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.
(Name of company)
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 that 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
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 56,014 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
Energy. 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. Diversified Energy Company
also operated Highland Propane, which is not a public utility, under two (2)
divisions, Highland Propane-Virginia and Highland Propane-West Virginia.
Highland Propane-Virginia was 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
provided managerial and other direct labor, goods and services to Highland
Propane-Virginia under agreement approved by the Virginia Commission. Highland
Propane was not otherwise subject to the regulatory jurisdiction of the Virginia
Commission. Highland Propane-West Virginia was 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. On July 12, 2004, RGC Resources, Inc. sold the propane
assets of Diversified Energy Company, d/b/a Highland Propane Company, for
approximately $28,500,000 in cash. The sale of assets encompassed all propane
plant assets (with the exception of a limited number of specific assets being
retained by Diversified), including the name "Highland Propane", customer
accounts receivable, propane gas inventory and inventory of propane related
materials.
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 4,138 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 multiple interstate and
intrastate 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 and Virginia Gas Pipeline. Bluefield Gas is served by Columbia
and T&F Operating, Inc. Columbia historically has delivered approximately 60
percent of Roanoke Gas' gas supply and 75 percent of Bluefield Gas' gas supply,
while the other pipelines deliver the balance of each company's requirements.
The rates paid for natural gas transportation and storage services purchased
from the interstate pipeline companies 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)
contracts to meet its system requirements. The Company's current suppliers
include Sequent 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.
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 7,481,395 DTH of gas during the
calendar year 2004 for total revenues of $75,623,880. Bluefield Gas
distributed at retail 775,559 DTH of gas in the State of West Virginia
during the calendar year 2004 for total revenues of $7,888,151.
(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 266,541 DTH of natural gas at
wholesale to Roanoke Gas at the Virginia- West Virginia line for
$1,932,647.
(d) Roanoke Gas purchased 7,634,136 DTH of natural gas outside the
Commonwealth of Virginia during the calendar year 2004 for $57,958,198. 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 1,085,495 DTH of natural gas for
$7,986,951 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 3,432,723
DTH of natural gas to its end-users for $2,170,773 in total transportation
fees. Bluefield Gas transported 19,739 DTH of natural gas to its end-users
for $16,211 in transportation fees. Highland Energy purchased and delivered
2,937,611 DTH of natural gas to Roanoke Gas Company and Bluefield Gas
Company for delivery to certain end-users for $19,771,837.
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 2004 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 28th day of February 2005.
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 Statement of Income
Twelve Months Ended December 31, 2004
Bluefield Highland
RGC Roanoke Gas Gas Propane Diversified Highland
Resources Company Company Company Energy Energy
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Operating Revenues:
Gas utilities $ 79,132,043 $ 9,872,712
Propane operations 9,428,067
Energy marketing 19,771,837
Other 405,538 17,142 71,842 331,319
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Total operating revenues 0 79,537,581 9,889,854 9,499,909 331,319 19,771,837
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Cost of Sales:
Gas utilities 58,101,083 7,986,950
Propane operations 5,197,481
Energy marketing 19,373,848
Other 156,534 9,521 34,254 266,656
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Total cost of sales 0 58,257,617 7,996,471 5,231,735 266,656 19,373,848
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Gross Margin 0 21,279,964 1,893,383 4,268,174 64,663 397,989
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Other Operating Expenses:
Operations (344) 8,811,817 1,086,087 2,155,471 321,047 49,783
Maintenance 1,573,901 161,720 67,588
General taxes 134 1,019,040 442,296 283,252 1,633
Depreciation and amortization 3,619,167 268,602 747,706
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Total other operating expenses (210) 15,023,925 1,958,705 3,254,017 321,047 51,416
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Operating Income 210 6,256,039 (65,322) 1,014,157 (256,384) 346,573
Other (Income) expenses, net (15,615,000) 80,322 (62) 14,620 (93,440)
Interest Expense (9) 1,803,889 123,998 105,308 358
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Income Before Income Taxes 15,615,219 4,371,828 (189,258) 894,229 (163,302) 346,573
Income Tax Expense of continuing operations 522 1,650,590 (72,424) 374,858 (64,036) 133,494
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Net Income from continuing operations 15,614,697 2,721,238 (116,834) 519,371 (99,266) 213,079
Income from discontinued operations, net of tax
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Net income $ 15,614,697 $ 2,721,238 $ (116,834) $ 519,371 $ (99,266) $ 213,079
============================================================================
Exhibit A
Highland Application Reclass & Discontinued Consolidated
Heating & Resources Eliminations Operations Total
Cooling
--------------------------------------------------------------------------
Operating Revenues:
Gas utilities $ (1,601,374) $ 87,403,381
Propane operations (9,428,067) -
Energy marketing 19,771,837
Other 15,423 (71,842) 769,422
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Total operating revenues 0 15,423 (1,601,374) (9,499,909) 107,944,640
--------------------------------------------------------------------------
Cost of Sales:
Gas utilities (1,920,941) 64,167,092
Propane operations (5,197,481) -
Energy marketing 19,373,848
Other 753 (34,254) 433,464
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Total cost of sales 0 753 (1,920,941) (5,231,735) 83,974,404
--------------------------------------------------------------------------
Gross Margin 0 14,670 319,567 (4,268,174) 23,970,236
--------------------------------------------------------------------------
Other Operating Expenses:
Operations 10,599 (30,046) (1,560,416) 10,843,998
Maintenance (65,533) 1,737,676
General taxes (269,145) 1,477,210
Depreciation and amortization 2,654 (718,219) 3,919,910
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Total other operating expenses 0 13,253 (30,046) (2,613,313) 17,978,794
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Operating Income 0 1,417 349,613 (1,654,861) 5,991,442
Other (Income) expenses, net 15,615,000 (14,620) (13,180)
Interest Expense (105,309) 1,928,235
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Income Before Income Taxes 0 1,417 (15,265,387) (1,534,932) 4,076,387
Income Tax Expense of continuing operations (75) 132,714 (627,917) 1,527,726
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Net Income from continuing operations - 1,492 (15,398,101) (907,015) 2,548,661
Income from discontinued operations, net of tax 10,411,344 10,411,344
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Net income $ - $ 1,492 $ (15,398,101) $9,504,329 $ 12,960,005
==========================================================================
Exhibit A (1)
RGC RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
December 31, 2004
Roanoke Bluefield
RGC Gas Gas Diversified Highland
ASSETS Resources Company Company Energy Energy
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Current Assets:
Cash and cash equivalents $ 1,818,982 $ 483,379 $ (41,630) $2,113,889
Accounts Receivable 12,693,373 1,664,413 33,276 2,262,064
Intercompany Accounts Receivable (728,815) (27,201) (11,877) (758,502) 2,125,725
Materials and supplies 503,470 190,189
Gas in storage 15,356,950 1,779,248
Prepaid income taxes
Deferred income taxes
Under-recovery of gas costs 751,544
Other 67,379 757,157 85,374 5,530 303
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Total current assets 1,157,546 29,767,128 4,417,261 1,394,193 4,388,092
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Property, Plant And Equipment:
Utility plant in service 95,767,684 8,449,505
Accumulated depreciation and amortization (31,962,406) (2,621,710)
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Utility plant in service, net - 63,805,278 5,827,795 - -
Construction work in progress 1,390,006 171,154
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Utility Plant, Net - 65,195,284 5,998,949 - -
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Nonutility property 783,173
Accumulated depreciation and amortization (193,092)
--------------------------------------------------------------------
Nonutility property, net - - - 590,081 -
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Total property, plant and equipment - 65,195,284 5,998,949 590,081 -
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Investment in Subsidiaries 33,228,079
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Other assets 50,391 298,229 186,075 - -
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Total Assets $ 34,436,016 $ 95,260,641 $ 10,602,285 $ 1,984,274 $ 4,388,092
====================================================================
Exhibit A (1)
Highland Application Consolidated
Heating & Cooling Resources Eliminations Total
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Current Assets:
Cash and cash equivalents $ 47,679 $4,422,299
Accounts Receivable 1,626 2,283,294 18,938,046
Intercompany Accounts Receivable (494,035) (105,295) -
Materials and supplies 693,659
Gas in storage 17,136,198
Prepaid income taxes 1,306,151 1,306,151
Deferred income taxes 1,940,384 1,940,384
Under-recovery of gas costs 51,550 803,094
Other 348,315 1,264,058
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Total current assets (494,035) (103,669) 5,977,373 46,503,889
-------------------------------------------------------------------
Property, Plant And Equipment:
Utility plant in service 104,217,189
Accumulated depreciation and amortization (34,584,116)
-------------------------------------------------------------------
Utility plant in service, net - - - 69,633,073
Construction work in progress 1,561,160
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Utility Plant, Net - - - 71,194,233
-------------------------------------------------------------------
Nonutility property 10,840 794,013
Accumulated depreciation and amortization (2,653) (195,745)
-------------------------------------------------------------------
Nonutility property, net - 8,187 - 598,268
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Total property, plant and equipment - 8,187 - 71,792,501
-------------------------------------------------------------------
Investment in Subsidiaries (33,228,079) -
-------------------------------------------------------------------
Other assets - - - 534,695
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Total Assets $(494,035) $ (95,482) $(27,250,706) $118,831,085
===================================================================
Exhibit A (1)
RGC RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
December 31, 2004
Roanoke Bluefield
RGC Gas Gas Diversified Highland
LIABILITIES AND STOCKHOLDERS' EQUITY Resources Company Company Energy Energy
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Current Liabilities:
Current maturities of long-term debt $ 8,011,523 $ 2,000,000
Borrowings under lines of credit 13,765,000 4,113,000
Dividends payable 609,869
Accounts payable 248,778 9,646,248 1,275,762 6,797 3,343,168
Income taxes payable (714,024) (451,518) (176,036) (98,045) 71,735
Customer deposits 874,705 53,238
Accrued expenses 575,933 2,648,214 344,822 382,610 10
Refunds from suppliers - due customers 11,811
Overrecovery of gas costs 2,837,871
Fair value of marked to market transactions
-----------------------------------------------------------------------
Total current liabilities 720,556 37,343,854 7,610,786 291,362 3,414,913
Long-term Debt, Excluding Current Maturities 16,000,000
Deferred Credits:
Asset retirement obligations 6,247,790 135,506
Deferred income taxes (217,385) 2,921,227 708,390 (116,627)
Deferred investment tax credits 215,918 7,990
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Total deferred credits (217,385) 9,384,935 851,886 (116,627) -
Stockholders' Equity:
Common Stock 10,335,710 8,603,965 49,704 196,421
Preferred Stock
Capital in excess of par value 13,097,072 12,578,754 370,564 1,213,662
Retained earnings 10,500,063 11,349,133 1,719,345 399,456 973,179
Accumulated comprehensive loss
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Total stockholders' equity 33,932,845 32,531,852 2,139,613 1,809,539 973,179
Total Liabilities and Stockholders' Equity $ 34,436,016 $ 95,260,641 $ 10,602,285 $ 1,984,274 $ 4,388,092
====================================================================
Exhibit A (1)
Highland Application Consolidated
LIABILITIES AND STOCKHOLDERS' EQUITY Heating & Cooling Resources Eliminations Total
-------------------------------------------------------------------
Current Liabilities:
Current maturities of long-term debt $ 10,011,523
Borrowings under lines of credit 17,878,000
Dividends payable 609,869
Accounts payable (94) 2,330,973 16,851,632
Income taxes payable 63,675 (1,938) 1,306,151 -
Customer deposits 927,943
Accrued expenses 3,951,589
Refunds from suppliers - due customers 11,811
Overrecovery of gas costs (286,300) 2,551,571
Fair value of marked to market transactions 358,949 358,949
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Total current liabilities 63,581 (1,938) 3,709,773 53,152,887
Long-term Debt, Excluding Current Maturities 16,000,000
Deferred Credits:
Asset retirement obligations 6,383,296
Deferred income taxes (343) 2,065,089 5,360,351
Deferred investment tax credits 223,908
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Total deferred credits - (343) 2,065,089 11,967,555
Stockholders' Equity:
Common Stock (8,850,090) 10,335,710
Preferred Stock -
Capital in excess of par value 903,225 (15,066,205) 13,097,072
Retained earnings (1,460,841) (93,201) (9,096,183) 14,290,951
Accumulated comprehensive loss (13,090) (13,090)
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Total stockholders' equity (557,616) (93,201) (33,025,568) 37,710,643
Total Liabilities and Stockholders' Equity $ (494,035) $ (95,482) $(27,250,706) $118,831,085
===================================================================
EXHIBIT B
Not applicable.