Regulation

9 Months Ended

Jun. 30, 2025

Accounting principles generally accepted in the United States require cost-based, rate-regulated entities that meet certain criteria to reflect the authorized recovery of costs due to regulatory decisions in their financial statements. As a result, certain costs are permitted to be capitalized rather than expensed because they can be recovered through rates. We record certain costs as regulatory assets when future recovery through customer rates is considered probable. Regulatory liabilities are recorded when it is probable that revenues will be reduced for amounts that will be credited to customers through the ratemaking process. Substantially all of our regulatory assets are recorded as a component of other current assets and deferred charges and other assets and our regulatory liabilities are recorded as a component of other current liabilities and deferred credits and other liabilities. Deferred gas costs are recorded either in other current assets or liabilities.

Regulatory assets and liabilities as of June 30, 2025 and September 30, 2024 included the following:


	June 30, 2025		September 30, 2024
	(In thousands)
Regulatory assets:
Pension and postretirement benefit costs	$	820	$	11,243
Infrastructure mechanisms (1)	252,035		246,734
Winter Storm Uri incremental costs	6,343		10,373

Deferred gas costs	36,623		159,762
Regulatory excess deferred taxes (2)	50,154		51,380
Recoverable loss on reacquired debt	2,945		3,070
Deferred pipeline record collection costs	38,021		41,742
System Safety and Integrity Riders (3)	43,332		38,632


Other	11,979		16,454
	$	442,252	$	579,390
Regulatory liabilities:
Regulatory excess deferred taxes (2)	$	209,166	$	257,001

Regulatory cost of removal obligation	635,389		607,032
Deferred gas costs	14,643		9,142

APT annual adjustment mechanism	84,426		73,119
Pension and postretirement benefit costs	230,948		247,250
Other	44,218		34,338
	$	1,218,790	$	1,227,882

(1)Infrastructure mechanisms in Texas, Louisiana, and Tennessee allow for the deferral of all eligible expenses associated with capital expenditures incurred pursuant to these rules, including the recording of interest on deferred expenses until the next rate proceeding (rate case or annual rate filing), at which time investment and costs would be recoverable through base rates.

(2)Regulatory excess deferred taxes represent changes in our net deferred tax liability related to our cost of service ratemaking due to the enactment of Tax Cuts and Jobs Act of 2017 (the "TCJA"), a Kansas legislative change enacted in fiscal 2020, and a Louisiana legislative change enacted in fiscal 2025. See Note 12 to the condensed consolidated financial statements for further information.

(3)In our APT and West Texas Divisions and portions of our Mid-Tex Division, the RRC has approved the deferral of certain system safety and integrity costs incurred in excess of a specified benchmark. These costs are eligible for recovery in a future filing after such costs are approved by the RRC.

We deferred $32.4 million in carrying costs incurred after September 1, 2022 associated with interim financing for gas costs incurred in February 2021 during Winter Storm Uri. During fiscal 2024, we recovered $22.0 million of this amount. During the first nine months of fiscal 2025, we have recovered $4.1 million of this amount. The remaining $6.3 million has been recorded as a current asset in other current assets as of June 30, 2025.