204		433,384	650,204		433,384
Equity Method Investments		348,963		217,491	348,963		217,491
Other activities
Operating Segment Financial Information [Line Items]
EBIT		(1,622)		(517)	(17,887)		(2,773)
Total Assets		$ 354,465		$ 198,905	$ 354,465		$ 198,905

[1] Operating revenues are reported gross of revenue taxes. Revenue taxes of both the regulated utility and the retail energy-marketing segments include gross receipt taxes. Revenue taxes of the regulated utility segment also include public service commission fees, franchise fees and energy taxes. Operating revenue amounts in the “Eliminations” row represent total intersegment revenues associated with sales from the regulated utility segment to the retail energy-marketing segment. Midstream Energy Services’ cost of energy related sales is netted with its gross revenues.

[2] Intersegment eliminations include any mark-to market valuations associated with trading activities between WGL Midstream and WGL Energy Services, intercompany loans and a timing difference between Commercial Energy Systems’ recognition of revenue for the sale of Renewable Energy Credits (RECs) to Retail Energy-Marketing and Retail Energy-Marketing’s recognition of the associated expense. Retail Energy-Marketing has recorded a portion of the RECs purchased as inventory to be used in future periods at which time they will be expensed.

[3] Commercial energy systems' operating revenues include revenues from non-controlling interest. Commercial energy systems' EBIT is adjusted for the effects of non-controlling interest.

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Operating Segment - Reconcilation from EBIT to Net Income Applicable to Common Stock (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting [Abstract]
Total consolidated EBIT	$ 35,806	$ 20,125	$ 352,224	$ 319,850
Interest expense	25,062	12,998	55,552	38,757
Income tax expense	2,149	4,772	106,381	103,619
Dividends on Washington Gas Light Company preferred stock	330	330	990	990
Net Income applicable to common stock	$ 8,265	$ 2,025	$ 189,301	$ 176,484

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Other Investments (Narrative) (Details) $ in Thousands, MMBTU in Millions	Jul. 10, 2017 USD ($)	Jun. 30, 2017 USD ($) MMBTU Bcfe investment mi	Oct. 24, 2016	Sep. 30, 2016 USD ($)	Mar. 31, 2015
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Number of investments qualifying as variable interest entities | investment		2
Investments in unconsolidated affiliates		$ 425,304		$ 303,491
Investments in direct financing leases, capital leases		0		29,780
Financial guarantee payment		56,579		41,991
Property, plant and equipment		5,856,655		5,542,916
WGSW
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Unammortized investment tax credits		9,400
WGSW | SFGF
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Contributions to tax equity partnership		16,800
WGSW | SFGF II
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Contributions to tax equity partnership		0
WGSW | SFRC
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Contributions to tax equity partnership		13,500
WGSW | ASD
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Investments in unconsolidated affiliates		66,700		66,100
Difference between carrying amount and underlying equity		35,800
WGSW | SunEdison
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Investments in unconsolidated affiliates		0
WGSW | American Solar Direct Inc.
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Financial guarantee payment		2,100
WGSW | American Solar Direct Inc. | Scenario, Forecast
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Gain on Investment	$ 2,000
WGSW | Nextility-Lease Settlement and Assignment
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Investments in direct financing leases, capital leases		5,400
Unammortized investment tax credits		3,000
Receivable reserve		1,000
Property, plant and equipment		4,000
Accounts receivable		1,400
WGSW | SFEE
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Contributions to tax equity partnership		6,500
Investments in unconsolidated affiliates		$ 9,600
WGL Midstream | Meade
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Pipeline length in miles | mi		185
Transportation and delivery capacity in dekatherms per day | MMBTU		1.7
Estimated Investment in Meade		$ 410,000
Ownership percentage		55.00%
Investments in unconsolidated affiliates		$ 121,000		80,800
WGL Midstream | Constitution
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Ownership percentage		10.00%
Investments in unconsolidated affiliates		$ 38,500		38,600
Forecasted cash contributions In Constitution		$ 95,500
WGL Midstream | Mountain Valley Pipeline
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Transportation and delivery capacity in dekatherms per day | MMBTU		2.0
Ownership percentage		10.00%	3.00%		7.00%
Investments in unconsolidated affiliates		$ 52,300		22,500
Difference between carrying amount and underlying equity		500
WGL Midstream | Mountain Valley Pipeline | Scenario, Plan
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Pro rata share of project cost		$ 327,600
WGL Midstream | Stonewall
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Ownership percentage		30.00%
Investments in unconsolidated affiliates		$ 137,200		$ 95,500
Difference between carrying amount and underlying equity		8,900
Investment in Stonewall System		$ 89,400
Pipeline gathering capacity | Bcfe		1.4
WGL Midstream | Stonewall | Capital contribution-project debt retirement
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Investment in Stonewall System		$ 45,500
WGL | SFEE
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Financial guarantees		$ 13,000

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Other Investments Balance Sheet Location Table (Details) - USD ($)		Jun. 30, 2017	Sep. 30, 2016
Balance Sheet Location of Unconsolidated Investments
Investments in unconsolidated affiliates		$ 425,304,000	$ 303,491,000
Property, plant and equipment		5,856,655,000	5,542,916,000
Investments in direct financing leases, capital leases		0	29,780,000
Consolidated VIE's | Current Assets
Balance Sheet Location of Consolidated Investments
VIE, Consolidated, Carrying Amount, Assets		2,100
Consolidated VIE's | Non-current Assets
Balance Sheet Location of Consolidated Investments
VIE, Consolidated, Carrying Amount, Assets		56,900	13,200
Consolidated VIE's | Total Assets
Balance Sheet Location of Consolidated Investments
VIE, Consolidated, Carrying Amount, Assets		59,000	13,200
Consolidated VIE's | Current Liabilities
Balance Sheet Location of Consolidated Investments
VIE, Consolidated, Carrying Amount, Liabilities		400	600
Consolidated VIE's | Noncurrent Liabilities
Balance Sheet Location of Consolidated Investments
VIE, Consolidated, Carrying Amount, Liabilities		300
Consolidated VIE's | Total Liabilities
Balance Sheet Location of Consolidated Investments
VIE, Consolidated, Carrying Amount, Liabilities		700	600
Non-consolidated VIE's | Solar Investments
Balance Sheet Location of Unconsolidated Investments
Investments in unconsolidated affiliates	[1]	66,700,000	66,100,000
Investments in direct financing leases, capital leases	[1],[2]		29,800,000
Accounts receivable	[1],[2]		1,100,000
Total assets	[1]	66,700,000	97,000,000
Non-consolidated VIE's | Pipelines
Balance Sheet Location of Unconsolidated Investments
Investments in unconsolidated affiliates	[3]	121,000,000	80,800,000
Total assets	[3]	121,000,000	80,800,000
Non consolidated non VIE's | Solar Investments
Balance Sheet Location of Unconsolidated Investments
Investments in unconsolidated affiliates	[4]	9,600,000
Total assets	[4]	9,600,000
Non consolidated non VIE's | Pipelines
Balance Sheet Location of Unconsolidated Investments
Investments in unconsolidated affiliates	[5]	228,000,000	156,600,000
Accounts receivable	[2],[5]		9,200,000
Total assets	[5]	228,000,000	165,800,000
Total
Balance Sheet Location of Unconsolidated Investments
Investments in unconsolidated affiliates		425,300,000	303,500,000
Investments in direct financing leases, capital leases	[2]		29,800,000
Accounts receivable	[2]		10,300,000
Total assets		$ 425,300,000	$ 343,600,000

[1] "Investments in unconsolidated affiliates" balance relates to equity method investment in ASD.

[2] Prior year balances relate to direct financing leases in Nextility and SunEdison.

[3] Balance relates to equity method investment in Meade.

[4] Balance relates to interest held in SFEE.

[5] Balance relates to equity method investments in Constitution, Mountain Valley Pipeline and Stonewall System.

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Other Investments Partnership Assets Liabilites and Non-Controlling Interest Table (Details) - Estimated Fair Value - Scenario, Forecast	Jul. 10, 2017 USD ($)
Equity Method Investment, Summarized Financial Information [Abstract]
Current Assets	$ 1,100
Other Assets	800
Property Plant and Equipment	76,400
Total Assets	78,300
Current Liabilities	900
Other Liabilities	27,000
Total Liabilities	27,900
Net Assets	50,400
Non-controlling Interest	500
WGSW equity interest	$ 49,900

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Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2016
Washington Gas Light Company
Related Party Transaction [Line Items]
Receivables from associated companies	$ 16,100		$ 16,100		$ 13,800
Payables to associated companies	91,500		91,500		65,800
WGL Energy Services | Washington Gas Light Company
Related Party Transaction [Line Items]
Receivables from associated companies	3,000		3,000
Payables to associated companies					800
Washington Gas Light Company
Related Party Transaction [Line Items]
Receivables from associated companies	16,094		16,094		13,799
Payables to associated companies	91,483		91,483		65,770
Washington Gas Light Company | WGL Energy Services
Related Party Transaction [Line Items]
Gas balancing service charge	4,200	$ 5,500	19,900	$ 21,700
Receivables purchased from related party	$ 3,900		$ 3,900		$ 4,200

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Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Millions				9 Months Ended
	Apr. 17, 2017	Dec. 01, 2016	Nov. 02, 2016	Jun. 30, 2017	Jun. 30, 2016	Aug. 26, 2016	Aug. 11, 2016	Sep. 30, 2015	Aug. 05, 2014
Commitments And Contingencies [Line Items]
Requested rate increase					$ 45.6
Base rate increase	$ 34.0
Mid-point minimum
Commitments And Contingencies [Line Items]
Return on equity mid-point percentage range		9.00%
Mid point maximum
Commitments And Contingencies [Line Items]
Return on equity mid-point percentage range		10.00%
Pipeline replacement program
Commitments And Contingencies [Line Items]
Requested rate increase					$ 22.3
Virginia SAVE program
Commitments And Contingencies [Line Items]
Base rate increase	$ 14.1
Silver Spring Maryland Incident
Commitments And Contingencies [Line Items]
Loss Contingency, Damages Sought, Value			$ 5.0
Washington Gas Light Company | Unfavorable Regulatory Action
Commitments And Contingencies [Line Items]
Excess payment amount							$ 2.4		$ 2.4
Estimated reimbursement to competitive service providers								$ 2.4
Regulatory proceeding payment						$ 2.4
WGL | Washington Gas Light Company | Guarantee on behalf of subsidiary
Commitments And Contingencies [Line Items]
Financial guarantees				$ 30.7
WGL | WGL Energy Services | Guarantee on behalf of subsidiary
Commitments And Contingencies [Line Items]
Financial guarantees				168.8
WGL | WGL Energy Systems | Guarantee on behalf of subsidiary
Commitments And Contingencies [Line Items]
Financial guarantees				114.0
WGL | WGL Midstream | Guarantee on behalf of subsidiary
Commitments And Contingencies [Line Items]
Financial guarantees				404.3
WGL | Other Non-Utility | Guarantee on behalf of subsidiary
Commitments And Contingencies [Line Items]
Financial guarantees				2.2
WGL | Other External Partners | Performance guarantee
Commitments And Contingencies [Line Items]
Financial guarantees				13.6
WGL Midstream
Commitments And Contingencies [Line Items]
Losses associated with contract dispute				$ 23.0

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Pension and Other Post-Retirement Benefit Plans (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 4.1	$ 3.6	$ 12.3	$ 10.7
Interest cost	9.6	10.3	28.8	31.0
Expected return on plan assets	(10.3)	(10.2)	(30.8)	(30.7)
Amortization of prior service cost (credit)	0.1	0.0	0.3	0.2
Amortization of net actuarial loss	5.5	4.3	16.5	12.7
Net periodic benefit cost (income)	9.0	8.0	27.1	23.9
Amount allocated to construction projects	(1.6)	(1.5)	(4.9)	(4.1)
Amount deferred as regulatory asset/liability—net	1.8	1.8	5.3	5.3
Amount charged (credited) to expense	9.2	8.3	27.5	25.1
Health and Life Benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost	1.4	1.2	4.3	3.4
Interest cost	2.9	3.2	8.7	9.8
Expected return on plan assets	(5.5)	(5.1)	(16.6)	(15.3)
Amortization of prior service cost (credit)	(4.4)	(4.4)	(13.2)	(13.2)
Amortization of net actuarial loss	0.2	0.3	0.6	0.9
Net periodic benefit cost (income)	(5.4)	(4.8)	(16.2)	(14.4)
Amount allocated to construction projects	1.1	1.1	3.5	3.0
Amount deferred as regulatory asset/liability—net	0.0	(0.1)	(0.1)	(0.2)
Amount charged (credited) to expense	$ (4.3)	$ (3.8)	$ (12.8)	$ (11.6)

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
AOCI, Net of Tax [Roll Forward]
Beginning Balance		$ (8,874)	$ (24,258)	$ (38,539)	$ (14,236)
Qualified cash flow hedging instruments	[1]	51	(16,995)	49,556	(34,545)
Change in prior service credit	[2]	(217)	(216)	(651)	(644)
Amortization of actuarial loss	[2]	588	420	1,763	1,258
Current-period other comprehensive income (loss)		422	(16,791)	50,668	(33,931)
Income tax expense (benefit) related to other comprehensive income (loss)		235	(6,969)	20,816	(14,087)
Ending Balance		(8,687)	(34,080)	(8,687)	(34,080)
Washington Gas Light Company
AOCI, Net of Tax [Roll Forward]
Beginning Balance		(7,383)	(6,464)	(7,830)	(6,712)
Change in prior service credit	[3]	(217)	(216)	(651)	(644)
Amortization of actuarial loss	[3]	588	420	1,763	1,258
Current-period other comprehensive income (loss)		371	204	1,112	614
Income tax expense (benefit) related to other comprehensive income (loss)		145	82	439	244
Ending Balance		$ (7,157)	$ (6,342)	$ (7,157)	$ (6,342)

[1] Cash flow hedging instruments represent interest rate swap agreements related to debt issuances. Refer to Note 8- Derivative and Weather-related Instruments for further discussion of the interest rate swap agreements.

[2] These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14- Pension and other post-retirement benefit plans for additional details.

[3] These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost. Refer to Note 14-Pension and other post-retirement benefit plans for additional details.

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Planned Merger With AltaGas (Details) $ / shares in Units, $ in Millions	Jan. 25, 2018	Jan. 25, 2017 USD ($) $ / shares shares	Dec. 31, 2017
Business Acquisition [Line Items]
Business Acquisition, Date of Acquisition Agreement		Jan. 25, 2017
Business Acquisition cash to be paid by acquirer		$ 6,400
Business Acquisition, Share Price | $ / shares		$ 88.25
Scenario, Forecast
Business Acquisition [Line Items]
Business Combination, Merger agreement extension period	180
Subscription agreement | Non-voting preferred stock
Business Acquisition [Line Items]
Business Acquisition, Share Price | $ / shares		$ 10,000
Preferred Stock, Shares Issued | shares		15,000
Maximum shares purchased per quarter | shares		5,000
Shares purchased after termination or Outside Date expiration | shares		0
Redemption period after termination or Outside Date expiration		6 months
Subscription agreement | Scenario, Forecast | Non-voting preferred stock
Business Acquisition [Line Items]
Ratio Of Indebtedness To Net Capital Percentage			62.00%
Termination right, Circumstance 1
Business Acquisition [Line Items]
Business Acquisition, termination fee		$ 205
Termination right, Circumstance 2
Business Acquisition [Line Items]
Business Acquisition, termination fee		182
Termination right, Circumstance 3
Business Acquisition [Line Items]
Business Acquisition, termination fee		68
WGL | Termination right
Business Acquisition [Line Items]
Business Acquisition, termination fee		$ 136
Minimum | Subscription agreement | Scenario, Forecast | Non-voting preferred stock
Business Acquisition [Line Items]
Ratio Of Indebtedness To Net Capital Percentage			62.00%