RGC RESOURCES, INC.
FILE NO.
FORM U-3A-2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
STATEMENT BY HOLDING COMPANY CLAIMING EXEMPTION
UNDER RULE U-3A-2 FROM THE PROVISIONS OF THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
RGC Resources, Inc. hereby files with the Securities and Exchange
Commission (the Commission), pursuant to Rule 2, its statement claiming
exemption as a holding company from the provisions of the Public Utility Holding
Company Act of 1935 (the "Act"), and submits the following information:
1. The Claimant RGC Resources, Inc., a Virginia corporation, is a holding
company which directly or indirectly holds interests in the following
subsidiaries, each of which is organized under the laws of the Commonwealth of
Virginia or the State of West Virginia:
a. Roanoke Gas Company, a public service corporation organized under the
laws of the Commonwealth of Virginia;
b. Diversified Energy Company, a Virginia corporation, d/b/a Highland
Propane Company and d/b/a Highland Energy;
c. Bluefield Gas Company, a public service corporation organized under
the laws of the State of West Virginia;
d. RGC Ventures of Virginia, Inc., a Virginia corporation, d/b/a
Application Resources, Inc.
The business address of the Claimant and each of its subsidiaries is:
RGC Resources, Inc.
519 Kimball Avenue, N.E.
Roanoke, VA 24016
Roanoke Gas Company
Diversified Energy Company
RGC Ventures of Virginia, Inc.
519 Kimball Avenue, N.E.
Roanoke, VA 24016
Bluefield Gas Company
4699 East Cumberland Road
Bluefield, WV 24701
Roanoke Gas Company ("Roanoke Gas") is a public service corporation
organized and existing in good standing under the laws of the Commonwealth of
Virginia. Roanoke Gas distributes natural gas to some 55,088 residential,
commercial and industrial customers located in the City of Roanoke and environs
and Bluefield, Virginia pursuant to certificates of convenience and necessity at
rates and charges issued and prescribed by the State Corporation Commission of
Virginia ("Virginia Commission"). Diversified Energy Company, a Virginia
corporation, operates as Highland Propane Company ("Highland Propane"), and
Highland Energy. Highland Propane, which is not a public utility, is operated
under two (2) divisions, Highland Propane-Virginia and Highland Propane-West
Virginia. Highland Propane-Virginia is engaged in the business of selling
liquefied petroleum gas (propane) in bulk to residential, commercial and
industrial customers in and around Roanoke, Virginia and Western Virginia.
Roanoke Gas provides managerial and other direct labor, goods and services to
Highland Propane-Virginia under agreement approved by the Virginia Commission.
Highland Propane is not otherwise subject to the regulatory jurisdiction of the
Virginia Commission. Highland Propane-West Virginia is engaged in the business
of selling liquefied petroleum gas (propane) in bulk to residential, commercial
and industrial customers in Southern West Virginia and has offices in Bluefield
and Rainelle, West Virginia. Highland Energy is a purchasing and marketing
entity that buys fuels on the spot and short-term market and resells to certain
transportation customers of Roanoke Gas Company and Bluefield Gas Company.
Bluefield Gas Company ("Bluefield Gas"), a West Virginia public service
corporation, is regulated as to rates and service by the Public Service
Commission of West Virginia ("West Virginia Commission"). Bluefield Gas provides
natural gas service to some 4,249 residential, commercial and industrial
customers located in and around Bluefield, West Virginia.
RGC Ventures of Virginia, Inc., a Virginia corporation, operates as
Application Resources, Inc. Application Resources, Inc. provides information
technology consulting services specific to the utility industry.
2. Roanoke Gas and Bluefield Gas are each served by two interstate
pipelines. Roanoke Gas is served by Columbia Gas Transmission Corporation and
Columbia Gulf Transmission Corporation (together "Columbia"), and East Tennessee
Natural Gas Company, Tennessee Gas Pipeline and Midwestern Gas Transmission
(together "East Tennessee"). Bluefield Gas is served by Columbia and Bluefield
Pipeline, LLC. Columbia historically has delivered approximately 60 percent of
Roanoke Gas' gas supply and 75 percent of Bluefield Gas' gas supply. East
Tennessee and Bluefield Pipeline, LLC deliver the remaining gas supply to
Roanoke Gas and Bluefield Gas, respectively. The rates paid for natural gas
transportation and storage services purchased from Columbia and East Tennessee
are established by tariffs approved by FERC. These tariffs contain flexible
pricing provisions, which, in some instances, authorize these transporters to
reduce rates and charges to meet price competition.
Both Roanoke Gas and Bluefield Gas currently use long-term (multi-year),
mid-term (seasonal) and short- term (spot) gas purchases to meet its system
requirements. As of December 31, 2003, both companies had entered into, or were
in the process of entering into, long-term and mid-term firm supply agreements
to cover the majority of its firm demand. Long-term and mid-term suppliers
currently include Cabot Oil and Gas, Duke Energy Trading and Marketing, LLC,
Equitable Energy, and Phoenix Energy Sales Company.
Roanoke Gas receives its gas supply from Columbia at two city gate
stations. Each station is connected by a thirty-three mile transmission line to
Columbia's system at Gala, Virginia. Roanoke Gas receives its gas supply from
East Tennessee at five city gate stations located on East Tennessee's
transmission line. The city gate stations are located on the perimeter of a
network of distribution mains located in the Cities of Roanoke and Salem, the
Towns of Vinton, Fincastle and Troutville, and the Counties of Bedford,
Botetourt, Montgomery and Roanoke, Virginia. Also, located on the transmission
line in Botetourt County, Virginia is a liquefied natural gas storage facility
which has the capacity to hold 200 million cubic feet of natural gas.
Bluefield Gas owns a transmission line extending from Princeton, West
Virginia to Bluefield, West Virginia, and a distribution system within the City
of Bluefield, West Virginia and the immediate surrounding area of Mercer County,
West Virginia. Bluefield Gas also owns a two mile distribution line that
connects its distribution system to facilities owned by Bluefield Pipeline, LLC.
A portion of the gas transported by Bluefield
Gas is sold at the West Virginia-Virginia State line to Roanoke Gas for resale
to its customers through a distribution network in Bluefield, Virginia and the
immediate surrounding area of Tazewell County, Virginia.
Highland Propane-West Virginia's principal bulk storage facility, located
at its Bluefield, West Virginia facility, is comprised of two 30,000-gallon
storage tanks and one 18,000-gallon storage tank. Three 18,000-gallon storage
tanks are located at its Rainelle, West Virginia facility, one 30,000-gallon
tank is located at Ansted, WV, one 30,000-gallon tank is located near Beckley,
WV, and one 30,000-gallon tank is located at Dunmore, WV.
Highland Propane-Virginia owns and operates twelve storage facilities. A
facility at Thirlane Road, N.W. in Roanoke, Virginia consists of two
30,000-gallon tanks. A second facility at Fort Chiswell, Virginia consists of
two 30,000-gallon tanks. The third facility is located on the property of
Consolidated Glass in Galax, Virginia and consists of one 30,000-gallon tank.
The fourth facility is located in Craig County, near the town of New Castle,
Virginia and consists of one 30,000-gallon tank. The fifth facility, located
near the intersection of Routes 221 and 679 in Floyd County, consists of one
30,000-gallon tank. The sixth facility is located on the property of Virginia
Forging in Botetourt County, near the Town of Buchanan, Virginia, and consists
of one 30,000-gallon tank. The seventh facility is located on the property of
Golden West Foods in Bedford, Virginia and consists of one 30,000- gallon tank.
The eighth facility is located in the City of Buena Vista, Virginia and consists
of two 30,000-gallon tanks. The ninth facility is located in Allegheny County
near the Town of Low Moor and consists of one 30,000- gallon tank. The tenth
facility is located at Weyers Cave in Augusta County, Virginia and consists of
one 30,000- gallon tank. The eleventh facility is located in Nelson County near
the town of Lovingston, Virginia and consists of one 30,000-gallon tank. The
twelfth facility is located in the town of Rocky Mount and consists of one
30,000- gallon tank.
3. The following information for the last calendar year with respect to
Roanoke Gas and Bluefield Gas is submitted:
(a) Roanoke Gas distributed at retail 8,052,916 DTH of gas during the
calendar year 2003 for total revenues of $69,328,519. Bluefield Gas
distributed at retail 875,662 DTH of gas in the State of West Virginia
during the calendar year 2003 for total revenues of $7,253,971.
(b) Neither Roanoke Gas nor Bluefield Gas distributed at retail natural
gas outside the state of its incorporation.
(c) Roanoke Gas did not sell at wholesale natural gas outside the
Commonwealth of Virginia. Bluefield Gas sold 278,864 DTH of natural
gas at wholesale to Roanoke Gas at the Virginia- West Virginia line
for $1,691,963.
(d) Roanoke Gas purchased 8,274,860 DTH of natural gas outside the
Commonwealth of Virginia during the calendar year 2003 for
$52,344,120. All such gas was transported to Roanoke Gas for resale as
system supply by Columbia Gas Transmission Corporation, East Tennessee
Natural Gas Company, and Bluefield Gas. Bluefield Gas purchased
1,199,798 DTH of natural gas for $7,139,776 outside the State of West
Virginia. All such gas was transported to Bluefield Gas for resale as
system supply by Columbia Gas Transmission Corporation and Bluefield
Pipeline, LLC. Roanoke Gas transported 2,961,831 DTH of natural gas to
its end-users for $1,781,424 in total transportation fees. Bluefield
Gas transported 24,759 DTH of natural gas to its end-users for $19,628
in transportation fees. Highland Energy purchased and delivered
2,458,338 DTH of natural gas to Roanoke Gas Company and Bluefield Gas
Company for delivery to certain end-users for $14,867,988.
4. (a)-(e) Not applicable. The Company holds no interest, directly or
indirectly in an exempt wholesale generator (EWG) or foreign utility company.
A consolidating statement of income and a consolidating balance sheet of
RGC Resources, Inc. and its subsidiaries for the 2003 calendar year is attached
as Exhibit A and Exhibit A(1).
The above-named claimant has caused this statement to be duly executed on
its behalf by its authorized officer on this 26th day of February, 2004.
RGC RESOURCES, INC.
By: s/John B. Williamson, III
Its President
(SEAL)
ATTEST:
s/ Howard T. Lyon
Howard T. Lyon,
Vice-President, Treasurer & Controller
Notices and correspondence regarding this statement should be addressed to:
Howard T. Lyon
Vice-President, Treasurer & Controller
RGC Resources, Inc.
Post Office Box 13007
Roanoke, VA 24030
Exhibit A
RGC RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATING INCOME STATEMENT
TWELVE MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)
Bluefield Highland
RGC Roanoke Gas Gas Propane Highland
Resources Company Company Company Energy GIS
----------------------------------------------------------------------------------
Operating Revenues:
Gas utilities $72,179,244 $8,990,551
Propane operations 15,128,854
Energy marketing 14,867,988
Other 392,368 17,050 325,415
----------------------------------------------------------------------------------
Total operating revenues 0 72,571,612 9,007,601 15,454,269 14,867,988 0
----------------------------------------------------------------------------------
Cost of Sales:
Gas utilities 52,136,661 7,139,776
Propane operations 7,798,867
Energy marketing 14,599,451
Other 191,828 10,285 197,299
----------------------------------------------------------------------------------
Total cost of sales 0 52,328,489 7,150,061 7,996,166 14,599,451 0
----------------------------------------------------------------------------------
Operating Margin 0 20,243,123 1,857,540 7,458,103 268,537 0
----------------------------------------------------------------------------------
Other Operating Expenses:
Operations 301 8,400,488 964,580 3,749,725 44,267
Maintenance 1,418,862 114,040 131,001
General taxes (249) 994,991 391,665 297,194 1,818
Depreciation and amortization 3,515,736 235,519 1,479,071
----------------------------------------------------------------------------------
Total other operating expenses 52 14,330,077 1,705,804 5,656,991 46,085 0
----------------------------------------------------------------------------------
Operating Income (52) 5,913,046 151,736 1,801,112 222,452 0
Other Expenses, net (1,995,000) 111,026 1,012 71,289
Interest Expense 9 1,836,834 134,298 191,591
----------------------------------------------------------------------------------
Income Before Income Taxes 1,994,939 3,965,186 16,426 1,538,232 222,452 0
Income Tax Expense 1,466,957 7,313 601,929 84,449 (3,526)
----------------------------------------------------------------------------------
Net Income $1,994,939 $2,498,229 $9,113 $936,303 $138,003 $3,526
==================================================================================
Exhibit A
Highland Application Consolidated
Heating & Cooling Resources Eliminations Total
--------------------------------------------------------------------
Operating Revenues:
Gas utilities ($1,709,237) $79,460,558
Propane operations 15,128,854
Energy marketing 14,867,988
Other 8,350 5,621 748,804
--------------------------------------------------------------------
Total operating revenues 8,350 5,621 (1,709,237) 110,206,204
--------------------------------------------------------------------
Cost of Sales:
Gas utilities (1,679,781) 57,596,656
Propane operations 7,798,867
Energy marketing 14,599,451
Other (11,794) 7,122 394,740
--------------------------------------------------------------------
Total cost of sales (11,794) 7,122 (1,679,781) 80,389,714
--------------------------------------------------------------------
Operating Margin 20,144 (1,501) (29,456) 29,816,490
--------------------------------------------------------------------
Other Operating Expenses:
Operations (4,250) 11,153 (29,456) 13,136,808
Maintenance 517 1,664,420
General taxes 409 1,685,828
Depreciation and amortization 2,203 443 5,232,972
--------------------------------------------------------------------
Total other operating expenses (1,530) 11,562 (29,013) 21,720,028
--------------------------------------------------------------------
Operating Income 21,674 (13,063) (443) 8,096,462
Other Expenses, net 1,995,000 183,327
Interest Expense 2,162,732
--------------------------------------------------------------------
Income Before Income Taxes 21,674 (13,063) (1,995,443) 5,750,403
Income Tax Expense 8,659 (5,033) 2,160,748
--------------------------------------------------------------------
Net Income $13,015 ($8,030) ($1,995,443) $3,589,655
====================================================================
Exhibit A(1)
RGC RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2003
(UNAUDITED) Roanoke Bluefield Highland
RGC Gas Gas Propane Highland GIS
ASSETS Resources Company Company Company Energy Resources
-------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 639,739 $ 166,206 $ 38,379 $ 519,288
Accounts Receivable 11,631,120 1,350,339 1,806,005 1,792,753
Intercompany Accounts Receivable 300,151 194,802 (55,707) (1,544,099) 1,855,391
Inventories 2,146,214 231,155 333,461
Prepaid gas service 9,694,212 1,301,588
Prepaid income taxes
Deferred income taxes
Under-recovery of gas costs 885,963
Unrealized gains on marked-to-market transactions
Other 44,001 656,118 70,232 263,482 300
-------------------------------------------------------------------------------------------
Total current assets 983,891 24,488,672 3,821,949 1,378,137 3,648,444 -
-------------------------------------------------------------------------------------------
Property, Plant And Equipment:
Utility plant in service 89,319,777 7,715,738
Accumulated depreciation and amortization (36,794,020) (2,700,799) - - -
-------------------------------------------------------------------------------------------
Utility plant in service, net - 52,525,757 5,014,939 - - -
Construction work in progress 2,080,966 395,634
-------------------------------------------------------------------------------------------
Utility Plant, Net - 54,606,723 5,410,573 - - -
-------------------------------------------------------------------------------------------
Nonutility property 21,018,966
Accumulated depreciation and amortization (9,018,341)
-----------------------------------------------------------------------------------------
Nonutility property, net - - - 12,000,625 - -
-------------------------------------------------------------------------------------------
Total property, plant and equipment - 54,606,723 5,410,573 12,000,625 - -
-------------------------------------------------------------------------------------------
Investment in Subsidiaries 28,078,079
-------------------------------------------------------------------------------------------
Other Assets:
Goodwill 298,314
Other assets 43,816 488,241 238,619 3,544 - -
-------------------------------------------------------------------------------------------
Total other assets 43,816 488,241 238,619 301,858 - -
-------------------------------------------------------------------------------------------
Total Assets $29,105,786 $79,583,636 $9,471,141 $13,680,620 $3,648,444 $0
===========================================================================================
RGC RESOURCES, INC. AND SUBSIDIARIES Exhibit A (1)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2003
(UNAUDITED)
Highland Application Consolidated
ASSETS Heating & Cooling Resources Eliminations Total
-----------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 49,333 $1,412,945
Accounts Receivable 2,322,143 18,902,360
Intercompany Accounts Receivable (646,574) (103,964) -
Inventories 2,710,830
Prepaid gas service 10,995,800
Prepaid income taxes -
Deferred income taxes 2,007,411 2,007,411
Under-recovery of gas costs (23,450) 862,513
Unrealized gains on marked-to-market transactions 503,330 503,330
Other 50 (1,300) 1,032,883
-----------------------------------------------------------------------
Total current assets (646,524) (103,964) 4,857,467 38,428,072
-----------------------------------------------------------------------
Property, Plant And Equipment:
Utility plant in service 97,035,515
Accumulated depreciation and amortization - - (39,494,819)
-----------------------------------------------------------------------
Utility plant in service, net - - - 57,540,696
Construction work in progress 2,476,600
-----------------------------------------------------------------------
Utility Plant, Net - - - 60,017,296
-----------------------------------------------------------------------
Nonutility property 128 21,019,094
Accumulated depreciation and amortization (9,018,341)
-----------------------------------------------------------------------
Nonutility property, net - 128 - 12,000,753
-----------------------------------------------------------------------
Total property, plant and equipment - 128 - 72,018,049
-----------------------------------------------------------------------
Investment in Subsidiaries (28,078,079) -
-----------------------------------------------------------------------
Other Assets:
Goodwill 298,314
Other assets - - - 774,220
-----------------------------------------------------------------------
Total other assets - - - 1,072,534
-----------------------------------------------------------------------
Total Assets ($646,524) ($103,836) ($23,220,612) $111,518,655
=======================================================================
Exhibit A(1)
RGC RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2003
Roanoke Bluefield Highland
RGC Gas Gas Propane Highland GIS
LIABILITIES AND STOCKHOLDERS' EQUITY Resources Company Company Company Energy Resources
-------------------------------------------------------------------------------------
Current Liabilities:
Current maturities of long-term debt $32,959
Borrowings under lines of credit 14,955,000 4,125,000
Dividends payable 574,562 -
Accounts payable 145,531 5,604,722 571,351 660,126 2,870,968
Income taxes payable (786,422) 1,734,458 (442,715) 113,588 17,376
Customer deposits 570,572 49,306
Accrued expenses 486,472 2,701,490 353,314 732,044
Refunds from suppliers - due customers 44,776
Overrecovery of gas costs 2,169,124
Unrealized losses on marked to market transactions
---------------------------------------------------------------------------------------
Total current liabilities 420,143 27,813,101 4,656,256 1,505,758 2,888,344 -
Long-term Debt, Excluding Current Maturities 24,011,523 2,000,000 4,200,000
Deferred Credits:
Deferred income taxes (165,286) 1,899,137 699,649 1,274,758
Deferred investment tax credits 249,257 8,789
---------------------------------------------------------------------------------------
Total deferred credits (165,286) 2,148,394 708,438 1,274,758 - -
STOCKHOLDERS' EQUITY:
Common Stock 10,072,880 8,603,965 49,704 196,421
Preferred Stock
Capital in excess of par value 12,179,869 7,578,754 220,564 1,213,662
Retained earnings 6,598,180 9,427,899 1,836,179 5,290,021 760,100
Accumulated comprehensive loss
---------------------------------------------------------------------------------------
Total stockholders' equity 28,850,929 25,610,618 2,106,447 6,700,104 760,100 -
Total Liabilities and Stockholders' Equity $29,105,786 $79,583,636 $9,471,141 $13,680,620 $3,648,444 $ -
=====================================================================================
RGC RESOURCES, INC. AND SUBSIDIARIES Exhibit A (1)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2003
Highland Application Consolidated
LIABILITIES AND STOCKHOLDERS' EQUITY Heating & Cooling Resources Eliminations Total
------------------------------------------------------------------------
Current Liabilities:
Current maturities of long-term debt $32,959
Borrowings under lines of credit 19,080,000
Dividends payable 574,562
Accounts payable (1,906) 2,371,476 12,222,268
Income taxes payable (13,771) (9,143) 613,371
Customer deposits 750 620,628
Accrued expenses 4,273,320
Refunds from suppliers - due customers 44,776
Overrecovery of gas costs 442,500 2,611,624
Unrealized losses on marked to market transactions 189,381 189,381
------------------------------------------------------------------------
Total current liabilities (14,927) (9,143) 3,003,357 40,262,889
Long-term Debt, Excluding Current Maturities 30,211,523
Deferred Credits:
Deferred income taxes (73,981) 1,950,081 5,584,358
Deferred investment tax credits 258,046
------------------------------------------------------------------------
Total deferred credits (73,981) - 1,950,081 5,842,404
STOCKHOLDERS' EQUITY:
Common Stock (8,850,090) 10,072,880
Preferred Stock -
Capital in excess of par value 903,225 (9,916,205) 12,179,869
Retained earnings (1,460,841) (94,693) (9,313,084) 13,043,761
Accumulated comprehensive loss (94,671) (94,671)
------------------------------------------------------------------------
Total stockholders' equity (557,616) (94,693) (28,174,050) 35,201,839
Total Liabilities and Stockholders' Equity $(646,524) $(103,836) $(23,220,612) $111,518,655
========================================================================
EXHIBIT B
Not Applicable.