Piedmont Natural Gas Company Inc. (PNY, Financial) filed Annual Report for the period ended 2011-10-31.
Piedmont Natural Gas Co. has a market cap of $2.44 billion; its shares were traded at around $33.75 with a P/E ratio of 21.4 and P/S ratio of 1.5. The dividend yield of Piedmont Natural Gas Co. stocks is 3.4%. Piedmont Natural Gas Co. had an annual average earning growth of 5.9% over the past 10 years.
We continually assess alternative rate structures and cost recovery mechanisms that are more appropriate to the changing energy economy. We have been pursuing alternatives to the traditional utility rate design that provide for the collection of margin revenue based on volumetric throughput with new rate designs and incentives that allow utilities to encourage energy efficiency and conservation. By decoupling the link between energy consumption and margin revenues, our interests are aligned with our customers interests on conservation and energy efficiency. In North Carolina, we have decoupled residential and commercial rates. In South Carolina, we operate under a rate stabilization mechanism that achieves the objectives of margin decoupling for residential and commercial customers with a one year lag. For the twelve months ended October 31, 2011, these and other rate designs stabilized our gas utility margin by providing fixed recovery of 70% of our utility margins, including margin decoupling in North Carolina, facilities charges to our customers and fixed-rate contracts; semi-fixed recovery of 18% of our utility margins, including the rate stabilization mechanism in South Carolina and WNA in South Carolina and
Our utility margin is defined as natural gas revenues less natural gas commodity purchases and fixed gas costs for transportation and storage capacity. Margin, rather than revenues, is used by management to evaluate utility operations due to the passthrough of changes in wholesale commodity gas costs, which accounted for 47% of revenues for the twelve months ended October 31, 2011, and transportation and storage costs, which accounted for 9%.
We have paid quarterly dividends on our common stock since 1956. We increased our common stock dividend on an annualized basis by $.04 per share in 2011, 2010 and 2009. Dividends of $82.9 million, $80.3 million and $78.4 million for 2011, 2010 and 2009, respectively, were paid on common stock. Provisions contained in certain note agreements under which long-term debt was issued restrict the amount of cash dividends that may be paid. As of October 31, 2011, our retained earnings were not restricted. On December 16, 2011, the Board of Directors declared a quarterly dividend on common stock of $.29 per share, payable January 13, 2012 to shareholders of record at the close of business on December 27, 2011. For further information, see Note 4 to the consolidated financial statements.
Revenue Recognition. Utility sales and transportation revenues are based on rates approved by state regulatory commissions. Base rates charged to customers may not be changed without formal approval by the regulatory commission in that jurisdiction; however, the wholesale cost of gas component of rates may be adjusted periodically under PGA procedures. In South Carolina and Tennessee, we have WNA mechanisms that are designed to protect a portion of our revenues against warmer-than-normal weather as deviations from normal weather can affect our financial performance and liquidity. The WNA also serves to offset the impact of colder-than-normal weather by reducing the amounts we can charge our customers. In North Carolina, a margin decoupling mechanism provides for the recovery of our approved margin from residential and commercial customers independent of consumption patterns. The margin earned monthly under the margin decoupling mechanism results in semi-annual rate adjustments to refund any over-collection or recover any under-collection. The gas cost portion of our costs is recoverable through PGA procedures and is not affected by the WNA or the margin decoupling mechanism. Without the WNA and margin decoupling mechanisms, our operating revenues in 2011 and 2010 would have been higher by $11.9 million and $14.7 million, respectively, and lower by $4.8 million in 2009.
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Piedmont Natural Gas Co. has a market cap of $2.44 billion; its shares were traded at around $33.75 with a P/E ratio of 21.4 and P/S ratio of 1.5. The dividend yield of Piedmont Natural Gas Co. stocks is 3.4%. Piedmont Natural Gas Co. had an annual average earning growth of 5.9% over the past 10 years.
Highlight of Business Operations:
We have two reportable business segments, regulated utility and non-utility activities. The regulated utility segment is the largest segment of our business with approximately 97% of our consolidated assets. Factors critical to the success of the regulated utility include operating a safe, reliable natural gas distribution system and the ability to recover the costs and expenses of the business in rates charged to customers. For the year ended October 31, 2011, 87% of our earnings before taxes came from our regulated utility segment. The non-utility activities segment consists of our equity method investments in joint venture, energy-related businesses that are involved in unregulated retail natural gas marketing, and regulated interstate natural gas storage and intrastate natural gas transportation. For the year ended October 31, 2011, 13% of our earnings before taxes came from our non-utility segment, which consisted of 5% from regulated non-utility activities and 8% from unregulated non-utility activities. For further information on equity method investments and business segments, see Note 12 and Note 14, respectively, to the consolidated financial statements.We continually assess alternative rate structures and cost recovery mechanisms that are more appropriate to the changing energy economy. We have been pursuing alternatives to the traditional utility rate design that provide for the collection of margin revenue based on volumetric throughput with new rate designs and incentives that allow utilities to encourage energy efficiency and conservation. By decoupling the link between energy consumption and margin revenues, our interests are aligned with our customers interests on conservation and energy efficiency. In North Carolina, we have decoupled residential and commercial rates. In South Carolina, we operate under a rate stabilization mechanism that achieves the objectives of margin decoupling for residential and commercial customers with a one year lag. For the twelve months ended October 31, 2011, these and other rate designs stabilized our gas utility margin by providing fixed recovery of 70% of our utility margins, including margin decoupling in North Carolina, facilities charges to our customers and fixed-rate contracts; semi-fixed recovery of 18% of our utility margins, including the rate stabilization mechanism in South Carolina and WNA in South Carolina and
Our utility margin is defined as natural gas revenues less natural gas commodity purchases and fixed gas costs for transportation and storage capacity. Margin, rather than revenues, is used by management to evaluate utility operations due to the passthrough of changes in wholesale commodity gas costs, which accounted for 47% of revenues for the twelve months ended October 31, 2011, and transportation and storage costs, which accounted for 9%.
We have paid quarterly dividends on our common stock since 1956. We increased our common stock dividend on an annualized basis by $.04 per share in 2011, 2010 and 2009. Dividends of $82.9 million, $80.3 million and $78.4 million for 2011, 2010 and 2009, respectively, were paid on common stock. Provisions contained in certain note agreements under which long-term debt was issued restrict the amount of cash dividends that may be paid. As of October 31, 2011, our retained earnings were not restricted. On December 16, 2011, the Board of Directors declared a quarterly dividend on common stock of $.29 per share, payable January 13, 2012 to shareholders of record at the close of business on December 27, 2011. For further information, see Note 4 to the consolidated financial statements.
Revenue Recognition. Utility sales and transportation revenues are based on rates approved by state regulatory commissions. Base rates charged to customers may not be changed without formal approval by the regulatory commission in that jurisdiction; however, the wholesale cost of gas component of rates may be adjusted periodically under PGA procedures. In South Carolina and Tennessee, we have WNA mechanisms that are designed to protect a portion of our revenues against warmer-than-normal weather as deviations from normal weather can affect our financial performance and liquidity. The WNA also serves to offset the impact of colder-than-normal weather by reducing the amounts we can charge our customers. In North Carolina, a margin decoupling mechanism provides for the recovery of our approved margin from residential and commercial customers independent of consumption patterns. The margin earned monthly under the margin decoupling mechanism results in semi-annual rate adjustments to refund any over-collection or recover any under-collection. The gas cost portion of our costs is recoverable through PGA procedures and is not affected by the WNA or the margin decoupling mechanism. Without the WNA and margin decoupling mechanisms, our operating revenues in 2011 and 2010 would have been higher by $11.9 million and $14.7 million, respectively, and lower by $4.8 million in 2009.
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