Texas Legislation and Capital Spending: Key Contradictions from O&M and Business Outlook in 2025 Q3

Operating and maintenance (O&M) spend and timing, through-system business outlook, capital spending and Rule 8.209 qualifications, and Texas



Customer Growth and Demand:
- Atmos Energy added nearly 58,000 new residential customers, with almost 45,000 in Texas, and 22 new industrial customers with an anticipated annual load of approximately 3.4 Bcf.
- Growth was driven by Texas's strong job growth, the vital role of natural gas in economic development, and increased industrial demand for natural gas.

Earnings Performance and Guidance:
- Year-to-date fiscal '25 net income was $1 billion or $6.40 per diluted share, with an updated earnings per share guidance range of $7.35 to $7.45.
- This performance was attributed to regulatory outcomes, customer growth, and strong through-system revenues at APT.

Capital Spending and Investment:
- Consolidated capital spending increased by 22% to $2.6 billion, with 86% dedicated to improving safety and reliability.
- The increase reflects higher safety and reliability spending and higher spending to support customer growth in both segments.

Legislative Impact and Tax Benefits:
- The newly passed Texas legislation HB4384 increases the eligible capital spending for regulatory asset deferral from 45% to 80%, affecting approximately 80% of Atmos Energy's capital spending.
- This legislation is expected to increase earnings per share by approximately $0.10 in the fourth quarter of fiscal '25.