Mountain Valley Pipeline (MVP) Comes into Operation
RGC Resources, in its recent earnings call, announced that the Mountain Valley Pipeline (MVP) has been operational since mid-June. This marks a significant milestone for the company as it aims to spur economic development in the region. The pipeline, which has been a subject of legal challenges in the past, is now providing firm capacity to Roanoke Gas, enabling additional gas to enter the system and enhancing customer services.
Operational and Financial Performance
The company reported a decrease in overall delivered gas volumes for the third quarter of 2024, primarily due to warmer weather conditions. However, the first nine months of the fiscal year showed a steady performance, with a total of 4.6 miles of main extensions and renewals, connecting 478 new services, and renewing 319 services. Despite cost pressures, including personnel and professional costs, and higher interest rates, the company's net income for the first nine months of fiscal 2024 was $11.6 million or $1.15 per diluted share, up from $10.3 million or $1.04 per diluted share in the previous fiscal year.
Capital Investment and Regulatory Developments
RGC Resources is planning to hold firm to its $21.7 million capital investment plan for fiscal 2024, focusing on customer growth and infrastructure renewal. The company is seeking a 5% increase in base rates, which includes projected rate base through June 30, 2025, and an increase in authorized ROE to 10.35%. The rate case is ongoing, with final resolution expected in the second quarter of 2025. Additionally, the company has filed for updates to its RNG and SAVE riders, with the resolution expected in September 2024.
Outlook for 2025
For the upcoming fiscal year, RGC Resources anticipates maintaining a consistent payout ratio relative to earnings, with a shareholder dividend plan. The company is optimistic about managing expenses and interest rates in the inflationary environment, with a hope for favorable trends in 2025. The operational earnings from the Mountain Valley Pipeline are expected to start in 2025, providing a boost to the company's cash flows.
Economic Development and Customer Growth
RGC Resources remains committed to promoting economic development in the region, with the first customer connection in Franklin County expected to be completed very soon. The company is working closely with local economic development partnerships to enhance growth opportunities. The operational MVP is expected to spur further development, providing certainty to potential businesses about the availability of natural gas.
Conclusion
RGC Resources' third quarter earnings call highlighted the company's operational and financial performance, regulatory developments, and outlook for the future. The successful operation of the Mountain Valley Pipeline is a significant achievement, paving the way for increased economic development in the region. Despite challenges, RGC Resources remains optimistic about its future, focusing on customer growth, infrastructure renewal, and managing expenses in the current economic climate.