Good morning. I'm Paul Nester, President and CEO of RGC Resources. Thank you for joining us as we discuss RGC Resources 2022 third quarter results. Let's review a few administrative items. We have muted all lines [Operator Instructions].

The link to today's presentation is available on the Investor and Financial Information page of our website at www.rgcresources.com. Joining me today is Jason Field, our Chief Financial Officer; Tommy Oliver, our Vice President in Regulatory Affairs and Strategy; and Kelsie Davenport, our Director of Finance. Okay. Let's go to Slide 1.

We do have forward-looking projections and forecast in this presentation and this is our disclaimer of such. The agenda is on Slide 02. We're going to start with an update of our operational results for the quarter. Jason will then discuss our delivered natural gas volumes and financial results.

Tommy is going to give us a nice update on our Renewable Natural Gas project and I will conclude with a discussion of the outlook for the remainder of fiscal 2022. Moving to Slide 03. Our operational results continued to be impressive in 2022. Customer additions are up 17% for the first 09 months when compared to 2021.

New main miles are ahead 12% at 2021, third one just over 5.5 miles. You may recall that last year was also a significant increase over historical norms for new customers in main miles. Since October 2022, we've installed over 12 miles of new main, it's just an outstanding result.

We believe the new customer main addition trend would continue through fiscal year-end. As you reviewed our recently filed 10-Q carefully, you may have noticed that from the March quarter to the June quarter, our total customer count receded from 63,000 in March to approximately 62,400 or 62,600 customers.

This was due to customer turnoffs for nonpayment. And as this change is more pronounced than prior period, we thought it's worth discussing. Service disconnection moratorium was prohibitive, customer turnoffs for nonpayment during the pandemic was lifted in late summer of 2021.

However we did not begin turning off customers until the winter season concluded here in March of 2022. So, at the March of 2022 to June of 2022, we turned off just over 900 customer accounts for nonpayment.

The pre-pandemic history is an indicator, we expect a large number of these customers to make necessary payments and request service this fall with the arrival of colder weather. There's no question the pandemic and the moratoriums that were associated with that has had a noticeable change in customer behavior from pre-pandemic experiences.

Jason will now discuss our delivered volumes, financial statements, and capital spending..

Thank you, Paul. We are on Slide 04. Our third quarter delivered volumes were strong with 2 million decatherm's delivered for the quarter up almost 200,000 decatherms compared to the third quarter of 2021 or an 11% increase. This increase was largely due to customer volumes in the industrial class.

The same customer that we highlighted in our second quarter earnings call continued blending natural gas in their fuel mix and we expect our customer to continue to use natural gas in their manufacturing process through the summer.

If we move to Slide 05, our year-to-date total volumes are 3% higher than the volumes we delivered through June 30 of last year.

That’s in spite of a 6% decline in heating-degree days, the decline in weather related deliveries to our residential customers was offset by the increase in our industrial transportation volumes again impacted by that same customer that's been utilizing natural gas to a greater extent this year compared to last year.

If you move to Slide 06, our financial results for the third quarter 2022, our operating income of $1.6 million exceeded the third quarter of 2021 by about $98,000 or 6.3%. The overall net income however for the quarter of $593,000 was a decline from the third quarter of 2021, approximately $18,000 or a $0.01 a share.

This was generally due to the decline in equity earnings or our investment in the Mountain Valley pipeline held by our wholly owned subsidiary Midstream. One thing that is common at the quarter the 09 months and the 12 months ending June 30 is increased gas cost and is reflected in the higher revenues and operating expenses each period.

As a reminder, gas cost is a pass-through with no operating income impact. Non-gas operating expenses for the three months have increase primarily due to higher corporate insurance premiums, professional services and bad debt expense, met a higher capital overhead.

For the 09 months ending June 30, 2022, operating income which is mainly from the Roanoke Gas subsidiary was $14.5 million, an increase of $238,000. Our net loss for the 09 months and 12 months reflected the significant impact of the non-cash impairment on our investment in the Mountain Valley pipeline which we recorded in the second quarter.

Both the 09 and 12 months that ended June 2022 reflected a net loss that was $20.3 million and we had no net income in the fourth quarter of 2021. That's why those numbers are the same at $20.3 million. Let's discuss our underlying financial results on Slide 07.

Trade in the comparison of our financial performance attributed to operations for the 09 months and 12 months ended June 30. We've adjusted our GAAP results for the non-cash impairment loss on our MVP investment that was recorded in the second quarter.

Our underlying net income for the 09 months and 12 months ending June 30, adjusting for the impairment was $9.3 million for both periods and represented a decline of $847,000 and $517,000 respectively. The decline for both periods was generally the result of the limited growth construction activity of the MVP in the current year compared to 2021.

In the prior year, we recognized non-cash AFUDC of over $1.4 million for the 09 months and $2.8 million for the 12 months ending June 30, 2021. Let's transition to Slide 08.

This represents our year-to-date capital expenditures and investments made by Roanoke Gas for Utility Property for the nine months of fiscal year 2022 totaled $17,431,000 and was approximately 17% higher than last year.

Capital expenditures are up primarily in customer growth and system expansion which includes approximately $2.5 million spent during the year on our Renewable Natural Gas project which Tommy will describe in greater detail later in the presentation. Paul will now discuss the outlook for the remainder of the fiscal year..

Yes. Thank you, Jason. As we've said on previous calls, our teams continue to just do an outstanding job of the financial results particularly in our Roanoke Gas subsidiary continue to reflect that. We are on Slide 09. And Slide 09 contains a rendering of our Renewable Natural Gas or RNG equipment.

And Tommy is going to give us a nice overview of that exciting project.

Tommy?.

Thanks, Paul. And good morning, everybody. As we've been leading too for some time, we are partnering with the Western Virginia Water Authority on a Renewable Natural Gas project. We did make an announcement about the project in mid-May.

And last week, we found an application with the Virginia State Corporation commissioned for recovery of our cost associated with that project. Under the terms of our agreement with the water authority, we will be buying digester gas from the water authority that they would normally it's largely flair.

What we're investing in is the equipment that is necessary to clean the digester gas and convert it into commercial quality natural gas or RNG. And as noted we filed our application with the commission last week and in that application we are seeking recovery of our cost associated with the project to a rate adjustment cost.

So, it's a separate mechanism outside of base rate to it's similar to our SAVE rider and that it's screwed up each year.

If the application is approved, the project will add about $7.7 million in rate base on which we will be allowed to earn a return based on our cost of capital from our prior rate case plus an additional 100 basis points to our authorized return on equity.

If you recall our equity ratio coming of that rate case was about 59.5%, and the 100 basis points on our 944 authorized ROE will be a 1044 return on that project if approved. The initial rate that we're proposing is $0.04 to an average residential customer that's on a monthly charge.

Our consultant has estimated that the greenhouse gas emissions on a carbon equivalent basis will decline by over 13,700 metric tons, great and are a benefit to the community. The gas, the project will also provide an additional source of gas within the interior of our distribution system where we desperately needed.

And we believe that this is approved, we will be the first utility in the state and possibly the country that have an RNG facility in rate base. No one's been able to point out one anywhere in the country where the utility has it in rate base, we are very proud of that..

the Roanoke Gas Utility and RGC Midstream. After adjusting for the non-cash impairment loss, we expect underlying earnings for fiscal 2022 to be in the range of $0.96 to a $1.02 per share which is consistent with our prior quarter guidance.

We are projecting a loss in the fiscal fourth quarter primarily due to the interest carrying cost of the MVP and the Midstream subsidiary. That concludes our prepared remarks. If you have questions, we'd be happy to entertain those. [Operator Instructions].

Operator:.

Good morning, everyone..

Mike, good morning.

How are you?.

I'm good.

Sir, yourselves?.

We are doing just fine. Thank you, for joining us today..

My pleasure. Two questions.

In the industrial customer, is this the same one that was switching between coal and gas in the past?.

It is. And most notable in 2020 as you may recall, it is the same customer..

Okay. I'm just kind of curious, you said you're expecting to use elevated gas lines through the rest of this year. Has -- I think in the way to ask is next question.

So, is gas now cheaper than coal or are they using both coal and gas?.

Yes. I'll try to maybe answer that from a sort of broader market perspective because we're actually not previewed to there. Coal contracts or even other purchasing gas through their marketer, suddenly prices for both are at a very elevated level. As you know natural gas from the spot market today is higher than it's been since approximately 2010.

We're at 8.0 to 8.50 a decatherm at the Henry Hub, very high. And it's been very volatile this summer as you're probably well aware. Certainly last year natural gas was about $3 at the Henry Hub plus or minus. So, there's been a big change there. Coal, and particularly central liable action basing coal is similarly elevated.

Obviously some of the Powder River basin and some of the coal top prices out West are also higher. There is a tremendous export demand for coal right now. And our understanding is sort of at the national level it's hard to domestically take a coal shipment because most of them are headed to the port.

So, we believe that customer's experiencing some of that. So, you know the price is on a per BTU basis maybe fairly close I think we would say. It's probably more of a supply availability consideration..

Okay.

I take we'll well continue with that through the winter, is it because it look that way or --?.

Yes. We try to stay in communication, regular communication with them Mike because of the volume of gas that they have past their ability to consume. This conduces in the summer time for them to use high volumes of gas. We like that and appreciate that from our system load standpoint. The winter time again back to the Mountain Valley.

Without the Mountain Valley, the winter time's a little bit of a different consideration and we try to balance that out. They're in the construction materials business, so typically the winter is a little bit slower for them if you will which also helps..

Yes..

As Jason said, little more to come on that as we continue to stay in touch with them..

Okay. And then, on MVP.

Just wondering any important dates we should be watching in terms of the permits or anything else that could swing momentum or sentiment on the project?.

Yes, it's a great question. Certainly this FERC extension is as we said in progress and I don’t believe there at this moment firm dates on when the FERC may act in terms of their response to the request for the extension. That's a very important item obviously. We're hopeful that it's in the near term. Certainly that's one to keep an eye on.

The biological assessment and I think the project publicly disclosed this a few days ago, was provided to the Fish and Wildlife Service. That was an incredibly comprehensive and thorough document we believe, as comprehensive and as thorough as any that's ever been prepared in this country.

So, that was important, it's a key piece to the biological opinion permit ultimately being reissued by the Fish and Wildlife Service. Again there's not a definitive timetable on that at this point but things are moving there and making forward progress..

Alright. Well, thank you for the time. That's all I've got for this morning..

Thank you, Mike. Thanks again for being with us. Do we have any other questions, "*6" to unmute your lines -- "*6".

Now as there are no more questions, this concludes our third quarter earnings call. And thank you again, for joining us. And we hope you enjoy the remainder of the summer. And of course please be safe. And we look forward to speaking with you again in December to review our full-year fiscal 2022 call. Have a great day..