But if you live in a neighborhood with natural gas leaks, all of this is taking far too long to play out, as residents can’t tell which spot is most likely to explode next.
A cynic might say that’s the way things often go in corporate America when the needs of customers conflict with the interests of shareholders. To that we say, but Atmos is a regulated monopoly, and those goals are supposed to align.
Atmos, as with all natural gas utilities, is required to maintain its network of distribution pipelines to meet safety standards, as regulated by the
This involves what used to be a long, onerous process of filing a rate case every few years and waiting for the money to finally roll in via customer bill payments. But Atmos persuaded the
All of that means that Atmos can upgrade the aging lines and expect customers to pay for the cost of those upgrades plus a profit. In fact, capital investment is a key profit mechanism for regulated companies.
That leaves us with the question: Why doesn’t Atmos make every upgrade right away?
We have two theories.
1. The scope of the needed upgrades in
Atmos said via email on Friday: “Factors that may influence the rate of acceleration include the availability of materials; trained and qualified employees to design, coordinate, and inspect this level of construction activity; contractors to fill material for street repairs; increase demand of line-locate contractors due to increasing activity; inclement weather and city resources to support this pace of replacement. In consideration of these factors and regulatory requirements, we are continuing forward with pipeline replacement as quickly and safely as possible.”
2. The Atmos board has boosted its dividend regularly, handing out large amounts of its profit to shareholders. Could Atmos throw more money at the problem by rebalancing how it uses cash to allow for more investment in pipeline upgrades faster? Or is the board reluctant to do that because their priorities are not as clear as they should be?
Last year, the board increased the dividend 8.2 percent, amounting to a total cash payout of around $215 million. And in 2018 Atmos also boosted capital investment to $1.5 billion for the entire company, which includes regulated utility operations outside of
Atmos’ answer via email is that the company relies on investors and creditors to finance a portion of its capital investments. “As an investor-owned utility, we can only attract these additional resources if we are financially healthy. This means we must maintain manageable debt balances, grow earnings and increase dividends.”
Atmos last week filed with the city of
We would urge Atmos and its shareholders as they meet in a few weeks to seriously consider whether making more investment money available for safety upgrades could shorten the amount of time that some customers live on top of a leaking time bomb.
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