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 ("Roanoke Gas"), 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 ("Highland Propane") and d/b/a Highland Energy;
c. Bluefield Gas Company ("Bluefield Gas"), a public service corporation
organized under the laws of the State of West Virginia;
d. RGC Ventures, Inc., a West Virginia Corporation, d/b/a Highland
Heating and Cooling; and
e. RGC Ventures of Virginia, Inc., a Virginia corporation, d/b/a
Application Resources, Inc. and d/b/a GIS Resources.
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, Inc.
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 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 54,708 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 Southwest 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 end-users.
Bluefield Gas Company ("Bluefield Gas"), a West Virginia public service
corporation, is regulated as to rates and service by the Public Service
Commission of the State of West Virginia ("West Virginia Commission"). Bluefield
Gas provides natural gas service to some 4,337 residential, commercial and
industrial customers located in and around Bluefield, West Virginia.
RGC Ventures, Inc., a West Virginia Corporation, operates as Highland
Heating and Cooling. Highland Heating and Cooling is headquartered in Rainelle,
West Virginia and provides limited repair and maintenance service for heating,
ventilation, and air conditioning equipment. RGC Resources, Inc. intends to
merge RGC Ventures, Inc. into Diversified Energy Company for the purposes of
combining the service functions of both companies in order to improve
efficiencies and reduce costs.
RGC Ventures of Virginia, Inc., a Virginia corporation, operates as
Application Resources, Inc., and GIS Resources. Application Resources, Inc.,
provides information technology consulting services specific to the utility
industry. GIS Resources (Geographic Information Systems) has ceased operating as
a provider of mapping services to external customers and has been integrated
into Roanoke Gas to focus on internal maintenance of system maps and other
related functions.
2
2. Columbia Gas Transmission Corporation ("Columbia") is Roanoke Gas'
primary transporter of natural gas. Columbia historically has transported
approximately two-thirds of Roanoke Gas' gas supply and 100% of Bluefield Gas'
gas supply. Prior to Federal Energy Regulatory Commission Order 636, Roanoke Gas
and Bluefield Gas purchased their core market requirements through Demand
Purchases, Firm Transportation Service and Firm Storage Service. Additional
requirements were met through the use of spot and short-term purchases under
contracts with producers and brokers. Under Order 636 the responsibility for
obtaining dependable natural gas supplies shifts from the pipeline companies to
the local distribution companies and to other "shippers" of natural gas. The
Company purchases gas supplies from a variety of producers and marketers. Recent
examples of suppliers or marketers include Cabot Oil and Gas Marketing
Corporation, Duke Energy Trading and Marketing, and Equitable Energy.
Roanoke Gas' other major transporter is East Tennessee Natural Gas Company
("East Tennessee"), a Duke Energy Company. Historically, East Tennessee has
delivered approximately one-third of Roanoke Gas' natural gas supply.
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 four 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. In December 1998, Bluefield Gas Company completed approximately
two miles of 4" steel distribution lines to connect to facilities owned by
Phoenix Energy Sales Company. 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.
3
Highland Propane-Virginia owns and operates eleven 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 35,000-gallon tanks. The third facility is located on the property of
Consolidated Glass in Galax, Virginia and consists of one 30,000-gallon tank and
one 12,000-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
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 7,414,811 DTH of gas during the
calendar year 2002 for total revenues of $54,427,830. Bluefield Gas
distributed at retail 847,542 DTH of gas in the State of West Virginia
during the calendar year 2002 for total revenues of $5,895,760.
(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 270,962 DTH of natural
gas at wholesale to Roanoke Gas at the Virginia-West Virginia line for
$1,288,179.
(d) Roanoke Gas purchased 7,570,639 DTH of natural gas outside the
Commonwealth of Virginia during the calendar year 2002 for
$37,914,624. 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
1,182,753 DTH of natural gas for $5,482,167 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 Phoenix
Energy Sales Company. Roanoke Gas transported 2,885,657 DTH of natural
gas to its end-users for $1,671,628 in total transportation fees.
Bluefield Gas transported 38,625 DTH of natural gas to its end-users
for $32,649 in transportation fees. Highland Energy purchased and
delivered 2,386,347 DTH of natural gas to Roanoke Gas Company and
Bluefield Gas Company for delivery to certain end-users for
$10,685,968.
4
4. (a through 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 surplus and a consolidating balance
sheet of RGC Resources, Inc. and its subsidiaries for the 2002 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, 2003.
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
5
RGC RESOURCES, INC. AND SUBSIDIARIES Exhibit A
CONSOLIDATING BALANCE SHEET
TWELVE MONTHS ENDED DECEMBER 31, 2002
Bluefield Highland
RGC Roanoke Gas Gas Propane Highland
Resources Company Company Company Energy GIS
---------------------------------------------------------------------------------------
Operating Revenues:
Gas utilities $56,223,836 $7,248,178
Propane operations 12,247,472
Energy marketing 10,699,056
Other 411,715 16,431 227,461 41,481
---------------------------------------------------------------------------------------
Total operating revenues 0 56,635,551 7,264,609 12,474,933 10,699,056 41,481
---------------------------------------------------------------------------------------
Cost of Sales:
Gas utilities 38,165,357 5,482,167
Propane operations 6,186,059
Energy marketing 10,425,178
Other 249,529 10,617 107,545
---------------------------------------------------------------------------------------
Total cost of sales 0 38,414,886 5,492,784 6,293,604 10,425,178 0
---------------------------------------------------------------------------------------
Operating Margin 0 18,220,665 1,771,825 6,181,329 273,878 41,481
---------------------------------------------------------------------------------------
Other Operating Expenses:
Operations (257) 7,068,982 781,651 3,119,164 31,056 105,906
Maintenance 1,045,009 86,889 109,342 1,885
General taxes 416 929,609 343,603 272,122 1,160 7,454
Depreciation and amortization 3,349,262 268,286 1,502,749 (3,894)
Impairment loss
Total other operating expenses 159 12,392,862 1,480,429 5,003,377 32,216 111,351
---------------------------------------------------------------------------------------
Operating Income (159) 5,827,803 291,396 1,177,952 241,662 (69,870)
Other Expenses, net (2,130,000) 99,706 2,420 9,751 1,083
Interest Expense 1,634,584 144,382 238,503 4,320
---------------------------------------------------------------------------------------
Income Before Income Taxes 2,129,841 4,093,513 144,594 929,698 241,662 (75,273)
Income Tax Expense 1,527,187 62,332 367,595 91,742 (24,954)
---------------------------------------------------------------------------------------
Net Income $2,129,841 $2,566,326 $82,262 $562,103 $149,920 $(50,319)
=======================================================================================
Highland Application Consolidated
Heating & Cooling Resources Eliminations Total
------------------------------------------------------------------------
Operating Revenues:
Gas utilities $(1,313,214) $62,158,800
Propane operations 12,247,472
Energy marketing 10,699,056
Other 24,777 0 721,865
------------------------------------------------------------------------
Total operating revenues 24,777 0 (1,313,214) 85,827,193
------------------------------------------------------------------------
Cost of Sales:
Gas utilities (1,273,800) 42,373,724
Propane operations 6,186,059
Energy marketing 10,425,178
Other 32,123 (557) 399,257
------------------------------------------------------------------------
Total cost of sales 32,123 (557) (1,273,800) 59,384,218
------------------------------------------------------------------------
Operating Margin (7,346) 557 (39,414) 26,442,975
------------------------------------------------------------------------
Other Operating Expenses:
Operations 77,602 6,444 (39,414) 11,151,134
Maintenance 150 1,243,275
General taxes 9,487 46 1,563,897
Depreciation and amortization 25,928 (5,853) 5,136,478
Impairment loss 72,008 72,008
------------------------------------------------------------------------
Total other operating expenses 185,175 6,490 (45,267) 19,166,792
------------------------------------------------------------------------
Operating Income (192,521) (5,933) 5,853 7,276,183
Other Expenses, net 19 1 2,130,000 112,980
Interest Expense 20,044 (21) 2,041,812
------------------------------------------------------------------------
Income Before Income Taxes (212,584) (5,913) (2,124,147) 5,121,391
Income Tax Expense (84,852) (1,916) 1,937,134
------------------------------------------------------------------------
Net Income $(127,732) $(3,997) $(2,124,147) $3,184,257
========================================================================
RGC RESOURCES, INC. AND SUBSIDIARIES Exhibit A (1)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2002
Roanoke Bluefield Highland
RGC Gas Gas Propane Highland
ASSETS Resources Company Company Company Energy GIS
----------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 187 $ (320,185) $ (130,260) $ 159,123
Accounts Receivable (12) 9,280,269 1,057,417 1,933,960 1,255,563
Intercompany Accounts Receivable 1,248,110 (34,676) 15,932 (518,612) 323,847 (150,023)
Inventories 1,664,687 168,354 281,894
Prepaid gas service 6,394,186 852,095
Prepaid income taxes
Deferred income taxes
Under-recovery of gas costs 319,439 386,509
Unrealized gains on marked-to-market
transactions
Other 31,465 572,836 63,156 353,261 331
-------------------------------------------------------------------------------------------
Total current assets 1,279,750 17,876,556 2,413,203 2,209,626 1,579,741 (150,023)
-------------------------------------------------------------------------------------------
Property, Plant And Equipment:
Utility plant in service 84,476,740 7,326,586
Accumulated depreciation and
amortization (34,233,438) (2,532,976) - - -
-------------------------------------------------------------------------------------------
Utility plant in service, net - 50,243,302 4,793,610 - - -
Construction work in progress 1,831,240 170,706
-------------------------------------------------------------------------------------------
Utility Plant, Net - 52,074,542 4,964,316 - - -
-------------------------------------------------------------------------------------------
Nonutility property 20,687,591
Accumulated depreciation and
amortization (8,231,593)
-------------------------------------------------------------------------------------------
Nonutility property, net - - - 12,455,998 - -
-------------------------------------------------------------------------------------------
Total property, plant and equipment - 52,074,542 4,964,316 12,455,998 - -
-------------------------------------------------------------------------------------------
Investment in Subsidiaries 27,678,079
-------------------------------------------------------------------------------------------
Other Assets:
Intangible assets, net of accumulated
amortization 298,314
Other assets 61,182 637,997 5,956 14,595 - -
-------------------------------------------------------------------------------------------
Total other assets 61,182 637,997 5,956 312,909 - -
-------------------------------------------------------------------------------------------
Total Assets $29,019,011 $70,589,095 $7,383,475 $14,978,533 $1,579,741 $(150,023)
===========================================================================================
Highland Application Consolidated
ASSETS Heating & Cooling Resources Eliminations Total
------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 1,428 $ 574,904 $ 285,197
Accounts Receivable 50,119 1,760,868 15,338,184
Intercompany Accounts Receivable (931,017) 46,439 -
Inventories 1,134 2,116,069
Prepaid gas service 7,246,281
Prepaid income taxes -
Deferred income taxes 1,323,677 1,323,677
Under-recovery of gas costs (589,739) 116,209
Unrealized gains on marked-to-market
transations 1,531,050 1,531,050
Other 427 (1,300) 1,020,176
------------------------------------------------------------------------
Total current assets (877,909) 46,439 4,599,460 28,976,843
------------------------------------------------------------------------
Property, Plant And Equipment
Utility plant in service (1,636,290) 90,167,036
Accumulated depreciation and
amortization - - 1,632,305 (35,134,109)
------------------------------------------------------------------------
Utility plant in service, net - - (3,985) 55,032,927
Construction work in progress 2,001,946
------------------------------------------------------------------------
Utility Plant, Net - - (3,985) 57,034,873
------------------------------------------------------------------------
Nonutility property 142,500 (209,764) 20,620,327
Accumulated depreciation and
amortization (8,078) 214,192 (8,025,479)
------------------------------------------------------------------------
Nonutility property, net 134,422 - 4,428 12,594,848
------------------------------------------------------------------------
Total property, plant and equipment 134,422 - 443 69,629,721
------------------------------------------------------------------------
Investment in Subsidiaries (27,678,079) -
------------------------------------------------------------------------
Other Assets:
Intangible assets, net of accumulated
amortization 298,314
Other assets - - - 719,730
------------------------------------------------------------------------
Total other assets - - - 1,018,044
------------------------------------------------------------------------
Total Assets $(743,487) $46,439 $(23,078,176) $99,624,608
========================================================================
RGC RESOURCES, INC. AND SUBSIDIARIES Exhibit A (1)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2002
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 $1,030,673 $1,175,000
Borrowings under lines of credit 204,000 9,712,000 3,134,000 2,545,000
Dividends payable 562,437 -
Accounts payable 121,843 4,606,073 463,722 686,642 919,821
Income taxes payable (427,253) 909,987 (171,530) (38,442) 37,823 (6,430)
Customer deposits 523,240 49,810 544
Accrued expenses 368,086 2,588,801 290,922 578,723
Refunds from suppliers - due customers 42,015 760
Overrecovery of gas costs -
Unrealized losses on marked to
market transactions
------------------------------------------------------------------------------------------
Total current liabilities 829,113 19,412,789 4,942,684 3,772,467 957,644 (6,430)
Long-term Debt, Excluding Current Maturities 24,044,482 4,200,000
Deferred Credits:
Deferred income taxes (84,761) 2,236,788 323,869 1,157,265 (4,189)
Deferred investment tax credits 282,646 9,588
------------------------------------------------------------------------------------------
Total deferred credits (84,761) 2,519,434 333,457 1,157,265 - (4,189)
Stockholders' Equity:
Common Stock 9,861,600 8,603,965 49,704 196,421
Preferred Stock
Capital in excess of par value 11,529,733 7,178,754 220,564 1,213,662
Retained earnings 6,883,326 8,829,671 1,837,066 4,438,718 622,097 (139,404)
Accumulated comprehensive income
------------------------------------------------------------------------------------------
Total stockholders' equity 28,274,659 24,612,390 2,107,334 5,848,801 622,097 (139,404)
Total Liabilities and Stockholders'
Equity $ 29,019,011 $ 70,589,095 $ 7,383,475 $ 14,978,533 $ 1,579,741 $(150,023)
=========================================================================================
Highland Application Consolidated
LIABILITIES AND STOCKHOLDERS' EQUITY Heating & Cooling Resources Eliminations Total
------------------------------------------------------------------------------------
Current Liabilities:
Current maturities of long-term debt $ 2,205,673
Borrowings under lines of credit 15,595,000
Dividends payable 562,437
Accounts payable (2,551) - 2,335,772 9,131,322
Income taxes payable (64,053) (2,776) 237,326
Customer deposits 750 574,344
Accrued expenses 10,822 3,837,354
Refunds from suppliers - due customers 42,775
Overrecovery of gas costs 761,761 761,761
Unrealized losses on marked to market
transactions 213,059 213,059
-------------------------------------------------------------------------------------
Total current liabilities (55,032) (2,776) 3,310,592 33,161,051
Long-term Debt, Excluding Current Maturities 28,244,482
Deferred Credits:
Deferred income taxes (117,823) 1,312,735 4,823,884
Deferred investment tax credits 292,234
-------------------------------------------------------------------------------------
Total deferred credits (117,823) - 1,312,735 5,116,118
Stockholders' Equity:
Common Stock (8,850,090) 9,861,600
Preferred Stock 0
Capital in excess of par value 903,225 (9,516,205) 11,529,733
Retained earnings (1,473,857) 49,215 (9,312,641) 11,734,191
Accumulated comprehensive income (22,567) (22,567)
-------------------------------------------------------------------------------------
Total stockholders' equity (570,632) 49,215 (27,701,503) 33,102,957
Total Liabilities and Stockholders' Equity $(743,487) $ 46,439 $(23,078,176) $ 99,624,608
=====================================================================================
EXHIBIT B
Not Applicable.