Stepping
forward
Spire Inc.
2020 Form 10-K
2020 highlights
Fiscal years ended September 30
2020
2019
2018
Earnings and dividends (millions, except per share amounts)
Net income
Diluted earnings per share of common stock
Net economic earnings*
Net economic earnings per share of common stock*
Dividends declared per share of common stock
Operating revenues (millions)
Gas Utility
Gas Marketing and other
Total operating revenues
Utility sales and customers
Therms sold and transported (millions)
Customers (thousands)
Shareholders
$
$
$
$
$
88.6
1.44
207.8
3.76
2.49
$ 1,751.8
103.6
$ 1,855.4
$ 184.6
$
$
$
$
3.52
195.1
3.73
2.37
$
$
$
$
$
214.2
4.33
183.7
3.72
2.25
$ 1,859.2
$ 1,888.0
93.2
77.0
$ 1,952.4
$ 1,965.0
3,297.8
1,713.2
3,386.0
1,698.0
3,330.4
1,692.8
Common shareholders of record, end of period
2,897
2,965
3,096
Employees
Total employees, end of period
*For further discussion of these non-GAAP financial measures, see pages 32-33 of our Form 10-K.
3,583
3,536
3,366
Profile
At Spire, we believe energy exists to help people’s lives. It’s a
and Spire Storage, a Wyoming-based provider of natural gas
simple idea, but one that’s at the heart of our company. Every
storage services to customers in the western U.S.
We are transforming our business and pursuing growth through
growing organically, investing in infrastructure, and advancing
through innovation. Learn more at SpireEnergy.com.
day we serve 1.7 million homes and businesses, making us
the fifth largest publicly traded natural gas company in the
country. We help people fuel their daily lives through our gas
utilities serving Alabama, Mississippi and Missouri.
Our gas-related businesses include Spire Marketing, a
Houston-based provider of natural gas marketing and related
services to a diverse customer base primarily in the central
and southern U.S.; Spire STL Pipeline, a 65-mile pipeline that
delivers economical shale gas from the Marcellus and Utica
producing regions to our customers in eastern Missouri,
while enhancing the resiliency and diversity of our supply;
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission
File Number
1-16681
1-1822
2-38960
Name of Registrant, Address of Principal
Executive Offices and Telephone Number
State of
Incorporation
I.R.S. Employer
Identification Number
Spire Inc.
700 Market Street
St. Louis, MO 63101
314-342-0500
Spire Missouri Inc.
700 Market Street
St. Louis, MO 63101
314-342-0500
Spire Alabama Inc.
605 Richard Arrington Blvd N
Birmingham, AL 35203
205-326-8100
Missouri
74-2976504
Missouri
43-0368139
Alabama
63-0022000
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (only
applicable to Spire Inc.):
Title of each class
Trading Symbol(s) Name of each exchange on which registered
Common Stock $1.00 par value
Depositary Shares, each representing a 1/1,000th interest in
a share of 5.90% Series A Cumulative Redeemable
Perpetual Preferred Stock, par value $25.00 per share
SR
SR.PRA
New York Stock Exchange LLC
New York Stock Exchange LLC
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate by check mark whether each registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of
1933, as amended.
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Yes [ X ]
]
Yes [
]
Yes [
]
No [
No [ X ]
No [ X ]
Indicate by check mark if each registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act.
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
No [ X ]
No [ X ]
No [ X ]
Yes [
Yes [
Yes [
]
]
]
Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [ X ]
Spire Inc.
Yes [ X ]
Spire Missouri Inc.
Yes [ X ]
Spire Alabama Inc.
No [
No [
No [
]
]
]
Indicate by check mark whether each registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files).
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Yes [ X ]
Yes [ X ]
Yes [ X ]
No [
No [
No [
]
]
]
Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
Large
accelerated filer
X
Accelerated
filer
Non-
accelerated filer
Smaller reporting
company
Emerging growth
company
X
X
If an emerging growth company, indicate by check mark if each registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
[
[
[
]
]
]
Indicate by check mark whether each registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report.
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
[ X ]
]
[
]
[
Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Spire Inc.
Spire Missouri Inc.
Spire Alabama Inc.
No [ X ]
No [ X ]
No [ X ]
Yes [
Yes [
Yes [
]
]
]
The aggregate market value of the common equity held by non-affiliates of Spire Inc. amounted to $3,703,018,742 as of
March 31, 2020. All of Spire Missouri Inc.’s and Spire Alabama Inc.’s equity securities are owned by Spire Inc., their parent
company and a reporting company under the Exchange Act.
The number of shares outstanding of each registrant’s common stock as of November 13, 2020 was as follows:
Spire Inc.
Common Stock, par value $1.00 per share
Spire Missouri Inc.
Common Stock, par value $1.00 per share (all owned by Spire Inc.)
Spire Alabama Inc.
Common Stock, par value $0.01 per share (all owned by Spire Inc.)
51,618,125
24,577
1,972,052
This combined Form 10-K represents separate filings by Spire Inc., Spire Missouri Inc., and Spire Alabama Inc. Information
contained herein relating to an individual registrant is filed by that registrant on its own behalf. Each registrant makes no
representation as to information relating to the other registrants, except that information relating to Spire Missouri Inc. and
Spire Alabama Inc. is also attributed to Spire Inc.
Spire Missouri Inc. and Spire Alabama Inc. meet the conditions set forth in General Instructions I(1)(a) and
(b) of Form 10-K and are therefore filing this Form 10-K with the reduced disclosure format specified in
General Instructions I(2) to Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of proxy statement for Spire Inc. to be filed on or about December 16, 2020 — Part III.
Certain exhibits as indicated in Part IV.
TABLE OF CONTENTS
GLOSSARY OF KEY TERMS AND ABBREVIATIONS
PART I
FORWARD-LOOKING STATEMENTS
Item 1
Business
Item 1A
Risk Factors
Item 1B
Unresolved Staff Comments
Item 2
Item 3
Item 4
Properties
Legal Proceedings
Mine Safety Disclosures
Information about our Executive Officers (Item 401(b) of Regulation S-K)
PART II
Item 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
Item 6
Item 7
of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
Item 8
Item 9
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A
Controls and Procedures
Item 9B
Other Information
PART III
Item 10
Directors, Executive Officers and Corporate Governance
Item 11
Executive Compensation
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13
Certain Relationships and Related Transactions, and Director Independence
Item 14
Principal Accounting Fees and Services
PART IV
Item 15
Exhibits, Financial Statement Schedules
Item 16
Form 10-K Summary
SIGNATURES
1
Page
2
3
3
4
10
23
23
23
23
24
25
25
27
28
54
55
138
138
139
139
139
139
139
139
139
140
140
145
146
GLOSSARY OF KEY TERMS AND ABBREVIATIONS
AOCI
Accumulated other comprehensive income or
loss
NYMEX
New York Mercantile Exchange, Inc.
APSC
Alabama Public Service Commission
ASC
ASU
CCM
Accounting Standards Codification
Accounting Standards Update
Cost Control Measure
Heating
degree days
The average of a day’s high and low
temperature below 65, subtracted from 65,
multiplied by the number of days impacted
EPS
ESR
Earnings per share
Enhanced Stability Reserve
NYSE
O&M
OCI
PGA
RSE
SEC
New York Stock Exchange
Operation and maintenance expense
Other comprehensive income or loss
Purchased Gas Adjustment
Rate Stabilization and Equalization
U.S. Securities and Exchange Commission
Spire
Alabama
Spire Alabama Inc.
FASB
Financial Accounting Standards Board
Spire
EnergySouth
Spire EnergySouth Inc., parent of Spire Gulf
and Spire Mississippi
FERC
Federal Energy Regulatory Commission
Spire Gulf
Spire Gulf Inc.
GAAP
Accounting principles generally accepted in
the United States of America
Spire
Marketing
Spire Marketing Inc.
Gas
Marketing
Segment including Spire Marketing, which
provides natural gas marketing services
Spire
Mississippi
Spire Mississippi Inc.
Gas Utility
Segment including the operations of the
Utilities
Gas Supply Adjustment
Spire
Missouri
Spire
Storage
Spire Missouri Inc.
The physical natural gas storage operations of
Spire Storage West LLC
GSA
ICE
ISRS
Intercontinental Exchange
TCJA
The Tax Cuts and Jobs Act of 2017
Infrastructure System Replacement Surcharge U.S.
United States
MMBtu
Million British thermal units
Utilities
Spire Missouri, Spire Alabama and the
subsidiaries of Spire EnergySouth
MoPSC
Missouri Public Service Commission
MSPSC
Mississippi Public Service Commission
2
FORWARD-LOOKING STATEMENTS
PART I
Certain matters discussed in this report, excluding historical information, include forward-looking statements. Certain
words, such as “may,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “seek,” “target,” and similar words and
expressions identify forward-looking statements that involve uncertainties and risks. Future developments may not be in
accordance with our current expectations or beliefs and the effect of future developments may not be those anticipated.
Among the factors that may cause results or outcomes to differ materially from those contemplated in any forward-
looking statement are:
• Weather conditions and catastrophic events, particularly severe weather in U.S. natural gas producing areas;
•
Impacts related to the COVID-19 pandemic and uncertainties as to their continuing duration and severity;
• Volatility in gas prices, particularly sudden and sustained changes in natural gas prices, including the related impact on
margin deposits associated with the use of natural gas derivative instruments, and the impact on our competitive
position in relation to suppliers of alternative heating sources, such as electricity;
• Changes in gas supply and pipeline availability, including decisions by natural gas producers to reduce production or
shut in producing natural gas wells, expiration of existing supply and transportation arrangements that are not
replaced with contracts with similar terms and pricing, as well as other changes that impact supply for and access to
the markets in which our subsidiaries transact business;
• Acquisitions may not achieve their intended results;
• Legislative, regulatory and judicial mandates and decisions, some of which may be retroactive, including those
affecting:
rate design structure and implementation,
• allowed rates of return,
incentive regulation,
•
•
industry structure,
• purchased gas adjustment provisions,
•
• capital structures established for rate-setting purposes,
•
• non-regulated and affiliate transactions,
•
• environmental or safety matters, including the potential impact of legislative and regulatory actions related to
franchise renewals,
regulatory assets,
climate change and pipeline safety,
taxes,
•
• pension and other postretirement benefit liabilities and funding obligations, or
• accounting standards;
• The results of litigation;
• The availability of and access to, in general, funds to meet our debt obligations prior to or when they become due and
to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) operating cash flow, or
(iii) access to the capital markets;
• Retention of, ability to attract, ability to collect from, and conservation efforts of, customers;
• Our ability to comply with all covenants in our indentures and credit facilities any violations of which, if not cured in a
timely manner, could trigger a default of our obligation;
• Energy commodity market conditions;
• Discovery of material weakness in internal controls;
• The disruption, failure or malfunction of our operational and information technology systems, including due to
cyberattacks; and
• Employee workforce issues, including but not limited to labor disputes, the inability to attract and retain key talent,
and future wage and employee benefit costs, including costs resulting from changes in discount rates and returns on
benefit plan assets.
Readers are urged to consider the risks, uncertainties, and other factors that could affect our business as described in this
report. All forward-looking statements made in this report rely upon the safe harbor protections provided under the
Private Securities Litigation Reform Act of 1995. We do not, by including this statement, assume any obligation to review
or revise any particular forward-looking statement in light of future events.
3
Item 1. Business
OVERVIEW
Spire Inc. (“Spire” or the “Company”) was formed in 2000 and is the holding company for Spire Missouri Inc.
(“Spire Missouri”), Spire Alabama Inc. (“Spire Alabama”), other gas utilities, and gas-related businesses. Spire
Missouri was formed in 1857 and Spire Alabama was formed in 1948 by the merger of two gas companies. Spire is
committed to transforming its business and pursuing growth through growing organically, investing in
infrastructure, and advancing through innovation. The Company has two key business segments: Gas Utility and
Gas Marketing.
The Gas Utility segment includes the regulated operations of Spire Missouri, Spire Alabama, Spire Gulf Inc. (“Spire
Gulf”) and Spire Mississippi Inc. (“Spire Mississippi”) (collectively, the “Utilities”). The business of the Utilities is
subject to seasonal fluctuations with the peak period occurring in the winter heating season, typically November
through April of each fiscal year. Spire Missouri is a public utility engaged in the purchase, retail distribution and
sale of natural gas, with primary offices located in St. Louis, Missouri. Spire Missouri is the largest natural gas
distribution utility system in Missouri, serving approximately 1.2 million residential, commercial and industrial
customers in St. Louis, Kansas City, and other areas in Missouri. Spire Alabama is a public utility engaged in the
purchase, retail distribution and sale of natural gas principally in central and northern Alabama, serving more than
0.4 million residential, commercial and industrial customers with primary offices located in Birmingham, Alabama.
Spire Gulf and Spire Mississippi are utilities engaged in the purchase, retail distribution and sale of natural gas to
0.1 million customers in the Mobile, Alabama area and south-central Mississippi.
The Gas Marketing segment includes Spire Marketing Inc. (“Spire Marketing”), a wholly owned subsidiary
providing natural gas marketing services.
As of September 30, 2020, Spire had 3,583 employees, including 2,424 for Spire Missouri and 947 for Spire
Alabama. We believe that:
1.
2.
3.
the safety and well-being of our employees is one of our most important responsibilities,
the development, education and advancement of employees is key to our sustainability, and
embracing an inclusive workforce full of diverse backgrounds and perspectives drives innovation.
We have implemented processes, procedures and programs that have helped us reduce our employee injury rate for
the sixth fiscal year in a row, marking a 17% year-over-year improvement and an overall improvement of 57% since
fiscal year 2015. We remain very focused on reducing at-fault motor vehicle accidents, thereby improving safety for
our employees and our communities, and this past year, the American Gas Association recognized us for our
commitment to safety with the Accident Prevention Certificate. Due to our swift and strategic response to COVID-
19, we did not furlough or lay off any employees in fiscal year 2020. We offer incentives for weight management and
gym membership, as well as employee assistance programs to provide counseling services and emotional support,
and in 2020, we created a formalized comprehensive well-being program that focuses on the physical, emotional,
social and financial health of every employee.
All employees have access to developmental assessments, customized training, specialized degree programs, and
partnerships with best-in-class organizations related to industry courses, leadership and management workshops
and computer application development seminars. In addition, all employees are eligible for up to $6,000 per year in
tuition assistance and have access to the Spire Learning Center, our robust internal learning management system.
In their first year, each construction and maintenance employee receives 80 hours of safety training, while each
service and installation employee receives 200 hours. Field operations employees average 24 hours of technical and
procedural training annually.
We regularly review and adjust our affirmative action plans based on placement and utilization rates, and we strive
to create an even more diverse and inclusive work environment by committing to and achieving the goals of the
CEO Action for Diversity & Inclusion Pledge. In addition, during fiscal year 2020, we adopted a Human Rights
Policy, which is our first step in demonstrating that Spire understands its universal responsibility to respect human
rights. This policy provides the basis for publicly affirming our values and embedding the responsibility into Spire’s
operations and the way we do business.
4
Spire uses its website, SpireEnergy.com, as a routine channel for distribution of important information including
news releases, analyst presentations and financial information. The information Spire, Spire Missouri and Spire
Alabama file or furnish to the United States (U.S.) Securities and Exchange Commission (SEC), including annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and their amendments, and
proxy statements are available free of charge under “Filings & reports” in the Investors section of Spire’s website,
SpireEnergy.com, as soon as reasonably practical after the information is filed with or furnished to the SEC.
Information contained on Spire’s website is not incorporated by reference in this report. The SEC also maintains a
website that contains Spire’s SEC filings (sec.gov).
GAS UTILITY
Natural Gas Supply
The Utilities’ fundamental gas supply strategy is to meet the two-fold objective of 1) ensuring a dependable gas
supply is available for delivery when needed and 2) insofar as is compatible with that dependability, purchasing gas
that is economically priced. In structuring their natural gas supply portfolio, the Utilities focus on natural gas assets
that are strategically positioned to meet the Utilities’ primary objectives.
Spire Missouri focuses its gas supply portfolio around a number of large natural gas suppliers with equity ownership
or control of assets strategically situated to complement its regionally diverse firm transportation arrangements.
Spire Missouri utilizes Midcontinent, Gulf Coast, Northeast, and Rocky Mountain gas sources to provide a level of
supply diversity that facilitates the optimization of pricing differentials as well as protecting against the potential of
regional supply disruptions. Further, Spire STL Pipeline, a wholly owned subsidiary of Spire, is capable of delivering
up to 4 million therms per day of natural gas into eastern Missouri, of which Spire Missouri is the foundation
shipper with a contractual commitment of 3.5 million therms per day.
In fiscal year 2020, Spire Missouri purchased natural gas from 27 different suppliers to meet its total service area
current gas sales and storage injection requirements. Spire Missouri entered into firm agreements with suppliers
including major producers and marketers providing flexibility to meet the temperature-sensitive needs of its
customers. Natural gas purchased by Spire Missouri for delivery to its service areas included 50.5 billion cubic feet
(Bcf) on the Southern Star Central Gas Pipeline, Inc. (Southern Star), 31.3 Bcf through the Enable Mississippi River
Transmission LLC (MRT) system, and a combined 39.3 Bcf on the Tallgrass Interstate Gas Transmission, LLC
(TIGT), Panhandle Eastern Pipe Line Company, LP (PEPL), Rockies Express Pipeline, LLC (REX), and Spire STL
Pipeline systems. Spire Missouri also holds firm transportation arrangements on several other interstate pipeline
systems that provide access to gas supplies upstream. Some of Spire Missouri’s commercial and industrial
customers purchased their own gas with Spire Missouri transporting 45.9 Bcf to them through its distribution
system.
The fiscal year 2020 peak day send out of natural gas to Spire Missouri customers, including transportation
customers, occurred on February 13, 2020. The average temperature was 11 degrees Fahrenheit in St. Louis and 13
degrees Fahrenheit in Kansas City. On that day, Spire Missouri’s customers consumed 1.56 Bcf of natural gas. For
eastern Missouri, this peak day demand was met with natural gas transported to St. Louis through the MRT, MoGas
Pipeline LLC, Spire STL Pipeline, and Southern Star transportation systems, and from Spire Missouri’s on-system
storage. For western Missouri, this peak day demand was met with natural gas transported to Kansas City through
the Southern Star, PEPL, TIGT, and REX transportation systems.
Spire Alabama’s distribution system is connected to two major interstate natural gas pipeline systems, Southern
Natural Gas Company, L.L.C. (Southern Natural Gas) and Transcontinental Gas Pipe Line Company, LLC
(Transco). It is also connected to two intrastate natural gas pipeline systems.
Spire Alabama purchases natural gas from various natural gas producers and marketers. Certain volumes are
purchased under firm contractual commitments with other volumes purchased on a spot market basis. The
purchased volumes are delivered to Spire Alabama’s system using a variety of firm transportation, interruptible
transportation and storage capacity arrangements designed to meet the system’s varying levels of demand.
5
In fiscal 2020, Spire Alabama purchased natural gas from 23 different suppliers to meet current gas sales, storage
injection, and liquefied natural gas (LNG) liquefaction requirements, of which five are under long-term supply
agreements. Approximately 64.0 Bcf was purchased for delivery by Southern Natural Gas, 5.2 Bcf by Transco, and
9.4 Bcf through intrastate pipelines to the Spire Alabama delivery points for its residential, commercial, and
industrial customers.
The fiscal 2020 peak day send out for Spire Alabama was 0.5 Bcf on November 12, 2019, when the average
temperature was 34 degrees Fahrenheit in Birmingham, of which 100% was met with supplies transported through
Southern Natural Gas, Transco, intrastate facilities, and one of the four LNG peak shaving facilities.
Spire Gulf’s distribution system is directly connected to interstate pipelines, natural gas processing plants and gas
storage facilities. Spire Gulf buys from a variety of producers and marketers, with BP Energy Company being the
primary supplier.
Natural Gas Storage
Spire Missouri believes that it has ample storage capacity to meet the demands of its distribution system,
particularly to augment its supply during peak demand periods. Spire Missouri has a contractual right to store 21.5
Bcf of gas in MRT’s storage facility located in Unionville, Louisiana, 16.3 Bcf of gas storage in Southern Star’s system
storage facilities located in Kansas and Oklahoma, and 1.4 Bcf of firm storage on PEPL’s system storage. MRT’s
tariffs allow injections into storage from May 1 through November 1 and require the withdrawal from storage of all
but 4.3 Bcf from November 1 through May 1. Southern Star tariffs allow both injections and withdrawals into
storage year-round with ratchets that restrict the associated flows dependent upon the underlying inventory level
per the contracts.
In addition, Spire Missouri supplements pipeline gas with natural gas withdrawn from its own underground storage
field located in St. Louis and St. Charles Counties in Missouri. The field is designed to provide approximately 0.3 Bcf
of natural gas withdrawals on a peak day and maximum annual net withdrawals of approximately 4.0 Bcf of natural
gas based on the inventory level that Spire Missouri plans to maintain.
Spire Alabama has a contractual right to store 12.5 Bcf of gas with Southern Natural Gas, 0.2 Bcf of gas with Transco
and 0.2 Bcf of gas with Tennessee Gas Pipeline. In addition, Spire Alabama has 1.8 Bcf of LNG storage that can
provide the system with up to an additional 0.2 Bcf of natural gas daily to meet peak day demand.
Spire Gulf obtains adequate storage capacity through Gulf South Pipeline Company, LP, and Enstor Gas, LLC’s Bay
Gas Storage.
Union Agreements
The Company believes labor relations with its employees are good. Should that condition change, the Company
could experience labor disputes, work stoppages or other disruptions that could negatively impact the Company’s
system operations, customer service, results of operations and cash flows.
6
The following table presents the Company’s various labor agreements as of September 30, 2020:
Union
Spire Missouri
United Steel, Paper and Forestry, Rubber Manufacturing,
Allied-Industrial and Service Workers International Union
(USW)
USW
USW
USW
USW
USW
Gas Workers Metal Trades locals of the United Association
of Journeyman and Apprentices of the Plumbing and
Pipefitting Industry of the United States and Canada
Gas Workers Metal Trades locals of the United Association
of Journeyman and Apprentices of the Plumbing and
Pipefitting Industry of the United States and Canada
Total Spire Missouri
Spire Alabama
USW
United Association of Gas Fitters
Total Spire Alabama
Spire Gulf
USW
Total Spire
Local
Employees
Covered
Contract Start
Date
Contract End
Date
884
11-6
11-194
12561
14228
11-267
781-
Kansas
City
781-
Monett
12030
548
67
928
82
140
44
29
210
57
1,557
234
125
359
August 1, 2018
August 1, 2018
August 1, 2018
October 9, 2019
October 9, 2019
October 9, 2019
September 21,
2019
September 21,
2019
July 31, 2021
July 31, 2021
July 31, 2021
July 31, 2022
July 31, 2022
July 31, 2022
July 31, 2022
July 31, 2022
May 1, 2020
May 1, 2019
April 30, 2023
April 30, 2022
541
63
August 1, 2020
July 31, 2023
1,979
Operating Revenues and Customer Information
The following tables present information on Spire’s revenues and therms sold and transported (before intersegment
eliminations), and annual average numbers of customers for the three years ended September 30, 2020, 2019 and
2018.
Gas Utility Operating Revenues
(% of Total)
Residential
Commercial & Industrial
Transportation
Other
Total
Gas Utility Therms Sold and Transported
(In millions)
Residential
Commercial & Industrial
Transportation
Interruptible
Total System
Off-System
Total
2020
2019
2018
68%
22%
6%
4%
100%
68%
23%
6%
3%
100%
66%
24%
6%
4%
100%
2020
2019
2018
1,054.2
473.4
1,670.5
14.8
3,212.9
84.9
3,297.8
1,132.9
525.2
1,673.2
16.2
3,347.5
38.5
3,386.0
1,095.8
536.4
1,615.1
14.5
3,261.8
68.6
3,330.4
7
Gas Utility Customers
Residential
Commercial & Industrial
Transportation
Interruptible
Total
2020
1,599,693
112,566
847
67
1,713,173
2019
1,584,570
112,561
842
69
1,698,042
2018
1,567,939
123,982
835
70
1,692,826
Total annual average number of customers for Spire Missouri and Spire Alabama for fiscal 2020 was 1,186,523 and
424,804, respectively.
Regulatory Matters
For details on regulatory matters, see Note 15, Regulatory Matters, of the Notes to Financial Statements in Item 8.
Other Pertinent Matters
Spire Missouri is the only distributor of natural gas within its franchised service areas, while Spire Alabama is the
main distributor of natural gas in its service areas. Spire Missouri and Spire Alabama have franchises in nearly all
the communities where they provide service with terms varying from five years to an indefinite duration. A
franchise is essentially a municipal permit to install pipes and construct other facilities in the community. All of the
franchises are free from unduly burdensome restrictions and are adequate for the conduct of Spire Missouri’s and
Spire Alabama’s current public utility businesses in their respective states. In recent years, although certain
franchise agreements have expired, the Utilities have continued to provide service in those communities without
formal franchises.
The principal competition for the Utilities comes from the local electric companies. Other competitors in the service
areas include suppliers of fuel oil, coal, and propane, as well as natural gas pipelines that can directly connect to
large volume customers. Coal has been price competitive as a fuel source for very large boiler plant loads, but
environmental requirements have shifted the economic advantage to natural gas. Oil and propane can be used to
fuel boiler loads and certain direct-fired process applications, but these fuels require on-site storage, thus limiting
their competitiveness. Competition also comes from district steam systems in the downtown areas of both St. Louis
and Kansas City and from municipally or publicly owned natural gas distributors located adjacent to the Alabama
service territories.
Residential, commercial, and industrial customers represent approximately 92% and 83% of fiscal 2020 operating
revenues for Spire Missouri and Spire Alabama, respectively. Given the current level of natural gas supply and
market conditions, the Utilities believe that the relative comparison of natural gas equipment and operating costs
with those of competitive fuels will not change significantly in the foreseeable future, and that these markets will
continue to be supplied by natural gas. In new multi-family and commercial rental markets, the Utilities’
competitive exposures are presently limited to space and water heating applications.
Spire Missouri and Spire Alabama offer gas transportation service to its large commercial and industrial customers.
Transportation customers represent approximately 3% and 16% of fiscal 2020 operating revenues for Spire
Missouri and Spire Alabama, respectively. The Spire Missouri tariff approved for that type of service produces a
margin similar to that which Spire Missouri would have received under their regular sales rates. Similarly, Spire
Alabama’s tariff is based on Spire Alabama’s sales profit margin so that operating margins are unaffected.
The Utilities are subject to various environmental laws and regulations that, to date, have not materially affected the
Utilities’ or the Company’s financial position and results of operations. For a detailed discussion of environmental
matters, see Note 16, Commitment and Contingencies, of the Notes to Financial Statements in Item 8.
8
GAS MARKETING
Spire Marketing is engaged in the marketing of natural gas and providing energy services to both on-system utility
transportation customers and customers outside of the Utilities’ service areas. The majority of Spire Marketing’s
business is derived from the procurement and physical delivery of natural gas to a diverse customer base, primarily
in the central and southern U.S. Through its retail operations, Spire Marketing offers natural gas marketing services
to large commercial and industrial customers, while its wholesale business consists of producers, pipelines, power
generators, municipalities, storage operators, and utility companies. Wholesale activities currently represent a
majority of the total Gas Marketing business.
In the course of its business, Spire Marketing enters into agreements to purchase natural gas at a future date in
order to lock up supply to cover future sales commitments to its customers. To secure access to the markets it
serves, Spire Marketing contracts for transportation capacity on various pipelines from pipeline companies directly
and from other parties through the secondary capacity market. Throughout fiscal 2020, Spire Marketing held
approximately 1.1 Bcf per day of firm transportation capacity. In addition, to ensure reliability of service and to
provide operational flexibility, Spire Marketing enters into firm storage contracts and interruptible park and loan
transactions with various companies, where it is able to buy and retain gas to be delivered at a future date, at which
time it sells the natural gas to third parties. As of September 30, 2020, Spire Marketing has contracted for
approximately 26 Bcf of such storage and park and loan capacity for the 2020-2021 winter season.
The Gas Marketing strategy is to leverage its market expertise and risk management skills to manage and optimize
the value of its portfolio of commodity, transportation, park and loan, and storage contracts while controlling costs
and acting on new marketplace opportunities. Overall, Gas Marketing saw volume growth in fiscal 2020 primarily
as a result of increased business with producers and integrated utilities, retail and wholesale customer growth, and
increased optimization opportunities resulting from its overall portfolio of assets. For fiscal 2020, Spire Marketing
volumes averaged 2.13 Bcf/day, an improvement from 1.9 Bcf/day in fiscal 2019.
OTHER
Other components of the Company’s consolidated information include:
• unallocated corporate items, including certain debt and associated interest costs;
• Spire STL Pipeline LLC (“Spire STL Pipeline”) and Spire Storage West LLC (“Spire Storage”), described
below; and
• Spire’s subsidiaries engaged in the operation of a propane pipeline, the compression of natural gas, and risk
management, among other activities.
Spire STL Pipeline is a wholly owned subsidiary of Spire which owns and operates a 65-mile pipeline connecting the
Rockies Express Pipeline in Scott County, Illinois, to delivery points in St. Louis County, Missouri, including Spire
Missouri’s storage facility. The pipeline is under the jurisdiction of the Federal Energy Regulatory Commission
(FERC) and is capable of delivering up to 4 million therms per day of natural gas into eastern Missouri. Spire
Missouri is the foundation shipper with a contractual commitment of 3.5 million therms per day. The pipeline was
primarily constructed during fiscal 2019 and was placed into service in November 2019.
Spire Storage is engaged in the storage of natural gas in the western region of the United States. The facility consists
of two storage fields operating under one FERC market-based rate tariff. On July 1, 2020, the Board of Directors of
Spire, based upon the recommendation of senior management, revised the development plan for Spire Storage. As a
result of the revised development plan, an asset impairment charge was recorded in the third quarter of fiscal 2020.
The revision to the development plan for Spire Storage was driven by the realization that a longer time horizon will
be required for optimization and positioning of the storage facility to serve energy markets in the western United
States that continue to evolve. Spire remains committed to serving its customers through the ongoing development
and operation of the facility. Such development is expected to include approximately $16 million in capital
investment over the next year or so to enhance the capabilities of the facility. Consistent with the revised
development plans, a FERC application to expand the working capacity of the facility, pursuant to Section 7(c) of
the Natural Gas Act, was filed on October 9, 2020. The application process and receipt of an authorizing certificate
does not commit Spire to incremental capital investment in Spire Storage.
9
Item 1A. Risk Factors
Spire’s and the Utilities’ business and financial results are subject to a number of risks and uncertainties, including
those set forth below. The risks described below are those the Company and the Utilities consider to be material.
When considering any investment in Spire or the Utilities’ securities, investors should carefully consider the
following information, as well as information contained in the caption “Forward-Looking Statements,” Item 7A, and
other documents Spire, Spire Missouri, and Spire Alabama file with the SEC. This list is not exhaustive, and Spire’s
and the Utilities’ respective management places no priority or likelihood based on the risk descriptions, order of
presentation or grouping by subsidiary. All references to dollar amounts are in millions.
RISKS AND UNCERTAINTIES THAT RELATE TO THE BUSINESS AND FINANCIAL RESULTS OF
SPIRE AND ITS SUBSIDIARIES
We face risks related to widespread public health concerns, such as the recent coronavirus
outbreak.
The actual or perceived effects of a disease outbreak, epidemic, pandemic or similar widespread public health
concern, such as COVID-19, will likely negatively affect our operations, liquidity, financial condition, cash flows and
results of operations. The outbreak of the novel coronavirus (COVID-19) has adversely impacted economic activity
and conditions worldwide. In particular, efforts to control the spread of COVID-19 have led to shutdowns of
customer operations, as well as disrupted financial markets and supply chains. The Company has implemented
what we believe to be appropriate procedures and protocols to ensure the safety of our customers, suppliers and
employees. These actions include activating incident management procedures, working-from-home for our office-
based employees, limiting direct contact with our customers, and, from March through June, suspending
disconnections and late payment charges for our utility customers. During fiscal 2020, we experienced impacts on
our results of operations as a result of COVID-19 including, but not limited to:
reduced collection of late payment charges, lower revenue on commercial and industrial volumes;
increased bad debt expenses;
increases in certain operational expenses such as enhanced cleaning and personal protection equipment;
•
•
•
• decreases in expense for travel and medical claims; and
• higher residential customer charges due to the moratorium on disconnections.
We are continuing to assess the developments involving our workforce, customers and suppliers, as well as the
ongoing response of federal and state authorities, our regulators and other business and community leaders. An
extended slowdown of the United States' economy or demand for commodities and/or material changes in
government policy in response to COVID-19 could result in lower demand for natural gas, particularly among our
commercial and industrial customers, as well as negatively impact the ability of our customers, contractors,
suppliers and other business partners to remain in business or return to reasonable business activity in the near
future. While the crisis has not had a material effect on the Company to date, the impacts continue to unfold and the
full extent of future developments are not known at this time and may have a material impact on our results of
operations, financial condition, liquidity and prospects. We have identified the following potential categories of
risks for Spire, Spire Missouri and Spire Alabama outside of those already experienced through September 2020:
• The health, safety and productivity of our workforce, including in a physically dispersed environment;
• Decreases in non-essential operational functions and/or capital investment;
• Supply chain impacts due to decreased production and imports of materials and supplies;
• The impact on operating results due to increased costs, lower demand in Spire’s service territories and/or
lower fees associated with suspending service disconnections and other billing practices or other
moratoriums;
• The impact of new regulatory actions that could increase costs or provide for future regulatory recovery of
those costs;
• Spire’s continued ability to access normal functioning capital markets in prolonged economic downturn;
10
• Adverse investment performance for postretirement benefit plan assets or the failure to maintain sustained
growth in these investments over time could lead to an increase in our plan costs and funding requirements
related to the plans; and
• Cybersecurity risks associated with a portion of our workforce working remotely.
To mitigate some of these risks, Spire has implemented additional health and safety precautions while continuing to
service utility customers. Spire is an essential business and continues to operate, while adhering to precautionary
safety measures, to ensure that critical infrastructure improvements continue and to maintain the safety of the gas
distribution network. Further, we have modified certain business and workforce practices (including employee
travel, employee work locations, and cancellation of physical participation in meetings, events, and conferences) to
conform to government restrictions and best practices encouraged by government and regulatory authorities. We
are monitoring impacts on our operations, costs and rate bases of our businesses, and continue to explore
alternative approaches to ensure the viability of our businesses and continued service to our customers.
To the extent the COVID-19 health crisis adversely affects our business, it may also have the effect of heightening
many of the other risks described in this item.
As a holding company, Spire depends on its operating subsidiaries to meet its financial obligations.
Spire is a holding company with no significant assets other than the stock of its operating subsidiaries and cash
investments. Spire, and Spire Missouri prior to the holding company’s formation in 2000, has paid common stock
dividends continuously since 1946. Spire’s ability to pay dividends to its shareholders is dependent on the ability of
its subsidiaries to generate sufficient net income and cash flows to pay upstream dividends and make loans or loan
repayments. In addition, because it is a holding company and the substantial portion of its assets are represented by
its holdings in the Utilities, the risks faced by the Utilities as described below under RISKS THAT RELATE TO THE
GAS UTILITY SEGMENT may also adversely affect Spire’s cash flows, liquidity, financial condition and results of
operations.
A downgrade in Spire’s and/or its subsidiaries’ credit ratings may negatively affect its ability to
access capital and its cost of capital.
Currently, Spire, Spire Missouri, and Spire Alabama have investment grade credit ratings. There is no assurance
that such credit ratings for any of the Spire companies will remain in effect for any given period of time or that such
ratings will not be lowered, suspended or withdrawn entirely by the rating agencies, if, in each rating agency’s
judgment, circumstances so warrant. Spire has a working capital line of credit to meet its short-term liquidity
needs. Spire’s line of credit may be used to meet the liquidity needs of any of its subsidiaries, subject to sublimits. If
the rating agencies lowered the credit rating at any of these entities, particularly below investment grade, it might
significantly limit that entity’s ability to secure new or additional credit facilities and would increase its costs of
borrowing. Spire’s or the Utilities’ ability to borrow under current or new credit facilities and costs of that borrowing
have a direct impact on their ability to execute their operating strategies.
Pipeline integrity programs and repairs may impose significant costs and liabilities on the
Company.
The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) requires pipeline operators to develop
integrity management programs to comprehensively evaluate certain areas along their pipelines and to take
additional measures to protect pipeline segments located in “high consequence areas” where a leak or rupture could
potentially do the most harm. As the operator of the STL Pipeline, the Company is required to:
• perform ongoing assessments of pipeline integrity;
•
identify and characterize applicable threats to pipeline segments that could impact a “high consequence
area”;
improve data collection, integration and analysis;
repair and remediate the pipeline as necessary; and
implement preventative and mitigating actions.
•
•
•
11
The Company is required to maintain pipeline integrity testing programs that are intended to assess pipeline
integrity. Any repair, remediation, preventative or mitigating actions may require significant capital and operating
expenditures. Should the Company fail to comply with applicable statutes and the PHMSA Office of Pipeline
Safety’s rules and related regulations and orders, it could be subject to significant penalties and fines.
Reductions in capacity of interconnecting, third-party pipelines could cause a reduction in volumes
transported by Spire STL Pipeline, which could adversely affect the Company.
Spire STL Pipeline is dependent upon third-party pipelines and other facilities to provide delivery options to and
from its pipeline. If any pipeline connection were to become unavailable for volumes of natural gas due to repairs,
damage to the facility, lack of capacity or any other reason, Spire STL Pipeline’s ability to continue shipping natural
gas to end markets could be restricted, and to the extent not mitigated by contractual indemnification, insurance or
tariffs, would thereby reduce its revenues. Any permanent interruption at any key pipeline interconnect that causes
a material reduction in volumes transported on its pipeline could result in an impairment loss that could have a
material adverse effect on the Company’s financial condition and operating results.
The Company’s natural gas storage business includes inherent geologic and operational risks, as
well as risks from competition and changes in market fundamentals.
In 2017 and 2018, the Company acquired two neighboring storage facilities, one of which had been operating in
bankruptcy for an extended period. The Company has restructured to integrate these facilities into one, now known
as Spire Storage, to increase capacity, improve operating performance, and improve the integrity of its storage fields
and associated above-ground facilities. Any damage to the storage facility or pipelines, or lack of integrity to its
storage fields, to the extent not covered by insurance, could have a material adverse effect on the Company’s
financial condition, operating results and cash flows.
The Company’s storage assets are connected to third-party-owned pipelines. The continuing operation of such
third-party pipelines is not within its control. If any of these pipelines become unable to transport, treat or process
natural gas or natural gas liquids, or if the volumes it gathers or transports do not meet the quality requirements of
such pipelines, the Company’s revenues and cash flows could be adversely affected.
The Company does not own all the land on which its storage facilities were constructed, and it is, therefore, subject
to the possibility of more onerous terms or increased costs to retain necessary land use, if and when applicable
property rights expire or are renewed. Changes in the terms of such land use could have an adverse impact on the
financial condition, results of operations and cash flows for the Company’s storage business.
Spire Storage is subject to competition from similar services provided by pipelines and from competing independent
storage providers capable of serving its customers. Natural gas storage is a competitive business, with competitors
having the ability to expand storage capacity. Increased competition in the natural gas storage business could
reduce the demand and drive rates down for the Company’s natural gas storage services.
Storage businesses are affected by various gas market fundamentals which impact the level of demand for storage
services and the rates that can be charged for these services. These market fundamentals include: seasonal price
spread; monthly, daily and hourly price volatility; locational basis for pricing points on pipelines connected to a
storage facility; seasonal, daily and hourly weather; and operational impacts in supply and market areas served by a
storage facility and its connected pipelines. These fundamentals have varying and potentially material adverse
impacts on the various services offered by storage facilities and the rates that can be charged for these services in
the market. These services include long-term firm storage, short-term park and loan, wheeling, and optimization.
Rates below the variable costs to operate a storage facility could result in a decision to not operate all the capacity in
the facility or to operate the facility at a loss if required to fulfill firm customer contract obligations. A sustained
decline in these rates or a shut-in of all or a portion of one or more facilities’ capacity could have an adverse impact
on the Company’s financial condition, results of operations and cash flows.
12
Transporting, distributing, and storing natural gas and propane involves numerous risks that may
result in accidents and other operating risks and costs.
Natural gas transportation, distribution and storage activities inherently involve a variety of hazards and operations
risks, such as leaks, accidental explosions, damage caused by third parties, and mechanical problems, which could
cause substantial financial losses. In addition, these risks could result in serious injury to employees and non-
employees, loss of human life, significant damage to property, environmental pollution, impairment of operations,
and substantial losses to the Company and its subsidiaries. The location of pipelines and storage facilities near
populated areas, including residential areas, commercial business centers, and industrial sites, could increase the
level of damages resulting from these risks. Similar risks also exist for Spire Missouri’s propane storage,
transmission and minor distribution operations. These activities may subject the Company to litigation or
administrative proceedings. Such litigation or proceedings could result in substantial monetary judgments, fines, or
penalties against the Company and its subsidiaries or be resolved on unfavorable terms. The Utilities and other
Spire businesses are subject to federal and state laws and regulations requiring them to maintain certain safety and
system integrity measures by identifying and managing storage and pipeline risks. Compliance with these laws and
regulations, or future changes in these laws and regulations, may result in increased capital, operating and other
costs which may not be recoverable in a timely manner from customers in rates. In accordance with customary
industry practices, the Utilities and other Spire businesses maintain insurance against a significant portion, but not
all, of these risks and losses. To the extent that the occurrence of any of these events is not fully covered by
insurance, it could adversely affect the financial condition and results of operations of the Company and its
subsidiaries.
In connection with acquisitions, Spire and Spire Missouri recorded goodwill and long-lived assets
that could become impaired and adversely affect its financial condition and results of operations.
Spire and Spire Missouri assess goodwill for impairment annually or more frequently if events or circumstances
occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. The
Company and Spire Missouri assess their long-lived assets for impairment whenever events or circumstances
indicate that an asset’s carrying amount may not be recoverable. To the extent the value of goodwill or long-lived
assets becomes impaired, the Company and Spire Missouri may be required to incur impairment charges that could
have a material impact on their results of operations.
Since interest rates are a key component, among other assumptions, in the models used to estimate the fair values
of the Company’s reporting units, rises in interest rates would generally decrease the calculated fair values and
future impairments may occur. Due to the subjectivity of the assumptions and estimates underlying the impairment
analysis, Spire and Spire Missouri cannot provide assurance that future analyses will not result in impairment.
These assumptions and estimates include projected cash flows, current and future rates for contracted capacity,
growth rates, weighted average cost of capital and market multiples.
Climate change and regulatory and legislative developments in the energy industry related to
climate change may in the future adversely affect operations and financial results.
Climate change, and regulatory, public policy, or legislative changes to address the potential for climate change,
could adversely affect operations and financial results of the Company. Management believes it is likely that any
such resulting impacts would occur over a long period of time and thus would be difficult to quantify with any
degree of specificity. To the extent climate change results in warmer temperatures, financial results could be
adversely affected through lower gas volumes and revenues and lack of marketing opportunities. Another possible
impact of climate change may be more frequent and more severe weather events, such as hurricanes and tornadoes,
which could increase costs to repair damaged facilities and restore service to customers, or result in lost revenues if
the Company were unable to deliver natural gas to customers. To the extent such impacts are not covered by
insurance or recovered in rates, this could have a material adverse effect on the Company’s financial condition,
operating results and cash flows.
13
In addition, there have been a number of federal, state and local legislative and regulatory initiatives proposed in
recent years in an attempt to control or limit the effects of global warming and overall climate change, including
greenhouse gas emissions, such as methane and carbon dioxide. The adoption in the future of this type of legislation
by Congress or similar legislation by states or localities, or the adoption of related regulations by federal, state or
local governments mandating a substantial reduction in greenhouse gas emissions, restricting the use of fossil fuels,
such as natural gas, or restricting the construction of infrastructure necessary to deliver natural gas to customers
could have far-reaching and significant impacts on the energy industry. Such new legislation or regulations could
result in increased compliance costs or additional operating restrictions, affect the demand for natural gas or impact
the prices charged to customers. At this time, we cannot predict the potential impact of such laws or regulations that
may be adopted on the Company’s and the Utilities’ future business, financial condition or financial results.
Changes to income tax policy, certain tax elections, tax regulations and future taxable income could
adversely impact the Company’s financial condition and results of operations.
The Company has significantly reduced its current federal and state income tax obligations over the past few years
through tax planning strategies and the use of bonus depreciation deductions for certain expenditures for property.
As a result, the Company has generated large annual taxable losses that have resulted in significant federal and state
net operating losses in years prior to the Tax Cuts and Jobs Act. The Company plans to utilize these net operating
losses in the future to reduce income tax obligations. The value of these net operating losses could be reduced if the
Company cannot generate enough taxable income in the future to utilize all of the net operating losses before they
expire due to lower than expected financial performance or regulatory actions.
Changes to income tax policy, laws and regulations, including but not limited to changes in tax rates, the
deductibility of certain expenses including interest and state and local income taxes and/or changes in the
deductibility of certain expenditures for property, could adversely impact the Company. Those impacts could
include reducing the value of its net operating losses and could result in material charges to earnings. Further, the
Company’s financial condition and results of operations may be adversely impacted.
Spire’s pension and other postretirement benefit plans are subject to investment and interest rate
risk that could negatively impact its financial condition.
The Company and its subsidiaries have pension and other postretirement benefit plans that provide benefits to
many of their employees and retirees. Costs of providing benefits and related funding requirements of these plans
are subject to changes in the market value of the assets that fund the plans. The funded status of the plans and the
related costs reflected in the Company’s financial statements are affected by various factors, which are subject to an
inherent degree of uncertainty, including economic conditions, financial market performance, interest rates, life
expectancies and demographics. Recessions and volatility in the domestic and international financial markets have
negatively affected the asset values of Spire’s pension plans at various times in the past. Poor investment returns or
lower interest rates may necessitate accelerated funding of the plans to meet minimum federal government
requirements, which could have an adverse impact on the Company’s and its subsidiaries’ financial condition and
results of operations. For more information, including regulatory provisions affecting the Utilities’ plans, see Note
13, Pension Plans and Other Postretirement Benefits, of the Notes to Financial Statements in Item 8.
14
RISKS THAT RELATE TO THE GAS UTILITY SEGMENT
Regulation of the Utilities’ businesses may impact rates they are able to charge, costs, and
profitability.
The Utilities are subject to regulation by federal, state and local authorities. At the state level, the Utilities are
regulated in Missouri by the Missouri Public Service Commission (MoPSC), in Alabama by the Alabama Public
Service Commission (APSC), and in Mississippi by the Mississippi Public Service Commission (MSPSC). These state
public service commissions regulate many aspects of the Utilities’ distribution operations, including construction
and maintenance of facilities, operations, safety, the rates the Utilities may charge customers, the terms of service to
their customers, transactions with their affiliates, the rate of return they are allowed to realize, and the accounting
treatment for certain aspects of their operations. For further discussion of these accounting matters, see Regulatory
Accounting under Critical Accounting Estimates in Item 7.
Accounting for the economics of rate regulation affects multiple financial statement line items, including property,
plant, and equipment; regulatory assets and liabilities; operating revenues; and depreciation expense, and affects
multiple disclosures in the Company’s financial statements. There is a risk that the state public service commissions
will not approve full recovery of the costs of providing utility service or recovery of all amounts invested in the utility
business and a reasonable return on that investment. A material disallowance of deferred costs could adversely
affect the Utilities’ results of operations.
The MoPSC also approves Spire Missouri’s Infrastructure System Replacement Surcharge (ISRS). The ISRS allows
Spire Missouri expedited recovery for its investment to upgrade its infrastructure and enhance its safety and
reliability without the necessity of a formal rate case. Such investments are subject to review, and there is risk that
any material disallowance of costs under ISRS could adversely affect the timing of revenues.
The Utilities’ ability to obtain and timely implement rate increases and rate supplements to maintain the current
rate of return is subject to regulatory review and approval. There can be no assurance that they will be able to obtain
rate increases or rate supplements or continue earning the current authorized rates of return. Spire Alabama’s and
Spire Gulf’s rate setting process, Rate Stabilization and Equalization (RSE), is subject to regulation by the APSC and
is implemented pursuant to APSC orders expiring September 30, 2022 and 2021, respectively. RSE adjustments
would continue after those dates unless the APSC enters an order to the contrary in a manner consistent with the
law. Spire Mississippi is subject to regulation by the MSPSC and utilizes the Rate Stabilization Adjustment (RSA)
Rider. For further details, see Note 15, Regulatory Matters, of the Notes to Financial Statements in Item 8.
The Utilities could incur additional costs if required to adjust to new laws or regulations, revisions to existing laws
or regulations or changes in interpretations of existing laws or regulations. In addition, as the regulatory
environment for the natural gas industry increases in complexity, the risk of inadvertent noncompliance could also
increase. If the Utilities fail to comply with applicable laws and regulations, whether existing or new, they could be
subject to fines, penalties or other enforcement action by the authorities that regulate the Utilities’ operations.
The Utilities are involved in legal or administrative proceedings before various courts and
governmental bodies that could adversely affect their results of operations, cash flows and financial
condition.
The Utilities are involved in legal or administrative proceedings before various courts and governmental bodies with
respect to general claims, rates, environmental issues, gas cost prudence reviews and other matters. For further
details, see Contingencies in Note 16 to the financial statements in Item 8. Adverse decisions regarding these
matters, to the extent they require the Utilities to make payments in excess of amounts provided for in their
financial statements, or to the extent they are not covered by insurance, could adversely affect the Utilities’ results of
operations, cash flows and financial condition.
15
The Utilities’ liquidity may be adversely affected by delays in recovery of their costs, due to
regulation.
In the normal course of business, there is a lag between when the Utilities incur increases in certain of their costs
and the time in which those costs are considered for recovery in the ratemaking process. Cash requirements for
increased operating costs, increased funding levels of defined benefit pension and postretirement costs, capital
expenditures, and other increases in the costs of doing business can require outlays of cash prior to the
authorization of increases in rates charged to customers, as approved by the MoPSC, APSC, and MSPSC.
Accordingly, the Utilities’ liquidity can be adversely impacted to the extent higher costs are not timely recovered
from their customers.
The Utilities’ ability to meet their customers’ natural gas requirements may be impaired if
contracted gas supplies, interstate pipeline and/or storage services are not available or delivered in
a timely manner.
In order to meet their customers’ annual and seasonal natural gas demands, the Utilities must obtain sufficient
supplies, interstate pipeline capacity, and storage capacity. If they are unable to obtain these, either from their
suppliers’ inability to deliver the contracted commodity or the inability to secure replacement quantities, to the
extent not mitigated by tariffs, contractual indemnification or insurance, the Utilities’ financial condition and
results of operations may be adversely impacted. If a substantial disruption in interstate natural gas pipelines’
transmission and storage capacity were to occur during periods of heavy demand, the Utilities’ financial results
could be adversely impacted.
The Utilities’ liquidity and, in certain circumstances, the Utilities’ results of operations may be
adversely affected by the cost of purchasing natural gas during periods in which natural gas prices
are rising significantly.
The tariff rate schedules of Spire Missouri, Spire Gulf and Spire Mississippi contain Purchased Gas Adjustment
(PGA) clauses and Spire Alabama’s tariff rate schedule contains a Gas Supply Adjustment (GSA) rider that permit
the Utilities to file for rate adjustments to recover the cost of purchased gas. Changes in the cost of purchased gas
are flowed through to customers and may affect uncollectible amounts and cash flows and can therefore impact the
amount of capital resources.
Currently, Spire Missouri is allowed to adjust the gas cost component of rates up to four times each year while Spire
Alabama and Spire Gulf (collectively, the “Alabama Utilities”) and Spire Mississippi may adjust the gas cost
component of their rates on a monthly basis. Spire Missouri must make a mandatory gas cost adjustment at the
beginning of the winter, in November, and during the next twelve months may make up to three additional
discretionary gas cost adjustments, so long as each of these adjustments is separated by at least two months.
The MoPSC typically approves the Spire Missouri PGA changes on an interim basis, subject to refund and the
outcome of a subsequent audit and prudence review. Due to such review process, there is a risk of a disallowance of
full recovery of these costs. Any material disallowance of purchased gas costs would adversely affect results of
operations. The Alabama Utilities’ gas supply charges are submitted for APSC review on a monthly basis, regardless
of whether there is a request for a change, so prudence review occurs on an ongoing basis. Spire Mississippi’s PGA is
adjusted on a monthly basis for the most recent charges and is filed at the MSPSC on a monthly basis.
Increases in the prices the Utilities charge for gas may also adversely affect revenues because they could lead
customers to reduce usage and cause some customers to have trouble paying the resulting higher bills. These higher
prices may increase bad debt expenses and ultimately reduce earnings. Rapid increases in the price of purchased
gas may result in an increase in short-term debt.
16
To lower financial exposure to commodity price fluctuations, Spire Missouri enters into contracts to hedge the
forward commodity price of its natural gas supplies. As part of this strategy, Spire Missouri may use fixed-price
forward physical purchase contracts, swaps, futures, and option contracts. However, Spire Missouri does not hedge
the entire exposure of energy assets or positions to market price volatility, and the coverage will vary over time. Any
costs, gains, or losses experienced through hedging procedures, including carrying costs, generally flow through the
PGA clause, thereby limiting Spire Missouri’s exposure to earnings volatility. However, variations in the timing of
collections of such gas costs under the PGA clause and the effect of cash payments for margin deposits associated
with Spire Missouri’s use of natural gas derivative instruments may cause short-term cash requirements to vary.
These procedures remain subject to prudence review by the MoPSC.
Other than fixed-price forward physical purchase contracts, Spire Alabama currently does not utilize risk mitigation
strategies that incorporate commodity hedge instruments but has the ability to do so through its GSA. Spire Gulf
hedges gas supply for up to 30 months in advance, and Spire Mississippi utilizes hedging for the upcoming heating
season.
The Utilities’ business activities are concentrated in three states.
The Utilities provide natural gas distribution services to customers in Alabama, Mississippi, and Missouri. Changes
in the regional economies, politics, regulations and weather patterns of these states could negatively impact the
Utilities’ growth opportunities and the usage patterns and financial condition of customers and could adversely
affect the Utilities’ earnings, cash flows, and financial position.
The Utilities may be adversely affected by economic conditions.
Periods of slowed economic activity generally result in decreased energy consumption, particularly by industrial and
large commercial companies, a loss of existing customers, fewer new customers especially in newly constructed
buildings. As a consequence, national or regional recessions or other downturns in economic activity could
adversely affect the Utilities’ revenues and cash flows or restrict their future growth. Economic conditions in the
Utilities’ service territories may also adversely impact the Utilities’ ability to collect accounts receivable, resulting in
an increase in bad debt expense.
Environmental laws and regulations may require significant expenditures or increase operating
costs.
The Utilities are subject to federal, state and local environmental laws and regulations affecting many aspects of
their present and future operations. These laws and regulations require the Utilities to obtain and comply with a
wide variety of environmental licenses, permits, inspections, and approvals. Failure to comply with these laws and
regulations and failure to obtain any required permits and licenses may result in costs to the Utilities in the form of
fines, penalties or business interruptions, which may be material. In addition, existing environmental laws and
regulations could be revised or reinterpreted and/or new laws and regulations could be adopted or become
applicable to the Utilities or their facilities, thereby impacting the Utilities’ cost of compliance. The discovery of
presently unknown environmental conditions, including former manufactured gas plant sites, and claims against
the Utilities under environmental laws and regulations may result in expenditures and liabilities, which could be
material. To the extent environmental compliance costs are not fully covered by insurance or recovered in rates
from customers, those costs may have an adverse effect on the Utilities’ financial condition and results of
operations.
17
Because of competition, the Utilities may not be able to retain existing customers or acquire new
customers, which could have an adverse impact on their business, operating results and financial
condition.
The Utilities face the risk that larger commercial or industrial customers may bypass gas distribution services by
gaining distribution directly from interstate pipelines or, in the case of Spire Alabama and Spire Gulf, also from
municipally or publicly owned gas distributors located adjacent to its service territory. The Utilities cannot provide
any assurance that increased competition will not have a material adverse effect on their business, financial
condition or results of operations.
The Utilities compete with distributors offering a broad range of services and prices, from full-service distributors to
those offering delivery only. The Utilities also compete for retail customers with suppliers of alternative energy
products, principally propane and electricity. If they are unable to compete effectively, the Utilities may lose existing
customers and/or fail to acquire new customers, which in the aggregate could have a material adverse effect on their
business, operating results and financial condition.
Changes in the wholesale costs of purchased natural gas supplies may adversely impact the Utilities’
competitive position compared with alternative energy sources.
Changes in wholesale natural gas prices compared with prices for electricity, fuel oil, coal, propane, or other energy
sources may affect the Utilities’ retention of natural gas customers and may adversely impact their financial
condition and results of operations.
Significantly warmer-than-normal weather conditions, the effects of climate change, legislative and
regulatory initiatives in response to climate change or in support of increased energy efficiency,
and other factors that influence customer usage may affect the Utilities’ sale of heating energy and
adversely impact their financial position and results of operations.
The Utilities’ earnings are primarily generated by the sale of heating energy. Spire Missouri and Spire Mississippi
each have a Weather Normalization Adjustment rider, Spire Alabama has a Temperature Adjustment Rider, and
Spire Gulf has a Weather Impact Normalization Factor. These mechanisms, approved by the respective state
regulatory body, provide better assurance of the recovery of fixed costs and margins during winter months despite
variations in sales volumes due to the impacts of weather, while the annual rate designs of Alabama and Mississippi
help adjust for other factors that affect customer usage. However, significantly warmer-than-normal weather
conditions in the Utilities’ service areas and other factors, such as climate change, alternative energy sources and
increased efficiency of gas furnaces and other appliances, may result in reduced profitability and decreased cash
flows attributable to lower gas sales. Furthermore, continuation of these adjustment factors is subject to regulatory
discretion.
In addition, legislative and regulatory initiatives by the federal, state and local governments addressing greenhouse
gas emissions or restricting the use of natural gas could adversely affect customer demand. The promulgation of
regulations of the emissions of greenhouse gases and efficiency for residential gas furnaces and other gas appliances
or the potential enactment of congressional legislation addressing global warming and climate change may decrease
customer usage, encourage fuel switching from gas to other energy forms, and may result in future additional
compliance costs that could impact the Utilities’ financial conditions and results of operations.
18
Regional supply/demand fluctuations and changes in national infrastructure, as well as regulatory
discretion, may adversely affect the Utilities’ ability to profit from off-system sales and capacity
release.
Spire Missouri’s and Spire Alabama’s income from off-system sales and capacity release is subject to fluctuations in
market conditions and changing supply and demand conditions in areas the Utilities hold pipeline capacity rights.
Specific factors impacting the Utilities’ income from off-system sales and capacity release include the availability of
attractively priced natural gas supply, availability of pipeline capacity, and market demand. Income from off-system
sales and capacity release is shared with customers. Spire Missouri and Spire Alabama are allowed to retain 25% of
the net margins achieved as a result of such off-system sales and capacity releases. The Utilities’ ability to retain
such income in the future is subject to regulatory discretion.
RISKS THAT RELATE TO THE GAS MARKETING SEGMENT
Increased competition, fluctuations in natural gas commodity prices, expiration of supply and
transportation arrangements, and infrastructure projects may adversely impact the future
profitability of Gas Marketing.
Competition in the marketplace and fluctuations in natural gas commodity prices have a direct impact on the Gas
Marketing business. Changing market conditions and prices, the narrowing of regional and seasonal price
differentials and limited future price volatility may adversely impact its sales margins or affect its ability to procure
gas supplies and/or to serve certain customers, which may reduce sales profitability and/or increase certain credit
requirements caused by reductions in netting capability. Also, Gas Marketing profitability may be impacted by the
effects of the expiration, in the normal course of business, of certain of its natural gas supply contracts if those
contracts cannot be replaced and/or renewed with arrangements with similar terms and pricing. Although the
FERC regulates the interstate transportation of natural gas and establishes the general terms and conditions under
which Spire Marketing may use interstate gas pipeline capacity to purchase and transport natural gas, Spire
Marketing must occasionally renegotiate its transportation agreements with a concentrated group of pipeline
companies. Renegotiated terms of new agreements, or increases in FERC-authorized rates of existing agreements,
may impact Gas Marketing’s future profitability. Profitability may also be adversely impacted if pipeline capacity or
future storage capacity secured is not fully utilized.
Reduced access to credit and/or capital markets may prevent the Gas Marketing business from
executing operating strategies.
The Gas Marketing segment relies on its cash flows, ability to effect net settlements with counterparties, parental
guaranties, and access to Spire’s liquidity resources to satisfy its credit and working capital requirements. Spire
Marketing’s ability to rely on parental guaranties is dependent upon Spire’s financial condition and credit ratings. If
Spire’s credit ratings were lowered, particularly below investment grade, counterparty acceptance of parental
guaranties may diminish, resulting in decreased availability of credit. Additionally, under such circumstances,
certain counterparties may require Spire Marketing to provide prepayments or cash deposits, amounts of which
would be dependent upon natural gas market conditions. Reduced access to credit or increased credit requirements,
which may also be caused by factors such as higher overall natural gas prices, may limit Spire Marketing’s ability to
enter into certain transactions. In addition, Spire Marketing has concentrations of counterparty credit risk in that a
significant portion of its transactions are with (or are associated with) energy producers, utility companies, and
pipelines. These concentrations of counterparties have the potential to affect the Company’s overall exposure to
credit risk, either positively or negatively, in that each of these three groups may be affected similarly by changes in
economic, industry, or other conditions. Spire Marketing also has concentrations of credit risk in certain
individually significant counterparties. Spire Marketing closely monitors its credit exposure and, although
uncollectible amounts have not been significant, increased counterparty defaults are possible and may result in
financial losses and/or capital limitations.
19
Risk management policies, including the use of derivative instruments, may not fully protect Spire
Marketing’s sales and results of operations from volatility and may result in financial losses.
In the course of its business, Spire Marketing enters into contracts to purchase and sell natural gas at fixed prices
and index-based prices. Commodity price risk associated with these contracts has the potential to impact earnings
and cash flows. To minimize this risk, Spire Marketing has a risk management policy that provides for daily
monitoring of a number of business measures, including fixed price commitments.
Spire Marketing currently manages the commodity price risk associated with fixed-price commitments for the
purchase or sale of natural gas by either closely matching the offsetting physical purchase or sale of natural gas at
fixed prices or through the use of natural gas futures, options, and swap contracts traded on or cleared through the
New York Mercantile Exchange, Inc. and/or the Intercontinental Exchange to lock in margins. These exchange-
traded/cleared contracts may be designated as cash flow hedges of forecasted transactions. However, market
conditions and regional price changes may cause ineffective portions of matched positions to result in financial
losses. Additionally, to the extent that Spire Marketing’s natural gas contracts are classified as trading activities or
do not otherwise qualify for the normal purchases or normal sales designation (or the designation is not elected),
the contracts are recorded as derivatives at fair value each period. Accordingly, the associated gains and losses are
reported directly in earnings and may cause volatility in results of operations. Gains or losses (realized and
unrealized) on certain wholesale purchase and sale contracts, consisting of those classified as trading activities, are
required to be presented on a net basis (instead of a gross basis) in the statements of consolidated income. Such
presentation could result in volatility in the Company’s operating revenues.
As a natural gas market participant, Spire Marketing is subject to applicable FERC- and Commodity Futures
Trading Commission- (CFTC) administered statutes, rules, regulations and orders, including those directed
generally to prevent manipulation of or fraud involving natural gas physical transactions and financial instruments,
such as futures, options and swaps. Spire Marketing could be subject to substantial penalties and fines by FERC or
CFTC, or both, for failure to comply with such rules.
Spire Marketing’s ability to meet its customers’ natural gas requirements may be impaired if
contracted gas supplies and interstate pipeline services are not available or delivered in a timely
manner.
Spire Marketing’s ability to deliver natural gas to its customers is contingent upon the ability of natural gas
producers, other gas marketers, and interstate pipelines to fulfill delivery obligations to Spire Marketing under firm
contracts. To the extent that it is unable to obtain the necessary supplies, Spire Marketing’s financial position and
results of operations may be adversely impacted.
Regulatory and legislative developments pertaining to the energy industry may adversely impact
Gas Marketing’s results of operations, financial condition and cash flows.
The Gas Marketing business is non-regulated, in that the rates it charges its customers are not currently established
by or subject to approval by any regulatory body with jurisdiction over its business. However, it is subject to various
laws and regulations affecting the energy industry. New regulatory and legislative actions may adversely impact Gas
Marketing’s results of operations, financial condition, and cash flows by potentially reducing customer growth
opportunities and/or increasing the costs of doing business.
20
Gas Marketing uses bilateral contracts and derivative instruments such as futures contracts, options and swaps to
hedge or mitigate ongoing commercial risks. Most standardized swaps, under the Dodd-Frank Act, are required to
be cleared through a registered clearing facility and traded on a designated exchange or swap execution facility,
subject to certain exceptions. In addition, the CFTC’s rules require companies, including Spire Marketing, to
maintain regulatory records of swap transactions, and to report swaps to centralized swap data repositories, among
other compliance obligations. Although Spire Marketing may qualify for exceptions to certain of these CFTC rules,
its derivatives counterparties are subject to capital, margin, documentation and business conduct requirements
imposed as a result of the Dodd-Frank Act. These obligations may increase transaction costs and may make it more
difficult for Spire Marketing to enter into hedging transactions on favorable terms or affect the number and/or
creditworthiness of available swap counterparties. Spire Marketing’s inability to enter into derivatives instruments
or other commercial risk hedging transactions on favorable terms, or at all, could increase operating expenses and
expose it to unhedged commercial risks, including potential adverse changes in commodity prices.
The CFTC has also recently finalized its position limits rules that modify and expand the applicability of position
limits on the amounts of certain speculative futures contracts, as well as economically equivalent options, futures
and swaps for or linked to certain physical commodities that market participants may hold. While Spire Marketing
anticipates qualifying for a bona fide hedging exemption to certain requirements of the final rule, the CFTC’s final
rule and earlier adopted aggregation rules may cause Spire Marketing’s hedging strategies described above to be
limited if Spire Marketing is unable to qualify for an exemption.
GENERAL RISK FACTORS
Unexpected losses may adversely affect Spire’s or its subsidiaries’ financial condition and results of
operations.
As with most businesses, there are operations and business risks inherent in the activities of Spire’s subsidiaries. If,
in the normal course of business, Spire or any of its subsidiaries becomes a party to litigation, such litigation could
result in substantial monetary judgments, fines, or penalties or be resolved on unfavorable terms. In accordance
with customary practice, Spire and its subsidiaries maintain insurance against a significant portion of, but not all,
risks and losses. In addition, in the normal course of its operations, Spire and its subsidiaries may be exposed to loss
from other sources, such as bad debt expense or the failure of a counterparty to meet its financial obligations. Spire
and its operating companies employ many strategies to gain assurance that such risks are appropriately managed,
mitigated, or insured, as appropriate. To the extent a loss is not fully covered by insurance or other risk mitigation
strategies, that loss could adversely affect the Company’s and/or its subsidiaries’ financial condition and results of
operations.
Increased dependence on technology may hinder Spire’s and its subsidiaries’ business operations
and adversely affect their financial condition and results of operations if such technologies fail.
Spire and its subsidiaries have implemented or acquired a variety of technological tools including both Company-
owned information technology and technological services provided by outside parties. These tools and systems
support critical functions including Spire and its subsidiaries’ integrated planning, scheduling and dispatching of
field resources, its automated meter reading system, customer care and billing, procurement and accounts payable,
operational plant logistics, management reporting, and external financial reporting. The failure of these or other
similarly important technologies, or the Company’s or its subsidiaries’ inability to have these technologies
supported, updated, expanded, or integrated into other technologies, could hinder their business operations and, to
the extent not covered by insurance, could adversely impact their financial condition and results of operations.
Although the Company and its subsidiaries have, when possible, developed alternative sources of technology and
built redundancy into their computer networks and tools, there can be no assurance that these efforts to date would
protect against all potential issues related to the loss of any such technologies or the Utilities’ use of such
technologies.
21
A cyberattack may disrupt Spire’s operations or lead to a loss or misuse of confidential and
proprietary information or potential liability.
The Company and its subsidiaries are subject to cybersecurity risks primarily related to breaches of security
pertaining to sensitive customer, employee, and vendor information maintained by the Company, its subsidiaries,
or its third-party vendors in the normal course of business, as well as breaches in the technology that manages
natural gas distribution operations and other business processes. A loss of confidential or proprietary data or
security breaches of technology for operations or business processes could adversely affect the Company’s and its
subsidiaries’ reputation, diminish customer confidence, disrupt operations, and subject the Company and its
subsidiaries to possible financial liability, any of which could have a material effect on the Company’s and its
subsidiaries’ financial condition and results of operations.
The Company acknowledges that increased dependence on technology increases the Company’s exposure to
cyberattack. The Company and its subsidiaries closely monitor both preventive and detective measures to manage
these risks and maintain cyber risk insurance to mitigate a significant portion, but not all, of these risks and losses.
To the extent that the occurrence of any of these cyber events is not fully covered by insurance, it could adversely
affect the Company’s and its subsidiaries’ financial condition and results of operations.
Resources expended to pursue or integrate business acquisitions, investments or other business
arrangements may adversely affect Spire’s financial position and results of operations and return
on investments made may not meet the Company’s expectations.
From time to time, Spire may seek to grow through strategic acquisitions, investments or other business
arrangements. Attractive acquisition and investment opportunities may be difficult to complete on economically
acceptable terms. It is possible for Spire to expend considerable resources pursuing acquisitions and investments
but, for a variety of reasons, decide not to move forward. Similarly, investment opportunities may be hindered or
halted by regulatory or legal actions. To the extent that acquisitions or investments are made, such transactions
involve a number of risks, including but not limited to, the assumption of material liabilities, the diversion of
management’s attention from daily operations, difficulties in assimilation and retention of employees, securing
adequate capital to support the transaction, and regulatory approval. Uncertainties exist in assessing the value,
risks, profitability, and liabilities associated with certain businesses or assets and there is a possibility that
anticipated operating and financial efficiencies expected to result from an acquisition or investment do not develop.
Additionally, there are no assurances that resources expended will achieve their intended result.
The failure to complete an acquisition successfully or to integrate acquisitions or investments it may undertake
could have an adverse effect on the Spire’s financial condition and results of operations and the market’s perception
of the Company’s execution of its strategy. To the extent Spire engages in any of the above activities together with or
through one or more of its subsidiaries, including the Utilities, such subsidiaries may face the same risks.
Workforce risks may affect the Company’s financial results.
The Company and its subsidiaries are subject to various workforce risks, including, but not limited to, the risk that it
will be unable to attract and retain qualified personnel; that it will be unable to effectively transfer to new personnel
the knowledge and expertise of an aging workforce as those workers retire; and that it will be unable to reach
collective bargaining arrangements with the unions that represent certain of its workers, which could result in work
stoppages.
Changes in accounting standards may adversely impact the Company’s financial condition and
results of operations.
Spire and its subsidiaries are subject to changes in U.S. generally accepted accounting principles (GAAP), SEC
regulations and other interpretations of financial reporting requirements for public utilities. Neither the Company
nor any of its subsidiaries have any control over the impact these changes may have on their financial condition or
results of operations nor the timing of such changes. The potential issues associated with rate-regulated accounting,
along with other potential changes to GAAP that the U.S. Financial Accounting Standards Board (FASB) continues
to consider may be significant.
22
Catastrophic events may adversely affect the Company’s facilities and operations.
Catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes, tropical storms, terrorist
acts, acts of civil unrest, pandemic illnesses or other similar occurrences could adversely affect the Utilities’ facilities
and operations, as well as those of Spire STL Pipeline and Spire Storage. The Utilities have emergency planning and
training programs in place to respond to events that could cause business interruptions. However, unanticipated
events or a combination of events, failure in resources needed to respond to events, or slow or inadequate response
to events may have an adverse impact on the operations, financial condition, and results of operations of the
Company and its subsidiaries. The availability of insurance covering catastrophic events may be limited or may
result in higher deductibles, higher premiums, and more restrictive policy terms.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Spire
Refer to the information below about the principal properties of Spire Missouri and Spire Alabama. The Spire
EnergySouth utilities own approximately 5,500 miles of pipelines. Other properties of Spire and its subsidiaries do
not constitute a significant portion of its properties. The current leases for office space in downtown St. Louis
commenced in early 2015, with terms ranging from 10 to 20 years, with multiple renewal options. For further
information on leases see Note 17, Leases, of the Notes to Financial Statements in Item 8.
Spire Missouri
The principal properties of Spire Missouri consist of its gas distribution system, which includes more than 31,100
miles of main and related service lines, odorization and regulation facilities, and customer meters. The mains and
service lines are located in municipal streets or alleys, public streets or highways, or on lands of others for which
Spire Missouri has obtained the necessary legal rights to place and operate its facilities on such property. Spire
Missouri has an underground natural gas storage facility, several operating centers, and other related properties.
Substantially all of Spire Missouri’s utility plant is subject to the liens of its mortgage. All the properties of Spire
Missouri are held in fee, by easement, or under lease agreements.
Spire Alabama
The properties of Spire Alabama consist primarily of its gas distribution system, which includes approximately
24,300 miles of main and related service lines, odorization and regulation facilities, and customer meters. The
mains and service lines are located in municipal streets or alleys, public streets or highways, or on lands of others
for which Spire Alabama has obtained the necessary legal rights to place and operate its facilities on such property.
Spire Alabama also has four LNG facilities, several operating centers, and other related properties. All of the
properties of Spire Alabama are held in fee, by easement, or under lease agreements.
Item 3. Legal Proceedings
For a description of pending regulatory matters of Spire, see Note 15, Regulatory Matters, of the Notes to Financial
Statements in Item 8. For a description of environmental and other legal matters, see Contingencies in Note 16 of
the Notes to Financial Statements in Item 8.
Item 4. Mine Safety Disclosures
Not applicable.
23
INFORMATION ABOUT OUR EXECUTIVE OFFICERS – Listed below are executive officers as defined by
the SEC for Spire. Their ages, at September 30, 2020, and positions are listed below along with their business
experience during the past five years.
Name
Age Position with Company (1)
S. Sitherwood
60
President and Chief Executive Officer
Chairman of the Board, Spire Missouri
Chairman of the Board, Spire Alabama
S. L. Lindsey
54
Executive Vice President, Chief Operating Officer
Executive Vice President, Chief Executive Officer of Gas Utilities and
Distribution Operations
Chief Executive Officer, Spire Missouri
President and Chief Executive Officer, Spire Missouri
Chief Executive Officer, Spire Alabama
S. P. Rasche
60
Executive Vice President and Chief Financial Officer
Chief Financial Officer, Spire Missouri (until January 2020)
Appointed (2)
February 2012
January 2015
September 2014
January 2020
October 2012
December 2018
January 2015
September 2014
November 2013
May 2012
Chief Financial Officer, Spire Alabama (until January 2020)
September 2014
M. C. Darrell
62
Senior Vice President, Chief Legal and Compliance Officer
May 2012
M. C. Geiselhart
61
Senior Vice President, Chief Strategy and Corporate Development
Officer
January 2015
S. B. Carter (3)
48
Senior Vice President, Chief Operating Officer of Distribution
Operations
Senior Vice President, Commercial Operations
President, Spire Missouri
January 2019
January 2017
December 2018
(1) The information provided relates to the Company and its principal subsidiaries. Many of the executive officers have served
or currently serve as officers or directors for other subsidiaries of the Company.
(2) Officers of Spire are normally reappointed by its Board of Directors in November of each year. Officers of Spire Missouri and
Spire Alabama are normally reappointed by their boards of directors in January of each year.
(3) Mr. Carter served as Senior Vice President Commercial Operations and Chief Regulatory Officer of AGL Resources, Inc.
from September 2012 to August 2016.
24
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
Spire
Spire’s common stock trades on The New York Stock Exchange (NYSE) under the symbol “SR”. The number of
holders of record as of November 13, 2020 was 2,888.
Dividends are payable on the Company’s common stock at the discretion of its Board of Directors (the “Board”).
Spire, and Spire Missouri prior to the holding company’s formation in 2000, has paid common stock dividends
continuously since 1946, with 2020 marking the 17th consecutive year of increasing dividends on an annualized
basis. Although the Board expects to continue paying dividends on the common stock for the foreseeable future, the
declaration of dividends is not guaranteed. The amount of dividends on the common stock, if any, will depend upon
the Company’s financial condition, results of operations, capital requirements, and other factors.
Performance Graph
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Spire Inc.
S&P 500 Utilities Index
S&P 500 Index
$200
$180
$160
$140
$120
$100
$80
9/30/2015
9/30/2016
9/30/2017
9/30/2018
9/30/2019
9/30/2020
September 30
Spire Inc.
S&P 500 Utilities Index
S&P 500 Index
2015
2016
2017
2018
2019
2020
$
100.00 $
100.00
100.00
120.55 $
117.37
115.43
145.53 $
131.49
136.91
147.91 $
135.34
161.43
180.60 $
172.02
168.30
114.13
163.47
193.80
* Cumulative total return is based on a $100 investment on September 30, 2015, assuming reinvestment of dividends.
The S&P 500 Utilities Index is comprised of 28 utilities heavily weighted to large capitalization (median market cap
of $22.5 billion) electric utilities. Stocks of small and mid cap utilities and gas utility companies in general (like
Spire) were recently trading lower relative to the large cap electric sector.
For disclosures related to securities authorized for issuance under equity compensation plans, see Note 3, Stock-
Based Compensation, of the Notes to Financial Statements in Item 8.
25
During the three months ended September 30, 2020, the only repurchases of the Company’s common stock were
pursuant to elections by employees to have shares of stock withheld to cover employee tax withholding obligations
upon the vesting of performance-based and time-vested restricted stock and stock units. The following table
provides information on those repurchases:
(a)
Total
Number
of
Shares
Purchased
493
40
532
1,065
(b)
Average
Price
Paid
Per
Share
$
$
62.80
60.65
53.20
57.92
(c)
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
(d)
Maximum Number
of Shares that May
Yet be Purchased
Under the Plans
or Programs
—
—
—
—
—
—
—
—
Period
July 1, 2020 - July 31, 2020
August 1, 2020 - August 31, 2020
September 1, 2020 - September 30, 2020
Total
Spire Missouri
Spire Missouri common stock is owned by its parent, Spire Inc., and is not traded on any stock exchange.
Spire Missouri’s mortgage contains restrictions on its ability to pay cash dividends on its common stock, as
described in further detail in Note 5, Shareholders’ Equity, of the Notes to Financial Statements in Item 8. As of
September 30, 2020 and 2019, the amount under the mortgage’s formula that was available to pay dividends was
$1,269.4 million and $1,182.4 million, respectively.
Spire Alabama
Spire Alabama common stock is owned by its parent, Spire Inc., and is not traded on any stock exchange.
26
Item 6. Selected Financial Data
Spire
(In millions, except per share amounts)
Balance Sheet data at year end (2)
Total Assets
Preferred Stock
Long-Term Debt (less current portion)
Income data (3)
Total Operating Revenues
Net Income [GAAP]
Impairments
Missouri regulatory adjustments
Fair value and timing adjustments
Acquisition, divestiture and restructuring activities
Income tax effect of adjustments
Effect of the Tax Cuts and Jobs Act
Net Economic Earnings [Non-GAAP]
Net Income Available to Common Shareholders
Diluted Earnings per Share of Common Stock:
Net Income [GAAP]
Impairments
Missouri regulatory adjustments
Fair value and timing adjustments
Acquisition, divestiture and restructuring activities
Income tax effect of adjustments
Effect of the Tax Cuts and Jobs Act
Weighted average shares adjustment
Net Economic Earnings [Non-GAAP]
Fiscal Years Ended September 30
2020
2019
2018
2017
2016(1)
$ 8,241.2
242.0
2,423.7
$ 7,619.2
242.0
2,082.6
$ 6,843.6
—
1,900.1
$ 6,546.7
—
1,995.0
$ 1,855.4
88.6
$
148.6
—
2.5
—
(31.9)
—
207.8
$
$ 1,952.4
184.6
$
—
12.2
1.2
0.4
(3.3)
—
195.1
$
$ 1,965.0
214.2
$
—
30.6
(4.3)
13.6
(10.3)
(60.1)
183.7
$
$ 1,740.7
161.6
$
—
—
5.7
4.0
(3.7)
—
167.6
$
$
$
$
73.7
1.44
2.89
—
0.05
—
(0.62)
—
—
3.76
$
$
$
$
$
$
178.9
3.52
—
0.23
0.03
0.01
(0.06)
—
—
3.73
51.0
2.37
0.344
823.3
$
$
$
$
$
$
213.7
4.33
—
0.62
(0.09)
0.28
(0.21)
(1.21)
—
3.72
$
$
$
161.2
3.43
—
—
0.12
0.09
(0.08)
—
—
3.56
50.7
2.25
$
— $
$
499.4
48.3
2.10
$
— $
$
438.1
$
$
$
$
$
$
$
6,064.4
—
1,820.7
1,537.3
144.2
—
—
(1.5)
9.2
(2.8)
—
149.1
143.7
3.24
—
—
(0.03)
0.21
(0.06)
—
0.06
3.42
45.6
1.96
—
293.3
Other data
Common Shares Outstanding at Year End
Common Stock Dividends Declared Per Share
Preferred Stock Dividends Declared Per Depositary Share
Capital Expenditures
51.6
$
2.49
$ 1.84375
638.4
$
(1) Effective September 12, 2016, Spire completed the purchase of 100% of the outstanding common stock of Spire
EnergySouth. Total cash consideration paid, net of cash acquired, debt assumed and a working capital settlement payment
received, was $313.9, funded with a combination of the issuance of approximately 2.2 shares of common stock on May 17,
2016, the issuance of $165.0 aggregate principal amount of senior notes on September 9, 2016, and cash on hand.
(2) Balance Sheet data for the fiscal year 2016 has been restated to retrospectively reflect the impact of implementing
Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest: Simplifying the Presentation of Debt
Issuance Costs, during fiscal 2017.
(3) This section contains the non-GAAP financial measures of net economic earnings (NEE) and net economic earnings per
share (NEEPS). NEEPS are calculated by replacing consolidated net income with consolidated NEE in the GAAP diluted
earnings per share calculation. Each reconciling item between NEE and net income is shown pre-tax. The income tax effect
is calculated by applying federal, state, and local income tax rates applicable to ordinary income to the amounts of the pre-
tax reconciling items and then adding any estimated effects of enacted state or local income tax laws for periods before the
related effective date. NEEPS for 2016 excludes the impact of the May 2016 equity offering to fund the acquisition of Spire
EnergySouth. The weighted-average diluted shares used in the NEEPS calculation for fiscal year 2016 was 43.5, compared to
44.3 used in the GAAP earnings per share calculation. For more information about net economic earnings data, refer to the
Non-GAAP Measures section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in
Item 7.
27
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
(Dollars in millions, except per share and per unit amounts)
INTRODUCTION
This section analyzes the financial condition and results of operations of Spire Inc. (the “Company”), Spire Missouri
Inc., and Spire Alabama Inc. Spire Missouri, Spire Alabama and Spire EnergySouth are wholly owned subsidiaries
of the Company. Spire Missouri, Spire Alabama and the subsidiaries of Spire EnergySouth are collectively referred
to as the “Utilities.” The subsidiaries of Spire EnergySouth are Spire Gulf and Spire Mississippi. This section
includes management’s view of factors that affect the respective businesses of the Company, Spire Missouri and
Spire Alabama, explanations of financial results including changes in earnings and costs from the prior periods, and
the effects of such factors on the Company’s, Spire Missouri’s and Spire Alabama’s overall financial condition and
liquidity. Unless otherwise indicated, references to years herein are references to the fiscal years ending September
30 for the Company and its subsidiaries.
Reference is made to “Item 1A. Risk Factors” and “Forward-Looking Statements,” which describe important factors
that could cause actual results to differ from expectations and non-historical information contained herein. In
addition, the following discussion should be read in conjunction with the audited financial statements and
accompanying notes thereto of Spire, Spire Missouri and Spire Alabama included in “Item 8. Financial Statements
and Supplementary Data.”
OVERVIEW
The Company has two reportable segments: Gas Utility and Gas Marketing. Nearly all of Spire’s earnings are
derived from its Gas Utility segment, which reflects the regulated activities of the Utilities. Due to the seasonal
nature of the Utilities’ business and the Spire Missouri rate design, earnings of Spire and each of the Utilities are
typically concentrated during the heating season of November through April each fiscal year.
Gas Utility - Spire Missouri
Spire Missouri is Missouri’s largest natural gas distribution utility and is regulated by the MoPSC. Spire Missouri
serves St. Louis, Kansas City, and other areas throughout the state. Spire Missouri purchases natural gas in the
wholesale market from producers and marketers and ships the gas through interstate pipelines into its own
distribution facilities for sale to residential, commercial and industrial customers. Spire Missouri also transports gas
through its distribution system for certain larger customers who buy their own gas on the wholesale market. Spire
Missouri delivers natural gas to customers at rates and in accordance with tariffs authorized by the MoPSC. The
earnings of Spire Missouri are primarily generated by the sale of heating energy.
Gas Utility - Spire Alabama
Spire Alabama is the largest natural gas distribution utility in the state of Alabama and is regulated by the APSC.
Spire Alabama’s service territory is located in central and northern Alabama. Among the cities served by Spire
Alabama are Birmingham, the center of the largest metropolitan area in the state, and Montgomery, the state
capital. Spire Alabama purchases natural gas through interstate and intrastate suppliers and distributes the
purchased gas through its distribution facilities for sale to residential, commercial, and industrial customers and
other end-users of natural gas. Spire Alabama also transports gas through its distribution system for certain large
commercial and industrial customers for a transportation fee. Effective December 1, 2020, for most of these
transportation service customers, Spire Alabama will also purchase gas on the wholesale market for sale to the
customer upon delivery to the Spire Alabama distribution system. All Spire Alabama services are provided to
customers at rates and in accordance with tariffs authorized by the APSC.
28
Gas Utility - Spire EnergySouth
Spire Gulf and Spire Mississippi are utilities engaged in the purchase, retail distribution and sale of natural gas to
approximately 100,000 customers in southern Alabama and south-central Mississippi. Spire Gulf is regulated by
the APSC, and Spire Mississippi is regulated by the MSPSC.
Gas Marketing
Spire Marketing is engaged in the marketing of natural gas and related activities on a non-regulated basis and is
reported in the Gas Marketing segment. Spire Marketing markets natural gas across the central and southern U.S. It
holds firm transportation and storage contracts in order to effectively manage its transactions with counterparties,
which primarily include producers, municipalities, electric and gas utility companies, and large commercial and
industrial customers.
Other
Other components of the Company’s consolidated information include:
• unallocated corporate items, including certain debt and associated interest costs;
• Spire STL Pipeline, a subsidiary of Spire which has constructed and, as of November 2019, operates a 65-
mile FERC-regulated pipeline to deliver natural gas into eastern Missouri;
• Spire Storage, a subsidiary of Spire providing physical natural gas storage services; and
• Spire’s subsidiaries engaged in the operation of a propane pipeline, the compression of natural gas, and risk
management, among other activities.
Business Evaluation Factors
Based on the nature of the business of the Company and its subsidiaries, as well as current economic conditions,
management focuses on several key variables in evaluating the financial condition and results of operations and
managing the business.
For the Gas Utility segment, these include:
the Utilities’ ability to recover from their customers the costs of purchasing and distributing natural gas;
•
•
the impact of weather and other factors, such as customer conservation, on revenues and expenses;
• changes in the regulatory environment at the federal, state, and local levels, as well as decisions by
regulators, that impact the Utilities’ ability to earn the authorized rate of return in each of the service
territories they serve;
the Utilities’ ability to access credit markets and maintain working capital sufficient to meet operating
requirements;
the effect of natural gas price volatility on the business; and
the ability to manage costs, integrate and standardize operations, and upgrade infrastructure.
•
•
•
In the Gas Marketing segment, these include:
the risks of competition;
fluctuations in natural gas prices;
the changing flow and availability of natural gas;
•
•
•
• new national infrastructure projects;
•
• credit and/or capital market access;
• counterparty risks; and
•
the effect of natural gas price volatility on the business.
the ability to procure firm transportation and storage services at reasonable rates;
Further information regarding how management seeks to manage these key variables is discussed below.
29
Gas Utility
The Utilities seek to provide reliable natural gas services at a reasonable cost, while maintaining and building secure
and dependable infrastructures. The Utilities’ strategies focus on improving both performance and the ability to
recover their authorized distribution costs and rates of return. The Utilities’ distribution costs are the essential,
primarily fixed, expenditures they must incur to operate and maintain more than 60,900 miles of mains and
services comprising their natural gas distribution systems and related storage facilities.
The Utilities’ distribution costs include wages and employee benefit costs, depreciation and maintenance expenses,
and other regulated utility operating expenses, excluding natural and propane gas expense. Distribution costs are
considered in the rate-making process, and recovery of these types of costs is included in revenues generated
through the Utilities’ tariff rates. Spire Missouri’s tariff rates are approved by the MoPSC, whereas Spire Alabama’s
tariff rates are approved by the APSC. Spire Gulf and Spire Mississippi have tariff rates that are approved by the
APSC and MSPSC, respectively.
Spire Missouri and Spire Alabama also have off-system sales and capacity release income streams that are regulated
by tariff but remain subject to fluctuations in market conditions. Some of the factors impacting the level of off-
system sales include the availability and cost of Spire’s natural gas supply, the weather in its service areas and the
weather in other markets. When Spire’s service areas experience warmer-than-normal weather while other markets
experience colder weather or supply constraints, some of Spire’s natural gas supply is available for sale to third
parties not on Spire’s system.
The Utilities work actively to reduce the impact of wholesale natural gas price volatility on their costs by
strategically structuring their natural gas supply portfolios to increase their gas supply availability and pricing
alternatives. They may also use derivative instruments to hedge against significant changes in the commodity price
of natural gas. Nevertheless, the overall cost of purchased gas remains subject to fluctuations in market conditions.
The Purchased Gas Adjustment (PGA) clause of Spire Missouri, Spire Gulf and Spire Mississippi and the Gas Supply
Adjustment (GSA) rider of Spire Alabama allow the Utilities to flow through to customers, subject to prudence
review by the public service commissions, the cost of purchased gas supplies, including costs, cost reductions and
related carrying costs associated with the use of derivative instruments to mitigate volatility in the cost of natural
gas. As of September 30, 2020, Spire Missouri had active derivative positions, but Spire Alabama has had no gas
supply derivative instrument activity since 2010. The Utilities believe they will continue to be able to obtain
sufficient gas supply. The price of natural gas supplies and other economic conditions may affect sales volumes, due
to the conservation efforts of customers, and cash flows associated with the timing of collection of gas costs and
related accounts receivable from customers.
The Utilities rely on short-term credit and long-term capital markets, as well as cash flows from operations, to
satisfy their seasonal cash requirements and fund their capital expenditures. The Utilities access the commercial
paper market through a program administered by the holding company, which then loans borrowed funds to the
Utilities. The Utilities directly access the long-term bond market. Access to debt markets is dependent on current
conditions in the credit and capital markets. Management focuses on maintaining a strong balance sheet and
believes the Utilities currently have adequate access to credit and capital markets and will have sufficient capital
resources to meet their foreseeable obligations. See the “Capital Resources” section for additional information.
Gas Marketing
Spire Marketing is engaged in the marketing of natural gas and providing energy services to both on-system utility
transportation customers and customers outside of the Utilities’ traditional service areas. Spire Marketing utilizes
its natural gas supply agreements, transportation agreements, park and loan agreements, storage agreements and
other executory contracts to support a variety of services to its customers at competitive prices. It closely monitors
and manages the natural gas commodity price and volatility risks associated with providing such services to its
customers through the use of a variety of risk management activities, including the use of exchange-traded/cleared
derivative instruments and other contractual arrangements. Spire Marketing is committed to managing commodity
price risk while it seeks to expand the services that it now provides. Nevertheless, income from the Gas Marketing
operations is subject to more fluctuations in market conditions than the Utilities’ operations.
30
The Gas Marketing business is directly impacted by the effects of competition in the marketplace, the impacts of
new infrastructure, surplus natural gas supplies, and the addition of new demand from exports, power generation
and industrial load. Spire Marketing’s management expects a growing need for marketing services across the
country as customers manage seasonal variability and marketplace volatility.
In addition to its operating cash flows, Spire Marketing relies on Spire’s parental guaranties to secure its purchase
and sales obligations of natural gas, and it also has access to Spire’s liquidity resources. A large portion of Spire
Marketing’s receivables are from customers in the energy industry. It also enters into netting arrangements with
many of its energy counterparties to reduce overall credit and collateral exposure. On a net dollar exposure basis,
the majority of Spire Marketing’s customers are utilities or utility affiliates. Although Spire Marketing’s
uncollectible amounts are closely monitored and have not been significant, increases in uncollectible amounts from
customers are possible and could adversely affect Spire Marketing’s liquidity and results of operations.
Spire Marketing carefully monitors the creditworthiness of counterparties to its transactions. It performs in-house
credit reviews of potential customers and may require credit assurances such as prepayments, letters of credit or
parental guaranties when appropriate. Credit limits for customers are established and monitored.
As a result of infrastructure optimization activities and an abundance of natural gas supply, Spire Marketing cannot
be certain that all of its wholesale purchase and sale transactions will settle physically. As such, certain transactions
are designated as trading activities for financial reporting purposes, due to their settlement characteristics. Results
of operations from trading activities are reported on a net basis in Spire Marketing operating revenues (or expenses,
if negative), which may cause volatility in the Company’s operating revenues, but have no effect on operating
income or net income.
In the course of its business, Spire Marketing enters into commitments associated with the purchase or sale of
natural gas. In accordance with U.S. GAAP, some of its purchase and sale transactions are not recognized in
earnings until the natural gas is physically delivered, while other energy-related transactions, including those
designated as trading activities, are required to be accounted for as derivatives with the changes in their fair value
(representing unrealized gains or losses) recorded in earnings in periods prior to settlement. Because related
transactions of a purchase and sale strategy may be accounted for differently, there may be timing differences in the
recognition of earnings under GAAP and economic earnings realized upon settlement. The Company reports both
GAAP and net economic earnings (non-GAAP), as discussed in the section “Non-GAAP Measures”.
COVID-19
The outbreak of the novel coronavirus (COVID-19) has adversely impacted economic activity and conditions
worldwide. We are continuing to assess the developments involving our workforce, customers and suppliers, as well
as the response of federal and state authorities, our regulators and other business and community leaders. The
Company has implemented what we believe to be appropriate procedures and protocols to ensure the safety of our
customers, suppliers and employees. These actions include activating incident management procedures, work-from-
home for our office-based employees, limiting direct contact with our customers, and, through June, suspending
disconnections and late payment fees for our utility customers.
We have experienced impacts on our results of operations from COVID-19. Based upon our analysis, the effects
through September 30, 2020, included:
lost late payment fees of $2.3 due to a Missouri moratorium from late March through mid-June;
•
• minor net margin impact from lower commercial and industrial volumes offset by additional residential fixed
charges;
• bad debt expense increases of $4.8 due to the aging of our accounts receivable balances; and
• net other direct cost reductions totaling less than $1.0 due to lower travel, meals and entertainment and
training offset by increased costs for enhanced cleaning and personal protective equipment for our facilities
and field personnel compared to normal and expected levels.
31
Spire Missouri received an Accounting Authority Order from the MoPSC to defer certain costs and has recorded a
related regulatory asset of $3.8 as of September 30, 2020. Even with the cost increases and lost revenues, Spire
Alabama exceeded the allowed return and recorded a Rate Stabilization and Equalization giveback in September
2020, so there was no bottom-line impact of these COVID-19 effects.
An extended slowdown of the United States' economy, changes in commodity costs and/or significant changes in
policy and regulation could result in lower demand for natural gas as well as negatively impact the ability of our
customers, contractors, suppliers and other business partners to remain in business or return to operating health.
These could have a material adverse effect on our results of operations, financial condition, liquidity and prospects.
The Company is participating in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provisions
allowing for a payroll tax deferral which will not have an impact on our results of operations but will defer the
payment of the Company’s portion of certain payroll taxes until fiscal 2021 and 2022. Although the Company does
not currently expect to seek relief under any other CARES Act provisions, we will continue to monitor all pending
and future federal, state and local efforts related to the COVID-19 health crisis and assess our need and, as
applicable, eligibility for any such relief.
NON-GAAP MEASURES
Net income, earnings per share and operating income reported by Spire, Spire Missouri and Spire Alabama are
determined in accordance with GAAP. Spire, Spire Missouri and Spire Alabama also provide the non-GAAP
financial measures of net economic earnings, net economic earnings per share and contribution margin.
Management and the Board of Directors use non-GAAP financial measures, in addition to GAAP financial
measures, to understand and compare operating results across accounting periods, for financial and operational
decision making, for planning and forecasting, to determine incentive compensation and to evaluate financial
performance. These non-GAAP operating metrics should not be considered as alternatives to, or more meaningful
than, the related GAAP measures. Reconciliations of non-GAAP financial measures to the most directly comparable
GAAP measures are provided on the following pages.
Net Economic Earnings and Net Economic Earnings Per Share
Net economic earnings and net economic earnings per share are non-GAAP measures that exclude from net income
the impacts of fair value accounting and timing adjustments associated with energy-related transactions, the
impacts of acquisition, divestiture and restructuring activities, and the largely non-cash impacts of impairments and
other non-recurring or unusual items such as certain regulatory, legislative or GAAP standard-setting actions. In
fiscal 2018, these other items included the revaluation of deferred tax assets and liabilities due to the federal Tax
Cuts and Jobs Act and the write-off of certain long-standing assets as a result of disallowances in Spire Missouri’s
rate proceedings. In fiscal 2019, other items included a provision for refunds to customers of amounts previously
collected under MoPSC approved orders as a result of the November 2019 ISRS rulings against Spire Missouri. In
fiscal 2020, adjustments for ISRS revenues reflect the regulatory settlement reached in the third quarter, such that
the related GAAP provision for customer credit for fiscal 2020 is reflected in net economic earnings. In addition, net
economic earnings per share excludes the impact, in the fiscal year of issuance, of shares issued to finance
acquisitions that have yet to be included in net economic earnings.
32
The fair value and timing adjustments are made in instances where the accounting treatment differs from what
management considers the economic substance of the underlying transaction, including the following:
• Net unrealized gains and losses on energy-related derivatives that are required by GAAP fair value
accounting associated with current changes in the fair value of financial and physical transactions prior to
their completion and settlement. These unrealized gains and losses result primarily from two sources:
1) changes in the fair values of physical and/or financial derivatives prior to the period of settlement; and
2) ineffective portions of accounting hedges, required to be recorded in earnings prior to settlement, due to
differences in commodity price changes between the locations of the forecasted physical purchase or sale
transactions and the locations of the underlying hedge instruments;
• Lower of cost or market adjustments to the carrying value of commodity inventories resulting when the net
realizable value of the commodity falls below its original cost, to the extent that those commodities are
economically hedged; and
• Realized gains and losses resulting from the settlement of economic hedges prior to the sale of the physical
commodity.
These adjustments eliminate the impact of timing differences and the impact of current changes in the fair value of
financial and physical transactions prior to their completion and settlement. Unrealized gains or losses are recorded
in each period until being replaced with the actual gains or losses realized when the associated physical transactions
occur. Management believes that excluding the earnings volatility caused by recognizing changes in fair value prior
to settlement and other timing differences associated with related purchase and sale transactions provides a useful
representation of the economic effects of only the actual settled transactions and their effects on results of
operations. While management uses these non-GAAP measures to evaluate all of its businesses, the net effect of
these fair value and timing adjustments on the Utilities’ earnings is minimal because gains or losses on their natural
gas derivative instruments are deferred pursuant to state regulation.
Contribution Margin
In addition to operating revenues and operating expenses, management also uses the non-GAAP measure of
contribution margin when evaluating results of operations. Contribution margin is defined as operating revenues
less natural and propane gas costs and gross receipts tax expense. The Utilities pass to their customers (subject to
prudence review by, as applicable, the MoPSC, APSC or MSPSC) increases and decreases in the wholesale cost of
natural gas in accordance with their PGA clauses or GSA riders. The volatility of the wholesale natural gas market
results in fluctuations from period to period in the recorded levels of, among other items, revenues and natural gas
cost expense. Nevertheless, increases and decreases in the cost of gas associated with system gas sales volumes and
gross receipts tax expense (which are calculated as a percentage of revenues), with the same amount (excluding
immaterial timing differences) included in revenues, have no direct effect on operating income. Therefore,
management believes that contribution margin is a useful supplemental measure, along with the remaining
operating expenses, for assessing the Company’s and the Utilities’ performance.
33
EARNINGS
This section contains discussion and analysis of the results for the year ended September 30, 2020 compared to the
results for the year ended September 30, 2019 and discussion and analysis of the results for the year ended
September 30, 2019 compared to the results for the year ended September 30, 2018.
Spire
Net Income (Loss) and Net Economic Earnings (Loss)
The following tables reconcile the Company’s net economic earnings to the most comparable GAAP number, net
income.
Year Ended September 30, 2020
Net Income (Loss) [GAAP]
Adjustments, pre-tax:
Impairments
Fair value and timing adjustments
Income tax effect of adjustments*
Net Economic Earnings (Loss) [Non-GAAP]
Year Ended September 30, 2019
Net Income (Loss) [GAAP]
Adjustments, pre-tax:
Provision for ISRS rulings
Fair value and timing adjustments
Acquisition, divestiture and restructuring activities
Income tax effect of adjustments*
Net Economic Earnings (Loss) [Non-GAAP]
Year Ended September 30, 2018
Net Income [GAAP]
Adjustments, pre-tax:
Missouri regulatory adjustments
Fair value and timing adjustments
Acquisition, divestiture and restructuring activities
Income tax effect of adjustments*
Effect of the Tax Cuts and Jobs Act
Net Economic Earnings (Loss) [Non-GAAP]
$
$
$
$
$
Gas
Utility
Gas
Marketing
Other
Consol-
idated
Per
Diluted
Share**
$
213.6
$
7.0
$
(132.0) $
88.6
$
1.44
—
(0.3)
0.1
213.4
$
—
2.8
(0.7)
9.1
$
148.6
—
(31.3)
(14.7) $
148.6
2.5
(31.9)
207.8
$
2.89
0.05
(0.62)
3.76
190.5
$
18.5
$
(24.4) $
184.6
$
3.52
12.2
—
—
(2.9)
199.8
$
—
1.2
—
(0.3)
19.4
$
—
—
0.4
(0.1)
(24.1) $
12.2
1.2
0.4
(3.3)
195.1
144.4
$
24.9
$
44.9
$
214.2
30.6
—
0.2
(9.1)
17.0
183.1
$
—
(4.3)
—
1.2
1.1
22.9
$
—
—
13.4
(2.4)
(78.2)
(22.3) $
30.6
(4.3)
13.6
(10.3)
(60.1)
183.7
0.23
0.03
0.01
(0.06)
3.73
4.33
0.62
(0.09)
0.28
(0.21)
(1.21)
3.72
$
$
$
$
*
Income tax effect is calculated by applying federal, state and local income tax rates applicable to ordinary income to the
amounts of the pre-tax reconciling items and then adding any estimated effects of enacted state or local income tax laws for
periods before the related effective date.
** Net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic
earnings in the GAAP diluted earnings per share calculation, which includes reductions for cumulative preferred dividends
and participating shares.
34
2020 vs. 2019
Consolidated
Spire’s net income was $88.6 in fiscal 2020, compared with $184.6 in fiscal 2019. Basic and diluted earnings per
share were $1.44 for fiscal 2020 compared with basic and diluted earnings per share of $3.53 and $3.52,
respectively, for fiscal 2019. The decrease in net income of $96.0 reflects a $148.6 pre-tax ($117.3 after-tax)
reduction in the current year due to impairment charges recorded in the third quarter of this year. The impairment
charges are further described under “Impairment of Long-lived Assets” in Note 1, Summary of Significant
Accounting Policies. These impairment charges were only partly offset by the $12.2 pre-tax ($9.3 after-tax)
reduction in the prior year results due to ISRS rulings against Spire Missouri.
Excluding these amounts, net income growth was $12.0, driven by higher operating results of the Gas Utility
segment primarily attributable to Spire Missouri’s higher ISRS charges, and RSE adjustment impacts at Spire
Alabama.
The Gas Marketing segment’s net income for fiscal 2020 was $7.0, an $11.5 reduction versus the comparable prior-
year period, reflecting primarily the cost of storage positions as noted below.
Net economic earnings were $207.8 ($3.76 per diluted share) for the twelve months ended September 30, 2020, up
from $195.1 ($3.73 per diluted share) for the same period last year. Earnings reflect a $13.6 increase for Gas Utility,
and by a $9.4 lower net economic loss in Other, partly offset by a $10.3 net economic earnings decrease experienced
by Gas Marketing. These fluctuations are described in more detail below. Earnings per share and net economic
earnings per share reflect the impact of preferred and common stock issued over the last twelve months.
Gas Utility
Gas Utility net income increased by $23.1, while net economic earnings increased $13.6 in fiscal 2020 compared to
fiscal 2019. Both measures benefited from a $20.2 increase in run rate ISRS revenues in the current year, combined
with a $1.1 pre-tax increase in all other factors, including modest customer growth. These positive drivers of income
growth were only partly offset by a $5.4 contribution margin reduction in the current year relating to lower
volumes, and a COVID-19-related $2.3 reduction in late payment charges. Net income was also impacted by the
$10.0 year-over-year favorable impact relating to the provision for and settlement of the ISRS Rulings that occurred
in late fiscal 2019 and were resolved in fiscal 2020.
Gas Marketing
The Gas Marketing segment reported net income totaling $7.0 for the twelve months ended September 30, 2020,
versus net income of $18.5 during the same period last year. Net economic earnings for the twelve months ended
September 30, 2020, was $9.1, a decrease of $10.3 from the same period last year. Both net income and net
economic earnings reflect the costs incurred in 2020 for incremental storage capacity (whose value will not be
realized until 2021), as well as less favorable market conditions.
Other
The Company’s other non-utility activities generated a net loss of $132.0 for fiscal 2020, compared to a net loss of
$24.4 for the same period last year. Fiscal 2020 reflects the $117.3 after-tax impairment charge previously
mentioned. Net economic loss was $14.7 for fiscal 2020, a decrease of $9.4 compared to fiscal 2019. The
improvement was driven by a smaller loss from Spire Storage and an increase in earnings from Spire STL Pipeline.
35
Operating Revenues and Operating Expenses
Reconciliations of contribution margin to the most directly comparable GAAP measure are shown below.
Year Ended September 30, 2020
Operating Income (Loss)
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Impairment loss
Less: Gross receipts tax expense
Contribution Margin [Non-GAAP]
Natural gas costs
Gross receipts tax expense
Operating Revenues
Year Ended September 30, 2019
Operating Income (Loss)
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin [Non-GAAP]
Natural gas costs
Gross receipts tax expense
Operating Revenues
Year Ended September 30, 2018
Operating Income (Loss)
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin [Non-GAAP]
Natural gas costs
Gross receipts tax expense
Operating Revenues
Consolidated
Gas
Utility
Gas
Marketing Other
Eliminations Consolidated
334.3 $
421.3
189.7
146.5
—
(91.1)
1,000.7
660.2
91.1
1,752.0 $
9.3 $
11.8
0.6
1.1
—
(0.4)
22.4
65.1
0.4
87.9 $
(137.2) $
38.2
7.0
0.8
148.6
—
57.4
0.4
—
57.8 $
— $
(12.7)
—
—
—
—
(12.7)
(29.6)
—
(42.3) $
206.4
458.6
197.3
148.4
148.6
(91.5)
1,067.8
696.1
91.5
1,855.4
Gas
Utility
Gas
Marketing Other
Eliminations Consolidated
293.4 $
441.7
179.4
151.7
(99.1)
967.1
794.6
99.1
1,860.8 $
23.2 $
11.7
0.1
0.8
(0.2)
35.6
47.9
0.2
83.7 $
(14.3) $
31.6
2.2
1.5
—
21.0
0.5
—
21.5 $
— $
(10.9)
—
—
—
(10.9)
(2.7)
—
(13.6) $
302.3
474.1
181.7
154.0
(99.3)
1,012.8
840.3
99.3
1,952.4
Gas
Utility
Gas
Marketing Other
Eliminations Consolidated
276.6 $
449.7
167.0
152.5
(98.3)
947.5
842.6
98.3
1,888.4 $
33.8 $
7.4
—
0.2
(0.1)
41.3
30.2
0.1
71.6 $
(16.3) $
30.3
1.4
0.8
—
16.2
0.3
—
16.5 $
— $
(10.1)
—
—
—
(10.1)
(1.4)
—
(11.5) $
294.1
477.3
168.4
153.5
(98.4)
994.9
871.7
98.4
1,965.0
$
$
$
$
$
$
Spire’s operating revenues for the twelve months ended September 30, 2020 were $97.0 lower than the same period
in the prior year. Operating revenues decreased by $108.8 at the Gas Utility segment and were $4.2 and $36.3
higher in the Gas Marketing segment and Other, respectively. Intercompany eliminations increased $28.7 year-
over-year, principally related to STL Pipeline. The Gas Utility decrease was due principally to lower gas cost
recoveries, weather/volumetric impacts (net of weather mitigation), lower gross-receipts tax, and lower off-system
sales that were only partly offset by higher ISRS, and Spire Alabama RSE adjustment impacts. The Gas Marketing
increase was primarily due to higher volumes that offset the impact of slightly lower pricing. The increase in
intercompany eliminations was driven by the STL Pipeline transportation services to Spire Missouri.
36
Spire’s contribution margin increased $55.0 compared with the same twelve-month period last year. The growth in
contribution margin was primarily attributable to the Gas Utility segment, up $33.6, with Spire Missouri up $23.4
and Spire Alabama up $6.5, with remaining growth from the utilities of Spire EnergySouth. Gas Marketing’s
contribution margin was down $13.2, reflecting the costs of incremental storage and transportation capacity that
will benefit the upcoming winter heating season. Depreciation and amortization expenses were higher in the Gas
Utility segment, driven principally by continued infrastructure investment in both Spire Missouri and Spire
Alabama. Gas Utility operation and maintenance (“O&M”) expenses were lower in the current year driven primarily
by lower bad debt expense, operations and employee-related costs. These fluctuations are described in more detail
below.
Gas Utility
Operating Revenues – Gas Utility operating revenues for fiscal 2020 decreased $108.8 compared to fiscal 2019,
and was attributable to the following factors:
Spire Missouri and Spire Alabama – Lower PGA/GSA gas cost recoveries
Spire Missouri and Spire Alabama – Volumetric usage
Spire Missouri and Spire Alabama – Gross Receipt Taxes
Spire Missouri – Off-system sales and capacity release
Spire Missouri – Higher ISRS
Spire Missouri – Smaller ISRS Rulings Provision versus prior year
Spire Alabama – RSE: net adjustments
All other factors
Total Variation
$
$
(96.8)
(35.8)
(7.8)
(7.1)
20.2
10.0
4.9
3.6
(108.8)
As shown in the table above, the decrease in revenues was driven primarily by a $96.8 reduction in gas cost
recoveries, $35.8 attributable to volumetric usage, lower gross receipt taxes of $7.8, and a $7.1 impact due to lower
Spire Missouri off-system sales. These impacts were only partly offset by an increase of $30.2 in ISRS ($20.2 of the
increase relating to run rate, with the remaining $10.0 increase attributable to the favorable year-over-year impact
of the ISRS Rulings provision and subsequent settlement), a $4.9 increase relating to Spire Alabama’s RSE
adjustments, and $3.6 attributable to all other factors.
Contribution Margin – Gas Utility contribution margin was $1,000.7 for fiscal 2020, a $33.6 increase over the
same period last year. The increase was attributable to the following factors:
Spire Missouri – Higher ISRS
Spire Missouri – Smaller ISRS Rulings Provision versus prior year
Spire Alabama – RSE: net adjustments
Spire Missouri and Spire Alabama – Volumetric usage
Spire Missouri – Late Payments
All other factors
Total Variation
$
$
20.2
10.0
3.8
(5.4)
(2.3)
7.3
33.6
The increase was primarily attributable to the $30.2 increase in Spire Missouri ISRS ($20.2 of the increase relating
to run rate, with the remaining $10.0 increase attributable to the favorable year-over-year impact of the ISRS
Rulings provision and subsequent settlement). Contribution margin also benefited from a $3.8 increase relating to
Spire Alabama’s RSE net adjustments, and $7.3 attributable to multiple smaller factors, including modest customer
growth. These positive impacts were only partly offset by a $5.4 volumetric/weather reduction (net of weather
mitigation) and a $2.3 COVID-19-related reduction in late payment fee revenue in Spire Missouri.
37
Operating Expenses – O&M expenses in fiscal 2020 decreased by $20.4 million compared to the prior-year
period. Current year expenses reflect a $9.1 million year-over-year reclassification of certain postretirement benefit
costs to other income and expense (no impact on net income). Excluding this adjustment, O&M expenses decreased
by $11.3 million due to lower bad debt expense, operations and employee-related costs. Depreciation and
amortization expenses for the twelve months ended September 30, 2020 increased $10.3 from the same period last
year, principally the result of continued infrastructure capital spending, with $6.5 of the increase attributable to
Spire Missouri and $3.1 attributable to Spire Alabama.
Gas Marketing
Operating Revenues – Gas Marketing operating revenue for the year ended September 30, 2020 increased $4.2
from the prior year. The variance in revenues reflects higher total volumes, partly offset by the impact of marginally
lower general pricing levels and slightly unfavorable derivative mark-to-market activity.
Contribution Margin – Gas Marketing contribution margin was $22.4 for fiscal 2020, a $13.2 decrease
compared to the same period last year. Excluding the net impact of fair value adjustments in both periods totaling
$1.6, the net year-over-year decline was $11.6. This reflects the costs associated with storage positions entered into
in the second half of 2020 whose value will not be realized until the upcoming winter heating season in fiscal 2021,
as well as less favorable market conditions.
Other
Other operating revenue increased $36.3 for the year ended September 30, 2020 compared to 2019, driven
principally by STL Pipeline that was placed in service in November of 2019. Other operating expenses were $6.6
higher than the prior year reflecting STL Pipeline, combined with higher activity levels at Spire Storage.
Interest Charges
Consolidated interest charges during the year ended September 30, 2020 increased $1.1 versus the prior year. The
increase was primarily driven by net long-term debt issuances in the current year and the prior year benefiting from
Allowance for Funds Used in Construction (AFUDC) non-cash income at STL Pipeline. The current year also
benefited from lower interest rates and stable levels of average short-term borrowings. Short-term rates averaged
1.7% in the current year versus 2.7% for the prior year and, for the years ended September 30, 2020 and 2019,
average short-term borrowings were $576.2 and $574.5, respectively.
Income Taxes
Consolidated income tax expense during the year ended September 30, 2020 was $12.4, compared to $34.5 for
fiscal 2019. This decrease of $22.1 is primarily the result of the $31.3 tax benefit relating to the impairment loss
recorded in the third quarter of fiscal 2020. This benefit was only partly offset by the effects of higher pre-tax book
income (excluding the restructuring charge) in the current year.
38
Spire Missouri
Summary Operating Results
Operating Income
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin [Non-GAAP]
Natural gas costs
Gross receipts tax expense
Operating Revenues
Net Income
Year ended September 30,
2020
2019
$
$
$
205.6
251.0
118.0
103.2
(63.5)
614.3
515.8
63.5
1,193.6
130.2
$
$
$
174.8
268.1
111.5
107.6
(71.1)
590.9
629.8
71.1
1,291.8
115.0
Operating revenues during the year ended September 30, 2020 decreased $98.2 from the same period last year. The
decrease in revenues was driven primarily by a $92.6 reduction in gas cost recoveries, $22.0 attributable to lower
volumetric usage, lower gross receipt taxes of $7.4, and a $7.1 impact due to lower off-system sales. These impacts
were only partly offset by an increase of $30.2 in ISRS ($20.2 of the increase relating to run rate, with the
remaining $10.0 increase attributable to the favorable year-over-year impact of the ISRS Rulings provision and
subsequent settlement), and $2.9 attributable to customer growth primarily due to a lower level of disconnections
related to COVID-19.
Contribution margin for the year ended September 30, 2020 increased $23.4 from the prior year. The increase was
primarily attributable to the $32.2 increase in Spire Missouri ISRS, as previously identified above. These positive
impacts were only partly offset by a $7.4 volumetric/weather reduction (net of weather mitigation) and a $2.3
COVID-19-related reduction in late payment fee revenue in Spire Missouri.
O&M expenses for the year ended September 30, 2020 were $17.1 lower than the prior year. Removing the $8.6 net
year-over-year impact due to the transfer of mix of service and non-service postretirement benefits costs to other
income and expense, O&M decreased $8.5 due to lower operations and employee-related costs. Depreciation and
amortization increased $6.5, reflecting continued infrastructure investments throughout Missouri. Income taxes
were $4.0 higher for the year ended September 30, 2020 versus the prior year. This increase is primarily the result
of higher pre-tax book income, partly offset by a favorable return to provision in the current year.
Temperatures experienced in Spire Missouri’s service area during fiscal 2020 were 9% warmer than the prior year
and 2% warmer than normal. Total system therms sold and transported were 1,684.0 million for fiscal 2020
compared with 1,805.7 million for fiscal 2019, a decrease of 7%. Total off-system therms sold and transported
outside of Spire Missouri’s service area decreased 21% to 30.6 million for fiscal 2020 compared with 38.5 million
for fiscal 2019.
39
Spire Alabama
Summary Operating Results
Operating Income
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin [Non-GAAP]
Natural gas costs
Gross receipts tax expense
Operating Revenues
Net Income
Year ended September 30,
2020
2019
$
$
$
102.9
139.1
59.3
34.8
(23.3)
312.8
118.9
23.3
455.0
65.7
$
$
$
95.5
142.6
56.2
35.7
(23.7)
306.3
135.5
23.7
465.5
60.3
Operating revenues for the year ended September 30, 2020 decreased $10.5 versus the comparable period ended
September 30, 2019. Of the decrease, $13.8 was the result of weather and usage impacts, and $4.2 related to lower
gas cost recoveries. Partly offsetting these negative impacts was a $4.9 increase relating to the impacts of RSE
adjustments, and $2.5 relating to off-system sales that commenced in fiscal 2020.
Contribution margin increased $6.5 versus the prior year, primarily the result of RSE adjustments of approximately
$3.8, a $2.0 increase due to weather/volumetric impacts (net of weather mitigation), and $0.8 relating to off-
system sales.
O&M expenses for the year ended September 30, 2020 decreased $3.5 versus the year ended September 30, 2019.
Removing the $0.8 net year-over-year impact due to the transfer of mix of service and non-service postretirement
benefits costs to other income and expense, O&M was down $2.7 from the prior year. The O&M decrease was due to
due to lower operations and employee-related costs, and a benefit associated with a bad debt charge in fiscal 2019
that did not repeat and was partially recovered. Depreciation and amortization was $3.1 higher versus the same
period last year, the result of continued infrastructure investment throughout Spire Alabama’s service territory.
Interest expense decreased $1.1. The decrease was primarily driven by net long-term debt issuances with lower
rates, and lower rates and levels of short-term borrowings. Income tax expense is $1.5 higher than the prior year,
primarily the result of higher pre-tax book income.
Temperatures in Spire Alabama’s service area during the year ended September 30, 2020 were 13% warmer than
last year, and approximately 17% warmer than historical norms. Spire Alabama’s total therms sold and transported
were 1,034.8 million for the year ended September 30, 2020, compared with 1,083.1 million last year, a 4%
decrease. In fiscal 2020 Spire Alabama commenced off-system sales and achieved total sales of 54.3 therms in the
current year.
2019 vs. 2018
Consolidated
Spire’s net income was $184.6 in fiscal 2019, compared with $214.2 in fiscal 2018. Basic and diluted earnings per
share were $3.53 and $3.52, respectively, for fiscal 2019 compared with basic and diluted earnings per share of
$4.35 and $4.33, respectively, for fiscal 2018. The decrease in net income of $29.6 reflects a $12.2 pre-tax ($9.3
after-tax) reduction in the current year due to ISRS rulings against Spire Missouri, and a $60.1 prior year income
benefit relating to the implementation of the Tax Cuts and Jobs Act (TCJA), partly offset by $38.4 in pre-tax ($23.6
after-tax) expense for Missouri rate case write-offs recorded in the prior year.
Excluding these amounts, net income growth was $16.2, driven by higher operating results of the Gas Utility
segment primarily attributable to Spire Missouri’s new rate design, higher ISRS charges, higher volumes, and
customer growth.
40
The Gas Marketing segment also experienced strong operating results, as the benefits of geographic expansion have
mostly offset the return of more normal market conditions and higher operating expenses.
Net economic earnings were $195.1 ($3.73 per diluted share) for the twelve months ended September 30, 2019, up
from $183.7 ($3.72 per diluted share) for the twelve months ended September 30, 2018. Earnings reflect a $16.7
increase for Gas Utility, partly offset by a $3.5 net economic earnings decrease experienced by Gas Marketing and
by a $1.8 higher net economic loss in Other. These fluctuations are described in more detail below. Earnings per
share and net economic earnings per share were further impacted by the issuance of 2.3 million common shares in
May 2018, and the dividends earned from the $250.0 in preferred shares issued in May 2019. Dividends earned on
cumulative preferred shares are deducted from net income in the calculation of earnings per share.
Gas Utility
Gas Utility net income increased by $46.1, while net economic earnings increased $16.7 in fiscal 2019 compared to
fiscal 2018. Both measures benefited from the 2018 rate case redesign at Spire Missouri, and from weather patterns
that were favorable compared to the prior year. Fiscal 2019 net income was negatively impacted by $9.3 in after-tax
impacts relating to ISRS rulings against Spire Missouri. Fiscal 2018 net income was negatively impacted by the
$23.6 after-tax expense related to Missouri rate case write-offs and by a $17.0 one-time tax expense related to the
implementation of the TCJA.
Gas Marketing
The Gas Marketing segment reported net income totaling $18.5 for fiscal 2019, versus net income of $24.9 during
fiscal 2018, with 2018 benefitting from favorable fair value mark-to-market valuations and unusually favorable
market conditions. Net economic earnings for the twelve months ended September 30, 2019, was $19.4, a decrease
of $3.5 from the twelve months ended September 30, 2018 as the benefits of geographic expansion were more than
offset by a return of more normal market conditions and higher operating expenses.
Other
The Company’s other non-utility activities generated a net loss of $24.4 for fiscal 2019, compared to net income of
$44.9 for fiscal 2018. Fiscal 2018 reflects a $78.2 tax benefit resulting from the implementation of the TCJA, partly
offset by higher acquisition and restructuring activities. Net economic loss was $24.1 for fiscal 2019, an increase of
$1.8 compared to fiscal 2018. The increased loss reflects higher corporate interest costs and a $15.4 loss from Spire
Storage, partially offset by increased allowance for funds used during construction (AFUDC) income for Spire STL
Pipeline.
Operating Revenues and Operating Expenses
Consolidated
Spire’s operating revenues for the twelve months ended September 30, 2019 were $12.6 lower than for the twelve
months ending September 30, 2018. Operating revenues decreased by $27.6 at the Gas Utility segment and were
$12.1 higher in the Gas Marketing segment. The Gas Utility decrease was due principally to lower gas cost
recoveries, rate case TCJA customer givebacks, impacts at Spire Missouri relating to ISRS rulings, and
weather/volumetric impacts (net of volume mitigation) that were only partly offset by Missouri rate design changes,
higher ISRS, and favorable Spire Alabama Rate Stabilization and Equalization (RSE) renewal and giveback. The Gas
Marketing increase was primarily due to higher volumes that offset the impact of slightly lower pricing.
41
Spire’s contribution margin increased $17.9 compared with the same twelve-month period last year. The growth in
contribution margin was primarily attributable to the Gas Utility segment, up $19.6, with Spire Missouri up $11.0
and Spire Alabama up $7.0, with remaining growth from the utilities of Spire EnergySouth. Gas Marketing’s
contribution margin was down $5.7, reflecting a decline in basis differentials that was only partly offset by higher
volumes combined with geographic expansion. Depreciation and amortization expenses were higher in the Gas
Utility segment, driven principally by continued infrastructure investment in both Spire Missouri and Spire
Alabama. Gas Utility operation and maintenance (“O&M”) expenses were lower in the current year driven primarily
by the Missouri rate case write-offs in the prior year. These fluctuations are described in more detail below.
Gas Utility
Operating Revenues – Gas Utility operating revenues for fiscal 2019 decreased $27.6 compared to fiscal 2018,
and was attributable to the following factors:
Spire Missouri and Spire Alabama – Lower PGA/GSA gas cost recoveries
Spire Missouri and Spire Alabama – Rate case TCJA customer giveback
Spire Missouri and Spire Alabama – Volumetric usage
Spire Missouri – Provision for ISRS rulings
Spire Missouri – 2018 rate case resets
Spire Missouri – Higher ISRS
Spire Alabama – RSE: net renewal and giveback
Customer growth
All other factors
Total Variation
$
$
(30.2)
(24.3)
(12.4)
(12.2)
32.2
8.7
4.6
2.7
3.3
(27.6)
As shown in the table above, the decrease in revenues was driven primarily by a $30.2 reduction in gas cost
recoveries, rate case TCJA customer givebacks totaling $24.3, $12.4 attributable to volumetric usage, and a $12.2
impact due to ISRS rulings. These impacts were only partly offset by an increase of $32.2 relating to the rate design
changes at Spire Missouri, an increase in ISRS of $8.7, a $4.6 increase relating to Spire Alabama’s RSE renewal and
giveback, and $2.7 attributable to customer growth.
Contribution Margin –– Gas Utility contribution margin was $967.1 for fiscal 2019, a $19.6 increase over the
same period last year. The increase was attributable to the following factors:
Spire Missouri – 2018 rate case resets
Spire Missouri – Higher ISRS
Spire Missouri and Spire Alabama – Volumetric usage
Spire Alabama – RSE: net renewal and giveback
Customer growth
Spire Missouri and Spire Alabama – Rate case TCJA customer giveback
Spire Missouri – Provision for ISRS rulings
All other factors
Total Variation
$
$
32.2
8.7
5.1
4.6
2.7
(24.3)
(12.2)
2.8
19.6
The increase was primarily attributable to the $32.2 increase resulting from the 2018 Missouri rate cases resets.
Contribution margin also benefited from $8.7 higher ISRS charges, $5.1 due to volumes and colder weather in the
current year (net of weather mitigation), a $4.6 increase relating to Spire Alabama’s RSE renewal and giveback, and
$2.7 attributable to customer growth. These positive impacts were only partly offset by rate case TCJA customer
givebacks totaling $24.3 from both Spire Missouri and Spire Alabama, and $12.2 relating to ISRS rulings against
Spire Missouri.
42
Operating Expenses – Gas Utility O&M expenses for the twelve months ended September 30, 2019 decreased
$8.0 from last year. Removing last year’s $38.4 of Missouri rate case write-offs, and the $19.6 net year-over-year
increase due to the transfer of mix of service and non-service postretirement benefits costs to other income and
expense, O&M increased $10.8. Of this increase, $9.0 relates to higher employee benefits and energy efficiency
costs that resulted from the 2018 Missouri rate cases. Depreciation and amortization expenses for the twelve
months ended September 30, 2019 increased $12.4 from the same period last year principally the result of
continued infrastructure capital spending, with $8.7 of the increase attributable to Spire Missouri and $3.0
attributable to Spire Alabama.
Gas Marketing
Operating Revenues – Gas Marketing operating revenue for the year ended September 30, 2019 increased $12.1
from the prior year. The variance in revenues reflects the effect of a $9.3 favorable mark-to-market adjustment on
derivatives combined with higher total volumes, partly offset by the impact of marginally lower general pricing
levels. Average commodity pricing for the year ended September 30, 2019 was approximately $2.670/MMBtu
versus approximately $2.681/MMBtu for fiscal 2018, a decrease of $0.011/MMBtu.
Contribution Margin – Gas Marketing contribution margin was $35.6 for fiscal 2019, a $5.7 decrease compared
to the same period last year. This reflects geographic expansion that created additional opportunities to optimize
the segment’s supply, transportation and storage portfolio that was more than offset by a return to more normal
market conditions, reflected in the narrowed basis differentials in the current year.
Other
Other operating revenue increased $5.0 for the year ended September 30, 2019 compared to 2018, driven
principally by gas storage revenues and slightly higher reinsurance premiums. Other operating expenses were $1.3
higher than the prior year primarily due to gas storage operations.
Interest Charges
Consolidated interest charges during the year ended September 30, 2019 increased $6.0 versus the prior year. The
increase was primarily driven by net long-term debt issuances and higher rates and levels of short-term borrowings.
Short-term rates averaged 2.7% in the current year versus 2.0% for the prior year and, for the years ended
September 30, 2019 and 2018, average short-term borrowings were $574.5 and $408.6, respectively. Partly
offsetting these factors was an increase in the non-cash AFUDC income for Spire STL Pipeline compared to the
prior year.
Income Taxes
Consolidated income tax expense during the year ended September 30, 2019 was $34.5, compared to a $26.5 tax
benefit for fiscal 2018. This increase of $61.0 is primarily the result of the $60.1 fiscal 2018 revaluation benefit of
deferred tax assets and liabilities on the balance sheet that were not reflected in net economic earnings. The
remaining increase in income tax is primarily the result of the effects of higher pre-tax book income in the current
year, partly offset by an increase in amortization of excess deferred income taxes.
43
Spire Missouri
Summary Operating Results
Operating Income
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin [Non-GAAP]
Natural gas costs
Gross receipts tax expense
Operating Revenues
Net Income
Year ended September 30,
2019
2018
$
$
$
174.8
268.1
111.5
107.6
(71.1)
590.9
629.8
71.1
1,291.8
115.0
$
$
$
158.5
279.1
102.8
108.4
(68.9)
579.9
636.8
68.9
1,285.6
129.3
Operating revenues during the year ended September 30, 2019 increased $6.2 from the same period last year.
Revenues were impacted primarily by the $9.4 increase attributable to the new rate design (net of TCJA giveback),
combined with higher ISRS charges of $8.7, and customer growth of $2.7. These positive impacts on the revenue
growth were partly offset by $12.2 in impacts relating to ISRS rulings and volume impacts (net of weather
mitigation) of $3.6.
Contribution margin for the year ended September 30, 2019 increased $11.0 from the prior year. Contribution
margin benefited from the $9.4 increase attributable to the new rate design (net of TCJA giveback), combined with
higher ISRS charges of $8.7, customer growth of $2.7, and the $2.8 increase due to the combined impacts of
volumetric usage and higher off-system sales. These positive impacts were only partly offset by the $12.2 in
adjustments relating to the ISRS rulings.
O&M expenses for the year ended September 30, 2019 were $11.0 lower than the prior year. Removing last year’s
$38.4 of Missouri rate case write-offs, and the $16.9 net year-over-year increase due to the transfer of mix of service
and non-service postretirement benefits costs to other income and expense, O&M increased $10.5. Of this increase,
$9.0 relates to higher employee benefits and energy efficiency costs that resulted from the 2018 Missouri rate cases.
Depreciation and amortization increased $8.7, reflecting continued infrastructure investments throughout
Missouri. Interest expense in the current year was $2.8 greater than prior year, the result of higher short-term
borrowings and higher average effective interest rates. Income taxes were $45.9 higher for the year ended
September 30, 2019 versus the prior year. This increase is primarily the result of the $45.2 fiscal 2018 revaluation
benefit of deferred tax assets and liabilities on the balance sheet.
Temperatures experienced in Spire Missouri’s service area during fiscal 2019 were 5% colder than the prior year and
8% colder than normal. Total system therms sold and transported were 1,805.7 million for fiscal 2019 compared
with 1,759.8 million for fiscal 2018, an increase of 3%. Total off-system therms sold and transported outside of Spire
Missouri’s service area decreased 44% to 38.5 million for fiscal 2019 compared with 68.6 million for fiscal 2018. The
decrease in off-system therms was the direct result of the increase in demand experienced for system therms.
44
Spire Alabama
Summary Operating Results
Operating Income
Operation and maintenance expenses
Depreciation and amortization
Taxes, other than income taxes
Less: Gross receipts tax expense
Contribution Margin [Non-GAAP]
Natural gas costs
Gross receipts tax expense
Operating Revenues
Net Income
Year ended September 30,
2019
2018
$
$
$
95.5
142.6
56.2
35.7
(23.7)
306.3
135.5
23.7
465.5
60.3
$
$
$
96.6
138.8
53.2
36.1
(25.4)
299.3
176.0
25.4
500.7
1.3
Operating revenues for the year ended September 30, 2019 decreased $35.2 versus the comparable period ended
September 30, 2018. Of the decrease, $27.8 related to lower gas cost recoveries, $8.8 was the result of weather and
usage impacts, $1.7 was attributable to lower gross receipt taxes, along with approximately $1.5 associated with rate
reductions to customers due to tax savings from the TCJA. Partly offsetting these negative impacts was a $4.6
increase relating to favorable RSE renewal and giveback.
Contribution margin increased $7.0 versus the prior year, as a favorable RSE adjustment of approximately $4.6 and
a $3.9 increase due to weather/volumetric impacts (net of weather mitigation) were only slightly offset by the $1.5
impact of the customer rate reduction resulting from the TCJA.
O&M expenses for the year ended September 30, 2019 increased $3.8 versus the year ended September 30, 2018.
Removing the $2.4 net year-over-year increase due to the transfer of mix of service and non-service postretirement
benefits costs to other income and expense, O&M increased $1.4. Depreciation and amortization was $3.0 higher
versus the same period last year, the result of continued infrastructure investment throughout Spire Alabama’s
service territory.
Interest expense increased $4.4. The increase was primarily driven by net long-term debt issuances and higher rates
and levels of short-term borrowings. Income tax expense is $61.1 lower than the prior year, primarily the result of
2018 being burdened with the $60.7 deferred tax revaluation impact resulting from the implementation of the
TCJA.
Temperatures in Spire Alabama’s service area during the year ended September 30, 2019 were 6% warmer than last
year, and approximately 6% warmer than historical norms. Spire Alabama’s total therms sold and transported were
1,083.1 million for the year ended September 30, 2019, compared with 1,020.8 million last year, a 6% increase.
REGULATORY MATTERS
For discussions of regulatory matters for Spire, Spire Missouri, and Spire Alabama, see Note 15, Regulatory Matters,
of the Notes to Financial Statements in Item 8.
ACCOUNTING PRONOUNCEMENTS
The Company, Spire Missouri and Spire Alabama have evaluated or are in the process of evaluating the impact that
recently issued accounting standards will have on their financial position or results of operations upon adoption.
For disclosures related to the adoption of new accounting standards, see the New Accounting Pronouncements
section of Note 1 of the Notes to Financial Statements in Item 8.
45
INFLATION
The accompanying financial statements reflect the historical costs of events and transactions, regardless of the
purchasing power of the dollar at the time. Due to the capital-intensive nature of the businesses of the Company,
Spire Missouri and Spire Alabama, the most significant impact of inflation is on the depreciation of utility plant.
Rate regulation, to which the Utilities are subject, allows recovery through its rates of only the historical cost of
utility plant as depreciation. The Utilities expect to incur significant capital expenditures in future years, primarily
related to the planned increased replacements of distribution plant. The Utilities believe any higher costs
experienced upon replacement of existing facilities will be recovered through the normal regulatory process.
CRITICAL ACCOUNTING ESTIMATES
Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources are
based upon our financial statements, which have been prepared in accordance with GAAP, which requires that we
make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our
estimates on historical experience and on various other assumptions that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. We
believe the following represent the more significant items requiring the use of judgment and estimates in preparing
our financial statements:
Regulatory Accounting – The Utilities account for their regulated operations in accordance with FASB
Accounting Standards Codification Topic 980, Regulated Operations. The provisions of this accounting guidance
require, among other things, that financial statements of a rate-regulated enterprise reflect the actions of regulators,
where appropriate. These actions may result in the recognition of revenues and expenses in time periods that are
different than non-rate-regulated enterprises. When this occurs, costs are deferred as assets in the balance sheet
(regulatory assets) and recorded as expenses when those amounts are reflected in rates. Also, regulators can impose
liabilities upon a regulated company for amounts previously collected from customers and for recovery of costs that
are expected to be incurred in the future (regulatory liabilities). Management believes that the current regulatory
environment supports the continued use of these regulatory accounting principles and that all regulatory assets and
regulatory liabilities are recoverable or refundable through the regulatory process. For Spire Missouri and Spire
Alabama, management believes the following represent the more significant items recorded through the application
of this accounting guidance:
PGA Clause – Spire Missouri’s PGA clauses allows it to flow through to customers, subject to a prudence
review by the MoPSC, the cost of purchased gas supplies, including the costs, cost reductions and related
carrying costs associated with the use of natural gas derivative instruments to hedge the purchase price of
natural gas. The difference between actual costs incurred and costs recovered through the application of the
PGA clauses are recorded as regulatory assets and regulatory liabilities that are recovered or refunded in a
subsequent period. The PGA clauses also permit the application of carrying costs to all over- or under-
recoveries of gas costs, including costs and cost reductions associated with the use of derivative instruments,
and also provide for a portion of income from off-system sales and capacity release revenues to be flowed
through to customers.
GSA Rider – Spire Alabama’s rate schedules for natural gas distribution charges contain a GSA rider,
established in 1993, which permits the pass-through to customers of changes in the cost of gas supply. Spire
Alabama’s tariff provides a temperature adjustment mechanism, also included in the GSA, that is designed to
moderate the impact of departures from normal temperatures on Spire Alabama’s earnings. The temperature
adjustment applies primarily to residential, small commercial and small industrial customers. Other non-
temperature weather related conditions that may affect customer usage are not included in the temperature
adjustment. In prior years, Spire Alabama entered into cash flow derivative commodity instruments to hedge its
exposure to price fluctuations on its gas supply. Spire Alabama recognizes all derivatives at fair value as either
assets or liabilities on the balance sheet. Any realized gains or losses are passed through to customers using the
mechanisms of the GSA rider in accordance with Spire Alabama’s APSC approved tariff and are recognized as a
46
regulatory asset or regulatory liability. All derivative commodity instruments in a gain position are valued on a
discounted basis incorporating an estimate of performance risk specific to each related counterparty. Derivative
commodity instruments in a loss position are valued on a discounted basis incorporating an estimate of
performance risk specific to Spire Alabama. Spire Alabama currently has no active gas supply derivative
positions.
ISRS –The ISRS allows Spire Missouri expedited recovery for its investment to upgrade its infrastructure and
enhance its safety and reliability without the necessity of a formal rate case. Spire Missouri records ISRS
revenues as authorized by the MoPSC and estimates the probability and amount of any refunds based on
commission precedent, current legal rulings, the opinion of legal counsel, and other considerations.
Employee Benefits and Postretirement Obligations – Pension and postretirement obligations are calculated
by actuarial consultants that utilize several statistical factors and other assumptions provided by management
related to future events, such as discount rates, returns on plan assets, compensation increases, and mortality rates.
For the Utilities, the amount of expense recognized and the amounts reflected in other comprehensive income are
dependent upon the regulatory treatment provided for such costs, as discussed further below. Certain liabilities
related to group medical benefits and workers’ compensation claims, portions of which are self-insured and/or
contain “stop-loss” coverage with third-party insurers to limit exposure, are established based on historical trends.
The amount of net periodic pension and other postretirement benefit costs recognized in the financial statements
related to the Utilities’ qualified pension plans and other postretirement benefit plans is based upon allowances, as
approved by the MoPSC (for Spire Missouri) and as approved by the APSC (for Spire Alabama). The allowances
have been established in the rate-making process for the recovery of these costs from customers. The differences
between these amounts and actual pension and other postretirement benefit costs incurred for financial reporting
purposes are deferred as regulatory assets or regulatory liabilities. GAAP also requires that changes that affect the
funded status of pension and other postretirement benefit plans, but that are not yet required to be recognized as
components of pension and other postretirement benefit costs, be reflected in other comprehensive income. For the
Utilities’ qualified pension plans and other postretirement benefit plans, amounts that would otherwise be reflected
in other comprehensive income are deferred with entries to regulatory assets or regulatory liabilities.
The tables below reflect the sensitivity of Spire’s plans to potential changes in key assumptions:
Pension Plan Benefits:
Actuarial Assumptions
Discount Rate
Expected Return on Plan Assets
Rate of Future Compensation Increase
Postretirement Benefits:
Actuarial Assumptions
Discount Rate
Expected Return on Plan Assets
Annual Medical Cost Trend
Increase/
(Decrease)
0.25%
(0.25)%
0.25%
(0.25)%
0.25%
(0.25)%
Increase/
(Decrease)
0.25%
(0.25)%
0.25%
(0.25)%
1.00%
(1.00)%
Estimated Increase/
(Decrease) to
Projected
Benefit Obligation
Estimated Increase/
(Decrease) to Annual
Net Pension Cost*
$
(21.7)
23.0
—
—
3.4
(3.3)
$
0.4
(0.4)
(1.2)
1.2
0.3
(0.3)
Estimated Increase/
(Decrease) to
Projected
Postretirement
Benefit Obligation
Estimated Increase/
(Decrease) to Annual
Net Postretirement
Benefit Cost*
$
(4.9)
5.2
—
—
9.7
(8.7)
$
0.2
(0.1)
(0.7)
0.7
0.8
(0.7)
*
Excludes the impact of regulatory deferral mechanism. See Note 13, Pension Plans and Other Postretirement Benefits, of
the Notes to Financial Statements in Item 8 for information regarding the regulatory treatment of these costs.
47
Impairment of Long-lived Assets – Long-lived assets classified as held and used are evaluated for impairment
when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.
Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable
to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, the
Company recognizes an impairment charge equal to the amount of the carrying value that exceeds the estimated fair
value of the assets. In the period in which the Company determines an asset meets held-for-sale criteria, an
impairment charge is recorded to the extent the book value exceeds its fair value less cost to sell.
On July 1, 2020, Spire’s Board of Directors, based upon the recommendation of senior management, revised the
development plan for Spire Storage, resulting in an impairment charge of $140.8 related to Spire Storage assets in
the quarter ended June 30, 2020. The revision was driven by the realization that a longer time horizon will be
required for optimization and positioning of the storage facility to serve energy markets in the western United
States. Among other factors, evaluations of the continuing evolution of market dynamics in the region led
management to update models of various development alternatives. Separately in the quarter ended June 30, 2020,
Spire recorded impairment charges totaling $7.8 related to two commercial compressed natural gas fueling stations
as a result of revised projections reflecting lower diesel prices and slower conversions of Class 8 vehicles. The fair
values used in measuring the impairment charges were determined with an expected present value technique using
a discounted cash flow method under an income approach. Our impairment loss calculations required management
to make assumptions and to apply judgment in order to estimate fair values of the assets. This involved estimating
cash flows, useful lives, and current market value for similar assets and selecting a discount rate that reflects the risk
inherent in future cash flows. Cash flow projections were based on assumptions about future market demand and
achievement of certain operational capabilities. Assumptions were selected from a range of reasonably possible
amounts and were supported by relevant and reliable data. However, if actual results are not consistent with our
estimates and assumptions, we may be exposed to additional impairments that could be material. We do not believe
there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to
calculate asset impairment losses.
Income Taxes – Income tax calculations require estimates due to book-tax differences, estimates with respect to
regulatory treatment of certain items, and uncertainty in the interpretation of tax laws and regulations. Critical
assumptions and judgments also include projections of future taxable income to determine the ability to utilize net
operating losses and credit carryforwards prior to their expiration. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Management regularly assesses financial statement tax provisions to identify
any change in regulatory treatment or tax related estimates and assumptions that could have a material impact on
cash flows, financial position and/or results of operations.
For further discussion of significant accounting policies, see Note 1, Summary of Significant Accounting Policies, of
the Notes to Financial Statements in Item 8.
LIQUIDITY
The Company’s short-term borrowing requirements typically peak during colder months when the Utilities borrow
money to cover the lag between when they purchase natural gas and when their customers pay for that gas. Changes
in the wholesale cost of natural gas (including cash payments for margin deposits associated with Spire Missouri’s
use of natural gas derivative instruments), variations in the timing of collections of gas cost under the Utilities’ PGA
clauses and GSA riders, the seasonality of accounts receivable balances, and the utilization of storage gas
inventories cause short-term cash requirements to vary during the year and from year to year, and may cause
significant variations in the Company’s cash provided by or used in operating activities.
Cash Flow Summary
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
2020
2019
2018
$
$
469.9
(631.6)
160.0
$
450.9
(838.3)
371.8
456.6
(531.7)
89.1
48
Net cash provided by operating activities increased $19.0 from 2019 to 2020 and decreased $5.7 from 2018 to 2019,
primarily as a result of fluctuations in working capital items.
In fiscal 2020, the Company used $206.7 less cash in investing activities than in fiscal 2019. The major driver of the
reduction was lower capital expenditures, down $184.9 versus the prior year. Spire STL Pipeline, which was placed
into service in the first fiscal quarter of 2020, accounted for $97.4 of the reduction, and expenditures at Spire
Storage were $59.6 below prior year levels. Capital expenditures at the Utilities were down $29.1, while remaining
focused on infrastructure upgrades and new business development. Utility capital expenditures resume growth in
fiscal 2021 and beyond, while total Company capital expenditures are planned to be $590.o for fiscal 2021.
In fiscal 2019, the Company used $306.6 more cash in investing activities than in 2018. Capital expenditures
increased $323.9 from fiscal 2018 to 2019, primarily as a result of $110.5 higher expenditures for the Spire STL
Pipeline project and a $118.9 increase in infrastructure upgrades, new business development and investment to
support customer growth across Missouri and Alabama. A further $89.9 in expenditures related to the development
of Spire Storage.
Net cash provided by financing activities declined $211.8 in fiscal 2020 versus fiscal 2019, the major driver being
the prior year issuance of preferred stock that generated $242.0 in proceeds. Year-over-year net debt issuance
increased by $32.3, and the issuance of common stock generated $21.6 more cash in fiscal 2020 than in fiscal 2019.
These increases in cash were only partly offset by a $20.4 increase in common and preferred stock dividends in
fiscal 2020 versus fiscal 2019.
Net cash provided by financing activities increased $282.7 from 2018 to 2019. The increase in 2019 versus 2018 was
primarily due to the issuance of preferred shares for $242.0 and an increase in net debt issuance of $189.2. These
increases were only partly offset by the $135.2 reduction in funds received from common stock issuances in 2019
versus 2018.
CAPITAL RESOURCES
The Company’s, Spire Missouri’s and Spire Alabama’s access to capital markets, including the commercial paper
market, and their respective financing costs, may depend on the credit rating of the entity that is accessing the
capital markets. Their debt is rated by two rating agencies: Standard & Poor’s Corporation (“S&P”) and Moody’s
Investors Service (“Moody’s”). As of September 30, 2020, the debt ratings of the Company, Spire Missouri and Spire
Alabama, shown in the following table, remain at investment grade with a stable outlook.
Spire Inc. senior unsecured long-term debt
Spire Inc. preferred stock
Spire Inc. short-term debt
Spire Missouri senior secured long-term debt
Spire Alabama senior unsecured long-term debt
S&P
BBB+
BBB
A-2
A
A-
Moody’s
Baa2
Ba1
P-2
A1
A2
It is management’s view that the Company, Spire Missouri and Spire Alabama have adequate access to capital
markets and will have sufficient capital resources, both internal and external, to meet anticipated capital
requirements, which primarily include capital expenditures, interest payments on long-term debt, scheduled
maturities of long-term debt, short-term seasonal needs and dividends.
The effects of COVID-19 on the U.S. capital markets may significantly impact Spire. We rely on access to the capital
markets to fund our capital requirements. These uncertain economic conditions may also result in the inability of
our customers to pay for services and could have an impact on our liquidity. Still, considering our financing as
described in Note 7, Notes Payable and Credit Agreements, of the Notes to Financial Statements in Item 8, we
believe we have sufficient access to cash to meet our needs.
49
Cash and Cash Equivalents
Bank deposits were used to support working capital needs of the business. Spire had no temporary cash investments
as of September 30, 2020 or 2019. Due to lower yields available to Spire on short-term investments, the Company
elected to provide all of Spire Missouri’s and Spire Alabama’s short-term funding through intercompany lending
during the past fiscal year.
Short-term Debt
The Utilities’ short-term borrowing requirements typically peak during the colder months, while most of the
Company’s other needs are less seasonal. These short-term cash requirements can be met through the sale of
commercial paper or through the use of a revolving credit facility. For information about these resources, see Note
7, Notes Payable and Credit Agreements, of the Notes to Financial Statements in Item 8 and “Interest Rate Risk”
under “Market Risk” below.
Long-term Debt and Equity
At September 30, 2020, including the current portion but excluding unamortized discounts and debt issuance costs,
Spire had long-term debt totaling $2,500.0, of which $1,098.0 was issued by Spire Missouri, $475.0 was issued by
Spire Alabama, and $237.0 was issued by other subsidiaries. For more information about long-term debt, see Note
6 of the Notes to Financial Statements in Item 8 and “Interest Rate Risk” under “Market Risk” below.
On November 12, 2019, Spire Missouri issued and sold to certain institutional purchasers in a private placement
$275.0 of 2.84% first mortgage bonds due November 15, 2029. Interest is payable semi-annually. The bonds are
secured by a mortgage and deed of trust and rank equal in right to payment with all Spire Missouri’s other first
mortgage bonds. Spire Missouri used the proceeds to repay its $100.0 floating-rate note and for other general
corporate purposes.
On December 2, 2019, Spire Alabama issued and sold to certain institutional investors in a private placement
$100.0 of 2.88% Series 2019B Senior Notes due December 1, 2029. Interest is payable semi-annually. The notes are
senior unsecured obligations of Spire Alabama and rank equal in right to payment with all its other senior
unsecured indebtedness. Spire Alabama used the proceeds to repay short-term debt and for general corporate
purposes.
On December 23, 2019, Spire STL Pipeline issued and sold notes to certain institutional investors in a $135.0
private placement. Interest is payable semi-annually at 2.95%, and principal repayment is scheduled annually in
accordance with a 15-year amortization schedule with an average life of 9.2 years. Proceeds were used to repay
short-term debt.
On June 16, 2020, Spire Missouri purchased and cancelled a portion of its outstanding first mortgage bonds,
including $5.7 of its 7% bonds due 2029, $0.8 of its 6% bonds due 2034, $0.5 of its 6.15% bonds due 2036, and $0.1
of its 4.625% bonds due 2043.
Spire Missouri was authorized by the MoPSC to issue registered securities (first mortgage bonds, unsecured debt
and preferred stock), common stock, and private placement debt in an aggregate amount of up to $500.0 for
financings placed any time before September 30, 2021. As of September 30, 2020, $125.0 remained available under
this authorization. Spire Alabama has no standing authority to issue long-term debt and must petition the APSC for
each planned issuance. On March 24, 2020, the APSC approved an application for up to $150.0 of additional long-
term debt financing.
Spire has a shelf registration statement on Form S-3 on file with the U.S. Securities and Exchange Commission
(SEC) for the issuance and sale of up to 250,000 shares of common stock under its Dividend Reinvestment and
Direct Stock Purchase Plan. There were 207,254 and 201,148 shares at September 30, 2020 and November 16,
2020, respectively, remaining available for issuance under this Form S-3. Spire and Spire Missouri also have a
universal shelf registration statement on Form S-3 on file with the SEC for the issuance of various equity and debt
securities, which expires on May 14, 2022.
50
On February 6, 2019, Spire entered into an “at-the-market” equity distribution agreement, supplemented as of May
14, 2019, pursuant to which the Company may offer and sell, from time to time, shares of its common stock having
an aggregate offering price of up to $150.0. Those shares are issued pursuant to Spire’s universal shelf registration
statement referenced above and a prospectus supplement dated May 14, 2019. Under this program, in the year
ended September 30, 2020, Spire issued 446,619 shares, generating $32.0 of proceeds net of issuance costs, and in
the year ended September 30, 2019, Spire issued 179,630 shares, generating $14.4 of proceeds net of issuance costs.
On May 21, 2019, Spire issued 5.90% Series A Cumulative Redeemable Perpetual Preferred Stock, resulting in
$242.0 of proceeds net of issuance costs.
Including the current portion of long-term debt, the Company’s long-term consolidated capitalization at September
30, 2020, consisted of 50% equity, compared to 55% equity at September 30, 2019. For more information about
equity, see Note 5 of the Notes to Financial Statements in Item 8.
CONTRACTUAL OBLIGATIONS
As of September 30, 2020, Spire had contractual obligations with payments due as summarized below:
Contractual Obligations
Total
Payments due by period
Less than
1 Year
1-3
Years
3-5
Years
More than
5 Years
Principal Payments on Long-term Debt
Interest Payments on Long-term Debt (a)
Operating Leases (b)
Purchase Obligations – Natural Gas (c)
Purchase Obligations – Other (d)
Asset Retirement Obligations
Total (e)
$
$
2,500.0
1,390.2
90.3
1,745.4
53.2
540.1
6,319.2
$
$
60.4
99.3
6.6
484.9
40.6
29.8
721.6
$
$
391.9
180.5
14.4
512.6
7.9
30.7
1,138.0
$
$
198.6
150.0
10.9
215.9
3.3
31.3
610.0
$
$
1,849.1
960.4
58.4
532.0
1.4
448.3
3,849.6
(a) Includes interest payments over the terms of the debt. Interest is calculated using the applicable interest rate and
outstanding principal for each instrument with the terms ending at each instrument’s stated maturity. See Note 6, Long-
Term Debt, of the Notes to Financial Statements in Item 8.
(b) Lease obligations are primarily for office space and power operated equipment. Additional payments will be incurred if
renewal options are exercised under the provisions of certain agreements.
(c) These purchase obligations represent the minimum payments required under existing natural gas transportation and
storage contracts and natural gas supply agreements in the Gas Utility and Gas Marketing segments. These amounts reflect
fixed obligations as well as obligations to purchase natural gas at future market prices, calculated using September 30, 2020
forward market prices. Each of the Utilities generally recovers costs related to its purchases, transportation and storage of
natural gas through the operation of its PGA clause or GSA rider, subject to prudence review by the appropriate regional
public service commission. Variations in the timing of collections of gas costs from customers may affect short-term cash
requirements. Additional contractual commitments are generally entered into prior to or during the heating season.
(d) These purchase obligations primarily reflect miscellaneous agreements for the purchase of materials and the procurement of
services necessary for normal operations.
(e) Long-term liabilities associated with unrecognized tax benefits, totaling $13.2, have been excluded from the table above
because the timing of future cash outflows, if any, cannot be reasonably estimated. Also, commitments related to pension
and postretirement benefit plans have been excluded from the table above. The Company expects to contribute $47.8 to its
qualified, trusteed pension plans and $0.6 to its non-qualified pension plans during fiscal 2021. With regard to the
postretirement benefits, the Company anticipates it will contribute $2.0 to the qualified trusts and $0.5 directly to
participants from Spire Missouri funds during fiscal 2021. For further discussion of the Company’s pension and
postretirement benefit plans, refer to Note 13, Pension Plans and Other Postretirement Benefits, of the Notes to Financial
Statements in Item 8.
51
ENVIRONMENTAL MATTERS
The Utilities and other Spire subsidiaries own and operate natural gas distribution, transmission and storage
facilities, the operations of which are subject to various environmental laws, regulations and interpretations. While
environmental issues resulting from such operations arise in the ordinary course of business, such issues have not
materially affected the Company’s, Spire Missouri’s or Spire Alabama’s financial position and results of operations.
As environmental laws, regulations and their interpretations change, however, the Company and the Utilities may
be required to incur additional costs. For information relative to environmental matters, see Contingencies in Note
16 of the Notes to Financial Statements in Item 8.
OFF-BALANCE SHEET ARRANGEMENTS
At September 30, 2020, the Company had no off-balance sheet financing arrangements, other than surety bonds,
and letters of credit entered into in the ordinary course of business. The Company does not expect to engage in any
significant off-balance sheet financing arrangements in the near future.
MARKET RISK
Commodity Price Risk
Gas Utility
The Utilities’ commodity price risk, which arises from market fluctuations in the price of natural gas, is primarily
managed through the operation of Spire Missouri’s PGA clauses and Spire Alabama’s GSA rider. The PGA clauses
and GSA rider allows the Utilities to flow through to customers, subject to prudence review by the MoPSC and
APSC, the cost of purchased gas supplies. Spire Missouri is allowed the flexibility to make up to three discretionary
PGA changes during each year, in addition to its mandatory November PGA change, so long as such changes are
separated by at least two months. Spire Missouri is able to mitigate, to some extent, changes in commodity prices
through the use of physical storage supplies and regional supply diversity. The Utilities also have risk management
policies that allow for the purchase of natural gas derivative instruments with the goal of managing its price risk
associated with purchasing natural gas on behalf of its customers. These policies prohibit speculation. As of
September 30, 2020, Spire Missouri had active natural gas derivative positions, but Spire Alabama did not. Costs
and cost reduction, including carrying costs, associated with the use of natural gas derivative instruments are
allowed to be passed on to customers through the operation of the PGA clauses or GSA rider. Accordingly, the
Utilities do not expect any adverse earnings impact as a result of the use of these derivative instruments. However,
the timing of recovery for cash payments related to margin requirements may cause short-term cash requirements
to vary. For more information about the Utilities’ natural gas derivative instruments, see Note 10, Derivative
Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8.
Gas Marketing
In the course of its business, Spire’s non-regulated gas marketing subsidiary, Spire Marketing, enters into contracts
to purchase and sell natural gas at fixed prices and natural gas index-based prices. Commodity price risk associated
with these contracts has the potential to impact earnings and cash flows. To minimize this risk, Spire Marketing has
a risk management policy that provides for daily monitoring of a number of business measures, including fixed
price commitments. In accordance with the risk management policy, Spire Marketing manages the price risk
associated with its fixed price commitments. This risk is currently managed either by closely matching the offsetting
physical purchase or sale of natural gas at fixed-prices or through the use of natural gas futures, options and swap
contracts traded on or cleared through the New York Mercantile Exchange (NYMEX) and Intercontinental
Exchange (ICE) to lock in margins. At September 30, 2020 and 2019, Spire Marketing’s unmatched fixed-price
positions were not material to Spire’s financial position or results of operations.
52
As mentioned above, Spire Marketing uses natural gas futures, options and swap contracts traded on or cleared
through the NYMEX and ICE to manage the commodity price risk associated with its fixed-price natural gas
purchase and sale commitments. These derivative instruments may be designated as cash flow hedges of forecasted
purchases or sales. Such accounting treatment, if elected, generally permits a substantial portion of the gain or loss
to be deferred from recognition in earnings until the period that the associated forecasted purchase or sale is
recognized in earnings. To the extent a hedge is effective, gains or losses on the derivatives will be offset by changes
in the value of the hedged forecasted transactions. Information about the fair values of Spire Marketing’s exchange-
traded/cleared natural gas derivative instruments is presented below:
Derivative
Fair
Values
Cash
Margin
Derivatives
and Cash
Margin
Net balance of derivative assets at September 30, 2019
Changes in fair value
Settlements/purchases - net
Changes in cash margin
Net balance of derivative assets at September 30, 2020
$
$
(1.4)
11.8
(4.7)
—
5.7
$
$
4.8
—
—
(5.2)
(0.4)
$
$
Maturity by Fiscal Year
Fair values of exchange-traded/cleared natural gas
Total
As of September 30, 2020
2022
2023
2021
derivatives - net
Fair values of basis swaps - net
Fair values of puts and calls - net
$
$
7.4
49.3
(0.7)
$
1.0
(9.2)
(0.8)
$
6.0
50.1
0.1
$
0.4
8.3
—
Position volumes:
MMBtu - net (short) long futures/swap/option positions
MMBtu - net (short) long basis swap positions
MMBtu - net (short) puts and calls positions
(12.4)
(1.0)
(0.8)
(11.2)
(1.0)
(0.8)
(1.1)
—
—
(0.1)
—
—
3.4
11.8
(4.7)
(5.2)
5.3
2024
—
0.1
—
—
—
—
Certain of Spire Marketing’s physical natural gas derivative contracts are designated as normal purchases or normal
sales, as permitted by GAAP. This election permits the Company to account for the contract in the period the
natural gas is delivered. Contracts not designated as normal purchases or normal sales, including those designated
as trading activities, are accounted for as derivatives with changes in fair value recognized in earnings in the periods
prior to settlement.
Below is a reconciliation of the beginning and ending balances for physical natural gas contracts accounted for as
derivatives, none of which will settle beyond fiscal 2022:
Net balance of derivative liabilities at September 30, 2019
Changes in fair value
Settlements
Net balance of derivative liabilities at September 30, 2020
$
$
3.0
(7.6)
(2.8)
(7.4)
For further details related to Spire Marketing’s derivatives and hedging activities, see Note 10, Derivative
Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8.
53
Counterparty Credit Risk
Spire Marketing has concentrations of counterparty credit risk in that a significant portion of its transactions are
with energy producers, utility companies and pipelines. These concentrations of counterparties have the potential to
affect the Company’s overall exposure to credit risk, either positively or negatively, in that each of these three
groups may be affected similarly by changes in economic, industry or other conditions. Spire Marketing also has
concentrations of credit risk with certain individually significant counterparties. To the extent possible, Spire
Marketing enters into netting arrangements with its counterparties to mitigate exposure to credit risk. It is also
exposed to credit risk associated with its derivative contracts designated as normal purchases and normal sales.
Spire Marketing closely monitors its credit exposure and, although uncollectible amounts have not been significant,
increased counterparty defaults are possible and may result in financial losses and/or capital limitations. For more
information on these and other concentrations of credit risk, including how Spire Marketing manages these risks,
see Note 11, Concentrations of Credit Risk, of the Notes to Financial Statements in Item 8.
Interest Rate Risk
The Company is subject to interest rate risk associated with its short-term debt issuances. Based on average short-
term borrowings during fiscal 2020, an increase of 100 basis points in the underlying average interest rate for short-
term debt would have caused an increase in interest expense (and a decrease in pre-tax earnings and cash flows) of
approximately $5.8 on an annual basis. Portions of such an increase may be offset through the Utilities’ application
of PGA and GSA carrying costs. At September 30, 2020, Spire had fixed-rate long-term debt totaling $2,500.0.
Spire Missouri had fixed-rate long-term debt totaling $1,098 and Spire Alabama had fixed-rate long-term debt of
$475.0, all included in Spire’s total long-term debt. While the long-term debt issues are fixed-rate, they are subject
to changes in fair value as market interest rates change. However, increases or decreases in fair value would impact
earnings and cash flows only if the Company were to reacquire any of these issues in the open market prior to
maturity. Under GAAP applicable to the Utilities’ regulated operations, losses or gains on early redemptions of long-
term debt would typically be deferred as regulatory assets or regulatory liabilities and amortized over a future
period.
During the first quarter of fiscal 2019, the Company entered into a three-year interest rate swap with a fixed interest
rate of 3.250% and a notional amount of $100.0 to protect itself against adverse movements in interest rates on
future interest rate payments. The Company recorded a $53.7 mark-to-market loss to comprehensive income on
this swap for twelve months ended September 30, 2020. In the second quarter of 2020, the Company entered into
multiple interest rate swaps with fixed interest rates ranging from 0.921% to 1.3105% for a total notional amount of
$150.0 to protect itself against adverse movements in interest rates on future interest rate payments. The Company
recorded a $0.5 mark-to-market loss to comprehensive income for these swaps for the twelve months ended
September 30, 2020.
Refer to Note 10, Derivative Instruments and Hedging Activities, of the Notes to Financial Statements in Item 8 for
additional details on the Company’s interest rate swap transactions.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
For this discussion, see “Market Risk” in Item 7, Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
54
Item 8. Financial Statements and Supplementary Data
Management Reports on Internal Control over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Financial Statements (for years ended September 30, 2020, 2019, and 2018):
Spire Inc.
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Spire Missouri Inc.
Statements of Comprehensive Income
Balance Sheets
Statements of Shareholder’s Equity
Statements of Cash Flows
Spire Alabama Inc.
Statements of Income
Balance Sheets
Statements of Shareholder’s Equity
Statements of Cash Flows
Notes to Financial Statements
Note 1. Summary of Significant Accounting Policies
Note 2. Revenue
Note 3. Stock-Based Compensation
Note 4. Earnings Per Common Share
Note 5. Shareholders’ Equity
Note 6. Long-Term Debt
Note 7. Notes Payable and Credit Agreements
Note 8. Fair Value of Financial Instruments
Note 9. Fair Value Measurements
Note 10. Derivative Instruments and Hedging Activities
Note 11. Concentrations of Credit Risk
Note 12. Income Taxes
Note 13. Pension Plans and Other Postretirement Benefits
Note 14. Information by Operating Segment
Note 15. Regulatory Matters
Note 16. Commitments and Contingencies
Note 17. Leases
Note 18. Interim Financial Information (Unaudited)
55
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Management Reports on Internal Control over Financial Reporting
Spire Inc.
Management is responsible for establishing and maintaining adequate internal controls over financial reporting.
Spire Inc.’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of America. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements and can provide only reasonable
assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Spire Inc.’s management, including its Chief Executive Officer and Chief Financial Officer, conducted an assessment
of the effectiveness of Spire Inc.’s internal control over financial reporting as of September 30, 2020. In making this
assessment, management used the criteria in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management
concluded that Spire Inc.’s internal control over financial reporting was effective as of September 30, 2020. Deloitte
& Touche LLP, an independent registered public accounting firm, has issued an attestation report on Spire Inc.’s
internal control over financial reporting, which is included herein.
Spire Missouri Inc.
Management is responsible for establishing and maintaining adequate internal controls over financial reporting.
Spire Missouri Inc.’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of America. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements and can provide only
reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any
evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Spire Missouri Inc.’s management, including its Chief Executive Officer and Chief Financial Officer, conducted an
assessment of the effectiveness of Spire Missouri Inc.’s internal control over financial reporting as of September 30,
2020. In making this assessment, management used the criteria in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that
assessment, management concluded that Spire Missouri Inc.’s internal control over financial reporting was effective
as of September 30, 2020.
Spire Alabama Inc.
Management is responsible for establishing and maintaining adequate internal controls over financial reporting.
Spire Alabama Inc.’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of America. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements and can provide only
reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any
evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Spire Alabama Inc.’s management, including its Chief Executive Officer and Chief Financial Officer, conducted an
assessment of the effectiveness of Spire Alabama Inc.’s internal control over financial reporting as of September 30,
2020. In making this assessment, management used the criteria in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that
assessment, management concluded that Spire Alabama Inc.’s internal control over financial reporting was effective
as of September 30, 2020.
56
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Spire Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Spire Inc. and subsidiaries (the “Company”) as of
September 30, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of September 30, 2020,
based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended September 30, 2020, of the
Company and our report dated November 18, 2020, expressed an unqualified opinion on those financial
statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for their assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
St. Louis, Missouri
November 18, 2020
57
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Spire Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Spire Inc. and subsidiaries (the “Company”) as of
September 30, 2020 and 2019, the related consolidated statements of income, comprehensive income,
shareholders’ equity, and cash flows, for each of the three years in the period ended September 30, 2020, and the
related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of September 30, 2020 and 2019, and the
results of their operations and their cash flows for each of the three years in the period ended September 30, 2020,
in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of September 30, 2020, based on
criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated November 18, 2020, expressed an unqualified
opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters
below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they
relate.
Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Note 15 to
the financial statements
Critical Audit Matter Description
The Company accounts for their regulated operations in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 980, Regulated Operations. The provisions of this accounting guidance
require, among other things, that financial statements of a rate-regulated enterprise reflect the actions of regulators,
where appropriate. These actions may result in the recognition of revenues and expenses in time periods that are
different than non-rate-regulated enterprises. When this occurs, costs are deferred as assets in the balance sheet
(regulatory assets) and recorded as expenses when those amounts are reflected in rates. Also, regulators can impose
liabilities upon a regulated company for amounts previously collected from customers and for recovery of costs that
are expected to be incurred in the future (regulatory liabilities).
58
The Company is subject to rate regulation by the Missouri, Alabama, and Mississippi Public Service Commissions
(the “Commissions”), which have jurisdiction with respect to the rates of natural gas companies within their
respective geographies. The Company has stated that all regulatory assets and regulatory liabilities are recoverable
or refundable through the regulatory process.
Accounting for the economics of rate regulation affects multiple financial statement line items, including property,
plant, and equipment; regulatory assets and liabilities; operating revenues; and depreciation expense, and affects
multiple disclosures in the Company’s financial statements. There is a risk that the Commissions will not approve
full recovery of the costs of providing utility service or recovery of all amounts invested in the utility business and a
reasonable return on that investment. As a result, we identified the impact of rate regulation as a critical audit
matter due to the high degree of subjectivity involved in assessing the impact of current and future regulatory
orders on events that have occurred as of September 30, 2020, and the judgments made by management to support
their assertions about impacted account balances and disclosures. Management judgments included assessing the
likelihood of (1) recovery in future rates of incurred costs or (2) refunds to customers or future reduction in rates.
Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by
the Commissions, auditing these rate-impacted account balances and disclosures, and the related judgments,
requires specialized knowledge of accounting for rate regulation due to the inherent complexities associated with
the specialized rules related to accounting for the effects of cost-based regulation.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the Commissions included the following,
among others:
We tested the effectiveness of management’s controls over evaluating the likelihood of (1) the recovery in
future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a
refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the
effectiveness of management’s controls over the initial recognition of amounts as property, plant, and
equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that
may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
We evaluated the Company's disclosures related to the impacts of rate regulation, including the balances
recorded and regulatory developments, in the financial statements.
We read relevant regulatory orders issued by the Commissions for the Company in Missouri, Alabama, and
Mississippi; regulatory statutes, interpretations, procedural memorandums, and filings made by interveners;
and other publicly available information to assess the likelihood of recovery in future rates or of a future
reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar
circumstances.
We obtained from management the regulatory orders that support the probability of recovery, refund, and/or
future reduction in rates for regulatory assets and liabilities and assessed management’s assertion that
amounts are probable of recovery, refund, or a future reduction in rates.
Evaluation of Spire Storage Asset Impairment – Refer to Note 1 to the financial statements
Critical Audit Matter Description
The Company evaluates for impairment long-lived assets classified as held and used when events or changes in
circumstance indicate that the carrying value of the respective asset (asset group) may not be recoverable. The
carrying value of the asset is not recoverable if it exceeds the sum of undiscounted cash flows expected to result
from the use and eventual disposition of the asset. If the carrying value of the asset is not recoverable, the Company
recognizes an impairment charge equal to the amount of the carrying value of the asset that exceeds the fair value of
the asset.
59
During the year ended September 30, 2020, the Company recorded an impairment loss of $140.8 million related to
their Spire Storage West LLC (“Storage”) long-lived assets (the “asset group”) after it was determined that their
carrying value was not recoverable due to a revision in future business development plans. The Company measured
the impairment loss by estimating the fair value of the asset group using a discounted cash flow model (the
“model”). The estimation of fair value required management to make assumptions and apply judgment regarding
future cash flows expected to result from the use and eventual disposition of the asset group under various business
development plans, future market demand, operational capabilities, and the selection of a discount rate. Significant
and unanticipated changes to these assumptions could require a provision for impairment in a future period.
We identified the estimation of the fair value of the Storage asset group as a critical audit matter due to the high
degree of auditor judgment and an increased level of effort, including the need to involve our fair value specialists,
when performing audit procedures to evaluate the reasonableness of management’s assumptions in determining the
fair value, including those related to revenue forecasts and the “terminal value” used to determine estimated future
cash flows under various business development plans, and the selection of a discount rate.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the estimation of the fair value of the Storage asset group included the following,
among others:
We tested the effectiveness of management’s controls over the Storage asset impairment evaluation, including
those over the key assumptions used in the estimation of the fair value of the asset group, including revenue
forecasts, terminal value, and selection of a discount rate.
We evaluated the reasonableness of key assumptions used by management in the fair value determination by:
o Comparing revenue and cash flow projections to current executed contracts, capital improvement plans,
and third-party reports about future market demand,
o Comparing assumed operational capabilities to internal development plans and third-party reports about
asset viability,
o Comparing the various development plans considered to internal communications to management and
the Board of Directors,
o Comparing estimated terminal value to comparable precedent transactions involving external parties,
and
o Performing sensitivity analyses of the key assumptions to evaluate the change in the fair value estimate
that would result from changes in the assumptions.
We evaluated the reasonableness of management’s assumptions involving revenue forecasts by determining if
the revenue forecasts were consistent with:
o Executed storage contracts,
o Third-party reports regarding future market demand, value of contracts, and operational capabilities of
the Storage sites, and
o Various business development plans communicated to management and the Board of Directors of Spire
Inc.
We evaluated the reasonableness of management’s assumptions involving terminal value by determining
whether the terminal value was consistent with comparable precedent transactions involving external parties.
With the assistance of our fair value specialists, we evaluated the reasonableness of the discounted cash flow
model by:
o Testing the mathematical accuracy of the model, and
o Evaluating the reasonableness of the discount rate used in the model by developing a range of
independent estimates and comparing those to the discount rate selected by management.
/s/ Deloitte & Touche LLP
St. Louis, Missouri
November 18, 2020
We have served as the Company’s auditor since 1953.
60
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Spire Missouri Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Spire Missouri Inc. (a wholly owned subsidiary of Spire Inc.)
(the "Company") as of September 30, 2020 and 2019, the related statements of comprehensive income,
shareholder’s equity, and cash flows, for each of the three years in the period ended September 30, 2020, and the
related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of September 30, 2020 and 2019, and the
results of their operations and their cash flows for each of the three years in the period ended September 30, 2020,
in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to
perform, an audit of their internal control over financial reporting. As part of our audits, we are required to obtain
an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on
the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical Audit Matter
Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Note 15 to
the financial statements
Critical Audit Matter Description
The Company accounts for their regulated operations in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 980, Regulated Operations. The provisions of this accounting guidance
require, among other things, that financial statements of a rate-regulated enterprise reflect the actions of regulators,
where appropriate. These actions may result in the recognition of revenues and expenses in time periods that are
different than non-rate-regulated enterprises. When this occurs, costs are deferred as assets in the balance sheet
(regulatory assets) and recorded as expenses when those amounts are reflected in rates. Also, regulators can impose
liabilities upon a regulated company for amounts previously collected from customers and for recovery of costs that
are expected to be incurred in the future (regulatory liabilities).
The Company is subject to rate regulation by the Missouri Public Service Commission (the “Commission”), which
has jurisdiction with respect to the rates of natural gas companies within their geography. The Company has stated
that all regulatory assets and regulatory liabilities are recoverable or refundable through the regulatory process.
61
Accounting for the economics of rate regulation affects multiple financial statement line items, including property,
plant, and equipment; regulatory assets and liabilities; operating revenues; and depreciation expense, and affects
multiple disclosures in the Company’s financial statements. There is a risk that the Commission will not approve full
recovery of the costs of providing utility service or recovery of all amounts invested in the utility business and a
reasonable return on that investment. As a result, we identified the impact of rate regulation as a critical audit
matter due to the high degree of subjectivity involved in assessing the impact of current and future regulatory
orders on events that have occurred as of September 30, 2020, and the judgments made by management to support
their assertions about impacted account balances and disclosures. Management judgments included assessing the
likelihood of (1) recovery in future rates of incurred costs or (2) refunds to customers or future reduction in rates.
Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by
the Commission, auditing these rate-impacted account balances and disclosures, and the related judgments,
requires specialized knowledge of accounting for rate regulation due to the inherent complexities associated with
the specialized rules related to accounting for the effects of cost-based regulation.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the Commission included the following,
among others:
We tested the effectiveness of management’s controls over evaluating the likelihood of (1) the recovery in
future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a
refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the
effectiveness of management’s controls over the initial recognition of amounts as property, plant, and
equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that
may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
We evaluated the Company's disclosures related to the impacts of rate regulation, including the balances
recorded and regulatory developments, in the financial statements.
We read relevant regulatory orders issued by the Commission for the Company in Missouri; regulatory
statutes, interpretations, procedural memorandums, and filings made by interveners; and other publicly
available information to assess the likelihood of recovery in future rates or of a future reduction in rates based
on precedents of the Commission’s treatment of similar costs under similar circumstances.
We obtained from management the regulatory orders that support the probability of recovery, refund, and/or
future reduction in rates for regulatory assets and liabilities and assessed management’s assertion that
amounts are probable of recovery, refund, or a future reduction in rates.
/s/ Deloitte & Touche LLP
St. Louis, Missouri
November 18, 2020
We have served as the Company’s auditor since 1953.
62
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Spire Alabama Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Spire Alabama Inc. (a wholly owned subsidiary of Spire Inc.)
(the "Company") as of September 30, 2020 and 2019, the related statements of income, shareholder’s equity, and
cash flows, for each of the three years in the period ended September 30, 2020, and the related notes (collectively
referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of September 30, 2020 and 2019, and the results of their
operations and their cash flows for each of the three years in the period ended September 30, 2020, in conformity
with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to
perform, an audit of their internal control over financial reporting. As part of our audits, we are required to obtain
an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on
the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical Audit Matter
Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Note 15 to
the financial statements
Critical Audit Matter Description
The Company accounts for their regulated operations in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 980, Regulated Operations. The provisions of this accounting guidance
require, among other things, that financial statements of a rate-regulated enterprise reflect the actions of regulators,
where appropriate. These actions may result in the recognition of revenues and expenses in time periods that are
different than non-rate-regulated enterprises. When this occurs, costs are deferred as assets in the balance sheet
(regulatory assets) and recorded as expenses when those amounts are reflected in rates. Also, regulators can impose
liabilities upon a regulated company for amounts previously collected from customers and for recovery of costs that
are expected to be incurred in the future (regulatory liabilities).
The Company is subject to rate regulation by the Alabama Public Service Commission (the “Commission”), which
has jurisdiction with respect to the rates of natural gas companies within their geography. The Company has stated
that all regulatory assets and regulatory liabilities are recoverable or refundable through the regulatory process.
63
Accounting for the economics of rate regulation affects multiple financial statement line items, including property,
plant, and equipment; regulatory assets and liabilities; operating revenues; and depreciation expense, and affects
multiple disclosures in the Company’s financial statements. There is a risk that the Commission will not approve full
recovery of the costs of providing utility service or recovery of all amounts invested in the utility business and a
reasonable return on that investment. As a result, we identified the impact of rate regulation as a critical audit
matter due to the high degree of subjectivity involved in assessing the impact of current and future regulatory
orders on events that have occurred as of September 30, 2020, and the judgments made by management to support
their assertions about impacted account balances and disclosures. Management judgments included assessing the
likelihood of (1) recovery in future rates of incurred costs or (2) refunds to customers or future reduction in rates.
Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by
the Commission, auditing these rate-impacted account balances and disclosures, and the related judgments,
requires specialized knowledge of accounting for rate regulation due to the inherent complexities associated with
the specialized rules related to accounting for the effects of cost-based regulation.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the Commission included the following,
among others:
We tested the effectiveness of management’s controls over evaluating the likelihood of (1) the recovery in
future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a
refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the
effectiveness of management’s controls over the initial recognition of amounts as property, plant, and
equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that
may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
We evaluated the Company's disclosures related to the impacts of rate regulation, including the balances
recorded and regulatory developments, in the financial statements.
We read relevant regulatory orders issued by the Commission for the Company in Alabama; regulatory
statutes, interpretations, procedural memorandums, and filings made by interveners; and other publicly
available information to assess the likelihood of recovery in future rates or of a future reduction in rates based
on precedents of the Commission’s treatment of similar costs under similar circumstances.
We obtained from management the regulatory orders that support the probability of recovery, refund, and/or
future reduction in rates for regulatory assets and liabilities and assessed management’s assertion that
amounts are probable of recovery, refund, or a future reduction in rates.
/s/ Deloitte & Touche LLP
St. Louis, Missouri
November 18, 2020
We have served as the Company’s auditor since 2014.
64
SPIRE INC.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended September 30
2019
2018
2020
$
1,855.4
$
1,952.4
$
1,965.0
696.1
458.6
197.3
148.4
148.6
1,649.0
206.4
105.5
0.1
101.0
12.4
88.6
14.8
0.1
73.7
51.2
51.3
1.44
1.44
$
$
$
840.3
474.1
181.7
154.0
—
1,650.1
302.3
104.4
21.2
219.1
34.5
184.6
5.3
0.4
178.9
50.7
50.8
3.53
3.52
$
$
$
871.7
477.3
168.4
153.5
—
1,670.9
294.1
98.4
(8.0)
187.7
(26.5)
214.2
-
0.5
213.7
49.1
49.3
4.35
4.33
$
$
$
(In millions, except per share amounts)
Operating Revenues
Operating Expenses:
Natural gas
Operation and maintenance
Depreciation and amortization
Taxes, other than income taxes
Impairments
Total Operating Expenses
Operating Income
Interest Expense, Net
Other Income (Expense), Net
Income Before Income Taxes
Income Tax Expense (Benefit)
Net Income
Provision for preferred dividends
Income allocated to participating securities
Net Income Available to Common Shareholders
Weighted Average Number of Common Shares Outstanding:
Basic
Diluted
Basic Earnings Per Share of Common Stock
Diluted Earnings Per Share of Common Stock
See the accompanying Notes to Financial Statements.
65
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SPIRE INC.
Years Ended September 30
2018
2019
2020
$
88.6
$
184.6
$
214.2
(8.9)
(3.2)
(12.1)
(0.5)
(0.5)
—
(12.6)
(2.7)
(9.9)
78.7
$
(46.4)
(1.3)
(47.7)
(0.9)
(0.9)
0.1
(48.5)
(10.8)
(37.7)
146.9
$
3.9
(1.5)
2.4
0.4
0.4
0.3
3.1
0.6
2.5
216.7
(In millions)
Net Income
Other Comprehensive (Loss) Income, Before Tax:
Cash flow hedging derivative instruments:
Net hedging (loss) gain arising during the period
Amounts reclassified into net income
Net (loss) gain on cash flow hedging derivative instruments
Defined benefit pension and other postretirement benefit plans:
Amortization of actuarial (gain) loss included in net periodic pension
and postretirement benefit cost
Net defined benefit pension and other postretirement benefit plans
Net unrealized gain on available-for-sale debt securities
Other Comprehensive (Loss) Income, Before Tax
Income Tax (Benefit) Expense Related to Items of Other Comprehensive (Loss) Income
Other Comprehensive (Loss) Income, Net of Tax
Comprehensive Income
$
See the accompanying Notes to Financial Statements.
66
SPIRE INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
ASSETS
Utility Plant
Less: Accumulated depreciation and amortization
Net Utility Plant
Non-utility Property (net of accumulated depreciation and amortization
of $19.0 and $12.7 at September 30, 2020 and 2019, respectively)
Other Investments
Total Other Property and Investments
Current Assets:
Cash and cash equivalents
Accounts receivable:
Utility
Other
Allowance for doubtful accounts
Delayed customer billings
Inventories:
Natural gas
Propane gas
Materials and supplies
Regulatory assets
Prepayments
Other
Total Current Assets
Deferred Charges and Other Assets:
Goodwill
Regulatory assets
Other
Total Deferred Charges and Other Assets
Total Assets
September 30
2020
2019
$
$
6,766.3
2,086.2
4,680.1
6,146.5
1,794.5
4,352.0
432.3
71.7
504.0
4.1
131.8
146.4
(24.9)
10.0
154.3
10.7
26.5
69.5
29.2
33.0
590.6
1,171.6
1,069.4
225.5
2,466.5
8,241.2
$
$
477.8
72.3
550.1
5.8
139.8
172.8
(23.0)
4.3
162.6
10.7
23.3
78.6
29.1
10.5
614.5
1,171.6
767.6
163.4
2,102.6
7,619.2
67
CONSOLIDATED BALANCE SHEETS (Continued)
SPIRE INC.
CAPITALIZATION AND LIABILITIES
Capitalization:
Preferred stock ($25.00 par value per share; 10.0 million depositary shares
authorized, issued and outstanding at September 30, 2020 and 2019)
Common stock (par value $1.00 per share; 70.0 million shares authorized; 51.6
million issued and outstanding at September 30, 2020, and 51.0 million shares
issued and outstanding September 30, 2019)
Paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Shareholders' Equity
Temporary equity
Long-term debt (less current portion)
Total Capitalization
Current Liabilities:
Current portion of long-term debt
Notes payable
Accounts payable
Advance customer billings
Wages and compensation accrued
Customer deposits
Taxes accrued
Regulatory liabilities
Other
Total Current Liabilities
Deferred Credits and Other Liabilities:
Deferred income taxes
Pension and postretirement benefit costs
Asset retirement obligations
Regulatory liabilities
Other
Total Deferred Credits and Other Liabilities
Commitments and Contingencies (Note 16)
Total Capitalization and Liabilities
See the accompanying Notes to Financial Statements.
September 30
2020
2019
$
242.0
$
242.0
51.6
1,549.2
720.7
(41.2)
2,522.3
3.4
2,423.7
4,949.4
60.4
648.0
243.3
45.3
46.3
30.6
71.4
113.0
190.9
1,449.2
511.4
309.0
540.1
343.7
138.4
1,842.6
51.0
1,505.8
775.5
(31.3)
2,543.0
3.4
2,082.6
4,629.0
40.0
743.2
301.5
32.6
45.7
35.6
68.5
60.8
140.9
1,468.8
451.4
264.8
337.6
399.0
68.6
1,521.4
$
8,241.2
$
7,619.2
68
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
SPIRE INC.
Preferred
Stock
Paid-in Retained
Capital
— $ 1,325.6
—
—
150.7
—
1.6
—
7.7
—
Earnings AOCI*
3.2
$
—
—
—
—
614.2
214.2
—
—
—
$
Total
$ 1,991.3
214.2
153.0
1.6
7.7
—
(2.8)
(112.1)
2.5
—
$ 2,255.4
184.6
14.4
5.1
6.2
—
(2.3)
(0.8)
242.0
$
—
—
—
2.5
0.7
6.4
—
—
—
—
—
—
—
—
—
—
(37.7)
(120.5)
(3.4)
(37.7)
$ (31.3) $ 2,543.0
88.6
32.0
9.2
6.0
—
—
—
—
—
—
—
—
—
(3.2)
3.4
(128.4)
$
$
—
—
(0.1)
(2.8)
—
—
—
—
—
—
— $ 1,482.7
—
—
14.2
—
5.1
—
6.2
—
—
—
—
242.0
—
—
—
242.0
—
—
—
—
—
—
—
—
(0.1)
(2.3)
—
—
—
—
—
$ 1,505.8
—
31.6
9.1
6.0
(0.1)
(3.2)
—
—
—
—
(112.1)
—
(0.7)
715.6
184.6
—
—
—
—
—
(0.8)
—
(120.5)
(3.4)
—
775.5
88.6
—
—
—
—
—
3.4
(128.4)
(Dollars in millions,
except per share amounts)
Balance at September 30, 2017
Net income
Common stock issued
Dividend reinvestment plan
Stock-based compensation costs
Stock issued under stock-based
compensation plans
Employees’ tax withholding for
stock-based compensation
Dividends declared:
Common stock ($2.25 per share)
Other comprehensive income, net of tax
Reclassification of certain income tax effects
Balance at September 30, 2018
Net income
Common stock issued
Dividend reinvestment plan
Stock-based compensation costs
Stock issued under stock-based
compensation plans
Employees’ tax withholding for
stock-based compensation
Temporary equity adjustment to
redemption value
Preferred stock issued
Dividends declared:
Common stock ($2.37 per share)
Preferred stock ($0.344 per depositary share)
Other comprehensive loss, net of tax
Balance at September 30, 2019
Net income
Common stock issued
Dividend reinvestment plan
Stock-based compensation costs
Stock issued under stock-based
compensation plans
Employees’ tax withholding for
stock-based compensation
Temporary equity adjustment to
redemption value
Dividends declared:
Common stock ($2.49 per share)
Preferred stock ($1.84375 per depositary
share)
Other comprehensive loss, net of tax
Balance at September 30, 2020
$
$
$
Common Stock
Shares
48,263,243
—
2,300,000
23,023
—
Par
$ 48.3
—
2.3
—
—
119,592
(33,955)
0.1
—
—
—
—
50,671,903
—
179,630
62,735
—
—
—
—
$ 50.7
—
0.2
—
—
87,978
0.1
(28,731)
—
—
—
—
—
—
—
—
50,973,515
—
446,619
122,545
—
—
—
—
$ 51.0
—
0.4
0.1
—
110,463
0.1
(41,353)
—
—
—
—
—
* Accumulated other comprehensive income (loss)
See the accompanying Notes to Financial Statements.
69
—
—
51,611,789
—
—
$ 51.6
$
—
—
242.0
—
—
$ 1,549.2
$
(18.4)
—
720.7
—
(9.9)
(18.4)
(9.9)
$ (41.2) $ 2,522.3
CONSOLIDATED STATEMENTS OF CASH FLOWS
SPIRE INC.
Years Ended September 30
2019
2018
2020
$
88.6
$
184.6
$
214.2
197.3
148.6
9.0
36.2
2.6
0.6
(43.1)
7.0
2.9
12.0
8.2
469.9
(638.4)
—
6.8
(631.6)
—
510.0
(147.0)
(95.2)
41.1
(128.0)
(14.8)
(6.1)
160.0
(1.7)
5.8
4.1
(100.0)
(2.9)
$
$
181.7
—
31.8
2.7
13.6
—
(6.4)
12.4
3.5
31.0
(4.0)
450.9
(823.3)
(7.9)
(7.1)
(838.3)
242.0
230.0
(184.1)
189.6
19.5
(119.0)
(3.4)
(2.8)
371.8
(15.6)
21.4
5.8
(102.4)
(2.7)
$
$
168.4
—
(28.7)
(32.7)
15.5
191.0
12.6
(12.8)
6.4
(121.2)
43.9
456.6
(499.4)
(28.1)
(4.2)
(531.7)
—
75.0
(105.0)
76.3
154.7
(108.7)
—
(3.2)
89.1
14.0
7.4
21.4
(95.1)
(1.5)
$
$
(In millions)
Operating Activities:
Net Income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Impairments
Deferred income taxes and investment tax credits
Changes in assets and liabilities:
Accounts receivable
Inventories
Regulatory assets and liabilities
Accounts payable
Delayed/advance customer billings, net
Taxes accrued
Other assets and liabilities
Other
Net cash provided by operating activities
Investing Activities:
Capital expenditures
Other business acquisitions
Other
Net cash used in investing activities
Financing Activities:
Issuance of preferred stock
Issuance of long-term debt
Repayment of long-term debt
(Repayment) issuance of short-term debt, net
Issuance of common stock
Dividends paid on common stock
Dividends paid on preferred stock
Other
Net cash provided by financing activities
Net (Decrease) Increase in Cash, Cash Equivalents, and
Restricted Cash
Cash, Cash Equivalents, and Restricted Cash at
Beginning of Year
Cash, Cash Equivalents, and Restricted Cash at End of Year
Supplemental disclosure of cash paid for:
Interest, net of amounts capitalized
Income taxes
See the accompanying Notes to Financial Statements.
70
SPIRE MISSOURI INC.
STATEMENTS OF COMPREHENSIVE INCOME
Years Ended September 30
2019
2018
2020
$
1,193.6
$
1,291.8
$
1,285.6
515.8
251.0
118.0
103.2
988.0
205.6
49.4
(8.7)
147.5
17.3
130.2
(0.5)
129.7
$
629.8
268.1
111.5
107.6
1,117.0
174.8
49.2
2.7
128.3
13.3
115.0
(0.8)
114.2
$
636.8
279.1
102.8
108.4
1,127.1
158.5
46.4
(15.4)
96.7
(32.6)
129.3
0.4
129.7
$
(In millions)
Operating Revenues
Operating Expenses:
Natural gas
Operation and maintenance
Depreciation and amortization
Taxes, other than income taxes
Total Operating Expenses
Operating Income
Interest Expense, Net
Other (Expense) Income, Net
Income Before Income Taxes
Income Tax Expense (Benefit)
Net Income
Other Comprehensive (Loss) Income, Net of Tax
Comprehensive Income
See the accompanying Notes to Financial Statements.
71
SPIRE MISSOURI INC.
BALANCE SHEETS
(In millions)
ASSETS
Utility Plant
Less: Accumulated depreciation and amortization
Net Utility Plant
Other Property and Investments
Current Assets:
Cash and cash equivalents
Accounts receivable:
Utility
Associated companies
Other
Allowance for doubtful accounts
Delayed customer billings
Inventories:
Natural gas
Propane gas
Materials and supplies
Regulatory assets
Prepayments
Total Current Assets
Deferred Charges and Other Assets:
Goodwill
Regulatory assets
Other
Total Deferred Charges and Other Assets
Total Assets
September 30
2020
2019
$
$
$
3,931.2
825.7
3,105.5
56.7
—
92.5
2.7
34.1
(18.1)
2.4
95.1
10.7
15.6
32.1
20.7
287.8
210.2
548.7
96.0
854.9
4,304.9
$
3,643.2
764.1
2,879.1
53.3
2.6
94.6
1.4
26.5
(14.9)
4.3
100.1
10.7
13.3
29.4
18.2
286.2
210.2
507.5
85.6
803.3
4,021.9
72
SPIRE MISSOURI INC.
BALANCE SHEETS (continued)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock (par value $1.00 per share; 50.0 million shares authorized; 24,577
issued and outstanding at September 30, 2020 and 2019)
Paid-in capital
Retained earnings
Accumulated other comprehensive loss
$
Total Shareholders' Equity
Long-term debt
Total Capitalization
Current Liabilities:
Notes payable – associated companies
Accounts payable
Accounts payable – associated companies
Advance customer billings
Wages and compensation accrued
Customer deposits
Taxes accrued
Regulatory liabilities
Other
Total Current Liabilities
Deferred Credits and Other Liabilities:
Deferred income taxes
Pension and postretirement benefit costs
Asset retirement obligations
Regulatory liabilities
Other
Total Deferred Credits and Other Liabilities
Commitments and Contingencies (Note 16)
Total Capitalization and Liabilities
See the accompanying Notes to Financial Statements.
September 30
2020
2019
$
0.1
765.0
672.9
(2.9)
1,435.1
1,092.0
2,527.1
301.2
66.7
9.3
32.7
33.3
9.3
39.1
103.2
39.9
634.7
434.7
217.2
153.4
274.8
63.0
1,143.1
0.1
765.0
576.6
(2.4)
1,339.3
925.0
2,264.3
386.4
75.7
5.5
20.8
34.5
13.4
36.4
52.3
26.4
651.4
364.6
192.4
173.5
326.5
49.2
1,106.2
$
4,304.9
$
4,021.9
73
SPIRE MISSOURI INC.
STATEMENTS OF SHAREHOLDER’S EQUITY
Common Stock
Par
(Dollars in millions)
Balance at September 30, 2017
Net income
Stock-based compensation costs
Dividends declared
Other comprehensive income, net of tax
Reclassification of certain income tax effects
Balance at September 30, 2018
Net income
Stock-based compensation costs
Dividends declared
Other comprehensive loss, net of tax
Balance at September 30, 2019
Net income
Dividends declared
Other comprehensive loss, net of tax
Balance at September 30, 2020
Shares
24,577
—
—
—
—
—
24,577
—
—
—
—
24,577
—
—
—
24,577
* Accumulated other comprehensive income (loss)
See the accompanying Notes to Financial Statements.
Paid-in
Capital
756.1
$
—
4.2
—
—
—
760.3
—
4.7
—
—
765.0
—
—
—
765.0
$
Retained
Earnings
416.5
$
129.3
—
(45.0)
—
0.3
501.1
115.0
—
(39.5)
—
576.6
130.2
(33.9)
—
672.9
$
$
AOCI*
$
Total
(1.7) $ 1,171.0
129.3
—
4.2
—
(45.0)
—
0.4
0.4
—
(0.3)
1,259.9
(1.6)
115.0
—
4.7
—
(39.5)
—
(0.8)
(0.8)
1,339.3
(2.4)
130.2
—
(33.9)
—
(0.5)
(0.5)
(2.9) $ 1,435.1
$
$
0.1
—
—
—
—
—
0.1
—
—
—
—
0.1
—
—
—
0.1
74
SPIRE MISSOURI INC.
STATEMENTS OF CASH FLOWS
Years Ended September 30
2019
2018
2020
$
130.2
$
115.0
$
129.3
118.0
17.1
(3.7)
2.7
27.3
2.3
13.7
2.7
(6.1)
0.6
304.8
(356.0)
1.3
(354.7)
275.0
(107.0)
(85.2)
(33.9)
(1.6)
47.3
(2.6)
2.6
— $
$
(46.0)
—
111.5
13.2
(0.3)
29.0
32.7
(8.4)
13.9
4.4
(2.6)
5.2
313.6
(356.9)
1.3
(355.6)
100.0
(50.0)
41.1
(48.5)
—
42.6
0.6
2.0
2.6
(48.7)
—
$
$
102.8
(32.6)
(2.0)
8.4
141.5
(14.8)
(7.4)
(2.1)
(83.9)
45.0
284.2
(295.8)
4.8
(291.0)
—
(100.0)
142.3
(36.0)
—
6.3
(0.5)
2.5
2.0
(45.6)
—
(In millions)
Operating Activities:
Net Income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Deferred income taxes and investment tax credits
Changes in assets and liabilities:
Accounts receivable
Inventories
Regulatory assets and liabilities
Accounts payable
Delayed/advance customer billings, net
Taxes accrued
Other assets and liabilities
Other
Net cash provided by operating activities
Investing Activities:
Capital expenditures
Other
Net cash used in investing activities
Financing Activities:
Issuance of first mortgage bonds / long-term debt
Redemption / maturity of first mortgage bonds / long-term debt
(Repayments of) borrowings from Spire, net
Dividends paid on common stock
Other
Net cash provided by financing activities
Net (Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year
Supplemental disclosure of cash paid for:
Interest, net of amounts capitalized
Income taxes
See the accompanying Notes to Financial Statements.
$
$
75
SPIRE ALABAMA INC.
STATEMENTS OF INCOME
Years Ended September 30
2019
2018
2020
$
455.0
$
465.5
$
118.9
139.1
59.3
34.8
352.1
102.9
20.6
5.4
87.7
22.0
65.7
$
135.5
142.6
56.2
35.7
370.0
95.5
21.7
7.0
80.8
20.5
60.3
$
$
500.7
176.0
138.8
53.2
36.1
404.1
96.6
17.3
3.6
82.9
81.6
1.3
(In millions)
Operating Revenues
Operating Expenses:
Natural gas
Operation and maintenance
Depreciation and amortization
Taxes, other than income taxes
Total Operating Expenses
Operating Income
Interest Expense, Net
Other Income, Net
Income Before Income Taxes
Income Tax Expense
Net Income
See the accompanying Notes to Financial Statements.
76
SPIRE ALABAMA INC.
BALANCE SHEETS
(In millions)
ASSETS
Utility Plant
Less: Accumulated depreciation and amortization
Net Utility Plant
Current Assets:
Accounts receivable:
Utility
Associated companies
Other
Allowance for doubtful accounts
Delayed customer billings
Inventories:
Natural gas
Materials and supplies
Regulatory assets
Prepayments
Other
Total Current Assets
Deferred Charges and Other Assets:
Regulatory assets
Deferred income tax
Other
Total Deferred Charges and Other Assets
Total Assets
September 30
2020
2019
$
2,469.9
1,117.0
1,352.9
2,138.0
882.1
1,255.9
31.4
0.6
5.8
(5.5)
7.5
22.5
8.4
20.4
4.3
0.2
95.6
489.9
59.3
53.7
602.9
2,051.4
$
37.5
—
8.5
(6.3)
—
35.1
7.8
33.9
5.3
0.4
122.2
231.2
81.3
53.0
365.5
1,743.6
$
$
77
SPIRE ALABAMA INC.
BALANCE SHEETS (continued)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock and paid-in capital (par value $0.01 per share; 3,000,000 shares
authorized; 1,972,052 issued and outstanding at September 30, 2020 and 2019)
Retained earnings
$
Total Shareholders' Equity
Long-term debt (less current portion)
Total Capitalization
Current Liabilities:
Current portion of long-term debt
Notes payable – associated companies
Accounts payable
Accounts payable – associated companies
Advance customer billings
Wages and compensation accrued
Customer deposits
Taxes accrued
Regulatory liabilities
Other
Total Current Liabilities
Deferred Credits and Other Liabilities:
Pension and postretirement benefit costs
Asset retirement obligations
Regulatory liabilities
Other
Total Deferred Credits and Other Liabilities
Commitments and Contingencies (Note 16)
Total Capitalization and Liabilities
See the accompanying Notes to Financial Statements.
September 30
2020
2019
$
350.9
500.8
851.7
471.8
1,323.5
—
121.3
43.7
4.2
11.5
8.0
18.7
28.0
3.9
11.8
251.1
74.9
374.3
18.5
9.1
476.8
370.9
459.1
830.0
372.2
1,202.2
40.0
128.7
56.2
1.6
10.6
8.0
19.5
27.4
3.4
9.2
304.6
59.2
148.7
23.0
5.9
236.8
$
2,051.4
$
1,743.6
78
SPIRE ALABAMA INC.
STATEMENTS OF SHAREHOLDER’S EQUITY
(Dollars in millions)
Balance at September 30, 2017
Net income
Dividends declared
Return of capital to Spire
Balance at September 30, 2018
Net income
Dividends declared
Return of capital to Spire
Balance at September 30, 2019
Net income
Dividends declared
Return of capital to Spire
Balance at September 30, 2020
See the accompanying Notes to Financial Statements.
Common Stock
Par
Shares
1,972,052
—
—
—
1,972,052
—
—
—
1,972,052
—
—
—
1,972,052
$
$
Paid-in
Capital
— $
—
—
—
—
—
—
—
—
—
—
—
— $
420.9
—
—
(30.0)
390.9
—
—
(20.0)
370.9
—
—
(20.0)
350.9
Retained
Earnings
446.5
$
1.3
(30.0)
—
417.8
60.3
(19.0)
—
459.1
65.7
(24.0)
—
500.8
$
$
$
Total
867.4
1.3
(30.0)
(30.0)
808.7
60.3
(19.0)
(20.0)
830.0
65.7
(24.0)
(20.0)
851.7
79
SPIRE ALABAMA INC.
STATEMENTS OF CASH FLOWS
Years Ended September 30
2019
2018
2020
$
65.7
$
60.3
$
1.3
59.3
22.0
7.3
11.9
(23.5)
(15.1)
(6.6)
0.6
18.9
0.2
140.7
(150.4)
1.6
(148.8)
100.0
(40.0)
(7.4)
(20.0)
(24.0)
(0.5)
8.1
—
—
— $
56.2
20.5
0.8
(1.2)
(28.2)
4.5
(2.5)
(0.9)
34.8
(3.2)
141.1
(174.5)
(3.3)
(177.8)
90.0
—
(13.8)
(20.0)
(19.0)
(0.5)
36.7
—
—
— $
$
(19.0)
—
$
(19.2)
—
53.2
81.6
(16.2)
(1.2)
40.7
4.7
(5.5)
4.9
(16.7)
(0.7)
146.1
(131.7)
(1.6)
(133.3)
75.0
—
(27.4)
(30.0)
(30.0)
(0.5)
(12.9)
(0.1)
0.1
—
(15.1)
—
(In millions)
Operating Activities:
Net Income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Deferred income taxes
Changes in assets and liabilities:
Accounts receivable
Inventories
Regulatory assets and liabilities
Accounts payable
Delayed/advance customer billings
Taxes accrued
Other assets and liabilities
Other
Net cash provided by operating activities
Investing Activities:
Capital expenditures
Other
Net cash used in investing activities
Financing Activities:
Issuance of long-term debt
Repayment of long-term debt, net
(Repayments of) borrowings from Spire, net
Return of capital to Spire
Dividends paid
Other
Net cash provided by (used in) financing activities
Net Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year
Supplemental disclosure of cash paid for:
Interest, net of amounts capitalized
Income taxes
See the accompanying Notes to Financial Statements.
$
$
80
SPIRE INC., SPIRE MISSOURI INC., AND SPIRE ALABAMA INC.
NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share, per unit and per gallon amounts)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION – These notes are an integral part of the accompanying audited financial statements
of Spire Inc. (“Spire” or the “Company”) presented on a consolidated basis, Spire Missouri Inc. (“Spire Missouri”)
and Spire Alabama Inc. (“Spire Alabama”). Spire Missouri and Spire Alabama are wholly owned subsidiaries of
Spire. Spire Missouri, Spire Alabama and the subsidiaries of Spire EnergySouth Inc. (“Spire EnergySouth”) are
collectively referred to as the “Utilities.” The subsidiaries of Spire EnergySouth are Spire Gulf Inc. and Spire
Mississippi Inc. Unless otherwise indicated, references to years herein are references to the fiscal years ending
September 30 for the Company and its subsidiaries.
The accompanying audited financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP). The consolidated financial position, results of
operations and cash flows of Spire include the accounts of the Company and all its subsidiaries. Transactions and
balances between consolidated entities have been eliminated from the consolidated financial statements of Spire. In
compliance with GAAP, transactions between Spire Missouri and Spire Alabama and their affiliates, as well as
intercompany balances on their balance sheets, have not been eliminated from their separate financial statements.
NATURE OF OPERATIONS – Spire has two reportable segments: Gas Utility and Gas Marketing. The Gas
Utility segment consists of the regulated natural gas distribution operations of the Company and is the core
business segment of Spire in terms of revenue and earnings. The Gas Utility segment is comprised of the operations
of: Spire Missouri, serving St. Louis, Kansas City, and other areas in Missouri; Spire Alabama, serving central and
northern Alabama; and the subsidiaries of Spire EnergySouth, serving the Mobile, Alabama area and south-central
Mississippi. The Gas Marketing segment includes Spire’s primary gas-related business, Spire Marketing Inc. (“Spire
Marketing”), which provides non-regulated natural gas services, primarily in the central and southern United States
(U.S.). The activities of other subsidiaries are reported as Other and are described in Note 14, Information by
Operating Segment. Spire Missouri and Spire Alabama each have a single reportable segment.
USE OF ESTIMATES – The preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those estimates.
SYSTEM OF ACCOUNTS – The accounts of the Utilities are maintained in accordance with the Uniform System
of Accounts prescribed by the applicable state public service commissions, which systems substantially conform to
that prescribed by the Federal Energy Regulatory Commission (FERC).
PROPERTY, PLANT, AND EQUIPMENT –
Utility Plant – Utility plant is stated at original cost. The cost of additions to utility plant includes contracted work,
direct labor and materials, allocable overheads and an allowance for funds used during construction. The costs of
units of property retired, replaced or renewed are removed from utility plant and are charged to accumulated
depreciation. Maintenance and repairs of property and replacement and renewal of items determined to be less
than units of property are charged to maintenance expenses.
81
For Spire Missouri, utility plant is depreciated on a straight-line basis at rates based on estimated service lives of the
various classes of property. In fiscal year 2020, the average depreciation and amortization expense averaged 2.9%,
while in fiscal years 2019 and 2018, annual depreciation and amortization expense averaged 3.0% of the original
cost of depreciable and amortizable property.
For Spire Alabama, depreciation is provided using the composite method of depreciation on a straight-line basis
over the estimated useful lives of utility property at rates approved by the Alabama Public Service Commission
(APSC). The composite depreciation rate in fiscal years 2020, 2019 and 2018 was approximately 3.1%.
Non-utility Property – Non-utility property is recorded at the original cost of acquisition or construction, which
includes material, labor, contractor services and, for FERC-regulated projects, an allowance for funds used during
construction. Repairs, replacements and renewals of items of property determined to be less than a unit of property
or that do not increase the property’s life or functionality are charged to maintenance expense. Upon retirement or
sale of non-utility property, the original cost and related accumulated depreciation are removed from the accounts
and any gain or loss is included in the income statements. Costs related to software developed or obtained for
internal use are capitalized and amortized on a straight-line basis over the estimated useful life of the related
software. If software is retired prior to being fully amortized, the difference is recorded as a loss in the income
statements.
Accrued Capital Expenditures – Accrued capital expenditures, shown in the following table, are excluded from
capital expenditures in the statements of cash flows until paid.
September 30
Spire
Spire Missouri
Spire Alabama
2020
2019
2018
$
$
67.6
34.3
17.0
$
80.6
40.1
11.9
62.1
36.7
8.9
ASSET RETIREMENT OBLIGATIONS – Spire, Spire Missouri and Spire Alabama record legal obligations
associated with the retirement of long-lived assets in the period in which the obligations are incurred, if sufficient
information exists to reasonably estimate the fair value of the obligations. Obligations are recorded as both a cost of
the related long-lived asset and as a corresponding liability. Subsequently, the asset retirement costs are depreciated
over the life of the asset and the asset retirement obligations are accreted to the expected settlement amounts. The
Company, Spire Missouri and Spire Alabama record asset retirement obligations associated with certain safety
requirements to purge and seal gas distribution mains upon retirement, the plugging and abandonment of storage
wells and other storage facilities, specific service line obligations, and certain removal and disposal obligations
related to components of Spire Missouri’s, Spire Alabama’s and Spire Gulf’s distribution systems and general plant.
Asset retirement obligations recorded by Spire’s other subsidiaries are not material. As authorized by the Missouri
Public Service Commission (MoPSC) and APSC, Spire Missouri, Spire Alabama and Spire Gulf accrue future asset
removal costs associated with their property, plant and equipment even if a legal obligation does not exist. Such
accruals are provided for through depreciation expense and are recorded with corresponding credits to regulatory
liabilities or regulatory assets. When those utilities retire depreciable utility plant and equipment, they charge the
associated original costs to accumulated depreciation and amortization, and any related removal costs incurred are
charged to regulatory liabilities or regulatory assets. The difference between removal costs recognized in
depreciation rates and the accretion expense and depreciation expense recognized for financial reporting purposes
is a timing difference between recovery of these costs in rates and their recognition for financial reporting purposes.
Accordingly, these differences are deferred as regulatory liabilities or regulatory assets. In the rate setting process,
the regulatory liabilities or regulatory assets are excluded from the rate base upon which those utilities have the
opportunity to earn their allowed rates of return.
82
In fiscal 2020, Spire Alabama refined certain assumptions and estimates used in calculating its asset retirement
obligations, resulting in both an increase in cost to retire gas distribution assets and a change in the timing of the
related cash outflows. As a result of this change in estimate, which the Company believes is more precise, Spire
Alabama recorded a $221.1 increase to its asset retirement obligations. Related adjustments were made to
regulatory assets and utility plant, with no impact on earnings. The following table presents a reconciliation of the
beginning and ending balances of asset retirement obligations at September 30, as reported in the balance sheets.
Asset retirement obligations, beginning of year
Liabilities incurred during the period
Liabilities settled during the period
Accretion
Revisions in estimated cash flows
Asset retirement obligations, end of year
Spire
2020
2019
Spire Missouri
2019
2020
Spire Alabama
2019
2020
$
$
337.6
3.0
(6.9)
14.0
192.4
540.1
$
$
321.1
10.8
(8.3)
13.0
1.0
337.6
$
$
173.5
2.6
(4.0)
7.2
(25.9)
153.4
$
$
174.1
1.6
(6.8)
7.4
(2.8)
173.5
$
$
148.7
—
(1.6)
6.1
221.1
374.3
$
$
135.7
8.8
(0.8)
5.0
—
148.7
REGULATED OPERATIONS – The Utilities account for their regulated operations in accordance with Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 980, Regulated Operations.
This topic sets forth the application of GAAP for those companies whose rates are established by or are subject to
approval by an independent third-party regulator. The provisions of this accounting guidance require, among other
things, that financial statements of a regulated enterprise reflect the actions of regulators, where appropriate. These
actions may result in the recognition of revenues and expenses in time periods that are different than non-regulated
enterprises. When this occurs, costs are deferred as assets in the balance sheet (regulatory assets) and recorded as
expenses when those amounts are reflected in rates. In addition, regulators can impose liabilities upon a regulated
company for amounts previously collected from customers and for recovery of costs that are expected to be incurred
in the future (regulatory liabilities). Management believes that the current regulatory environment supports the
continued use of these regulatory accounting principles and that all regulatory assets and regulatory liabilities are
recoverable or refundable through the regulatory process. See additional discussion on regulated operations in Note
15, Regulatory Matters.
NATURAL GAS AND PROPANE GAS – For Spire Missouri’s eastern region, inventory of natural gas in storage
is priced on a last in, first out (LIFO) basis and inventory of propane gas in storage is priced on a first in, first out
(FIFO) basis. For the rest of the Gas Utility segment, inventory of natural gas in storage is priced on the weighted
average cost basis. The replacement cost of Spire Missouri’s natural gas for current use in eastern Missouri at
September 30, 2020, and September 30, 2019, was less than the LIFO cost by $12.5 and $17.0, respectively. The
carrying value of the Utilities’ inventory is never adjusted to a lower net realizable value or market value because,
pursuant to Purchased Gas Adjustment (PGA) clauses or a Gas Supply Adjustment (GSA) rider, actual gas costs are
recovered in customer rates. Natural gas and propane gas storage inventory in Spire’s other operating segments is
recorded at the lower of average cost or net realizable value.
BUSINESS COMBINATIONS – Spire’s acquisitions were accounted for using business combination accounting.
Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities
assumed as of the acquisition date based on their fair value.
In December 2017, the Company acquired an 80% voting interest in a natural gas storage facility in Wyoming. The
transaction was valued at $24.8, consisting of $16.0 in cash and a $10.0 non-interest-bearing note valued at $8.8.
In October 2018, the Company completed the exercise of its right to call the remaining 20% voting interest in that
facility and settled the related note for a combined total of $17.0. In May 2018, the Company expanded its
operations by acquiring 100% of a neighboring natural gas storage facility for $12.2 in cash. Together, these storage
operations are referred to herein as “Spire Storage.”
83
GOODWILL – Goodwill is measured as the excess of the acquisition-date fair value of the consideration
transferred over the amount of acquisition-date identifiable assets acquired net of assumed liabilities. At September
30, 2020, goodwill included in Spire’s Gas Utility and Gas Marketing segments was $210.2 and zero, respectively,
with the remainder held at the corporate level. Goodwill amounts have not changed since fiscal 2017, and there are
no accumulated impairment losses. Spire and Spire Missouri evaluate goodwill for impairment as of July 1 of each
year, or more frequently if events and circumstances indicate that goodwill might be impaired. At July 1, 2020 and
2019, Spire and Spire Missouri conducted qualitative assessments and determined goodwill was not impaired. The
Company updated the assessments as of September 30, 2020, determining that it remained more likely than not
that the fair value of each reporting unit exceeded its carrying value.
IMPAIRMENT OF LONG-LIVED ASSETS – Long-lived assets classified as held and used are evaluated for
impairment when events or changes in circumstances indicate that the carrying value of such assets may not be
recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows
attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash
flows, the Company recognizes an impairment charge equal to the amount of the carrying value that exceeds the
estimated fair value of the assets. In the period in which the Company determines an asset meets held-for-sale
criteria, an impairment charge is recorded to the extent the book value exceeds its fair value less cost to sell.
On July 1, 2020, Spire’s Board of Directors, based upon the recommendation of senior management, revised the
development plan for Spire Storage, resulting in an impairment charge of $140.8 related to Spire Storage assets
(non-utility property on the balance sheet) in the quarter ended June 30, 2020. The revision was driven by the
realization that a longer time horizon will be required for optimization and positioning of the storage facility to
serve energy markets in the western United States. Among other factors, evaluations of the continuing evolution of
market dynamics in the region led management to update models of various development alternatives. Separately in
the quarter ended June 30, 2020, Spire recorded impairment charges totaling $7.8 related to two commercial
compressed natural gas fueling stations (also non-utility property) as a result of revised projections reflecting lower
diesel prices and slower conversions of Class 8 vehicles. The fair values used in measuring the impairment charges
were determined with an expected present value technique using a discounted cash flow method under an income
approach.
DERIVATIVES – In the course of their business, certain subsidiaries of Spire enter into commitments associated
with the purchase or sale of natural gas. Certain of their derivative natural gas contracts are designated as normal
purchases or normal sales and, as such, are excluded from the scope of FASB ASC Topic 815, Derivatives and
Hedging. Those contracts are accounted for as executory contracts and recorded on an accrual basis. Revenues and
expenses from such contracts are recorded gross. Contracts not designated as normal purchases or normal sales are
recorded as derivatives with changes in fair value recognized in earnings in the periods prior to physical delivery.
Certain of Spire Marketing’s wholesale purchase and sale transactions are classified as trading activities for financial
reporting purposes. Under GAAP, revenues and expenses associated with trading activities are presented on a net
basis in Gas Marketing operating revenues (or expenses, if negative) in the Condensed Consolidated Statements of
Income. This net presentation has no effect on operating income or net income. Refer to Note 10, Derivative
Instruments and Hedging Activities, for more information about derivatives.
INCOME TAXES – Spire and its subsidiaries account for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the financial statement carrying amount of existing assets and liabilities and the respective tax basis and for tax
credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be realized or settled. The effects
on deferred tax assets and liabilities of a change in enacted tax rates is recognized in income or loss for non-
regulated operations, and in a regulatory asset or regulatory liability for regulated operations. A valuation allowance
is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
84
The Company accounts for uncertain tax positions in accordance with authoritative guidance. The authoritative
guidance addresses the determination of whether tax benefits claimed, or expected to be claimed, on a tax return
should be recorded in the financial statements. Spire may recognize the tax benefit from an uncertain tax position
only if it is more likely than not that the position will be sustained upon examination by the taxing authority, based
on the technical merits of the position. Tax-related interest and penalties, if any, are classified as a liability on the
balance sheets. For additional information on the accounting for income taxes, refer to Note 12, Income Taxes.
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – All highly liquid debt instruments purchased
with original maturities of three months or less are considered to be cash equivalents. Such instruments are carried
at cost, which approximates market value. Outstanding checks on the Company’s and Utilities’ bank accounts in
excess of funds on deposit create book overdrafts (which are funded at the time checks are presented for payment)
and are classified as Other in the Current Liabilities section of the balance sheets. Changes in book overdrafts are
reflected as Operating Activities in the statements of cash flows. In Spire’s statements of cash flows, total cash, cash
equivalents, and restricted cash included $17.0 of restricted cash reported in “Other” current assets on Spire’s
balance sheet as of September 30, 2018 (in addition to amounts shown as “Cash and cash equivalents”). This
restricted cash was an escrow deposit for the purchase of the remaining 20% interest in a natural gas storage
business and the settlement of the related note payable, and the transaction was completed on October 25, 2018.
NATURAL GAS RECEIVABLE – Spire Marketing enters into natural gas transactions with natural gas pipeline
and storage companies known as park and loan arrangements. Under the terms of the arrangements, Spire
Marketing purchases natural gas from a third party and delivers that natural gas to the pipeline or storage company
for the right to receive the same quantity of natural gas from that company at the same location in a future period.
These arrangements are accounted for as non-monetary transactions under GAAP and are recorded at the carrying
amount. As such, natural gas receivables are reflected on the Consolidated Balance Sheets at cost, which includes
related fees associated with the transactions. In the period that the natural gas is returned to Spire Marketing,
concurrent with the sale of the natural gas to a third party, the related natural gas receivable is expensed in the
Consolidated Statements of Income. In conjunction with these transactions, Spire Marketing usually enters into
New York Mercantile Exchange (NYMEX) and Intercontinental Exchange (ICE) natural gas futures, options, and
swap contracts or fixed price sales agreements to protect against market changes in future sales prices.
EARNINGS PER COMMON SHARE – GAAP requires dual presentation of basic and diluted earnings per share
(EPS). EPS is computed using the two-class method, which is an earnings allocation method for computing EPS that
treats a participating security as having rights to earnings that would otherwise have been available to common
shareholders. Certain of the Company’s stock-based compensation awards pay non-forfeitable dividends to the
participants during the vesting period and, as such, are deemed participating securities. Basic EPS is computed by
dividing net income available to common shareholders by the weighted average number of common shares
outstanding during the period. Diluted EPS is computed by dividing net income available to common shareholders
by the weighted average number of common shares outstanding that are increased for additional shares that would
be outstanding if potentially dilutive non-participating securities were converted to common shares, pursuant to the
treasury stock method. Shares attributable to equity units, non-participating stock options and time-vested
restricted stock/units are excluded from the calculation of diluted earnings per share if the effect would be
antidilutive. Shares attributable to non-participating performance-contingent restricted stock awards are only
included in the calculation of diluted earnings per share to the extent the underlying performance and/or market
conditions are satisfied (a) prior to the end of the reporting period or (b) would be satisfied if the end of the
reporting period were the end of the related contingency period and the result would be dilutive. The Company’s
EPS computations are presented in Note 4, Earnings Per Common Share.
85
TRANSACTIONS WITH AFFILIATES – Transactions between affiliates of the Company have been eliminated
from the consolidated financial statements of Spire. Spire Missouri and Spire Alabama borrowed funds from the
Company and incurred related interest, as reflected in their separate financial statements, and they participated in
normal intercompany shared services transactions. In addition, Spire Missouri’s other transactions with affiliates
included:
Purchases of natural gas from Spire Marketing
Sales of natural gas to Spire Marketing
Transportation services received from STL Pipeline LLC
Transportation services received from Spire NGL Inc.
2020
2019
2018
$
$
56.9
0.1
27.9
1.0
$
95.3
1.7
—
1.0
71.5
0.3
—
1.0
In the twelve months ended September 30, 2020, Spire Alabama had natural gas purchases from and sales to Spire
Marketing totaling $6.3 and $0.3, respectively.
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS – Trade accounts receivable
are recorded at the amounts due from customers, including unbilled amounts. Estimates of the collectability of
trade accounts receivable are based on historical trends, age of receivables, economic conditions, credit risk of
specific customers, and other factors. Accounts receivable are written off against the allowance for doubtful
accounts when they are deemed to be uncollectible.
Allowance at beginning of year
Additions charged to expense
Net deductions
Allowance at end of year
2020
$ 23.0
14.0
(12.1)
$ 24.9
Spire
2019
$ 22.4
16.9
(16.3)
$ 23.0
2018
$ 18.3
14.6
(10.5)
$ 22.4
Spire Missouri
2019
$ 16.0
12.3
(13.4)
$ 14.9
2020
$ 14.9
12.7
(9.5)
$ 18.1
2018
$ 14.1
11.9
(10.0)
$ 16.0
Spire Alabama
2019
3.9
$
4.7
(2.3)
6.3
2020
6.3
$
0.9
(1.7)
5.5
2018
2.6
$
2.1
(0.8)
3.9
$
$
$
FINANCE RECEIVABLES – Spire Alabama finances third party contractor sales of merchandise including gas
furnaces and appliances. At September 30, 2020 and September 30, 2019, Spire Alabama’s finance receivable
totaled approximately $9.4 and $11.7, respectively. Financing is available only to qualified customers who meet
creditworthiness thresholds for customer payment history and external agency credit reports. Spire Alabama relies
upon ongoing payments as the primary indicator of credit quality during the term of each contract. The allowance
for credit losses is recognized using an estimate of write-off percentages based on historical experience. Delinquent
accounts are evaluated on a case-by-case basis and, absent evidence of debt repayment, after 90 days are due in full
and assigned to a third-party collection agency. The remaining finance receivable is written off approximately 12
months after being assigned to the third-party collection agency. Spire Alabama had finance receivables past due 90
days or more of $0.3 at September 30, 2020 and $0.4 at September 30, 2019.
GROUP MEDICAL AND WORKERS’ COMPENSATION RESERVES – The Company self-insures its group
medical and workers’ compensation costs and carries stop-loss coverage in relation to medical claims and workers’
compensation claims. Reserves for amounts incurred but not reported are established based on historical cost levels
and lags between occurrences and reporting.
FAIR VALUE MEASUREMENTS – Certain assets and liabilities are recognized or disclosed at fair value, which
is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (exit price). GAAP establishes a fair value hierarchy that
prioritizes the inputs used to measure fair value.
The levels of the hierarchy are described below:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Pricing inputs other than quoted prices included within Level 1, which are either directly or
indirectly observable for the asset or liability as of the reporting date. These inputs are derived principally
from, or corroborated by, observable market data.
86
Level 3 – Pricing that is based upon inputs that are generally unobservable that are based on the best
information available and reflect management’s assumptions about how market participants would price
the asset or liability.
Assessment of the significance of a particular input to the fair value measurements may require judgment and may
affect the valuation of the asset or liability and its placement within the fair value hierarchy. Additional information
about fair value measurements is provided in Note 8, Fair Value of Financial Instruments, Note 9, Fair Value
Measurements, and Note 13, Pension Plans and Other Postretirement Benefits.
STOCK-BASED COMPENSATION – The Company accounts for share-based compensation arrangements in
accordance with ASC Topic 718, Compensation - Stock Compensation. The Company measures stock-based
compensation awards at fair value at the date of grant and recognizes the compensation cost of the awards over the
requisite service period. Forfeitures are recognized in the period they occur. Refer to Note 3, Stock-Based
Compensation, for further discussion of the accounting for the Company’s stock-based compensation plans.
NEW ACCOUNTING PRONOUNCEMENTS – Spire, Spire Missouri and Spire Alabama adopted the guidance
in ASU No. 2014-09, Revenue from Contracts with Customers, and related amendments (collectively, “ASC 606”),
in the first quarter of fiscal year 2019 using the modified retrospective method applied to all contracts at October 1,
2018. The core principle of ASC 606 is that revenue should be recognized to depict the transfer of control of
promised goods or services to customers in an amount that reflects the consideration to which the entity expects to
be entitled in exchange for those goods or services. Under the new standard, an entity must identify the
performance obligations in a contract, determine the transaction price and allocate the price to specific performance
obligations to recognize revenue when the obligation is completed. In addition, ASC 606 requires disclosure of the
nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The
adoption of ASC 606 resulted in no change to how Spire, Spire Missouri and Spire Alabama recognize revenue, and
therefore, no cumulative effect adjustment to the opening balance of retained earnings was required, and there was
no significant impact to financial results after adoption. The adoption did result in changes to the disclosures about
revenue, which are included in Note 2, Revenue. Some revenue arrangements, such as alternative revenue programs
and certain derivative contracts, are excluded from the scope of ASC 606 and, therefore, are presented separately in
disclosures.
Also effective October 1, 2018, Spire, Spire Missouri and Spire Alabama adopted ASU No. 2017-07, Compensation –
Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement
Benefit Cost, with no material impact on interim or annual financial statements. The amended guidance requires
that the service cost component of net periodic pension and postretirement benefit costs be presented within the
same line item in the income statement as other compensation costs (except for the amount being capitalized),
while other components are to be presented outside the subtotal of operating income and are no longer eligible for
capitalization (e.g., as part of utility plant). The amended guidance is applied retrospectively for income statement
presentation and prospectively for capitalization. The Company, Spire Missouri and Spire Alabama elected the
practical expedient permitting the use of the amounts disclosed in its pension and other postretirement benefit plan
note for the prior comparative periods as the estimation basis for applying the retrospective presentation
requirements. Accordingly, for the year ended September 30, 2018, the Company, Spire Missouri and Spire
Alabama reclassified net benefit costs (income) of $14.4, $17.2 and $(2.0), respectively, from “operation and
maintenance” to “other income (expense), net.” For Spire Missouri, Spire Alabama, and the Company’s other rate-
regulated entities, all components of net benefit cost have historically been recovered from customers as a
component of utility plant and will continue to be recovered in the same manner over the depreciable lives of the
related plant assets; therefore, for those entities, the components that are no longer eligible to be capitalized as a
component of plant under GAAP are reported as regulatory assets.
87
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other
Comprehensive Income. This guidance permits companies to make an election to reclassify stranded income tax
effects from the enactment of the Tax Cuts and Jobs Act of 2017, included in accumulated other comprehensive
income or loss (AOCI), to retained earnings. The Company, Spire Missouri and Spire Alabama adopted this
guidance in the quarter ended September 30, 2018, and the related reclassifications are shown on the statements of
shareholders’ equity of the Company and Spire Missouri. There was no effect for Spire Alabama.
The Company, Spire Missouri and Spire Alabama adopted ASU No. 2016-02, Leases, along with related ASU Nos.
2018-01, 2018-10, 2018-11, 2018-20 and 2019-01 (collectively, “ASC 842”), using a modified retrospective transition
method for leases existing at, or entered into after, October 1, 2019. Under the selected transition method,
comparative periods in the financial statements are presented under ASC 840 (previous lease accounting guidance).
ASC 842 requires lessees to recognize a right-of-use asset and lease liability for almost all lease contracts based on
the present value of lease payments. It provides new guidelines for identifying and classifying a lease, and
classification affects the pattern and income statement line item for the related expense. The Company and its
subsidiaries elected a package of three practical expedients permitted by the standard, allowing them not to reassess
existing contracts for (1) whether it is or contains a lease, (2) lease classification and (3) initial direct costs. They
also elected to use the benefit of hindsight in determining both the lease term and impairments associated with any
existing leases, which resulted in lease terms that best represent management’s expectations with respect to use of
the underlying asset but did not result in recognition of any impairment. Finally, they elected not to assess whether
existing land easements are leases under ASC 842. The adoption of ASC 842 impacted the balance sheets through
recognition of right-of-use assets and lease liabilities for operating leases but did not result in a cumulative effect
adjustment or significant impacts to income or cash flows. For other lease policy elections and disclosures about
leases, see Note 17, Leases.
Spire, Spire Missouri and Spire Alabama adopted the guidance in ASU No. 2017-12, Derivatives and Hedging:
Targeted Improvements to Accounting for Hedging Activities, and related ASU Nos. 2018-16, 2019-04, and 2019-
10 in the first quarter of fiscal year 2020. The amendments in these ASUs more closely align the results of hedge
accounting with risk management activities through changes to both the designation and measurement guidance for
qualifying hedging relationships and the presentation of hedge results in the financial statements. They did not have
a significant impact on the financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit
Losses on Financial Instruments, which was later supplemented by ASU Nos. 2018-19, 2019-04, 2019-05 and 2019-
11. The standard replaces the current “incurred loss” model with an “expected loss” model for certain instruments,
including trade receivables, requiring measurement of all expected credit losses for financial assets held at the
reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. It also
requires entities to record credit loss allowances for available-for-sale securities rather than impair the carrying
amount of the securities. Spire, Spire Missouri and Spire Alabama will initially apply the new standard for the
quarter ending December 31, 2020, using a modified retrospective method of adoption. Based on the credit quality
of the existing available-for sale securities portfolio, no allowance for credit losses will be recognized at adoption for
those investments. The ASU did not result in any significant modifications to the Company’s policies related to
recognizing an allowance on trade receivables, and the adoption of the new standard is not expected to have a
material impact on Spire’s, Spire Missouri’s and Spire Alabama’s financial statements.
RECLASSIFICATIONS – Spire’s consolidated statements of income historically showed Gas Utility operating
revenues and expense line items separately from Gas Marketing and other operations. The current presentation
shows operating revenues and expense line items on a consolidated basis. Disaggregated data is presented in Note
14, Information by Operating Segment. Prior period amounts have been reclassified to conform with the current
period presentation.
88
2. REVENUE
The following tables show revenue disaggregated by source and customer type.
Spire
Gas Utility:
Residential
Commercial & industrial
Transportation
Off-system & other incentive
Other customer revenue
Total revenue from contracts with customers
Changes in accrued revenue under alternative revenue programs
Total Gas Utility operating revenues
Gas Marketing:
Revenue from contracts with retail customers
Revenue from wholesale derivative contracts
Total Gas Marketing operating revenues
Other
Total before eliminations
Intersegment eliminations (see Note 14, Information by Operating Segment)
Total Operating Revenues
Spire Missouri
Residential
Commercial & industrial
Transportation
Off-system & other incentive
Other customer revenue
Total revenue from contracts with customers
Changes in accrued revenue under alternative revenue programs
Total Operating Revenues
Spire Alabama
Residential
Commercial & industrial
Transportation
Off-system & other incentive
Other customer revenue
Total revenue from contracts with customers
Changes in accrued revenue under alternative revenue programs
Total Operating Revenues
2020
2019
1,184.3
383.0
115.8
38.4
26.2
1,747.7
4.3
1,752.0
87.9
—
87.9
57.8
1,897.7
(42.3)
1,855.4
859.6
241.4
32.9
35.1
22.3
1,191.3
2.3
1,193.6
267.8
109.4
72.9
3.2
1.9
455.2
(0.2)
455.0
$
$
$
$
$
$
1,267.3
433.9
112.1
41.9
22.5
1,877.7
(16.9)
1,860.8
83.7
—
83.7
21.5
1,966.0
(13.6)
1,952.4
945.9
283.8
33.1
41.9
—
1,304.7
(12.9)
1,291.8
265.3
113.5
69.5
—
20.7
469.0
(3.5)
465.5
$
$
$
$
$
$
The Utilities sell natural gas to residential and other customers. The sale of natural gas is governed by the various
state utility commissions, which set rates, charges, and terms and conditions of service, collectively included in a
“tariff.” The performance obligation, which relates to the promise to provide natural gas, is satisfied over time as the
customer simultaneously receives and consumes the natural gas, and revenue is recognized accordingly.
The Utilities’ transportation revenue relates to the promise to transport the specified quantities of natural gas at
tariff rates. This performance obligation is satisfied over time as the gas is transported, and revenue is recognized as
invoiced monthly.
89
The Utilities have alternative revenue programs (ARPs), which represent an agreement between the utility and its
regulator, currently consisting of decoupling mechanisms (also known as weather normalization adjustments) and
incentive programs (primarily Alabama’s Cost Control Measure). When the criteria to recognize additional (or
reduced) revenue from ARPs have been met, the Utilities establish a regulatory asset (or liability). When amounts
previously recognized for ARPs are billed, the Utilities reduce the regulatory asset (or liability) and increase (or
decrease) accounts receivable. Billed amounts, which are part of the overall tariff paid by customers, are included in
revenue from contracts with customers, while the change in the related regulatory asset or liability is presented as
revenue from ARPs. Depending on whether the beginning accrued ARP balance was a regulatory asset or liability
and depending on the size and direction of the current period accrual, the amount presented as revenue from ARPs
could be negative.
The Utilities read meters and bill customers on monthly cycles. Spire Missouri, Spire Gulf and Spire Mississippi
record their gas utility revenues from gas sales and transportation services on an accrual basis that includes
estimated amounts for gas delivered but not yet billed. The accruals for unbilled revenues are reversed in the
subsequent accounting period when meters are actually read and customers are billed. Spire Alabama records
natural gas distribution revenues in accordance with the tariff established by the APSC. Unbilled revenue is accrued
in an amount equal to the related gas cost, as profit margin is not considered earned until billed. Spire’s other
subsidiaries, including Spire Marketing, record revenues when earned, as the product is delivered or as services are
performed.
Gas Marketing’s contracts are derivatives. The wholesale contracts (with producers, municipalities, and utility
companies) are subject to derivative accounting. The retail contracts (with large commercial and industrial
customers) are designated as “normal purchase, normal sale” arrangements and are therefore accounted for as
revenue from contracts with customers. The performance obligation is satisfied over time by the transfer of control
of natural gas to the customer, and revenue is recognized as invoiced monthly.
Payments are generally required within 30 days of billing, and contracts generally do not have a significant
financing component. Spire’s revenues are not subject to significant returns, refunds, or warranty obligations.
Spire, Spire Missouri, and Spire Alabama have elected to apply a “right to invoice” practical expedient, recognizing
revenue for volumes delivered for which they have a right to invoice, as long as that amount corresponds with the
value to the customer. Disclosures about remaining performance obligations are not required because either
contracts have an original expected duration of one year or less, or revenue is recognized under the right to invoice
practical expedient, or both.
Sales taxes imposed on applicable Spire Alabama and Spire Missouri sales are billed to customers. These amounts
are not recorded in the statements of income but are recorded as tax collections payable and included in the “Other”
line of the Current Liabilities section of the balance sheets.
Gross receipts taxes associated with the Company’s natural gas utility services are imposed on the Company, Spire
Missouri, and Spire Alabama and billed to its customers. The expense amounts (shown in the table below) are
reported gross in the “Taxes, other than income taxes” line in the statements of income, and corresponding
revenues are reported in “Operating Revenues.”
Spire
Spire Missouri
Spire Alabama
2020
2019
2018
$
$
91.5
63.5
23.3
$
99.3
71.1
23.7
98.4
68.9
25.4
90
3. STOCK-BASED COMPENSATION
The Spire 2015 Equity Incentive Plan (EIP) was approved by shareholders of Spire on January 29, 2015 and
amended on November 9, 2018. The purpose of the EIP is to encourage directors, officers, and key employees of the
Company and its subsidiaries to contribute to the Company’s success and align their interests with that of
shareholders. To accomplish this purpose, the Compensation Committee (“Committee”) of Spire’s Board of
Directors (the “Board”) may grant awards under the EIP that may be earned by achieving performance objectives
and/or other criteria as determined by the Committee. Under the terms of the EIP, officers and employees of the
Company and its subsidiaries, as determined by the Committee, are eligible to be selected for awards. The EIP
provides for restricted stock, restricted stock units, qualified and non-qualified stock options, stock appreciation
rights, and performance shares payable in stock, cash, or a combination of both. The EIP generally provides a
minimum vesting period of at least three years for each type of award, with pro rata vesting permitted during the
minimum three-year vesting period. The maximum number of shares reserved for issuance under the EIP is
1,000,000.
The Company issues new shares to satisfy employee restricted stock awards.
Restricted Stock Awards
During fiscal 2020, the Company granted 91,662 performance-contingent restricted share units to executive officers
and key employees at a weighted average grant date fair value of $76.19 per share. This number represents the
target shares that can be earned pursuant to the terms of the awards. The share units have a performance period
ending September 30, 2023. While the participants have no interim voting rights on these share units, dividends
accrue during the performance period and are paid to the participants upon vesting but are subject to forfeiture if
the underlying share units do not vest.
The number of share units that will ultimately vest is dependent upon the attainment of certain levels of earnings
and other strategic goals, as well as the Company’s level of total shareholder return (TSR) during the performance
period relative to a comparator group of peer companies. This TSR provision is considered a market condition
under GAAP and is discussed further below. The maximum amount of shares that can be earned pursuant to the
terms of the awards is 200% of the target units granted.
The weighted average grant date fair value of performance-contingent restricted share units granted during fiscal
years 2019 and 2018 was $80.72 and $79.88 per share, respectively.
Fiscal 2020 activity of restricted stock units subject to performance and/or market conditions is presented below:
Nonvested at September 30, 2019
Granted
Vested
Forfeited
Nonvested at September 30, 2020
Weighted
Average
Grant Date
Fair Value
Per Unit
73.20
76.19
58.68
79.34
78.92
Units
263,910
91,662
(86,287)
(9,341)
259,944
$
$
$
$
$
For the year ended September 30, 2020, the total number of shares that could be issued if all outstanding award
grants attain maximum performance payout is 519,888.
91
During fiscal 2020, the Company granted 33,350 shares of time-vested restricted stock to executive officers and key
employees at a weighted average grant date fair value of $76.13 per share. Unless forfeited based on terms of the
agreements, these shares will vest in fiscal 2021. In the interim, participants receive full voting rights and dividends,
which are not subject to forfeiture. The weighted average grant date fair value of time-vested restricted stock and
restricted stock units awarded to employees during fiscal years 2019 and 2018 was $76.66 and $76.60 per share,
respectively.
During fiscal 2020, the Company granted 10,560 shares of time-vested restricted stock to non-employee directors at
a weighted average grant date fair value of $84.58 per share. These shares vested in fiscal 2020, six months after the
grant date. The weighted average grant date fair value of restricted stock awarded to non-employee directors during
fiscal years 2019 and 2018 was $78.69 and $63.20 per share, respectively.
Time-vested restricted stock and stock unit activity for fiscal 2020 is presented below:
Nonvested at September 30, 2019
Granted
Vested
Forfeited
Nonvested at September 30, 2020
Weighted
Average
Grant Date
Fair Value
Per Share
72.83
76.13
65.28
76.94
76.45
Shares/
Units
96,277
33,350
(32,326)
(3,628)
93,673
$
$
$
$
$
For restricted stock and stock units (performance-contingent and time-vested) that vested during fiscal years 2020,
2019, and 2018, the Company withheld 41,353 shares, 28,731 shares and 34,922 shares, respectively, at weighted
average prices of $77.07, $79.23 and $81.65 per share, respectively, pursuant to elections by employees to satisfy
tax withholding obligations. The total fair value of restricted stock (performance-contingent and time-vested) that
vested during fiscal years 2020, 2019, and 2018 was $9.8, $7.6, and $10.5, respectively, and the related tax benefit
was $3.7, $2.9, and $4.0, respectively. None of the tax benefits have been realized.
In fiscal 2019, the Company gave participants in the EIP the ability to defer a portion or all of their award.
Participants have elected to defer 59,408 shares and 80,760 shares (at target payout) in fiscal years 2020 and 2019,
respectively. Based on actual performance, these awards will be issued in cash, not shares, once the performance
requirements have been achieved, so related amounts are reflected as temporary equity on the consolidated balance
sheet.
92
Equity Compensation Costs
Compensation cost for performance-contingent restricted stock and stock unit awards is based upon the probable
outcome of the performance conditions. For shares or units that do not vest or that are not expected to vest due to
the outcome of the performance conditions (excluding market conditions), no compensation cost is recognized and
any previously recognized compensation cost is reversed.
The fair value of awards of performance-contingent and time-vested restricted stock and restricted stock units, not
subject to the TSR provision, are estimated using the closing price of the Company’s stock on the grant date. For
those awards that do not pay dividends during the vesting period, the estimate of fair value is reduced by the
present value of the dividends expected to be paid on the Company’s common stock during the performance period,
discounted using an appropriate U.S. Treasury yield. For shares subject to the TSR provision, the estimated impact
of this market condition is reflected in the grant date fair value per share of the awards. Accordingly, compensation
cost is not reversed to reflect any actual reductions in the awards that may result from the TSR provision. However,
if the Company’s TSR during the performance period ranks below the level specified in the award agreements,
relative to a comparator group of companies, and the Committee elects not to reduce the award (or reduce by a
lesser amount), this election would be accounted for as a modification of the original award and additional
compensation cost would be recognized at that time. The grant date fair value of the awards subject to the TSR
provision awarded during fiscal years 2020, 2019 and 2018 was valued by a Monte Carlo simulation model that
assessed the probabilities of various TSR outcomes. The significant assumptions used in the Monte Carlo
simulations are as follows:
Risk-free interest rate
Expected dividend yield of stock
Expected volatility of stock
Vesting period
2020
1.57%
—
16.8%
3.0 years
2019
2.88%
—
17.0%
3.0 years
2018
1.76%
—
16.0%
2.9 years
The risk-free interest rate was based on the yield on U.S. Treasury securities matching the vesting period. A zero
percent dividend yield was used, which is mathematically equivalent to the assumption that dividends are
reinvested as they are paid. The expected volatility is based on the historical volatility of the Company’s stock.
Volatility assumptions were also made for each of the companies included in the comparator group. The vesting
period is equal to the performance period set forth in the terms of the award.
The amounts of compensation cost recognized for share-based compensation arrangements are presented below:
Total compensation cost
Compensation cost capitalized
Prior period disallowed stock compensation capitalization
Compensation cost recognized in net income
Income tax benefit recognized in net income
Compensation cost recognized in net income, net of income tax
$
$
2020
2019
2018
9.4
$
8.6
$
(0.6)
—
8.8
(2.1)
(1.4)
—
7.2
(1.7)
6.7
$
5.5
$
6.9
(1.3)
6.9
12.5
(4.0)
8.5
As of September 30, 2020, there was $10.8 of total unrecognized compensation cost related to non-vested share-
based compensation arrangements, which is expected to be recognized over a weighted average period of 1.75 years.
93
4. EARNINGS PER COMMON SHARE
Basic Earnings Per Common Share:
Net Income
Less: Provision for preferred dividends
Income allocated to participating securities
Net Income Available to Common Shareholders
Weighted Average Common Shares Outstanding (in millions)
Basic Earnings Per Share of Common Stock
Diluted Earnings per Common Share:
Net Income
Less: Provision for preferred dividends
Income allocated to participating securities
Net Income Available to Common Shareholders
Weighted Average Common Shares Outstanding (in millions)
Dilutive Effect of Restricted Stock and Restricted Stock Units (in millions)*
Weighted Average Diluted Common Shares (in millions)
Diluted Earnings Per Share of Common Stock
* Calculation excludes certain outstanding common shares (shown in millions by
period at the right) attributable to stock units subject to performance or market
conditions and restricted stock, which could have a dilutive effect in the future
5. SHAREHOLDERS’ EQUITY
Spire
Preferred Stock
2020
2019
2018
$
$
$
$
$
$
88.6
14.8
0.1
73.7
51.2
1.44
88.6
14.8
0.1
73.7
51.2
0.1
51.3
1.44
$
$
$
$
$
$
184.6
5.3
0.4
178.9
50.7
3.53
184.6
5.3
0.4
178.9
50.7
0.1
50.8
3.52
$
$
$
$
$
$
214.2
—
0.5
213.7
49.1
4.35
214.2
—
0.5
213.7
49.1
0.2
49.3
4.33
0.1
0.1
0.4
At September 30, 2020 and 2019, Spire had authorized 5,000,000 shares of preferred stock.
On May 21, 2019, Spire completed the public offering of 10,000,000 depositary shares (the “Depositary Shares”),
each representing a 1/1,000th interest in a share of the Company’s 5.90% Series A Cumulative Redeemable
Perpetual Preferred Stock, par value $25.00 per share, with a liquidation preference of $25,000 per share (the
“Preferred Stock”). The transaction resulted in $242.0 of net proceeds, after deducting commissions and sale
expenses, which proceeds were used to (i) refinance long-term and short-term Spire debt and (ii) fund capital
expenditures at both the Utilities and Spire’s gas-related businesses.
Dividends on the Preferred Stock, when declared by the Board, will be payable on the liquidation preference
amount, on a cumulative basis, quarterly in arrears on the 15th day of February, May, August and November of each
year, beginning on August 15, 2019. Dividends will be payable out of amounts legally available for the payment of
dividends at an annual rate equal to 5.90% of the liquidation preference per share of Preferred Stock (equivalent to
$25.00 per Depositary Share). Dividends will accumulate daily and be cumulative from May 21, 2019.
Under the terms of the Preferred Stock, the Company’s ability to declare or pay dividends on, or purchase or
redeem, shares of its common stock or any class or series of capital stock of the Company that rank junior to the
Preferred Stock will be subject to certain restrictions in the event that the Company does not declare and pay the full
cumulative dividends on the Preferred Stock through the most recently completed quarterly dividend period.
Spire may, at its option, redeem the Preferred Stock (i) in whole, but not in part, at any time prior to August 15,
2024, within 120 days after a ratings event where a rating agency amends, clarifies or changes the criteria it uses to
assign equity credit for securities such as the Preferred Stock, at a redemption price in cash equal to $25,500 per
share, or (ii) in whole or in part, from time to time, on or after August 15, 2024, at a redemption price in cash equal
to $25,000 per share, plus, in each case, all accumulated and unpaid dividends (whether declared or not) up to such
redemption date.
94
Shareholders of the Preferred Stock generally have no voting rights with respect to matters that generally require
the approval of voting stockholders. The limited voting rights of holders of the Preferred Stock include the right to
vote on certain matters that may affect the preference or special rights of the Preferred Stock. In addition, if and
whenever dividends on any shares of Preferred Stock have not been declared and paid for at least six dividend
periods, whether or not consecutive, the number of directors then constituting the Board shall automatically be
increased by two (to be elected by the holders of the Preferred Stock) until all accumulated and unpaid dividends on
the Preferred Stock have been paid in full.
ATM Program
On February 6, 2019, Spire entered into an at-the-market (ATM) equity distribution agreement, supplemented as of
May 14, 2019, pursuant to which the Company may offer and sell, from time to time, shares of its common stock
having an aggregate offering price of up to $150.0. Proceeds from this program are intended to be used (i) to fund,
in part, investments related to the construction of infrastructure and infrastructure improvements in the Utilities, as
well as pipelines and storage, and (ii) for general corporate purposes, including repayment of short-term debt and
the adjustment from time to time of the Company’s capital structure. Under this program, for the year ended
September 30, 2020, Spire issued 446,619 shares, generating $32.0 of proceeds net of issuance costs, and for the
year ended September 30, 2019, Spire issued 179,630 shares, generating $14.4 of proceeds net of issuance costs.
Other Equity Information
Spire has a shelf registration statement on Form S-3 on file with the U.S. Securities and Exchange Commission
(SEC) for the issuance and sale of up to 250,000 shares of common stock under its Dividend Reinvestment and
Direct Stock Purchase Plan. There were 207,254 and 201,148 shares at September 30, 2020 and November 13,
2020, respectively, remaining available for issuance under this Form S-3. Spire also has a universal shelf
registration statement on Form S-3 on file with the SEC for the issuance of various equity and debt securities, which
expires on May 14, 2022.
Spire Missouri
Substantially all of Spire Missouri’s plant is subject to the liens of its first mortgage bonds. The mortgage contains
several restrictions on Spire Missouri’s ability to pay cash dividends on its common stock or to make loans to its
parent company. These mortgage restrictions are applicable regardless of whether the stock is publicly held or held
solely by Spire Missouri’s parent company. Under the most restrictive of these provisions, no cash dividend may be
declared or paid if, after the dividend, the aggregate net amount spent for all dividends after September 30, 1953
would exceed a maximum amount determined by a formula set out in the mortgage. Under that formula, the
maximum amount is the sum of $8.0 plus earnings applicable to common stock (adjusted for stock repurchases and
issuances) for the period from September 30, 1953 to the last day of the quarter before the declaration or payment
date for the dividends. As of September 30, 2020 and 2019, the amount under the mortgage’s formula that was
available to pay dividends was $1,269.4 and $1,182.4, respectively. Thus, all of Spire Missouri’s retained earnings
were free from such dividend restrictions as of those dates.
Spire Missouri has a universal shelf registration statement on Form S-3 on file with the SEC for the issuance of
various equity and debt securities, which expires on May 14, 2022. Spire Missouri was authorized by the MoPSC to
issue registered securities (first mortgage bonds, unsecured debt and preferred stock), common stock, and private
placement debt in an aggregate amount of up to $500.0 for financings placed any time before September 30, 2021.
As of September 30, 2020, $125.0 remained available under this authorization.
At September 30, 2020 and 2019, Spire Missouri had authorized 1,480,000 shares of preferred stock, but none
were issued and outstanding.
95
Spire Alabama
At September 30, 2020 and 2019, Spire Alabama had authorized 120,000 shares of preferred stock, but none were
issued and outstanding.
Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income (AOCI), net of income taxes, recognized in the
balance sheets at September 30 were as follows:
Spire
Balance at September 30, 2018
Other comprehensive (loss) income
Balance at September 30, 2019
Other comprehensive loss
Balance at September 30, 2020
Spire Missouri
Balance at September 30, 2018
Other comprehensive loss
Balance at September 30, 2019
Other comprehensive loss
Balance at September 30, 2020
Net
Unrealized
Gains (Losses)
on Cash Flow
Hedges
Defined Benefit
Pension and
Other
Postretirement
Benefit Plans
Net Unrealized
Losses on
Available-for-
Sale Debt
Securities
Total
$
$
$
$
$
7.9
(36.9)
(29.0)
(9.4)
(38.4) $
— $
—
—
—
— $
(1.5) $
(0.9)
(2.4)
(0.5)
(2.9) $
(1.6) $
(0.8)
(2.4)
(0.5)
(2.9) $
— $
0.1
0.1
—
0.1
$
— $
—
—
—
— $
6.4
(37.7)
(31.3)
(9.9)
(41.2)
(1.6)
(0.8)
(2.4)
(0.5)
(2.9)
Income tax expense (benefit) recorded for items of other comprehensive income (loss) reported in the statements of
comprehensive income is calculated by applying statutory federal, state, and local income tax rates applicable to
ordinary income. The tax rates applied to individual items of other comprehensive income (loss) are similar within
each reporting period. For the periods presented, Spire Alabama had no AOCI balances.
96
6. LONG-TERM DEBT
The composition of long-term debt as of September 30 is shown in the following tables.
Spire
2.52% Senior Notes, due September 1, 2021
3.31% Notes Payable, due December 15, 2022
3.54% Senior Notes, due February 27, 2024
3.13% Senior Notes, due September 1, 2026
3.93% Senior Notes, due March 15, 2027
4.70% Senior Notes, due August 15, 2044
Total principal of Spire Missouri long-term debt (see below)
Total principal of Spire Alabama long-term debt (see below)
Other subsidiaries' long-term debt:
4.14% First Mortgage Bonds, due September 30, 2021
5.00% First Mortgage Bonds, due September 30, 2031
2.95% Notes, with annual principal payments through December 2034
3.52% First Mortgage Bonds, due September 30, 2049
Total principal of long-term debt
Less: Unamortized discounts and debt issuance costs
Less: Current portion
Long-term debt, excluding current portion
Spire Missouri
Floating-rate note due December 1, 2021
First Mortgage Bonds:
3.00% Series, due March 15, 2023
3.40% Series, due August 15, 2023
3.40% Series, due March 15, 2028
7.00% Series, due June 1, 2029
2.84% Series, due November 15, 2029
7.90% Series, due September 15, 2030
3.68% Series, due September 15, 2032
6.00% Series, due May 1, 2034
6.15% Series, due June 1, 2036
4.63% Series, due August 15, 2043
4.23% Series, due September 15, 2047
4.38% Series, due September 15, 2057
Total principal of Spire Missouri long-term debt
Less: Unamortized discounts and debt issuance costs
Less: Current portion
Spire Missouri long-term debt, excluding current portion
Spire Alabama
5.20% Notes, due January 15, 2020
3.86% Notes, due December 22, 2021
3.21% Notes, due September 15, 2025
2.88% Notes, due December 1, 2029
5.90% Notes, due January 15, 2037
4.31% Notes, due December 1, 2045
3.92% Notes, due January 15, 2048
4.64% Notes, due January 15, 2049
4.02% Notes, due January 15, 2058
Total principal of Spire Alabama long-term debt
Less: Unamortized discounts and debt issuance costs
Less: Current portion
Spire Alabama long-term debt, excluding current portion
97
2020
2019
35.0
25.0
150.0
130.0
100.0
250.0
1,098.0
475.0
20.0
42.0
135.0
40.0
2,500.0
(15.9)
(60.4)
2,423.7
$
$
35.0
25.0
150.0
130.0
100.0
250.0
930.0
415.0
20.0
42.0
—
40.0
2,137.0
(14.4)
(40.0)
2,082.6
— $
100.0
55.0
250.0
45.0
19.3
275.0
30.0
50.0
99.3
54.5
99.9
70.0
50.0
1,098.0
(6.0)
—
1,092.0
$
— $
50.0
35.0
100.0
45.0
80.0
45.0
90.0
30.0
475.0
(3.2)
—
471.8
$
55.0
250.0
45.0
25.0
—
30.0
50.0
100.0
55.0
100.0
70.0
50.0
930.0
(5.0)
—
925.0
40.0
50.0
35.0
—
45.0
80.0
45.0
90.0
30.0
415.0
(2.8)
(40.0)
372.2
$
$
$
$
$
$
Maturities of long-term debt for Spire on a consolidated basis, Spire Missouri and Spire Alabama for the five fiscal
years after September 30, 2020 are as follows:
Spire
Spire Missouri
Spire Alabama
2021
2022
2023
2024
2025
$
60.4
$
55.8
$
—
—
—
50.0
336.2
305.0
—
$
156.6
$
—
—
42.0
—
35.0
The long-term debt agreements of Spire, Spire Missouri and Spire Alabama contain customary financial covenants
and default provisions. As of September 30, 2020, there were no events of default under these financial covenants.
Spire
At September 30, 2020, including the current portion but excluding unamortized discounts and debt issuance costs,
Spire had long-term debt totaling $2,500.0, of which $1,098.0 was issued by Spire Missouri, $475.0 was issued by
Spire Alabama and $237.0 was issued by other subsidiaries. All long-term debt bears fixed rates and is subject to
changes in fair value as market interest rates change. However, increases and decreases in fair value would impact
earnings and cash flows only if the Company were to reacquire any of these issues in the open market prior to
maturity. Under GAAP applicable to the Utilities’ regulated operations, losses or gains on early redemption of long-
term debt would typically be deferred as regulatory assets or regulatory liabilities and amortized over a future
period. Interest expense shown on Spire’s consolidated statement of income is net of capitalized interest totaling
$5.8, $6.8 and $2.6 for the years ended September 30, 2020, 2019 and 2018, respectively.
As indicated in Note 5, Shareholders’ Equity, Spire has a shelf registration statement on Form S-3 on file with the
SEC for the issuance of equity and debt securities.
Spire Missouri
At September 30, 2020, including the current portion (none) but excluding unamortized discounts and debt
issuance costs, Spire Missouri had long-term debt totaling $1,098.0. All long-term debt bears fixed rates and is
subject to changes in fair value as market interest rates change. Interest expense shown on Spire Missouri’s
statement of comprehensive income is net of capitalized interest totaling $0.8, $1.9 and $0.9 for the years ended
September 30, 2020, 2019 and 2018, respectively.
As indicated in Note 5, Shareholders’ Equity, Spire Missouri has a shelf registration on Form S-3 on file with the
SEC for issuance of first mortgage bonds, unsecured debt and preferred stock, which expires on May 14, 2022. Spire
Missouri was authorized by the MoPSC to issue registered securities (first mortgage bonds, unsecured debt and
preferred stock), common stock, and private placement debt in an aggregate amount of up to $500.0 for financings
placed any time before September 30, 2021. As of September 30, 2020, $125.0 remained available under this
authorization.
Substantially all of Spire Missouri’s plant is subject to the liens of its first mortgage bonds. The mortgage contains
several restrictions on Spire Missouri’s ability to pay cash dividends on its common stock, which are described in
Note 5, Shareholders’ Equity.
Spire Alabama
At September 30, 2020, including the current portion but excluding unamortized debt issuance costs, Spire
Alabama had fixed-rate long-term debt totaling $475.0. While these long-term debt issues are fixed-rate, they are
subject to changes in fair value as market interest rates change. Interest expense shown on Spire Alabama’s
statement of income is net of capitalized interest totaling $1.9 for the year ended September 30, 2020.
Because Spire Alabama has no standing authority to issue long-term debt, it must petition the APSC for each
planned issuance. On March 24, 2020, the APSC approved an application for up to $150.0 of additional long-term
debt financing.
98
7. NOTES PAYABLE AND CREDIT AGREEMENTS
Spire, Spire Missouri and Spire Alabama have a syndicated revolving credit facility pursuant to a loan agreement
with 11 banks, expiring October 31, 2023. The loan agreement has an aggregate credit commitment of $975.0,
including sublimits of $300.0 for Spire, $475.0 for Spire Missouri and $200.0 for Spire Alabama. These sublimits
may be reallocated from time to time among the three borrowers within the $975.0 aggregate commitment, with
commitment fees applied for each borrower relative to its credit rating. Spire may use its line to provide for the
funding needs of various subsidiaries. The agreement also contains financial covenants limiting each borrower’s
consolidated total debt, including short-term debt, to no more than 70% of its total capitalization. As defined in the
line of credit, on September 30, 2020, total debt was less than 60% of total capitalization for each borrower.
Spire has a commercial paper program (“CP Program”) pursuant to which it may issue short-term, unsecured
commercial paper notes. Amounts available under the CP Program may be borrowed, repaid and re-borrowed from
time to time, with the aggregate face or principal amount of the notes outstanding under the CP Program at any
time not to exceed $975.0. The notes may have maturities of up to 365 days from date of issue.
On March 26, 2020, Spire entered into a new loan agreement with two banks providing for a term loan of $150.0,
which was immediately fully funded and matures on March 25, 2021, subject to optional prepayment by Spire. The
term loan bears interest at the LIBOR Rate (as defined in the loan agreement) plus 0.85% per annum. Proceeds
were used for working capital and general corporate purposes.
Information about Spire’s consolidated short-term borrowings and about Spire Missouri’s and Spire Alabama’s
borrowings from Spire is presented in the following table. As of September 30, 2020, $449.8 of Spire’s short-term
borrowings were used to support lending to the Utilities.
Spire (Parent Only)
Term
CP
Loan
Spire Missouri
Spire
Credit
Note
Program Facility
Credit
Facility
Spire Alabama
Spire
Credit
Note
Facility
Spire
Consol-
idated
Year Ended September 30, 2020
Weighted average borrowings
Lowest borrowings outstanding
Highest borrowings outstanding
Weighted average interest rate
As of September 30, 2020
Borrowings outstanding
Weighted average interest rate
As of September 30, 2019
Borrowings outstanding
Weighted average interest rate
$
$
$
$
0.1
—
23.1
$ 77.5
—
150.0
476.1
73.5
856.6
$
17.9
—
185.1
$242.0
16.0
429.5
$
4.6
—
50.0
$ 89.0
18.5
161.3
$ 576.2
432.6
856.6
1.9%
1.6%
1.7%
1.9%
1.5%
1.9%
1.4%
1.7%
— $150.0
n/a
1.1%
$
498.0
$
0.2%
— $301.2
n/a
0.2%
— $ — $
n/a
n/a
743.2
$
2.3%
— $386.4
n/a
2.3%
$
$
— $121.3
n/a
0.2%
$ 648.0
0.6%
— $128.7
n/a
2.3%
$ 743.2
2.3%
99
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and estimated fair values of financial instruments not measured at fair value on a recurring
basis were as follows:
Classification of
Estimated Fair Value
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
$
$
4.1
—
—
5.8
—
—
— $
—
$
2.6
—
—
— $
—
— $
—
—
648.0
2,908.6
—
743.2
2,373.4
301.2
1,313.5
—
386.4
1,065.2
121.3
576.9
128.7
474.8
Carrying
Amount
Fair
Value
$
$
$
$
$
$
4.1
648.0
2,484.1
5.8
743.2
2,122.6
301.2
1,092.0
2.6
386.4
925.0
121.3
471.8
128.7
412.2
$
$
$
$
$
$
4.1
648.0
2,908.6
5.8
743.2
2,373.4
301.2
1,313.5
2.6
386.4
1,065.2
121.3
576.9
128.7
474.8
$
$
$
$
$
$
Spire
As of September 30, 2020
Cash and cash equivalents
Notes payable
Long-term debt, including current portion
As of September 30, 2019
Cash and cash equivalents
Notes payable
Long-term debt, including current portion
Spire Missouri
As of September 30, 2020
Notes payable - associated companies
Long-term debt
As of September 30, 2019
Cash and cash equivalents
Notes payable - associated companies
Long-term debt
Spire Alabama
As of September 30, 2020
Notes payable - associated companies
Long-term debt, including current portion
As of September 30, 2019
Notes payable - associated companies
Long-term debt, including current portion
9. FAIR VALUE MEASUREMENTS
The information presented below categorizes the assets and liabilities in the balance sheets that are accounted for at
fair value on a recurring basis in periods subsequent to initial recognition.
The mutual funds included in Level 1 are valued based on exchange-quoted market prices of individual securities.
The mutual funds included in Level 2 are valued based on the closing net asset value per unit.
Derivative instruments included in Level 1 are valued using quoted market prices on the NYMEX or the
Intercontinental Exchange (ICE). Derivative instruments classified in Level 2 include physical commodity
derivatives that are valued using broker or dealer quotation services whose prices are derived principally from, or
are corroborated by, observable market inputs. Also included in Level 2 are certain derivative instruments that have
values that are similar to, and correlate with, quoted prices for exchange-traded instruments in active markets.
Derivative instruments included in Level 3 are valued using generally unobservable inputs that are based upon the
best information available and reflect management’s assumptions about how market participants would price the
asset or liability. There were no material Level 3 balances as of September 30, 2020 or 2019. The Company’s and
the Utilities’ policy is to recognize transfers between the levels of the fair value hierarchy, if any, as of the beginning
of the interim reporting period in which circumstances change or events occur to cause the transfer.
100
The mutual funds are included in “Other investments” on the Company’s balance sheets and in “Other Property and
Investments” on Spire Missouri’s balance sheets. Derivative assets and liabilities, including receivables and payables
associated with cash margin requirements, are presented net on the balance sheets when a legally enforceable
netting agreement exist between the Company, Spire Missouri or Spire Alabama and the counterparty to the
derivative contract. For additional information on derivative instruments, see Note 10, Derivative Instruments and
Hedging Activities.
Spire
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Effects of
Netting and
Cash
Margin
Receivables
/Payables
Total
$
$
$
$
21.9 $
0.3
6.3
—
—
18.6
47.1 $
— $
—
—
27.7
14.5
—
42.2 $
— $
—
—
—
0.4
—
0.4 $
— $
(0.3)
(6.3)
(25.4)
—
—
(32.0) $
21.9
—
—
2.3
14.9
18.6
57.7
0.9 $
— $
— $
(0.9) $
—
0.7
—
—
1.6 $
21.4
22.3
54.2
97.9 $
—
—
—
— $
(22.1)
—
—
(23.0) $
—
22.3
54.2
76.5
As of September 30, 2020
ASSETS
Gas Utility:
U.S. stock/bond mutual funds
Gasoline and heating oil contracts
NYMEX/ICE natural gas contracts
Gas Marketing:
NYMEX/ICE natural gas contracts
Natural gas commodity contracts
Other:
U.S. stock/bond mutual funds
Total
LIABILITIES
Gas Utility:
NYMEX/ICE natural gas contracts
Gas Marketing:
NYMEX/ICE natural gas contracts
Natural gas commodity contracts
Other:
Interest rate swaps
Total
As of September 30, 2019
ASSETS
Gas Utility:
U.S. stock/bond mutual funds
$
20.5 $
— $
— $
— $
20.5
Gas Marketing:
NYMEX/ICE natural gas contracts
Natural gas commodity contracts
Other:
U.S. stock/bond mutual funds
Total
LIABILITIES
Gas Utility:
NYMEX/ICE natural gas contracts
Gas Marketing:
NYMEX/ICE natural gas contracts
Natural gas commodity contracts
Other:
Interest rate swaps
Total
$
$
$
0.9
—
15.5
36.9 $
6.5
16.8
—
23.3 $
—
—
—
— $
(6.9)
(2.5)
—
(9.4) $
0.5
14.3
15.5
50.8
12.3 $
— $
— $
(12.3) $
—
8.5
13.8
43.4
65.7 $
—
0.1
—
0.1 $
(8.9)
(2.5)
—
(23.7) $
—
11.4
43.4
54.8
0.4
—
—
12.7 $
101
Spire Missouri
As of September 30, 2020
ASSETS
U.S. stock/bond mutual funds
Gasoline and heating oil contracts
NYMEX/ICE natural gas contracts
Total
LIABILITIES
NYMEX/ICE natural gas contracts
As of September 30, 2019
ASSETS
U.S. stock/bond mutual funds
LIABILITIES
NYMEX/ICE natural gas contracts
Spire Alabama
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Effects of
Netting and
Cash
Margin
Receivables
/Payables
Total
$
$
$
$
$
21.9 $
0.3
6.3
28.5 $
— $
—
—
— $
— $
—
—
— $
— $
(0.3)
(6.3)
(6.6) $
21.9
—
—
21.9
0.9 $
— $
— $
(0.9) $
—
20.5 $
12.3 $
— $
— $
— $
— $
20.5
— $
(12.3) $
—
Spire Alabama occasionally utilizes a gasoline derivative program to stabilize the cost of fuel used in operations. As
of September 30, 2020, and September 30, 2019, there were no gasoline derivatives outstanding.
10. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Spire
Spire Missouri has a risk management policy to utilize various derivatives, including futures contracts, exchange-
traded options and swaps for the explicit purpose of managing price risk associated with purchasing and delivering
natural gas on a regular basis to customers in accordance with its tariffs. The objective of this policy is to limit Spire
Missouri’s exposure to natural gas price volatility and to manage, hedge and mitigate substantial price risk. Further
discussion of this policy can be found in the Spire Missouri section.
From time to time Spire Missouri and Spire Alabama purchase NYMEX futures and options contracts to help
stabilize operating costs associated with forecasted purchases of gasoline and diesel fuels used to power vehicles and
equipment. Further information on these derivatives can be found in the Spire Missouri and Spire Alabama
sections, respectively.
In the course of its business, Spire’s gas marketing subsidiary, Spire Marketing (including a wholly owned
subsidiary), enters into commitments associated with the purchase or sale of natural gas. Certain of Spire
Marketing’s derivative natural gas contracts are designated as normal purchases or normal sales and, as such, are
excluded from the scope of ASC Topic 815 and are accounted for as executory contracts on an accrual basis. Any of
Spire Marketing’s derivative natural gas contracts that are not designated as normal purchases or normal sales are
accounted for at fair value. At September 30, 2020, the fair values of 278.3 million MMBtu of non-exchange-traded
natural gas commodity contracts were reflected in the Consolidated Balance Sheet. Of these contracts, 233.1 million
MMBtu will settle during fiscal 2021, and 35.7 million MMBtu, 5.8 million MMBtu, 1.3 million MMBtu, 1.6 million
MMBtu, and 0.8 million MMBtu will settle during fiscal years 2022, 2023, 2024, 2025, and 2026, respectively.
These contracts have not been designated as hedges; therefore, changes in the fair value of these contracts are
reported in earnings each period.
102
Furthermore, Spire Marketing manages the price risk associated with its fixed-priced commitments by either closely
matching the offsetting physical purchase or sale of natural gas at fixed prices or through the use of NYMEX or ICE
futures, swap, and option contracts to lock in margins.
At September 30, 2020, Spire Marketing’s unmatched fixed-price positions were not material to Spire’s financial
position or results of operations. Spire Marketing’s NYMEX and ICE natural gas futures, swap and option contracts
used to lock in margins may be designated as cash flow hedges of forecasted transactions for financial reporting
purposes.
In August 2018, Spire entered into a three- year interest rate swap with a fixed interest rate of 2.7675% and a
notional amount of $100.0 to protect itself against adverse movements in interest rates. In the first quarter of 2020,
the Company settled this position, resulting in a loss of $2.5 which will be amortized to interest expense over the
hedged periods. During the first quarter of fiscal 2019, the Company entered into a three-year interest rate swap
with a fixed interest rate of 3.250% and a notional amount of $100.0 to protect itself against adverse movements in
interest rates on future interest rate payments. The Company recorded a cumulative $53.7 mark-to-market loss in
accumulated other comprehensive loss on this swap at September 30, 2020. In the second quarter of 2020, the
Company entered into multiple interest rate swaps with fixed interest rates ranging from 0.921% to 1.3105% for a
total notional amount of $150.0 to protect itself against adverse movements in interest rates on future interest rate
payments. The Company recorded a $0.5 mark-to-market loss to comprehensive income for these swaps for the
twelve months ended September 30, 2020. In the third quarter of fiscal 2020, the Company entered into a ten-year
interest rate swap with a fixed interest rate of 0.761% and a notional amount of $40.0 to protect itself against
adverse movements in interest rates on future interest rate payments. In the fourth quarter of 2020 the Company
settled this hedged position, resulting in a loss of $0.3 which will be amortized to interest expense over the hedged
periods.
The Company’s and Spire Missouri’s exchange-traded/cleared derivative instruments consist primarily of NYMEX
and ICE positions. The NYMEX is the primary national commodities exchange on which natural gas derivatives are
traded. Open NYMEX and ICE natural gas futures and swap positions at September 30, 2020 and 2019 were as
follows:
Gas Marketing
Natural gas futures purchased
Natural gas options purchased, net
Natural gas basis swaps purchased
Gas Utility
Natural gas futures purchased
September 30, 2020
September 30, 2019
Notional
(MMBtu
millions)
22.9
4.8
6.2
25.9
Maximum
Term
(Months)
41
6
24
12
Notional
(MMBtu
millions)
29.1
6.9
90.1
69.0
Maximum
Term
(Months)
36
12
36
12
At September 30, 2020, neither Spire Missouri nor Spire Marketing had any further price mitigation in place.
103
Derivative instruments designated as cash flow hedges of forecasted transactions are recognized on the balance
sheets of the Company at fair value, and the change in fair value of the effective portion of these hedge instruments
is recorded, net of income tax, in other comprehensive income or loss (OCI). Accumulated other comprehensive
income or loss (AOCI) is a component of Total Common Stock Equity. Amounts are reclassified from AOCI into
earnings when the hedged items affect net income, using the same revenue or expense category that the hedged
item impacts. Based on market prices at September 30, 2020, it is expected that an immaterial amount of
unrealized gains will be reclassified into the Consolidated Statements of Income of the Company during the next
twelve months. Cash flows from hedging transactions are classified in the same category as the cash flows from the
items that are being hedged in the Consolidated Statements of Cash Flows.
Effect of Derivative Instruments on the Consolidated Statements of Income and Comprehensive Income
Location of Gain (Loss)
Recorded in Income
2020
2019
2018
Derivatives in Cash Flow Hedging Relationships
Effective portion of gain (loss) recognized in OCI on derivatives:
Interest rate swaps
Total
Effective portion of gain (loss) reclassified from AOCI to income:
Gasoline and heating oil contracts
Interest rate swaps
Gas Utility Other Operating Expenses
Interest Expense
Total
Derivatives Not Designated as Hedging Instruments*
Gain (loss) recognized in income on derivatives:
Natural gas commodity contracts
Gas Marketing Operating Revenues
Gas Marketing Operating Expenses
NYMEX / ICE natural gas contracts Gas Marketing Operating Revenues
Total
(8.9)
(8.9)
—
(3.2)
(3.2)
9.2
—
(11.8)
(2.6)
$
$
$
$
(46.4)
(46.4)
—
1.3
1.3
2.5
(8.4)
—
(5.9)
$
$
$
$
$
$
$
$
3.9
3.9
0.1
1.4
1.5
10.2
(8.1)
—
2.1
*
Gains and losses on Spire Missouri’s natural gas derivative instruments, which are not designated as hedging instruments
for financial reporting purposes, are deferred pursuant to the Missouri Utilities’ PGA clauses and initially recorded as
regulatory assets or regulatory liabilities. These gains and losses are excluded from the table above because they have no
direct impact on the statements of income. Such amounts are recognized in the statements of income as a component of
Regulated Gas Distribution Natural and Propane Gas operating expenses when they are recovered through the PGA clause
and reflected in customer billings.
104
Fair Value of Derivative Instruments in the Consolidated Balance Sheets
Derivative Assets*
Derivative Liabilities*
September 30, 2020
Derivatives designated as hedging instruments
Balance Sheet Location
Other: Interest rate swaps
Subtotal
Derivative Instrument
Liability
Fair
Value
$
—
—
Balance Sheet Location
Derivative Instrument
Liability
Fair
Value
$
54.2
54.2
Derivatives not designated as hedging instruments
Gas Utility:
Natural gas contracts
Gasoline and heating oil contracts
Accounts Receivable – Other
Derivative Instrument Assets
6.3
0.3
Accounts Receivable – Other
Gas Marketing:
NYMEX / ICE natural gas contracts Derivative Instrument Assets
Natural gas commodity
Subtotal
Total derivatives
Deferred Charges – Other
Derivative Instrument Assets
Deferred Charges – Other
Current Liabilities – Other
Deferred Credits – Other
September 30, 2019
Derivatives designated as hedging instruments
Other: Interest rate swaps
Subtotal
Derivative Instrument
Liability
Derivatives not designated as hedging instruments
Gas Utility:
20.5 Derivative Instrument Assets
7.2 Deferred Charges – Other
13.5 Derivative Instrument Assets
1.4 Deferred Charges – Other
— Current Liabilities – Other
— Deferred Credits – Other
$
$
49.2
49.2
—
—
Derivative Instrument
Liability
Natural gas contracts
Accounts Receivable – Other
— Accounts Receivable – Other
Gas Marketing:
NYMEX / ICE natural gas contracts Derivative Instrument Assets
Natural gas commodity
Subtotal
Total derivatives
Deferred Charges – Other
Derivative Instrument Assets
Deferred Charges – Other
Current Liabilities – Other
Deferred Credits – Other
7.0 Derivative Instrument Assets
0.5 Deferred Charges – Other
10.4 Derivative Instrument Assets
4.8 Deferred Charges – Other
Current Liabilities – Other
1.4
0.1 Deferred Credits – Other
24.2
24.2
$
0.9
—
21.3
0.8
—
—
16.8
5.5
45.3
99.5
43.4
43.4
12.3
7.3
1.6
0.9
—
11.5
1.5
35.1
78.5
$
$
$
*
The fair values of Derivative Assets and Derivative Liabilities exclude the fair value of cash margin receivables or payables
with counterparties subject to netting arrangements. Fair value amounts of derivative contracts (including the fair value
amounts of cash margin receivables and payables) for which there is a legal right to set off are presented net on the balance
sheets. As such, the gross balances presented in the table above are not indicative of the Company’s net economic exposure.
Refer to Note 9, Fair Value Measurements, for information on the valuation of derivative instruments.
105
Following is a reconciliation of the amounts in the tables above to the amounts presented in the Consolidated
Balance Sheets:
Fair value of derivative assets presented above
Fair value of cash margin receivable offset with derivatives
Netting of assets and liabilities with the same counterparty
Total
Derivative Instrument Assets, per Consolidated Balance Sheets:
Current Assets – Other
Deferred Charges and Other Assets – Other
Total
Fair value of derivative liabilities presented above
Netting of assets and liabilities with the same counterparty
Total
Derivative Instrument Liabilities, per Consolidated Balance Sheets:
Current Liabilities – Other
Deferred Credits and Other Liabilities – Other
Total
2020
2019
$
$
$
$
$
$
$
$
49.2
(9.0)
(23.0)
17.2
15.8
1.4
17.2
99.5
(23.0)
76.5
71.0
5.5
76.5
$
$
$
$
$
$
$
$
24.2
14.3
(23.7)
14.8
4.2
10.6
14.8
78.5
(23.7)
54.8
50.0
4.8
54.8
Additionally, at September 30, 2020 and 2019, the Company had $7.6 and $8.1, respectively, in cash margin
receivables not offset with derivatives, which are presented in Accounts Receivable – Other.
Spire Missouri
Spire Missouri has a risk management policy to utilize various derivatives, including futures contracts, exchange-
traded options, swaps and over-the-counter instruments for the explicit purpose of managing price risk associated
with purchasing and delivering natural gas on a regular basis to customers in accordance with its tariffs. The
objective of this policy is to limit Spire Missouri’s exposure to natural gas price volatility and to manage, hedge and
mitigate substantial price risk. This policy strictly prohibits speculation and permits Spire Missouri to hedge current
physical natural gas purchase commitments or forecasted or anticipated future peak (maximum) physical need for
natural gas delivered. Costs and cost reductions, including carrying costs, associated with Spire Missouri’s use of
natural gas derivative instruments are allowed to be passed on to Spire Missouri customers through the operation of
its PGA clause, through which the MoPSC allows Spire Missouri to recover gas supply costs, subject to prudence
review by the MoPSC. Accordingly, Spire Missouri does not expect any adverse earnings impact as a result of the use
of these derivative instruments.
Spire Missouri does not designate these instruments as hedging instruments for financial reporting purposes
because gains or losses associated with the use of these derivative instruments are deferred and recorded as
regulatory assets or regulatory liabilities pursuant to ASC Topic 980, Regulated Operations, and, as a result, have
no direct impact on the statements of income.
The timing of the operation of the PGA clause may cause interim variations in short-term cash flows, because Spire
Missouri is subject to cash margin requirements associated with changes in the values of these instruments.
Nevertheless, carrying costs associated with such requirements are recovered through the PGA clause.
From time to time, Spire Missouri purchases NYMEX futures and options contracts to help stabilize operating costs
associated with forecasted purchases of gasoline and diesel fuels used to power vehicles and equipment used in the
course of its business. These contracts are designated as cash flow hedges of forecasted transactions pursuant to
ASC Topic 815, Derivatives and Hedging. The gains or losses on these derivative instruments are not subject to
Spire Missouri’s PGA clause. At September 30, 2020, Spire Missouri had an immaterial amount of gasoline futures
contracts outstanding.
106
Derivative instruments designated as cash flow hedges of forecasted transactions are recognized on the balance
sheets at fair value and the change in the fair value of the effective portion of these hedge instruments is recorded,
net of income tax, in OCI. AOCI is a component of Total Common Stock Equity. Amounts are reclassified from AOCI
into earnings when the hedged items affect net income, using the same revenue or expense category that the hedged
item impacts. Based on market prices at September 30, 2020, it is expected that an immaterial amount of pre-tax
gains will be reclassified into the statements of income during fiscal 2021. Cash flows from hedging transactions are
classified in the same category as the cash flows from the items that are being hedged in the statements of cash
flows.
Spire Missouri’s derivative instruments consist primarily of NYMEX positions. The NYMEX is the primary national
commodities exchange on which natural gas derivatives are traded. Open NYMEX natural gas futures positions at
September 30, 2020 were as follows:
Natural gas futures purchased
September 30, 2020
Notional
(MMBtu
millions)
Maximum
Term
(Months)
25.9
12
At September 30, 2020, Spire Missouri had no other price mitigation derivatives in place.
Effect of Derivative Instruments on the Statements of Comprehensive Income
Location of Gain (Loss)
Recorded in Income
2020
2019
2018
Derivatives in Cash Flow Hedging Relationships
Effective portion of gain (loss) recognized in OCI on derivatives:
Gasoline and heating oil contracts
Effective portion of gain (loss) reclassified from AOCI to income:
Gasoline and heating oil contracts
Gas Utility Other Operating Expenses
$
$
— $
— $
— $
— $
—
0.1
*
Gains and losses on Spire Missouri’s natural gas derivative instruments, which are not designated as hedging instruments
for financial reporting purposes, are deferred pursuant to the Spire Missouri’s PGA clauses and initially recorded as
regulatory assets or regulatory liabilities. These gains and losses are excluded from the table above because they have no
direct impact on the Statements of Income. Such amounts are recognized in the Statements of Income as a component of
Regulated Gas Distribution Natural and Propane Gas operating expenses when they are recovered through the PGA clause
and reflected in customer billings.
Fair Value of Derivative Instruments in the Balance Sheets
Derivative Assets*
Derivative Liabilities*
September 30, 2020
Derivatives not designated as hedging instruments
Balance Sheet Location
Natural gas contracts
Gasoline and heating oil
contracts
Total derivatives
Accounts Receivable – Other
Derivative Instrument Assets
$
$
Fair
Value
Balance Sheet Location
6.3
Accounts Receivable – Other
0.3
6.6
Fair
Value
$
$
0.9
—
0.9
September 30, 2019
Derivatives not designated as hedging instruments
Natural gas contracts
Accounts Receivable – Other
$
— Accounts Receivable – Other
$
12.3
*
The fair values of Derivative Assets and Derivative Liabilities exclude the fair value of cash margin receivables or payables
with counterparties subject to netting arrangements. Fair value amounts of derivative contracts (including the fair value
amounts of cash margin receivables and payables) for which there is a legal right to set off are presented net on the Balance
Sheets. As such, the gross balances presented in the table above are not indicative of Spire Missouri’s net economic
exposure. Refer to Note 9, Fair Value Measurements, for information on the valuation of derivative instruments.
107
Following is a reconciliation of the amounts in the tables above to the amounts presented in Spire Missouri’s
Balance Sheets:
Fair value of derivative assets presented above
Fair value of cash margin (payable) receivable offset with derivatives
Netting of assets and liabilities with the same counterparty
Total
Fair value of derivative liabilities presented above
Netting of assets and liabilities with the same counterparty
Total
2020
2019
$
6.6
(5.7)
(0.9)
— $
$
0.9
(0.9)
— $
—
12.3
(12.3)
—
12.3
(12.3)
—
$
$
$
$
Additionally, at September 30, 2019 and 2018, Spire Missouri had $7.2 and $7.8, respectively, in cash margin
receivables not offset with derivatives, which are presented in Accounts Receivable – Other.
Spire Alabama
Spire Alabama periodically employs a gasoline derivative program to help stabilize operating costs associated with
forecasted purchases of gasoline and diesel fuels used to power vehicles and equipment used in the course of its
business. The gains or losses on these derivative instruments are not subject to Spire Alabama’s GSA rider. The level
of contracts outstanding as of September 30, 2020 and 2019 were not material.
11. CONCENTRATIONS OF CREDIT RISK
Spire’s Gas Utility segment serves 1.7 million customers in three states across multiple rate classes resulting in a
significant amount of revenue diversity. Credit risk is mitigated by the high percentage of residential customers as
well as the geographic diversity of the Utilities, though customers for each of the Utilities are concentrated in a
single state.
Spire Marketing’s accounts receivable attributable to utility companies and their marketing affiliates totaled $73.0
at September 30, 2020. The concentration of transactions with these counterparties has the potential to affect the
Company’s overall exposure to credit risk, either positively or negatively, in that customers in this group may be
affected similarly by changes in economic, industry, or other conditions. Spire Marketing also has concentrations of
credit risk with certain individually significant counterparties. At September 30, 2020, the amounts included in
accounts receivable from its five largest counterparties (in terms of net accounts receivable exposure) totaled
$35.7. Four of these five counterparties are investment-grade rated integrated utilities, while the fifth is not rated
but is a subsidiary of an investment-grade rated company.
To manage these risks, Spire Marketing has established procedures to determine the creditworthiness of its
counterparties. These procedures include obtaining credit ratings and credit reports, analyzing counterparty
financial statements to assess financial condition, and considering the industry environment in which the
counterparty operates. This information is monitored on an ongoing basis. In some instances, Spire Marketing may
require credit assurances such as prepayments, letters of credit, or parental guaranties. In addition, Spire Marketing
may enter into netting arrangements to mitigate credit risk with counterparties in the energy industry with whom it
conducts both sales and purchases of natural gas. Where there is no netting arrangement, Spire Marketing records
accounts receivable, accounts payable, and prepayments for physical sales and purchases of natural gas on a gross
basis. Sales are typically made on an unsecured credit basis with payment due the month following delivery.
Accounts receivable amounts are closely monitored and provisions for uncollectible amounts are accrued when
losses are probable.
108
12. INCOME TAXES
The Company, Spire Missouri, and Spire Alabama are subject to federal income tax as well as income tax in various
state and local jurisdictions. Spire files a consolidated federal income tax return and various state income tax
returns and allocates income taxes to Spire Missouri, Spire Alabama and its other subsidiaries as if each entity were
a separate taxpayer.
The provision (benefit) for income taxes during the fiscal years ended September 30, 2020, 2019, and 2018 was as
follows:
2020
Spire
2019
2018
Spire Missouri
2019
2018
2020
Spire Alabama
2019
2018
2020
Federal:
Current
Deferred
Investment tax credits
State and local:
Current
Deferred
Total income tax expense (benefit)
$
$
0.4
5.8
(0.2)
0.6
27.4
(0.2)
$ — $ — $ — $ — $ — $ — $ —
81.5
—
(26.1)
(0.2)
(22.7)
(0.2)
14.9
(0.2)
11.5
(0.2)
16.3
—
17.4
—
3.0
3.4
$ 12.4
2.1
4.6
$ 34.5
2.2
(5.8)
0.1
2.5
$ (26.5) $ 17.3
—
2.0
$ 13.3
—
(6.3)
—
4.6
$ (32.6) $ 22.0
—
4.2
$ 20.5
—
0.1
$ 81.6
The effective income tax rate varied from the federal statutory income tax rate for each year due to the following:
Federal income tax statutory rate
State and local income taxes, net
of federal income tax benefits
Certain expenses capitalized on
books and deducted on tax return
Taxes related to prior years
Tax law changes
Amortization of excess deferred taxes
Other items – net *
Effective income tax rate
Spire
2019
2020
Spire Missouri
Spire Alabama
2018
2020
2019
2018
2020
2019
2018
21.0%
21.0%
24.5%
21.0%
21.0%
24.5%
21.0%
21.0%
24.5%
9.0
3.6
3.4
2.6
2.6
3.4
4.1
(6.6)
(1.8)
—
(8.3)
(1.0)
(3.8)
0.2
—
(3.8)
(1.4)
(2.3)
(0.4)
(35.9)
(1.8)
(1.6)
(4.6)
(1.4)
—
(5.7)
(0.2)
(6.5)
0.1
—
(6.6)
(0.3)
(4.6)
(0.7)
(50.3)
(3.6)
(2.5)
—
0.1
—
—
(0.1)
4.1
—
—
—
—
0.2
3.8
—
—
70.0
—
0.1
12.3%
15.8% (14.1)%
11.7%
10.3% (33.8)%
25.1%
25.3%
98.4%
* Other consists primarily of property adjustments.
109
The significant items comprising the net deferred tax liability or asset as of September 30 were as follows:
Deferred tax assets:
Reserves not currently deductible
Pension and other postretirement benefits
Goodwill
Operating losses
Regulatory amount due to customers, net
Other
Deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Relating to property
Regulatory pension and other postretirement benefits
Other**
Total deferred tax liabilities
Net deferred tax (liability) asset
Spire
Spire Missouri
Spire Alabama
2020
2019
2020
2019
2020
2019
$
24.8
108.3
—
170.4
36.1
44.7
384.3
(0.9)
383.4
(614.0)
(138.4)
(142.4)
(894.8)
$
31.4
102.7
—
162.2
46.5
20.0
362.8
(1.8)
361.0
(562.9)
(135.9)
(113.6)
(812.4)
$
16.7
78.5
—
36.0
32.3
—
163.5
(0.9)
162.6
(427.1)
(107.4)
(62.8)
(597.3)
$
21.2
78.7
—
51.1
42.7
1.2
194.9
(1.8)
193.1
(395.1)
(111.7)
(50.9)
(557.7)
$
5.9
—
101.3
111.3
—
—
218.5
—
218.5
$
6.2
—
116.8
94.2
—
—
217.2
—
217.2
(151.4)
(3.4)
(4.4)
(159.2)
(129.3)
(2.0)
(4.6)
(135.9)
$ (511.4) $ (451.4) $ (434.7) $ (364.6) $
59.3
$
81.3
** For Spire, Other consists primarily of goodwill-related liabilities.
The Tax Cuts and Jobs Act (TCJA) was signed into law on December 22, 2017, with an effective date of January 1,
2018, for substantially all of the provisions. This comprehensive act includes significant reform of the current
income tax code including changes in the calculation for business entities and a reduction in the corporate federal
income tax rate from 35% to 21%. The specific provisions related to regulated public utilities in the TCJA generally
allow for the continued deductibility of interest expense, the elimination of full expensing for tax purposes of certain
property acquired after September 27, 2017 and the continuation of certain rate normalization requirements for
accelerated depreciation benefits.
ASC Topic 740, Income Taxes, requires that the effects of changes in tax laws be recognized in the period in which
the new law is enacted. It also requires deferred tax assets and liabilities to be measured at the enacted tax rate
expected to apply when temporary differences are to be realized or settled. For the Company’s regulated entities, the
changes in deferred taxes related to the regulated operations are recorded as either an offset to or creation of a
regulatory asset or liability and may be subject to refund to customers in future periods. The changes in deferred
taxes that are not associated with rate making (including all changes for the Company’s non-regulated operations)
are recorded as adjustments to deferred tax expense or benefit.
As indicated in Note 1, Summary of Significant Accounting Policies, the Company’s regulated operations accounting
for income taxes is impacted by ASC Topic 980, Regulated Operations. Reductions in deferred income tax balances
due to the reduction in the corporate income tax rate resulted in amounts previously collected from utility
customers for these deferred taxes becoming refundable to such customers, generally through reductions in future
rates. The TCJA includes provisions that stipulate how these excess deferred taxes are to be passed back to
customers for certain accelerated tax depreciation benefits. In fiscal 2018, the MoPSC Amended Report and Order
took effect and the estimated excess accumulated deferred income tax began to be returned to Spire Missouri
customers in rates. The amount being returned is estimated with a tracker established to defer the difference from
the estimated amounts to the actual amounts once the actual amounts have been calculated. Excess accumulated
deferred taxes of $8.4 were returned by Spire Missouri during both fiscal 2020 and 2019. The treatment for
accumulated deferred income tax balances for Spire Alabama, Spire Gulf and Spire Mississippi is yet to be
determined by state regulators.
110
The Company recorded the TCJA impacts in fiscal 2018, including the impact of the federal income tax rate
reduction and the revaluation of the deferred tax assets and liabilities. The total adjustments recorded, before
reduction for amounts returned to customers, for the year ended September 30, 2018, were as follows:
Adjustment to deferred tax liabilities
Adjustment to deferred income tax expense
Adjustment to regulatory assets
Adjustment to regulatory liabilities
$
Spire
(318.3)
(75.0)
(75.9)
167.4
Spire
Missouri
$
(285.3)
(57.0)
(78.1)
150.2
$
Spire
Alabama
(61.0)
58.8
2.2
—
In assessing whether deferred tax assets are realizable, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. Management considers all significant
available positive and negative evidence, including the existence of losses in recent years, the timing of deferred tax
liability reversals, projected future taxable income, taxable income in carryback years, and tax planning strategies to
assess the need for a valuation allowance. Based upon this evidence, management believes it is more likely than not
the Company, Spire Missouri and Spire Alabama will realize the benefits of these deferred tax assets, except for the
contribution carryforward valuation allowances noted below.
The Company had federal and state loss carryforwards of approximately $726.8 at September 30, 2020. The loss
carryforwards begin to expire in fiscal 2030 for certain state purposes and fiscal 2035 for federal and other states
purposes. The Company also had contribution carryforwards of approximately $9.3 at September 30, 2020, which
began to expire this year. The Company has a valuation allowance of $3.6, as a portion of the contribution
carryforward will not be realized prior to its expiration. The Company also has various tax credit carryforwards of
approximately $2.9 along with a valuation allowance of $0.1 as a portion of these tax credits began to expire in
2020.
Spire Missouri had federal and state loss carryforwards of approximately $207.8 at September 30, 2020 on a
separate company basis, which begin to expire in fiscal 2035. For federal tax purposes, these loss carryforwards may
be utilized against income from another member of the consolidated group. Spire Missouri also has contribution
carryforwards of approximately $5.4 at September 30, 2020 that began to expire this year. Spire Missouri has a
valuation allowance of $3.0, as a portion of the contribution carryforward will not be realized prior to its expiration.
Spire Missouri also has approximately $2.0 of various tax credit carryforwards, and a valuation allowance of $0.1 as
a portion of these tax credits began to expire in 2020.
On a separate company basis, Spire Alabama had federal and state loss carryforwards of approximately $443.5 at
September 30, 2020. The loss carryforwards begin to expire in fiscal 2030 for state purposes and fiscal 2035 for
federal purposes. For federal tax purposes, these loss carryforwards may be utilized against income from another
member of the consolidated group.
111
The Company, Spire Missouri and Spire Alabama recognize the tax benefit from a tax position only if it is at least
more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the
technical merits of the position. Unrecognized tax benefits are reported as a reduction of a deferred tax asset for an
operating loss carryforward to the extent the recognition of the benefit would impact the operating loss
carryforward, pursuant to ASU 2013-11. In addition, pursuant to the TCJA, the deferred tax asset for a net operating
loss carryforward was revalued in fiscal 2018 based on the federal tax law change. The following table presents a
reconciliation of the beginning and ending balances of unrecognized tax benefits:
Unrecognized tax benefits, beginning of year
Decrease related to tax law changes
Increases related to tax positions taken in current year
Reductions related to tax positions taken in prior year
Reductions due to lapse of applicable statute of limitations
2020
10.7
$
—
2.6
—
(0.1)
Spire
2019
2018
$
$
8.1
—
4.5
(1.9)
—
11.0
(4.0)
1.2
—
(0.1)
Spire Missouri
$
2020
10.4
$
—
2.6
—
—
2019
2018
$
7.8
—
4.5
(1.9)
—
10.7
(4.0)
1.1
—
—
Unrecognized tax benefits, end of year
$
13.2
$
10.7
$
8.1
$
13.0
$
10.4
$
7.8
As of September 30, 2020 and 2019, the amounts of unrecognized tax benefits which, if recognized, would affect the
effective tax rate were $2.9 and $2.5 , respectively, for the Company and $2.7 and $2.2, respectively, for Spire
Missouri. It is reasonably possible that events will occur in the next 12 months that could increase or decrease the
amount of the unrecognized tax benefits. The Company and Spire Missouri do not expect that any such change will
be significant to the balance sheets. Spire Alabama reported no unrecognized tax benefits for fiscal years 2020,
2019, and 2018.
The Company, Spire Missouri, and Spire Alabama record potential interest and penalties related to uncertain tax
positions as interest expense and other income deductions, respectively. As of September 30, 2020 and 2019,
interest accrued associated with uncertain tax positions was de minimis, and no penalties were accrued.
The Company, Spire Missouri, and Spire Alabama are no longer subject to examination for fiscal years prior to 2017,
except to the extent the net operating losses from prior years are reviewed.
13. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
Pension Plans
The pension plans of Spire consist of plans for employees at Spire Missouri, the employees of Spire Alabama and
employees of the subsidiaries of Spire EnergySouth.
Spire Missouri has non-contributory, defined benefit, trusteed forms of pension plans covering the majority of their
employees. Plan assets consist primarily of corporate and U.S. government obligations and a growth segment
consisting of exposure to equity markets, commodities, real estate and inflation-indexed securities, achieved
through derivative instruments.
Spire Alabama has non-contributory, defined benefit, trusteed forms of pension plans covering the majority of its
employees. Qualified plan assets are comprised of mutual and commingled funds consisting of U.S. equities with
varying strategies, global equities, alternative investments, and fixed income investments.
112
The net periodic pension costs include the following components:
Service cost – benefits earned during the period
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of prior service (credit) cost
Amortization of actuarial loss
Loss on lump-sum settlements and curtailments
Subtotal
Regulatory adjustment
Net pension cost
Spire
2020 2019 2018
$ 20.2
$ 19.3
$ 22.5
27.4
28.2
22.6
(37.0)
(36.3)
(35.0)
(0.9)
(1.1)
(2.5)
10.9
9.3
14.4
18.6
31.6
—
39.2
19.4
53.6
37.4
39.6
6.6
$ 76.6
$ 59.0
$ 60.2
Spire Missouri
2020 2019 2018
$ 12.7
$ 12.4
$ 15.7
19.5
15.8
19.8
(27.2)
(25.5)
(24.6)
0.9
0.9
0.1
9.4
8.7
11.3
16.1
—
26.6
31.4
16.3
44.9
32.1
31.8
3.9
$ 63.5
$ 48.1
$ 48.8
Spire Alabama
2020 2019 2018
$ 6.4
$ 6.2
$ 6.1
5.5
6.0
4.9
(6.5)
(7.3)
(6.9)
(1.8)
(1.8)
(2.4)
1.5
0.8
3.1
2.4
—
5.0
7.5
3.9
9.8
4.5
6.9
1.8
$ 12.0
$ 10.8
$ 11.6
Other changes in plan assets and pension benefit obligations recognized in other comprehensive income or loss
include the following:
Current year actuarial loss (gain)
Amortization of actuarial loss
Acceleration of loss recognized due to settlement
Current year service credit
Transfer due to merger
Amortization of prior service credit (cost)
Amortization of transition asset
Subtotal
Regulatory adjustment
Total recognized in OCI
Spire Missouri
Spire Alabama
Spire
2020 2019
$ 90.9
$ 68.0
(14.4)
(9.3)
(31.7)
(4.4)
—
2.5
—
20.0
(19.5)
$ 0.5
(10.2)
—
1.1
—
72.5
(71.7)
$ 0.8
2018 2020 2019
$ 59.0
$ (1.4) $ 37.8
(11.3)
(8.7)
(26.6)
(4.4)
—
(0.1)
—
(4.6)
5.1
$ (0.3) $ 0.5
(3.7)
—
(0.9)
—
45.7
(44.9)
$ 0.8
(10.9)
— (18.5)
(0.1)
0.1
(2.9)
1.8
(31.9)
31.6
2018 2020 2019
$ 26.3
$ 24.4
$ 2.2
(0.8)
(3.1)
(9.4)
—
(5.1)
— (16.1)
(6.5)
—
—
—
—
0.1
1.8
2.4
(0.9)
—
—
—
20.8
18.6
(24.1)
(20.8)
(18.6)
23.8
2018
$ (0.6)
(1.5)
(2.4)
—
—
—
1.8
(2.7)
2.7
$ (0.3) $ — $ — $ —
Spire pension obligations are driven by separate plan and regulatory provisions governing Spire Missouri, Spire
Alabama and Spire EnergySouth pension plans.
Pursuant to the provisions of Spire Missouri’s and Spire Alabama’s pension plans, pension obligations may be
satisfied by monthly annuities, lump-sum cash payments, or special termination benefits. Lump-sum payments are
recognized as settlements (which can result in gains or losses) only if the total of such payments exceeds the sum of
service and interest costs in a specific year. Special termination benefits, when offered, are also recognized as
settlements which can result in gains or losses. In the fiscal year ended September 30, 2020, two Spire Missouri
plans and one Spire Alabama plan met the criteria for settlement recognition, requiring re-measurement of the
obligation under those plans using updated census data and assumptions for discount rate and mortality. For the
remeasurements, the discount rates for the Missouri plans were updated to 2.85% at September 30, 2020 (from
3.2% at September 30, 2019), and the discount rate for the Alabama plan was updated to 2.95% (from 3.20%).
Lump-sum payments recognized as settlements during fiscal year 2020 was $89.3 ($74.5 attributable to Spire
Missouri and $14.8 to Spire Alabama).
No Spire plans met the criteria for settlement recognition for the fiscal year ended September 30, 2019.
113
Pursuant to a MoPSC Order, the return on plan assets is based on the market-related value of plan assets
implemented prospectively over a four-year period. Gains or losses not yet includible in pension cost are amortized
only to the extent that such gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-
related value of plan assets. Such excess is amortized over the average remaining service life of active participants.
Effective April 19, 2018, the pension cost for Spire Missouri’s western territory (Missouri West) included in
customer rates was reduced from $9.9 to $5.5 per year, the pension cost included in Spire Missouri’s eastern
territory (Missouri East) customer rates was increased from $15.5 to $29.0 per year. Over an amortization period of
eight years, Missouri East rates also include the amortization of $173.0 of assets for pension and other
postretirement benefits, and Missouri West rates will be reduced by the amortization of a $26.2 net liability for
pension and other postretirement benefits.
The difference between these amounts and pension expense as calculated pursuant to the above and that otherwise
would be included in the statements of income and statements of comprehensive income is deferred as a regulatory
asset or regulatory liability.
The following table shows the reconciliation of the beginning and ending balances of the pension benefit obligation
at September 30:
Benefit obligation, beginning of year
Service cost
Interest cost
Actuarial loss (gain)
Plan amendments
Settlement loss
Settlement benefits paid
Regular benefits paid
Benefit obligation, end of year
Accumulated benefit obligation, end of year
Spire
2020
2019
Spire Missouri
2019
2020
Spire Alabama
2019
2020
$
$
$
751.4
22.5
22.6
37.5
(4.4)
16.5
(89.3)
(24.2)
732.6
699.3
$
$
$
664.6
19.3
28.2
104.8
(10.2)
—
—
(55.3)
751.4
712.9
$
$
$
538.4
15.7
15.8
15.6
(4.4)
16.5
(74.5)
(17.9)
505.2
473.7
$
$
$
473.3
12.4
19.8
76.0
(3.7)
—
—
(39.4)
538.4
500.2
$
$
$
152.5
6.1
4.9
18.4
—
—
(14.8)
(3.6)
163.5
161.8
$
$
$
136.3
6.2
6.0
23.7
(6.5)
—
—
(13.2)
152.5
152.3
The following table sets forth the reconciliation of the beginning and ending balances of the fair value of plan assets
at September 30:
Fair value of plan assets, beginning of year
Actual return on plan assets
Employer contributions
Settlement benefits paid
Regular benefits paid
Fair value of plan assets, end of year
Spire
2020
2019
Spire Missouri
2019
2020
Spire Alabama
2019
2020
$
$
521.8
21.1
43.7
(89.3)
(24.2)
473.1
$
$
499.2
50.1
27.8
—
(55.3)
521.8
$
$
379.2
19.1
30.3
(74.5)
(17.9)
336.2
$
$
349.1
42.4
27.1
—
(39.4)
379.2
$
$
93.3
1.0
12.7
(14.8)
(3.6)
88.6
$
$
101.3
4.7
0.5
—
(13.2)
93.3
Funded status of plans, end of year
$ (259.5) $ (229.6) $ (169.0) $ (159.2) $
(74.9) $
(59.2)
The following table sets forth the amounts recognized in the balance sheets at September 30:
Current liabilities
Noncurrent liabilities
Total
Spire
2020
2019
Spire Missouri
2019
2020
Spire Alabama
2019
2020
$
(0.6) $
(0.5) $
(0.6) $
(0.5) $
(258.9)
(229.1)
(168.4)
(158.7)
$ (259.5) $ (229.6) $ (169.0) $ (159.2) $
— $
(74.9)
(74.9) $
—
(59.2)
(59.2)
114
Pre-tax amounts recognized in accumulated other comprehensive loss not yet recognized as components of net
periodic pension cost consist of:
Net actuarial loss
Prior service (credit) cost
Subtotal
Adjustments for amounts included in regulatory assets
Total
Spire
2020
2019
$
$
235.6
(25.6)
210.0
(206.7)
3.3
$
$
213.7
(23.7)
190.0
(187.1)
2.9
Spire Missouri
2019
2020
Spire Alabama
2019
2020
$
$
152.9
(2.8)
150.1
(146.8)
3.3
$
$
153.1
1.7
154.8
(151.9)
2.9
$
$
$
78.1
(21.1)
57.0
(57.0)
— $
61.9
(23.5)
38.4
(38.4)
—
At September 30, 2020, the following pre-tax amounts are expected to be amortized from accumulated other
comprehensive loss into net periodic pension cost during fiscal 2020:
Amortization of net actuarial loss
Amortization of prior service (credit) cost
Subtotal
Regulatory adjustment
Total
Spire
Spire
Missouri
Spire
Alabama
$
$
16.0
(3.2)
12.8
(12.5)
0.3
$
$
11.4
(0.6)
10.8
(10.5)
0.3
$
$
4.6
(2.4)
2.2
(2.2)
—
The assumptions used to calculate net periodic pension costs for Spire Missouri are as follows:
Weighted average discount rate - Spire Missouri East plan
Weighted average discount rate - Spire Missouri West plan
Weighted average rate of future compensation increase
Expected long-term rate of return on plan assets
2020
3.20%
3.15%
3.00%
7.25%
2019
4.30%
4.35%
3.00%
7.50%
2018
3.75%
3.70%
3.00%
7.75%
The assumptions used to calculate net periodic pension costs for Spire Alabama are as follows:
Weighted average discount rate
Weighted average rate of future compensation increase
Expected long-term rate of return on plan assets
2020
3.25%/3.20%
3.00%
7.25%
2019
4.35%
3.00%
7.25%
2018
3.65%/3.70%
3.00%
7.25%
The discount rate is based on long-term, high quality bond indices at the measurement date. The expected long-
term rate of return on plan assets is based on historical and projected rates of return for current and planned asset
classes in the investment portfolio. Assumed projected rates of return for each asset class were selected after
analyzing historical experience and future expectations of the returns. The overall expected rate of return for the
portfolio was developed based on the target allocation for each class.
The assumptions used to calculate the benefit obligations are as follows:
Weighted average discount rate - Spire Missouri East plan
Weighted average discount rate - Spire Missouri West plan
Weighted average discount rate - Spire Alabama plans
Weighted average rate of future compensation increase
2020
2.85%
2.75%
2.95%/2.80%
3.00%
2019
3.20%
3.15%
3.20%/3.25%
3.00%
115
Following are the year-end projected benefit obligation, accumulated benefit obligation, and fair value of plan assets
for plans that have a projected benefit obligation and an accumulated benefit obligation in excess of plan assets:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Spire
2019
$
751.4
712.9
521.8
2020
$ 732.6
699.3
473.1
2020
$ 505.2
473.7
336.2
Spire Missouri
2019
Spire Alabama
2019
$
538.4
500.2
379.2
2020
$ 163.5
161.8
88.6
$
152.5
152.3
93.3
Following are the targeted and actual plan assets by category as of September 30 of each year for Spire Missouri and
Spire Alabama:
Spire Missouri
Return seeking assets
Liability hedging assets
Other
Total
Spire Alabama
Return seeking assets
Liability hedging assets
Other*
Total
2020
Target
2020
Actual
2019
Target
2019
Actual
70.0%
30.0%
—%
100.0%
70.0%
27.0%
3.0%
100.0%
56.5%
43.5%
—%
100.0%
57.0%
39.8%
3.2%
100.0%
2020
Target
2020
Actual
2019
Target
2019
Actual
70.0%
30.0%
—
100.0%
71.0%
27.0%
2.0%
100.0%
60.0%
29.0%
11.0%
100.0%
58.5%
29.8%
11.7%
100.0%
*
Includes cash for 2020. For 2019, includes cash and funds invested in real estate, commodities, natural resources and
inflation-protected securities.
Spire Missouri’s investment policies are designed to maximize, to the extent possible, the funded status of the plans
over time, and minimize volatility of funding and costs. The policy seeks to maximize investment returns consistent
with these objectives and Spire Missouri’s tolerance for risk. The duration of plan liabilities and the impact of
potential changes in asset values on the funded status are fundamental considerations in the selection of plan
assets. Outside investment management specialists are utilized in each asset class. Such specialists are provided
with guidelines, where appropriate, designed to ensure that the investment portfolio is managed in accordance with
the policy. The policy seeks to avoid significant concentrations of risk by investing in a diversified portfolio of assets,
currently including a growth (equity) component and a liability-driven (debt) component. Investments in corporate,
U.S. government and agencies, and, to a lesser extent, international debt securities seek to provide duration
matching with plan liabilities, and typically have investment grade ratings and reflect allocations across various
entities and industries. There are also exposures to additional asset types in the target portfolio: commodities, real
estate and inflation-indexed securities. For the Missouri East plan, the investment policy permits the use of
derivative instruments, which may be used to achieve the desired market exposure of an index, adjust portfolio
duration, or rebalance the total portfolio to the target asset allocation. The growth strategy utilizes a combination of
derivative instruments and debt securities to achieve diversified exposure to equity and other markets while
generating returns from the fixed-income investments and providing further duration matching with the liabilities.
Performance and compliance with the guidelines are regularly monitored. The policy calls for increased allocations
to debt securities as the funded status improves.
116
Spire Alabama employs a total return investment approach whereby a mix of equities and fixed income investments
are used to maximize the long-term return of plan assets with a prudent level of risk. Risk tolerance is established
through consideration of plan liabilities, plan funded status, corporate financial condition and market conditions.
Spire Alabama has developed an investment strategy that focuses on asset allocation, diversification and quality
guidelines. The investment goals are to obtain an adequate level of return to meet future obligations of the plans by
providing above average risk-adjusted returns with a risk exposure in the mid-range of comparable funds.
Investment managers are retained by Spire Alabama to manage separate pools of assets. Funds are allocated to such
managers in order to achieve an appropriate, diversified, and balanced asset mix. Comparative market and peer
group benchmarks are utilized to ensure that investment managers are performing satisfactorily. Spire Alabama
seeks to maintain an appropriate level of diversification to minimize the risk of large losses in a single asset class.
Accordingly, plan assets for the pension plans do not have a concentration of assets in a single entity, industry,
country, commodity or class of investment fund.
Following are expected pension benefit payments for the succeeding five fiscal years, and in aggregate for the five
fiscal years thereafter, for Spire, Spire Missouri, and Spire Alabama:
Spire
Spire Missouri
Spire Alabama
2021
2022
2023
2024
2025
$
$
65.6
49.1
13.5
$
64.1
45.6
15.4
$
60.8
43.3
14.3
$
58.6
41.9
13.5
54.4
37.7
13.3
2026- 2030
246.0
$
168.7
59.0
The funding policy of Spire Missouri and Spire Alabama is to contribute an amount not less than the minimum
required by government funding standards nor more than the maximum deductible amount for federal income tax
purposes. Spire Missouri’s contributions to the pension plans in fiscal 2021 are anticipated to be $36.4 into the
qualified trusts, and $0.6 into the non-qualified plans. Spire Alabama’s contributions to the pension plans in fiscal
2021 are anticipated to be $11.3 into the qualified trusts.
Other Postretirement Benefits
Spire and the Utilities provide certain life insurance benefits at retirement. Spire Missouri plans provide for medical
insurance after early retirement until age 65. For retirements prior to January 1, 2015, the Missouri West plans
provided medical insurance after retirement until death. The Spire Alabama plans provide medical insurance upon
retirement until death for certain retirees depending on the type of employee and the date the employee was
originally hired.
Net periodic postretirement benefit costs consist of the following components:
Service cost – benefits earned during the period
Interest cost on accumulated postretirement
benefit obligation
Expected return on plan assets
Amortization of prior service (credit) cost
Amortization of actuarial (gain) loss
Subtotal
Regulatory adjustment
Net postretirement benefit cost
Spire
2020 2019 2018
$ 9.4
$ 7.4
$ 5.9
Spire Missouri
2020 2019 2018
$ 9.0
$ 6.8
$ 5.3
Spire Alabama
2020 2019 2018
$ 0.2
$ 0.4
$ 0.4
1.4
(5.0)
(0.3)
—
(3.5)
(1.8)
1.5
(4.1)
(0.4)
(0.1)
(2.9)
(1.8)
$ (5.3) $ (4.8) $ (4.7)
1.8
(4.8)
(0.4)
—
(3.0)
(1.8)
6.3
(16.7)
(0.5)
(2.0)
(7.0)
16.0
$ 9.0
9.0
(16.2)
(0.1)
(0.5)
(0.4)
10.0
$ 9.6
8.6
(13.9)
(0.1)
0.8
4.8
2.2
$ 7.0
4.7
(11.4)
(0.2)
(2.0)
(3.6)
17.7
$ 14.1
6.9
(11.1)
0.3
(0.5)
2.4
11.7
$ 14.1
6.9
(9.6)
0.3
0.9
7.5
3.9
$ 11.4
117
Other changes in plan assets and postretirement benefit obligations recognized in OCI include the following:
Current year actuarial (gain) loss
Amortization of actuarial gain (loss)
Current year prior service credit (cost)
Amortization of current year service cost
Amortization of prior service (cost) credit
Subtotal
Regulatory adjustment
Total recognized in OCI
Spire Missouri
2020 2019 2018
Spire
2020 2019 2018
$ (7.3) $ (12.2) $ (45.1) $ (7.6) $ (17.3) $ (47.1) $ 1.1
—
6.3
—
0.3
7.7
(7.7)
Spire Alabama
2020 2019 2018
$ 1.6
$ 5.5
0.1
—
0.5
—
0.6
4.9
—
0.4
—
0.4
—
(0.3)
2.1
6.5
(12.2)
(2.1)
(6.5)
12.2
$ — $ — $ — $ — $ — $ — $ — $ — $ —
(0.8)
—
—
0.1
(45.8)
45.8
(0.9)
—
—
(0.3)
(48.3)
48.3
2.0
15.8
—
0.5
11.0
(11.0)
0.5
5.5
0.4
(0.3)
(6.1)
6.1
2.0
9.5
—
0.2
4.1
(4.1)
Pursuant to a MoPSC Order, the return on plan assets is based on the market-related value of plan assets
implemented prospectively over a four-year period. Gains and losses not yet includible in postretirement benefit
cost are amortized only to the extent that such gain or loss exceeds 10% of the greater of the accumulated
postretirement benefit obligation or the market-related value of plan assets. Such excess is amortized over the
average remaining service life of active participants. Effective April 18, 2018, the recovery in rates for Spire
Missouri’s postretirement benefit plans is based on an annual allowance of $8.6. The difference between these
amounts and postretirement benefit cost based on the above and that otherwise would be included in the
statements of income and statements of comprehensive income is deferred as a regulatory asset or regulatory
liability.
The following table sets forth the reconciliation of the beginning and ending balances of the postretirement benefit
obligation at September 30:
Benefit obligation, beginning of year
Service cost
Interest cost
Actuarial (gain) loss
Plan amendments
Retiree drug subsidy program
Benefits paid
Benefit obligation, end of year
Spire
2020
2019
Spire Missouri
2019
2020
Spire Alabama
2019
2020
$
$
197.3
5.9
6.3
0.2
15.8
—
(13.2)
212.3
$
$
208.1
7.4
9.0
(18.9)
5.5
0.2
(14.0)
197.3
$
$
147.9
5.3
4.7
1.7
9.5
—
(10.7)
158.4
$
$
158.8
6.8
6.9
(19.5)
4.9
0.2
(10.2)
147.9
$
$
43.4
0.4
1.4
(0.7)
6.3
—
(2.5)
48.3
$
$
43.1
0.4
1.8
1.2
0.6
—
(3.7)
43.4
The following table sets forth the reconciliation of the beginning and ending balances of the fair value of plan assets
at September 30:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Fair value of plan assets, end of year
Funded status of plans, end of year
Spire
2020
2019
Spire Missouri
2019
2020
Spire Alabama
2019
2020
$
$
$
279.8
24.2
0.2
(13.2)
291.0
78.7
$
$
$
283.5
9.7
0.6
(14.0)
279.8
82.5
$
$
$
188.9
20.8
0.2
(10.7)
199.2
40.8
$
$
$
189.5
9.0
0.6
(10.2)
188.9
41.0
$
$
$
86.4
3.1
—
(2.5)
87.0
38.7
$
$
$
89.6
0.5
—
(3.7)
86.4
43.0
118
The following table sets forth the amounts recognized in the balance sheets at September 30:
Noncurrent assets
Current liabilities
Noncurrent liabilities
Total
Spire
2020
2019
$
$
129.0
(0.5)
(49.8)
78.7
$
$
118.3
(0.5)
(35.3)
82.5
$
$
Spire Missouri
2019
2020
Spire Alabama
2019
2020
90.3
(0.5)
(49.0)
40.8
$
$
75.3
(0.5)
(33.8)
41.0
$
$
38.7
—
—
38.7
$
$
43.0
—
—
43.0
Pre-tax amounts recognized in accumulated other comprehensive loss not yet recognized as components of net
periodic postretirement benefit cost consist of:
Net actuarial gain
Prior service (credit) cost
Subtotal
Adjustments for amounts included in regulatory assets
Total
Spire
2020
2019
Spire Missouri
2019
2020
Spire Alabama
2019
2020
$
$
(61.7) $
15.5
(46.2)
46.2
— $
(56.3) $
(1.0)
(57.3)
57.3
— $
(58.3) $
10.4
(47.9)
47.9
— $
(52.6) $
0.6
(52.0)
52.0
— $
(1.5) $
5.1
3.6
(3.6)
— $
(2.6)
(1.6)
(4.2)
4.2
—
At September 30, 2020, the following pre-tax amounts are expected to be amortized from accumulated other
comprehensive loss into net periodic postretirement benefit cost during fiscal 2020:
Amortization of net actuarial gain
Amortization of prior service credit
Subtotal
Regulatory adjustment
Total
Spire
Spire
Missouri
Spire
Alabama
$
$
$
(1.6)
1.0
(0.6)
0.6
— $
$
(1.5)
0.7
(0.8)
0.8
— $
—
0.3
0.3
(0.3)
—
The assumptions used to calculate net periodic postretirement benefit costs for Spire Missouri are as follows:
Weighted average discount rate - Spire Missouri plans
Weighted average rate of future compensation increase
Expected long-term rate of return on plan assets - Spire Missouri plans
2020
3.15%
3.00%
6.25%
2019
4.30%
3.00%
6.25%
2018
3.60%
3.00%
5.75%/7.75%
The assumptions used to calculate net periodic postretirement benefit costs for Spire Alabama are as follows:
Weighted average discount rate
Expected long-term rate of return on plan assets
2020
3.15%
5.00%/6.25%
2019
4.30%
5.00%/6.25%
2018
3.80%
3.75%/6.00%
The discount rate is based on long-term, high quality bond indices at the measurement date. The expected long-
term rate of return on plan assets is based on historical and projected rates of return for current and planned asset
classes in the investment portfolio. Assumed projected rates of return for each asset class were selected after
analyzing historical experience and future expectations of the returns. The overall expected rate of return for the
portfolio was developed based on the target allocation for each class.
The assumptions used to calculate the accumulated postretirement benefit obligations are as follows:
Weighted average discount rate - Spire Alabama plans
Weighted average discount rate - Spire Missouri plans
Weighted average rate of future compensation increase - Spire Missouri East plans
2020
2.75%
2.75%
3.00%
2019
3.15%
3.15%
3.00%
119
The assumed medical cost trend rates at September 30 are as follows:
Medical cost trend assumed for next year - Spire Missouri
Medical cost trend assumed for next year - Spire Alabama
Rate to which the medical cost trend rate is assumed to decline
(the ultimate medical cost trend rate)
Year the rate reaches the ultimate trend
2020
6.50%
6.50%
5.00%
2025
2019
6.75%
6.75%
5.00%
2025
The following table presents the effects of an assumed 1% change in the assumed medical cost trend rate:
Net periodic postretirement benefit cost
Accumulated postretirement benefit obligation
Spire
1%
Increase
$
0.8 $
9.7
1%
Decrease
Spire Missouri
1%
Increase
1%
Decrease
(0.7) $
(8.7)
0.6 $
6.5
(0.6) $
(5.9)
Spire Alabama
1%
1%
Decrease
Increase
(0.1)
(2.3)
0.2 $
2.6
Following are the targeted and actual plan assets by category as of September 30 of each year for Spire Missouri and
Spire Alabama:
Spire Missouri
Equity securities
Debt securities
Other (cash and cash equivalents held to make benefit payments)
Total
Spire Alabama
Equity securities
Debt securities
Total
Target
2020
Actual
2019
Actual
60.0%
40.0%
—%
100.0%
57.4%
37.8%
4.8%
100.0%
58.4%
38.8%
2.8%
100.0%
Target
60.0%
40.0%
100.0%
2020
Actual
2019
Actual
61.8%
38.2%
100.0%
60.3%
39.7%
100.0%
Missouri and Alabama state laws provide for the recovery in rates of costs accrued pursuant to GAAP provided that
such costs are funded through an independent, external funding mechanism. The Utilities have established
Voluntary Employees’ Beneficiary Association and Rabbi Trusts as external funding mechanisms. Their investment
policies seek to maximize investment returns consistent with their tolerance for risk. Outside investment
management specialists are utilized in each asset class. Such specialists are provided with guidelines, where
appropriate, designed to ensure that the investment portfolio is managed in accordance with policy. Performance
and compliance with the guidelines is regularly monitored. Spire Missouri and Spire Alabama currently invest in
mutual funds which are rebalanced periodically to the target allocation. The mutual funds are diversified across U.S.
stock and bond markets, and for Spire Alabama, international stock markets.
Following are expected postretirement benefit payments for the succeeding five fiscal years, and in aggregate for the
five fiscal years thereafter for Spire, Spire Missouri, and Spire Alabama:
Spire
Spire Missouri
Spire Alabama
2021
2022
2023
2024
2025
$
$
14.7
11.7
2.7
$
15.4
12.3
2.8
$
16.1
12.9
2.9
$
16.5
13.2
3.0
16.6
13.3
3.0
2026- 2030
78.2
$
61.7
14.2
The Utilities’ funding policy is to contribute amounts to the trusts equal to the periodic benefit cost calculated
pursuant to GAAP as recovered in rates. For Spire Missouri, contributions to the postretirement plans in fiscal 2021
are anticipated to be $4.8 to the qualified trusts and $0.6 paid directly to participants from Spire Missouri funds. It
is not anticipated that contributions will be made to the Spire Alabama postretirement plans in fiscal 2021.
120
Other Plans
Spire Services Inc. sponsors a 401(k) plan that cover substantially all employees of Spire Inc. and its subsidiaries.
The plan allows employees to contribute a portion of their base pay in accordance with specific guidelines. The cost
of the defined contribution plan for Spire Inc. totaled $13.6, $13.8, and $12.5 for fiscal years 2020, 2019, and 2018,
respectively. Spire Missouri provides a match of such contributions within specific limits. The cost of the defined
contribution plan for Spire Missouri amounted to $9.5, $10.0, and $9.0 for fiscal years 2020, 2019, and 2018,
respectively. Spire Alabama also provides a match of employee contributions within specific limits. The cost of the
defined contribution plan for Spire Alabama amounted to $3.4, $3.1, and $3.0 for fiscal years 2020, 2019, and
2018, respectively.
Fair Value Measurements of Pension and Other Postretirement Plan Assets
Spire
The table below categorizes the fair value measurements of the Spire pension plan assets:
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
As of September 30, 2020
Cash and cash equivalents
Equity funds - global (including U.S.)
Equity index funds - global (including U.S.)
Debt securities:
U.S. bond funds
U.S. government index funds
Global funds (including U.S.)
Total
As of September 30, 2019
Cash and cash equivalents
Equity mutual funds - U.S.
Equity mutual funds - international
Debt securities:
U.S. bond mutual funds
U.S. government
U.S. corporate
U.S. municipal
International
Derivatives and margin receivable
103-12 Direct Filing Entities
Total
11.5 $
31.4
32.6
48.9
78.3
—
202.7 $
42.5 $
40.5
30.1
34.8
52.9
143.7
4.0
44.1
0.2
—
392.8 $
— $
195.6
—
—
—
74.8
270.4 $
— $
17.0
8.6
73.9
9.5
—
—
7.5
—
12.5
129.0 $
— $
—
—
—
—
—
— $
— $
—
—
—
—
—
—
—
—
—
— $
11.5
227.0
32.6
48.9
78.3
74.8
473.1
42.5
57.5
38.7
108.7
62.4
143.7
4.0
51.6
0.2
12.5
521.8
$
$
$
$
121
The table below categorizes the fair value measurements of Spire’s postretirement plan assets:
As of September 30, 2020
Cash and cash equivalents
U.S. stock/bond mutual funds
International fund
Total
As of September 30, 2019
Cash and cash equivalents
U.S. stock/bond mutual funds
International fund
Total
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
$
$
$
$
3.6 $
199.4
1.0
204.0 $
5.3 $
187.1
1.0
193.4 $
— $
72.2
14.8
87.0 $
— $
71.8
14.6
86.4 $
— $
—
—
— $
— $
—
—
— $
3.6
271.6
15.8
291.0
5.3
258.9
15.6
279.8
Cash and cash equivalents include money market mutual funds valued based on quoted market prices. Fair values
of derivative instruments are calculated by investment managers who use valuation models that incorporate
observable market inputs. Debt securities are valued based on broker/dealer quotations or by using observable
market inputs. The stock and bond mutual funds are valued at the quoted market price of the identical securities.
Spire Missouri
The table below categorizes the fair value measurements of Spire Missouri’s pension plan assets:
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
As of September 30, 2020
Cash and cash equivalents
Equity funds - global (including U.S.)
Equity index funds - global (including U.S.)
Debt securities:
U.S. bond funds
U.S. government index funds
Global funds (including U.S.)
Total
As of September 30, 2019
Cash and cash equivalents
Equity mutual funds - U.S.
Equity mutual funds - international
Debt securities:
U.S. bond mutual funds
U.S. government
U.S. corporate
U.S. municipal
International
Derivatives and margin receivable
Total
9.5 $
22.1
22.8
31.0
59.6
—
145.0 $
41.2 $
—
—
—
52.9
143.7
4.0
44.1
0.2
286.1 $
— $
137.8
—
—
—
53.4
191.2 $
— $
9.1
3.3
73.9
6.8
—
—
—
—
93.1 $
— $
—
—
—
—
—
— $
— $
—
—
—
—
—
—
—
—
— $
9.5
159.9
22.8
31.0
59.6
53.4
336.2
41.2
9.1
3.3
73.9
59.7
143.7
4.0
44.1
0.2
379.2
$
$
$
$
122
The table below categorizes the fair value measurements of Spire Missouri’s postretirement plan assets:
As of September 30, 2020
Cash and cash equivalents
U.S. stock/bond mutual funds
Total
As of September 30, 2019
Cash and cash equivalents
U.S. stock/bond mutual funds
Total
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
$
$
$
$
3.0 $
196.2
199.2 $
5.2 $
183.7
188.9 $
— $
—
— $
— $
—
— $
— $
—
— $
— $
—
— $
3.0
196.2
199.2
5.2
183.7
188.9
Cash and cash equivalents include money market mutual funds valued based on quoted market prices. Fair values
of derivative instruments are calculated by investment managers who use valuation models that incorporate
observable market inputs. Debt securities are valued based on broker/dealer quotations or by using observable
market inputs. The stock and bond mutual funds are valued at the quoted market price of the identical securities.
Spire Alabama
The table below categorizes the fair value measurements of Spire Alabama’s pension plan assets:
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
As of September 30, 2020
Cash and cash equivalents
Equity funds - global (including U.S.)
Equity index funds - global (including U.S.)
Debt securities:
U.S. bond funds
U.S. government index funds
Global funds (including U.S.)
Total
As of September 30, 2019
Cash and cash equivalents
Equity mutual funds - U.S.
Equity mutual funds - international
Debt securities:
U.S. bond mutual funds
U.S. government
International
103-12 Direct Filing Entities
Total
0.9 $
6.1
6.4
11.7
12.1
—
37.2 $
0.8 $
26.5
19.7
22.8
—
—
—
69.8 $
— $
37.5
—
—
—
13.9
51.4 $
— $
5.2
3.5
—
1.7
4.9
8.2
23.5 $
— $
—
—
—
—
—
— $
— $
—
—
—
—
—
—
— $
0.9
43.6
6.4
11.7
12.1
13.9
88.6
0.8
31.7
23.2
22.8
1.7
4.9
8.2
93.3
$
$
$
$
123
The table below categorizes the fair value measurements of Spire Alabama’s postretirement plan assets:
As of September 30, 2020
U.S. stock/bond mutual funds
International fund
Total
As of September 30, 2019
U.S. stock/bond mutual funds
International fund
Total
Quoted Prices
in Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
$
$
$
$
— $
—
— $
— $
—
— $
72.2 $
14.8
87.0 $
71.8 $
14.6
86.4 $
— $
—
— $
— $
—
— $
72.2
14.8
87.0
71.8
14.6
86.4
Cash and cash equivalents include money market mutual funds valued based on quoted market prices. Fair values
of derivative instruments are calculated by investment managers who use valuation models that incorporate
observable market inputs. Debt securities are valued based on broker/dealer quotations or by using observable
market inputs. The stock and bond mutual funds are valued at the quoted market price of the identical securities.
14. INFORMATION BY OPERATING SEGMENT
The Company has two reportable segments: Gas Utility and Gas Marketing. The Gas Utility segment is the
aggregation of the operations of the Utilities. The Gas Marketing segment includes the results of Spire Marketing, a
subsidiary engaged in the non-regulated marketing of natural gas and related activities, including utilizing natural
gas storage contracts for providing natural gas sales. Other components of the Company’s consolidated information
include:
• unallocated corporate items, including certain debt and associated interest costs;
• Spire STL Pipeline, a subsidiary of Spire which has constructed and, as of November 2019, operates a 65-mile
FERC-regulated pipeline to deliver natural gas into eastern Missouri;
• Spire Storage, a subsidiary of Spire providing physical natural gas storage services; and
• Spire’s subsidiaries engaged in the operation of a propane pipeline, the compression of natural gas, and risk
management, among other activities.
Accounting policies are described in Note 1, Summary of Significant Accounting Policies. Intersegment transactions
include sales of natural gas from Spire Marketing to Spire Missouri and Spire Alabama, sales of natural gas from
Spire Missouri to Spire Marketing, sales of natural gas from Spire Alabama to Spire Marketing, propane
transportation services provided by Spire NGL Inc. to Spire Missouri, and propane storage services provided by
Spire Missouri to Spire NGL Inc.
124
Management evaluates the performance of the operating segments based on the computation of net economic
earnings. Net economic earnings exclude from reported net income the after-tax impacts of fair value accounting
and timing adjustments associated with energy-related transactions, the impacts of acquisition, divestiture and
restructuring activities, and the largely non-cash impacts of other non-recurring or unusual items such as certain
regulatory, legislative or GAAP standard-setting actions. In fiscal 2019, this included impacts from ISRS rulings
against Spire Missouri. In fiscal 2018, these items included the revaluation of deferred tax assets and liabilities due
to the Tax Cuts and Jobs Act and the write-off of certain long-standing assets as a result of disallowances in Spire
Missouri’s rate proceedings.
2020
Revenues from external customers
Intersegment revenues
Total Operating Revenues
Operating Expenses
Natural gas
Other operation and maintenance
Depreciation and amortization
Taxes, other than income taxes
Impairments
Total Operating Expenses
Operating Income (Loss)
Net Economic Earnings (Loss)
Capital Expenditures
2019
Revenues from external customers
Intersegment revenues
Total Operating Revenues
Operating Expenses
Natural gas
Other operation and maintenance
Depreciation and amortization
Taxes, other than income taxes
Total Operating Expenses
Operating Income (Loss)
Net Economic Earnings (Loss)
Capital Expenditures
2018
Revenues from external customers
Intersegment revenues
Total Operating Revenues
Operating Expenses
Natural gas
Other operation and maintenance
Depreciation and amortization
Taxes, other than income taxes
Total Operating Expenses
Operating Income (Loss)
Net Economic Earnings (Loss)
Capital Expenditures
$
$
$
$
$
$
$
$
$
$
$
$
Gas
Utility
Gas
Marketing
Other
1,751.8 $
0.2
1,752.0
87.9 $
—
87.9
Eliminations Consolidated
1,855.4
— $
—
1,855.4
(42.3)
(42.3)
15.7 $
42.1
57.8
660.2
421.3
189.7
146.5
—
1,417.7
334.3 $
213.4 $
547.8 $
65.1
11.8
0.6
1.1
—
78.6
9.3 $
9.1 $
3.6 $
0.4
38.2
7.0
0.8
148.6
195.0
(137.2) $
(14.7) $
87.0 $
(29.6)
(12.7)
—
—
—
(42.3)
— $
— $
— $
696.1
458.6
197.3
148.4
148.6
1,649.0
206.4
207.8
638.4
Gas
Utility
Gas
Marketing
Other
Eliminations Consolidated
1,952.4
— $
—
1,952.4
(13.6)
(13.6)
9.5 $
12.0
21.5
0.5
31.6
2.2
1.5
35.8
(14.3) $
(24.1) $
254.8 $
(2.7)
(10.9)
—
—
(13.6)
— $
— $
— $
840.3
474.1
181.7
154.0
1,650.1
302.3
195.1
823.3
Eliminations Consolidated
1,965.0
— $
—
1,965.0
(11.5)
(11.5)
5.4 $
11.1
16.5
0.3
30.3
1.4
0.8
32.8
(16.3) $
(22.3) $
41.7 $
(1.4)
(10.1)
—
—
(11.5)
— $
— $
— $
871.7
477.3
168.4
153.5
1,670.9
294.1
183.7
499.4
Gas
Utility
Gas
Marketing
Other
1,859.2 $
1.6
1,860.8
794.6
441.7
179.4
151.7
1,567.4
293.4 $
199.8 $
565.4 $
83.7 $
—
83.7
47.9
11.7
0.1
0.8
60.5
23.2 $
19.4 $
3.1 $
71.6 $
—
71.6
30.2
7.4
—
0.2
37.8
33.8 $
22.9 $
— $
1,888.0 $
0.4
1,888.4
842.6
449.7
167.0
152.5
1,611.8
276.6 $
183.1 $
457.7 $
125
Total Assets at End of Year
Gas Utility
Gas Marketing
Other
Eliminations
Total Assets
Reconciliation of Consolidated Net Income
to Consolidated Net Economic Earnings
Net Income
Adjustments, pre-tax:
Impairments
Provision for ISRS rulings
Missouri regulatory adjustments
Fair value and timing adjustments
Acquisition, divestiture and restructuring activities
Income tax effect of adjustments
Effect of the Tax Cuts and Jobs Act
Net Economic Earnings
15. REGULATORY MATTERS
2020
2019
2018
6,716.2
182.7
2,443.5
(1,101.2)
8,241.2
$
$
6,094.6
212.3
2,692.7
(1,380.4)
7,619.2
$
$
5,606.7
295.3
2,508.0
(1,566.4)
6,843.6
2020
2019
2018
88.6
$
184.6
$
214.2
148.6
—
—
2.5
—
(31.9)
—
207.8
$
—
12.2
—
1.2
0.4
(3.3)
—
195.1
$
—
—
30.6
(4.3)
13.6
(10.3)
(60.1)
183.7
$
$
$
$
As discussed below for Spire Missouri and Spire Alabama, the Purchased Gas Adjustment (PGA) clauses and Gas
Supply Adjustment (GSA) riders allow the Utilities to pass through to customers the cost of purchased gas supplies.
Regulatory assets and regulatory liabilities related to the PGA clauses and the GSA rider are both labeled
Unamortized Purchased Gas Adjustments herein.
126
The following regulatory assets and regulatory liabilities were reflected in the Balance Sheets as of September 30,
2020 and 2019.
September 30
Regulatory Assets:
Current:
Spire
2020
2019
Spire Missouri
2019
2020
Spire Alabama
2019
2020
Pension and postretirement benefit costs
Unamortized purchased gas adjustments
Other
$
Total Current Regulatory Assets
30.6
5.5
33.4
69.5
Noncurrent:
Future income taxes due from customers
Pension and postretirement benefit costs
Cost of removal
Unamortized purchased gas adjustments
Energy efficiency
Other
Total Noncurrent Regulatory Assets
Total Regulatory Assets
Regulatory Liabilities:
Current:
Pension and postretirement benefit costs
Unamortized purchased gas adjustments
Other
Total Current Regulatory Liabilities
Noncurrent:
Deferred taxes due to customers
Pension and postretirement benefit costs
Accrued cost of removal
Unamortized purchased gas adjustments
Other
Total Noncurrent Regulatory Liabilities
Total Regulatory Liabilities
123.5
439.3
395.6
12.1
39.6
59.3
1,069.4
$ 1,138.9
$
$
5.8
73.1
34.1
113.0
138.8
157.6
28.6
4.4
14.3
343.7
456.7
$
$
$
$
30.1
18.2
30.3
78.6
111.0
416.6
150.9
9.1
35.0
45.0
767.6
846.2
5.8
26.2
28.8
60.8
179.8
142.3
41.6
—
35.3
399.0
459.8
$
$
$
$
21.9
—
10.2
32.1
114.6
332.6
7.1
12.1
39.6
42.7
548.7
580.8
3.6
72.3
27.3
103.2
121.4
140.4
—
4.4
8.6
274.8
378.0
$
$
$
$
21.9
—
7.5
29.4
102.9
333.3
—
9.1
35.0
27.2
507.5
536.9
3.6
25.4
23.3
52.3
162.5
119.1
15.7
—
29.2
326.5
378.8
$
$
$
$
7.7
5.5
7.2
20.4
2.2
98.2
388.6
—
—
0.9
489.9
510.3
2.2
—
1.7
3.9
—
14.8
—
—
3.7
18.5
22.4
$
$
$
$
7.3
17.7
8.9
33.9
2.2
77.2
150.9
—
—
0.9
231.2
265.1
2.2
—
1.2
3.4
—
19.1
—
—
3.9
23.0
26.4
A portion of the Company’s regulatory assets are not earning a return and are shown in the schedule below:
September 30
Pension and postretirement benefit costs
Future income taxes due from customers
Other
Total Regulatory Assets Not Earning a Return
Spire
Spire Missouri
2020
2019
2020
2019
$
$
$
232.3
121.3
12.9
$
211.1
108.8
14.3
$
232.3
114.6
12.9
366.5
$
334.2
$
359.8
$
211.1
102.9
14.3
328.3
Like all the Company’s regulatory assets, these regulatory assets are expected to be recovered from customers in
future rates. The recovery period for the future income taxes due from customers and pension and other
postretirement benefit costs could be 20 years or longer, based on current Internal Revenue Service guidelines and
average remaining service life of active participants, respectively. The other items not earning a return are expected
to be recovered over a period not to exceed 15 years, consistent with precedent set by the MoPSC. Spire Alabama
does not have any regulatory assets that are not earning a return.
127
Spire Missouri
As authorized by the MoPSC, the PGA clause allows Spire Missouri to flow through to customers, subject to
prudence review by the MoPSC, the cost of purchased gas supplies. To better match customer billings with market
natural gas prices, Spire Missouri is allowed to file to modify, on a periodic basis, the level of gas costs in its PGA.
Certain provisions of the PGA clause are included below:
• Spire Missouri has a risk management policy that allows for the purchase of natural gas derivative
instruments with the goal of managing price risk associated with purchasing natural gas on behalf of its
customers. The MoPSC clarified that costs, cost reductions, and carrying costs associated with the Utility’s
use of natural gas derivative instruments are gas costs recoverable through the PGA mechanism.
• The tariffs allow Spire Missouri flexibility to make up to three discretionary PGA changes during each year,
in addition to its mandatory November PGA change, so long as such changes are separated by at least two
months.
• Spire Missouri is authorized to apply carrying costs to all over- or under-recoveries of gas costs, including
costs and cost reductions associated with the use of derivative instruments, including cash payments for
margin deposits.
• The MoPSC approved a plan applicable to Spire Missouri’s gas supply commodity costs under which it
retains a portion of cost savings associated with the acquisition of natural gas below an established
benchmark level. This gas supply cost management program allows Spire Missouri to retain 10% of cost
savings, up to a maximum of $3.0 annually. Spire Missouri did not record any such incentive compensation
under the plan during the three fiscal years reported. Incentives recorded under the plan, if any, are included
in Gas Utility Operating Revenues on the Consolidated Statements of Income and under Operating Revenues
on Spire Missouri’s Statements of Comprehensive Income.
Pursuant to the provisions of the PGA clause, the difference between actual costs incurred and costs recovered
through the application of the PGA clause are reflected as a deferred charge or credit at the end of the fiscal year. At
that time, the balance is classified as a current asset or current liability and recovered from, or credited to,
customers over an annual period commencing in November. The balance in the current account is amortized as
amounts are reflected in customer billings.
The PGA clause also provides for the treatment of income from off-system sales and capacity release revenues. Pre-
tax income from off-system sales and capacity release revenues is shared with customers, with an estimated amount
assumed in PGA rates. The difference between the actual amount allocated to customers for each fiscal year and the
estimated amount assumed in PGA rates is recovered from, or credited to, customers over an annual period
commencing in the subsequent November. Before April 19, 2018, the customer share of such income ranged from
70% to 85%. In the latest rate cases (discussed in the following paragraphs), the multiple sharing tiers and
percentages were eliminated in favor of a single sharing percentage under which customers receive 75% (and Spire
Missouri receives 25%) of the net margins achieved as a result of such off-system sales and capacity releases.
128
On March 7, 2018, the MoPSC issued its order in two general rate cases (docketed as GR-2017-0215 and GR-2017-
0216), approving new tariffs that became effective on April 19, 2018. Certain provisions of the order allow less
future recovery of certain deferred or capitalized costs than estimated based upon previous rate proceedings, and
management determined that the related regulatory assets should be written down or off in connection with the
preparation of the financial statements for the second quarter of 2018. The charges totaled $38.4 for the year ended
September 30, 2018, and are included primarily in operation and maintenance expense on the statements of income
and in other cash flows from operating activities on the statements of cash flows. The after-tax reduction to net
income and earnings per share was $23.6 and $0.49, respectively. The charges related to the long-standing pension
and real estate assets, totaling $30.6, were excluded in the determination of 2018 net economic earnings, as shown
in Note 14, Information by Operating Segment. On April 25, 2018, Spire Missouri filed an appeal of the MoPSC’s
order related to the disallowance of certain pension costs incurred prior to 1997 ($28.8), real estate sold in 2014
($1.8), and rate case expenses ($0.9) to Missouri’s Southern District Court of Appeals. On March 15, 2019, the
appeal was denied by the Southern District Court of Appeals, and Spire Missouri requested review by the Missouri
Supreme Court, which agreed to take the case. Oral arguments were made before the Missouri Supreme Court on
January 29, 2020. The case is awaiting a decision.
Spire Missouri filed Infrastructure System Replacement Surcharge (ISRS) applications which were approved by the
MoPSC and the costs associated therewith were included in new tariffs that went into effect from its last general rate
cases on April 19, 2018. Since then, ISRS filings became effective on October 8, 2018, May 25, 2019, November 16,
2019, and May 25, 2020, bringing total authorized future annualized ISRS revenues for Spire Missouri to $40.3 as
of September 30, 2020. An incremental $7.0 annualized ISRS rate increase was approved by the MoPSC on
November 12, 2020, this increase is expected to be effective in late November or early December 2020.
On November 19, 2019, the Missouri Western District Court of Appeals issued rulings (“ISRS rulings”) that
determined certain capital investments in 2016 through 2018 were not eligible for recovery under the ISRS. The
ISRS rulings upheld appeals by the OPC that contested recovery of portions of Spire Missouri’s ISRS and
overturned the three prior MoPSC decisions. As a result of the rulings, Spire Missouri recorded a $12.2 provision for
fiscal year 2019 and an additional $4.8 in the first half of fiscal year 2020. In the third quarter of fiscal 2020, Spire
Missouri reached a settlement with the MoPSC staff and the OPC to resolve these cases, which was subsequently
approved by the MoPSC. Pursuant to the settlement, Spire Missouri has made a customer refund in the total
amount of $15.0 as a one-time bill credit issued in August 2020. The favorable difference between the total
provision and the actual settlement was recorded to earnings in the third quarter.
Additional ISRS appeals were taken by Spire Missouri and the OPC relating to the January 2019 ISRS filings with
annual authorized revenue of $12.4, as approved by the MoPSC effective May 25, 2019, and the July 2019 ISRS
filings with annual authorized revenue totaling $8.8, which was approved by the MoPSC effective November 16,
2019. The January 2019 ISRS decision has been upheld by the Western District, resulting in no revenue change or
customer refund. On October 20, 2020, the Western District issued its opinion in the July 2019 case upholding the
MoPSC’s decision, resulting in no revenue change or customer refund.
House Bill 2120 was passed by the General Assembly on May 15, 2020, and signed into law by Missouri Governor
Parson on July 2, 2020, clarifying which infrastructure investments qualify for ISRS recovery under the statute
governing the ISRS mechanism. The provisions of the bill became effective August 28, 2020, and apply to new ISRS
applications made on or after that date.
In September 2020, Spire Missouri, the MoPSC staff and the OPC reached a Unanimous Stipulation and Agreement
regarding Spire Missouri’s request for an Accounting Authority Order (AAO) pertaining to certain costs and lost
customer fee revenue related to the COVID-19 pandemic. In October 2020, the MoPSC issued an order approving
that agreement and granting an AAO. Accordingly, Spire Missouri recorded a regulatory asset of $3.8 as of
September 30, 2020, related to the deferral of applicable costs and is tracking lost customer fee revenue. All
ratemaking treatment of the deferrals and any revenue recoveries is reserved for consideration in Spire Missouri’s
next general rate case.
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On October 8, 2020, Spire Missouri filed a Notice of Intended Rate Case Filing with the MoPSC, indicating its
intention to initiate a general base rate case more than 60 days following the filing of the notice. The notice
indicates Spire Missouri’s intention to seek rate recovery for investments made since its last general rate case, as
well as a need to reset the ISRS cap which has been reached for its western operating unit. The notice further
indicates Spire Missouri’s intention to further unify its operating units through the anticipated tariff filings.
Spire Alabama
Effective January 1, 2014, Spire Alabama’s allowed range of return on average common equity (ROE) was 10.5% to
10.95% with an adjusting point of 10.8%. Spire Alabama was eligible to receive a performance-based adjustment of
5 basis points to the ROE adjusting point, based on meeting certain customer satisfaction criteria. Under its Rate
Stabilization and Equalization (RSE) rate-setting process, the APSC conducts quarterly reviews to determine
whether Spire Alabama’s ROE at the end of the rate year will be within the allowed range of return. Reductions in
rates can be made quarterly to bring the projected ROE within the allowed range; increases, however, are allowed
only once each rate year, effective December 1, and cannot exceed 4% of prior-year revenues. In October 2018, the
APSC approved the renewal of RSE through September 30, 2022, with several modifications. Effective October 1,
2018, Spire Alabama’s allowed range of ROE is 10.15% to 10.65% with an adjusting point of 10.4%. Spire Alabama is
eligible to receive a performance-based adjustment of +/- 10 basis point to the ROE adjusting point, based upon the
terms of the newly approved Accelerated Infrastructure Modernization (AIM) Program tariff. The 5-basis point
adjustment for certain customer satisfaction criteria has been removed. Other modifications include an equity
limitation as a percent of total capitalization from 56.5% to 55.5% and adjustments to the Cost Control Measure
(CCM) as noted below.
On November 25, 2019, Spire Alabama filed an increase for rate year 2020 of $5.9, which became effective
December 1, 2019. On October 26, 2020, Spire Alabama made its annual RSE rate filing with the APSC, presenting
the utility’s budget for the fiscal year ending September 30, 2021, including net income and a calculation of allowed
ROE. The AIM mechanism provides for a 10 basis-point increase in the allowed ROE each year if a prescribed
number of pipeline miles are replaced. Spire Alabama exceeded the threshold for 2020 and accordingly filed for a
10.5% ROE for fiscal 2021.
Spire Alabama’s rate schedules for natural gas distribution charges contain a GSA rider which permits the pass-
through to customers of changes in the cost of gas supply. Spire Alabama’s tariff provides a temperature adjustment
mechanism, also included in the GSA rider, which is designed to moderate the impact of departures from normal
temperatures on Spire Alabama’s earnings. The temperature adjustment applies primarily to residential, small
commercial and small industrial customers. Other non-temperature weather-related conditions that may affect
customer usage are not included in the temperature adjustment. In November 2019, the APSC approved Spire
Alabama’s proposal to establish a mechanism under its GSA rider allowing the utility to create value through off-
system sales of excess natural gas supply and capacity and to retain 25% of the value created while giving 75% of the
value to customers. The mechanism was effective with the establishment of new rates on December 1, 2019. Spire
Alabama filed a GSA rate decrease effective February 1, 2020, of approximately $13.9 (on an annual basis) primarily
attributable to lower natural gas prices and results of the off-system sale and capacity release share program.
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The inflation-based CCM, established by the APSC, allows for annual increases to operation and maintenance
(“O&M”) expense. If rate year O&M expense falls within the index range, no adjustment is required. If rate year
O&M expense exceeds the index range, three-quarters of the difference is returned to customers through future rate
adjustments. To the extent rate year O&M is less than the index range, Spire Alabama benefits by one-half of the
difference through future rate adjustments. Certain items that fluctuate based on situations demonstrated to be
beyond Spire Alabama’s control may be excluded from the CCM calculation. Before fiscal 2019, the CCM index
range was Spire Alabama’s 2007 actual rate year O&M expense inflation-adjusted based on the June Consumer
Price Index For All Urban Consumers (CPI-U) each rate year, plus or minus 1.75%. Effective October 1, 2018, the
CCM is calculated based upon O&M expense per customer and the index range is Spire Alabama’s actual 2018 O&M
expense adjusted for inflation and adjusted by 2/3 and 1/3 of the 2018 CCM differential (amount below the CCM
range in 2018) in 2019 and 2020, respectively, plus or minus 1.50%. As of September 30, 2020, Spire Alabama
recorded an RSE point of test giveback of $3.0 and a CCM benefit of $5.2 for rate year 2020, which will both be
reflected in rates effective December 1, 2020. The CCM benefit was $5.9 for rate year 2019 and $9.7 for rate year
2018.
On June 28, 2010, the APSC approved a reduction in depreciation rates, effective June 1, 2010, and a regulatory
liability to be recorded for Spire Alabama. Refunds from such negative salvage liability were passed back to eligible
customers on a declining basis through lower tariff rates through rate year 2019 pursuant to the terms of the
Negative Salvage Rebalancing (NSR) rider. The total amount refundable to customers was subject to adjustments
for charges made to the Enhanced Stability Reserve (ESR) and other APSC-approved charges. The refunds were due
to a re-estimation of future removal costs provided for through the prior depreciation rates. For fiscal 2019 and
2018, NSR amounts returned to customers were approximately $4.2 and $7.2, respectively.
The APSC approved an ESR in 1998, which was subsequently modified and expanded in 2010. As currently
approved, the ESR provides deferred treatment and recovery for the following: (1) extraordinary O&M expenses
related to environmental response costs; (2) extraordinary O&M expenses related to self-insurance costs that exceed
$1.0 per occurrence; (3) extraordinary O&M expenses, other than environmental response costs and self-insurance
costs, resulting from a single force majeure event or multiple force majeure events greater than $0.3 and $0.4,
respectively, during a rate year; and (4) negative individual large commercial and industrial customer budget
revenue variances that exceed $0.4 during a rate year. Spire Alabama is tracking costs and other impacts of COVID-
19 in anticipation that some of these items could be recoverable under its ESR, but no related changes to regulatory
assets or liabilities have been recorded to date. Charges to the ESR are subject to certain limitations which may
disallow deferred treatment and which prescribe the timing of recovery. Funding to the ESR is provided as a
reduction to the refundable negative salvage balance over its nine-year term beginning December 1, 2010.
Subsequent to the nine-year period and subject to APSC authorization, Spire Alabama expects to be able to recover
underfunded ESR balances over a five-year amortization period with an annual limitation of $0.7. Amounts in
excess of this limitation are deferred for recovery in future years.
Spire Alabama has APSC approval for an intercompany revolving credit agreement allowing Spire Alabama to
borrow from Spire in a principal amount not to exceed $200.0 at any time outstanding in combination with its bank
line of credit, and to loan to Spire in a principal amount not to exceed $25.0 at any time outstanding. Borrowings
may be used for the following purposes: (a) meeting increased working capital requirements; (b) financing
construction requirements related to additions, extensions, and replacements of the distribution systems; and (c)
financing other expenditures that may arise from time to time in the normal course of business. In fiscal 2019, the
APSC approved Spire Alabama’s applications for $90.0 and $100.0 of long-term debt financing (issued January 15,
2019, and December 2, 2019, respectively). On March 24, 2020, the APSC approved an application for up to $150.0
of additional long-term debt financing for Spire Alabama.
Spire
In addition to those discussed above for Spire Missouri and Spire Alabama, Spire is affected by the following
regulatory matters.
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Spire Gulf has similar rate regulation to Spire Alabama. The RSE allowed range of ROE is 10.45% to 10.95% with an
adjusting point of 10.7%. The CCM has the same return and similar recovery provisions when expenses exceed or
are under a band of +/- 1.50% around the CPI-U inflated O&M per customer expense level from 2017, excluding
expenses for pensions and gas bad debt. Additionally, it has a Cast Iron Main Replacement factor that provides an
enhanced return on the pro-rata costs associated with cast iron main replacement exceeding 10 miles per year based
on a 75% weighting for the equity content. Spire Gulf also has an ESR for negative revenue variances over $0.1 or a
force majeure event expense of $0.1 (or two events that exceed $0.15), a Self Insurance Reserve for general liability
coverage, and an Environmental Cost Recovery Factor that recovers 90% of prudently incurred costs for compliance
with environmental laws, rules and regulations. It also has an APSC-approved intercompany revolving credit
agreement with Spire to borrow in a principal amount not to exceed $50.0, and to loan up to $25.0. Spire Gulf
recorded a July 31, 2020, point of test refund under the RSE rate mechanism for approximately $1.4 and also
recorded a CCM benefit for rate year 2020 of $1.8. On October 23, 2020, Spire Gulf made its annual RSE rate filing
with the APSC based on its budget for fiscal 2021 and an allowed ROE of 10.7%, reflecting an increase in annual
revenue of $1.1, pending APSC review.
Spire Gulf’s rates were reduced $1.9 effective February 1, 2018, to reflect lower income taxes resulting from the
TCJA.
Spire Mississippi utilizes a formula rate-making process under the Rate Stabilization Adjustment (RSA) Rider. It is
based on a formulaically derived return on equity (currently 9.79%), and is updated on an annual basis if the equity
return on an end of period rate base is beyond the allowed return on equity by 1.0%, with 75% of any shortfall
recovered through a rate increase and 50% of any excess resulting in a rate decrease. Updates may include known
and measurable adjustments to historic costs from the 12 months ended June 30, submitted September 15 for an
effective date of November 1, unless disputed by the Mississippi Public Utilities Staff (MPUS), with any disputes to
be resolved by the MSPSC by January 15 of the following year. In December 2015, a Supplemental Growth Rider
(SGR) was approved for a 3-year period to provide recovery of certain system expansion projects. On September 4,
2018, the SGR was extended to October 15, 2021. On February 5, 2019, the MSPSC approved an agreement between
Spire Mississippi and the MPUS settling its Rates Stabilization and Adjustments filing that was made on September
14, 2018, resulting in a $0.7 increase in the annualized revenue requirement. New rates became effective March 1,
2019. On December 11, 2019, the MSPSC approved an agreement between Spire Mississippi and the MPUS settling
its RSA filing that was made on August 30, 2019, resulting in a $0.3 increase in annual revenue. New rates became
effective December 11, 2019. On August 28, 2020, Spire Mississippi filed its RSA for the rate year ended June 30,
2020, that reflected an increase to annual revenue totaling $0.6. This RSA filing is being reviewed by the MPUS.
In August 2018, the Federal Energy Regulatory Commission (FERC) approved an order issuing a Certificate of
Public Convenience and Necessity for the Spire STL Pipeline (“August 2018 Order”), and in November 2018, the
FERC issued a Notice to Proceed, allowing construction to begin. In November 2019, Spire STL Pipeline received
FERC authorization to place the STL Pipeline into service. Also, in November 2019, the FERC issued an Order on
Rehearing of the August 2018 Order dismissing or denying the outstanding requests for rehearing filed by several
parties, dismissing the request for stay filed by one party, and noting the withdrawal of the request for rehearing by
another party. On January 21, 2020, two of the rehearing parties filed petitions for review of the FERC’s orders with
the U.S. Court of Appeals for the District of Columbia Circuit. Spire STL Pipeline and Spire Missouri have
intervened and filed responsive briefs in this proceeding, which remains pending.
In August 2019, Spire Storage filed with the FERC two Prior Notice Applications of its intent to convert a total of six
existing observation wells into injection/withdrawal wells and to install related gas flowlines, fuel gas lines and fiber
optic communication. The applications cleared FERC authorization in October and November 2019, and both
projects remain under development. On October 9, 2020, Spire Storage filed with the FERC an Abbreviated
Application for an Amendment of Certificate of Public Convenience and Necessity, Reaffirmation of Market-Based
Rate Authority, and Related Authorizations pursuant to Section 7(c) of the Natural Gas Act. The application
requests authorization to expand capacity and increase pipeline connectivity at certain of Spire Storage’s natural gas
storage facilities in Wyoming.
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16. COMMITMENTS AND CONTINGENCIES
Commitments
The Company and the Utilities have entered into contracts with various counterparties, expiring on dates through
2032, for the storage, transportation, and supply of natural gas. Minimum payments required under the contracts in
place at September 30, 2020, are estimated at $1,745.4, $1,410.3 and $229.7 for the Company, Spire Missouri and
Spire Alabama, respectively. Additional contracts are generally entered into prior to or during the heating season of
November through April. The Utilities recover their costs from customers in accordance with their PGA clauses or
GSA riders.
Spire NGL Inc. is providing liquid propane transportation service to Spire Missouri pursuant to an approved FERC
tariff and a contractual arrangement with Spire Missouri. In accordance with the terms of that agreement, Spire
Missouri is obligated to pay Spire NGL Inc. approximately $1.0 annually, at current rates. The agreement will
terminate March 31, 2021.
A consolidated subsidiary is a general partner in an unconsolidated partnership that invests in real estate
partnerships. The subsidiary and third parties are jointly and severally liable for the payment of mortgage loans in
the aggregate outstanding amount of approximately $1.2 incurred in connection with various real estate ventures.
Spire has no reason to believe that the other principal liable parties will not be able to meet their proportionate
share of these obligations. Spire further believes that the asset values of the real estate properties are sufficient to
support these mortgage loans.
Contingencies
The Company and the Utilities account for contingencies, including environmental liabilities, in accordance with
accounting standards under the loss contingency guidance of ASC Topic 450, Contingencies, when it is probable
that a liability has been incurred and the amount of the loss can be reasonably estimated.
In addition to matters noted below, the Company and the Utilities are involved in other litigation, claims, and
investigations arising in the normal course of business. Management, after discussion with counsel, believes the
final outcome will not have a material effect on the statements of income, balance sheets, and statements of cash
flows of the Company, Spire Missouri, or Spire Alabama. However, there is uncertainty in the valuation of pending
claims and prediction of litigation results.
The Company and the Utilities own and operate natural gas distribution, transmission, and storage facilities, the
operations of which are subject to various environmental laws, regulations, and interpretations. While
environmental issues resulting from such operations arise in the ordinary course of business, such issues have not
materially affected the Company’s or Utilities’ financial position and results of operations. As environmental laws,
regulations, and their interpretations change, the Company or the Utilities may incur additional environmental
liabilities that may result in additional costs, which may be material.
In the natural gas industry, many gas distribution companies have incurred environmental liabilities associated
with sites they or their predecessor companies formerly owned or operated where manufactured gas operations took
place. The Utilities each have former manufactured gas plant (MGP) operations in their respective service
territories. To the extent costs are incurred associated with environmental remediation activities, the Utilities would
request authority from their respective regulators to defer such costs (less any amounts received from insurance
proceeds or as contributions from other potentially responsible parties (PRPs)) and collect them through future
rates.
Spire Missouri
Spire Missouri has identified three former MGP sites in the city of St. Louis, Missouri (the “City”) where costs have
been incurred and claims have been asserted. Spire Missouri has enrolled two of the sites in the Missouri
Department of Natural Resources (MDNR) Brownfields/Voluntary Cleanup Program (BVCP). The third site is the
result of a relatively new claim assertion by the United States Environmental Protection Agency (EPA).
133
In conjunction with redevelopment of one of the sites, Spire Missouri and another former owner of the site entered
into an agreement (the “Remediation Agreement”) with the City development agencies, the developer, and an
environmental consultant that obligates one of the City agencies and the environmental consultant to remediate the
site and obtain a No Further Action letter from the MDNR. The Remediation Agreement also provides for a release
of Spire Missouri and the other former site owner from certain liabilities related to the past and current
environmental condition of the site and requires the developer and the environmental consultant to maintain
certain insurance coverage, including remediation cost containment, premises pollution liability, and professional
liability. The operative provisions of the Remediation Agreement were triggered on December 20, 2010, on which
date Spire Missouri and the other former site owner, as full consideration under the Remediation Agreement, paid a
small percentage of the cost of remediation of the site.
Spire Missouri has not owned the second site for many years. In a letter dated June 29, 2011, the Attorney General
for the State of Missouri informed Spire Missouri that the MDNR had completed an investigation of the site. The
Attorney General requested that Spire Missouri participate in the follow up investigations of the site. In a letter
dated January 10, 2012, Spire Missouri stated that it would participate in future environmental response activities
at the site in conjunction with other PRPs that are willing to contribute to such efforts in a meaningful and equitable
fashion. Accordingly, Spire Missouri entered into a cost sharing agreement for remedial investigation with other
PRPs. To date, MDNR has not approved the agreement, so remedial investigation has not yet occurred.
Additionally, in correspondence dated November 30, 2016, Region 7 of the EPA has asserted that Spire Missouri is
liable under Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (CERCLA) for alleged coal gas waste contamination at a third site in the northern portion of the City on which
Spire Missouri operated a MGP. Spire Missouri has not owned or operated the site (also known as Station “B”) for
over 70 years. Spire Missouri and the site owner have met with the EPA and reviewed its assertions. Both Spire
Missouri and the site owner have notified the EPA that information and data provided by the EPA to date does not
rise to the level of documenting a threat to the public health or environment. As such, Spire Missouri requested
more information from the EPA, some of which would also be utilized to identify other former owners and operators
of the site that could be added as PRPs. To date, Spire Missouri has not received a response from the EPA.
Spire Missouri has notified its insurers that it seeks reimbursement for costs incurred in the past and future
potential liabilities associated with these MGP sites. While some of the insurers have denied coverage and reserved
their rights, Spire Missouri retains the right to seek potential reimbursements from them.
On March 10, 2015, Spire Missouri received a Section 104(e) information request under CERCLA from EPA Region
7 regarding the former Thompson Chemical/Superior Solvents site in the City. In turn, Spire Missouri issued a
Freedom of Information Act (FOIA) request to the EPA on April 3, 2015, in an effort to identify the basis of the
inquiry. The FOIA response from the EPA was received on July 15, 2015, and a response was provided to the EPA on
August 15, 2015. Spire Missouri has received no further inquiry from the EPA regarding this matter.
In its western service area, Spire Missouri has seven owned MGP sites enrolled in the BVCP, including Joplin MGP
#1, St. Joseph MGP #1, Kansas City Coal Gas Station B, Kansas City Station A Railroad area, Kansas City Coal Gas
Station A North, Kansas City Coal Gas Station A South, and Independence MGP #2. Source removal has been
conducted at all of the owned sites since 2003 with the exception of Joplin. On September 15, 2016, a request was
made with the MDNR for a restrictive covenant use limitation with respect to Joplin. Remediation efforts at the
seven sites are at various stages of completion, ranging from groundwater monitoring and sampling following
source removal activities to the aforementioned request in respect to Joplin. As part of its participation in the BVCP,
Spire Missouri communicates regularly with the MDNR with respect to its remediation efforts and monitoring
activities at these sites. On May 11, 2015, MDNR approved the next phase of investigation at the Kansas City Station
A North and Railroad areas.
134
To date, costs incurred for all Spire Missouri’s MGP sites for investigation, remediation and monitoring these sites
have not been material. However, the amount of costs relative to future remedial actions at these and other sites is
unknown and may be material. The actual future costs that Spire Missouri may incur could be materially higher or
lower depending upon several factors, including whether remediation will be required, final selection and regulatory
approval of any remedial actions, changing technologies and government regulations, the ultimate ability of other
PRPs to pay, and any insurance recoveries.
In 2013, Spire Missouri retained an outside consultant to conduct probabilistic cost modeling of 19 former MGP
sites owned or operated by Spire Missouri. The purpose of this analysis was to develop an estimated range of
probabilistic future liability for each site. That analysis, completed in August 2014, provided a range of
demonstrated possible future expenditures to investigate, monitor and remediate all 19 MGP sites. Spire Missouri
has recorded its best estimate of the probable expenditures that relate to these matters. The amount is not material.
Spire Missouri and the Company do not expect potential liabilities that may arise from remediating these sites to
have a material impact on their future financial condition or results of operations.
Spire Alabama
Spire Alabama is in the chain of title of nine former MGP sites, four of which it still owns, and five former
manufactured gas distribution sites, one of which it still owns. Spire Alabama does not foresee a probable or
reasonably estimable loss associated with these sites. Spire Alabama and the Company do not expect potential
liabilities that may arise from remediating these sites to have a material impact on their future financial condition or
results of operations.
In 2012, Spire Alabama responded to an EPA Request for Information Pursuant to Section 104 of CERCLA relating
to the 35th Avenue Superfund Site located in North Birmingham, Jefferson County, Alabama. Spire Alabama was
identified as a PRP under CERCLA for the cleanup of the site or costs the EPA incurs in cleaning up the site. At this
point, Spire Alabama has not been provided information that would allow it to determine the extent, if any, of its
potential liability with respect to the 35th Avenue Superfund Site and vigorously denies its inclusion as a PRP.
Spire
In addition to those discussed above for Spire Missouri and Spire Alabama, Spire is aware of the following
contingent matter.
In February 2018, the Company was made aware of a complaint filed with the U.S. Department of Housing and
Urban Development (HUD) by the South Alabama Center for Fair Housing and the National Community
Reinvestment Coalition. The complaint alleges that Spire Gulf discriminated against unspecified residents of Eight
Mile, Alabama, on the basis of race in violation of the Fair Housing Act by failing to adequately address the odorant
release that occurred in 2008. The Company believes there is no basis for the complaint, HUD has no jurisdiction in
the matter, and there will be no material impact on its future financial condition or results of operations.
17. LEASES
The lease agreement covering the Company’s primary office space in St. Louis extends through February 2035, with
an option to renew for an additional five years. Spire Alabama’s lease agreement for office space in Birmingham
extends through January 2024. The lease agreement covering Spire Marketing and Spire Storage office space in
Houston extends through December 2028, with options to terminate three years earlier or to renew for an
additional five years. The renewal options in the St. Louis and Houston leases are reasonably certain to be exercised
and are included in the lease term used to determine the right-of use assets and lease liabilities. The Company and
its subsidiaries have other relatively minor rental arrangements for real estate and equipment with remaining terms
of up to ten years.
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Operating lease cost, cash flow and noncash information for the year ended September 30, 2020, are shown in the
following table.
Operating lease cost, including amounts capitalized
Cash flow and noncash information about operating leases:
Operating cash flows representing cash paid for amounts included in the
measurement of lease liabilities
Right-of-use assets obtained in exchange for lease liabilities
Spire
$
8.7
Spire
Missouri
0.5
$
Spire
Alabama
3.5
$
8.5
71.1
0.5
2.1
3.3
10.0
The following table shows balance sheet and weighted-average information about operating leases as of September
30, 2020.
Right-of-use assets
Lease liabilities, current
Lease liabilities, noncurrent
Weighted-average remaining lease term
Weighted-average discount rate
Balance sheet classification
Deferred Charges and Other Assets: Other
Current Liabilities, Other
Deferred Credits and Other Liabilities: Other
Spire
$
65.1
6.5
58.4
15.9 years
Spire
Missouri
1.7
$
0.3
1.4
5.3 years
Spire
Alabama
6.7
$
1.9
4.7
3.3 years
4.2%
2.5%
2.2%
Following is a maturity analysis by fiscal year for operating lease liabilities as of September 30, 2020.
Spire
Missouri
0.3
$
0.4
0.3
0.3
0.3
0.2
1.8
(0.1)
1.7
2021
2022
2023
2024
2025
Thereafter
Total undiscounted lease payments
Less present value discount
Total current and noncurrent lease liabilities
6.6
7.2
7.2
5.8
5.1
58.4
90.3
(25.4)
64.9
Spire
$
$
$
Spire
Alabama
1.9
$
2.1
2.1
0.7
—
—
6.8
(0.2)
6.6
$
The aggregate rental expense for fiscal years 2018 and 2019 and the annual minimum rental commitments for all
leases having an initial or remaining non-cancelable term of more than one year as of September 30, 2019, were as
follows (under ASC 840).
Spire
Spire Missouri
Spire Alabama
Aggregate
Rental Expense
2019
2018
$ 10.9
$ 10.0
3.7
3.6
5.2
4.7
Minimum Rental Commitments as of September 30, 2019
Total
2023
2020
$ 69.4
6.1
8.2
$
$
0.7
—
0.5
9.9
2.1
2.9
Later
$ 36.5
—
—
2022
6.8
$
—
2.1
2021
7.0
$
0.2
2.1
2024
4.8
$
—
0.7
There are no significant finance leases, short-term leases, subleases, variable lease payments, residual value
guarantees, restrictions or covenants pertaining to leases.
The Company elected, for all asset classes, not to recognize right-of-use assets and lease liabilities for short-term
leases. Instead, the lease payments are recognized in profit or loss on a straight-line basis over the lease term and
variable lease payments are recognized in the period in which the obligation for those payments is incurred. The
Company elected, for all asset classes, not to separate nonlease components from lease components and instead to
account for each separate lease component and the nonlease components associated with that lease component as a
single lease component.
The discount rate used for all the leases is the applicable incremental borrowing rate, which is the rate of interest
that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease
payments in a similar economic environment. For a subsidiary lessee, the rate applicable to the subsidiary is used
unless the lease terms are influenced by parent credit.
136
18. INTERIM FINANCIAL INFORMATION (UNAUDITED)
Spire
In the opinion of Spire, the quarterly information presented below for fiscal years 2020 and 2019 includes all
adjustments necessary for a fair statement of the results of operations for such periods. Variations in consolidated
operations reported on a quarterly basis primarily reflect the seasonal nature of the business of the Utilities.
Three Months Ended
Fiscal Year 2020
Total Operating Revenues
Operating Income (Loss)
Net Income (Loss)
Basic Earnings (Loss) Per Share of Common Stock
Diluted Earnings (Loss) Per Share of Common Stock
Fiscal Year 2019
Total Operating Revenues
Operating Income (Loss)
Net Income (Loss)
Basic Earnings (Loss) Per Share of Common Stock
Diluted Earnings (Loss) Per Share of Common Stock
Spire Missouri
Dec. 31 March 31
June 30
Sept. 30
$
$
$
$
$
$
566.9
102.3
67.0
1.24
1.24
602.0
105.1
67.3
1.33
1.32
$
$
$
$
$
$
715.5
210.5
133.6
2.55
2.54
803.5
209.5
154.6
3.05
3.04
$
$
$
$
$
$
$
321.1
(106.5)
(92.3)
(1.87) $
(1.87) $
$
321.3
13.3
(3.0)
(0.09) $
(0.09) $
251.9
0.1
(19.7)
(0.45)
(0.45)
225.6
(25.6)
(34.3)
(0.75)
(0.74)
In the opinion of Spire Missouri, the quarterly information presented below for fiscal years 2020 and 2019 includes
all adjustments necessary for a fair statement of the results of operations for such periods. Variations in operations
reported on a quarterly basis primarily reflect their seasonal nature.
Three Months Ended
Fiscal Year 2020
Total Operating Revenues
Operating Income
Net Income
Fiscal Year 2019
Total Operating Revenues
Operating Income (Loss)
Net Income (Loss)
Spire Alabama
Dec. 31 March 31
June 30
Sept. 30
$
$
$
$
374.0
67.0
48.0
413.2
71.4
51.2
$
$
457.5
117.7
74.5
556.6
102.4
80.0
$
$
203.9
7.0
6.5
191.4
12.2
1.1
158.2
13.9
1.2
130.6
(11.2)
(17.3)
In the opinion of Spire Alabama, the quarterly information presented below for fiscal years 2020 and 2019 includes
all adjustments necessary for a fair statement of the results of operations for such periods. Variations in operations
reported on a quarterly basis primarily reflect their seasonal nature.
Three Months Ended
Fiscal Year 2020
Total Operating Revenues
Operating Income (Loss)
Net Income (Loss)
Fiscal Year 2019
Total Operating Revenues
Operating Income (Loss)
Net Income (Loss)
Dec. 31 March 31
June 30
Sept. 30
$
$
$
$
126.2
20.9
13.2
133.5
17.1
10.3
$
$
185.5
81.2
57.8
180.4
79.6
56.7
$
$
81.2
9.3
3.6
90.8
11.1
5.6
62.1
(8.5)
(8.9)
60.8
(12.3)
(12.3)
137
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
There have been no changes in or disagreements on accounting and financial disclosure with Spire’s, Spire
Missouri’s, or Spire Alabama’s outside auditors that are required to be disclosed.
Item 9A. Controls and Procedures
Spire
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with
participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and
Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon such evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.
Change in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter
that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
Spire Missouri
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with
participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and
Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter
that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
Spire Alabama
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with
participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the disclosure controls and procedures pursuant to Rule 13a-15(e) and
Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter
that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
The Management Reports on Internal Control Over Financial Reporting and the Reports of Independent Registered
Public Accounting Firm are included in Item 8, Financial Statements and Supplementary Data.
138
Item 9B. Other Information
None.
Item 10. Directors, Executive Officers and Corporate Governance
Information about:
PART III
• our directors is incorporated by reference from the discussion under Proposal 1 of our proxy statement to be
filed on or about December 16, 2020 (“2020 proxy statement”);
• our executive officers is reported in Part I of this Form 10-K;
• our Financial Code of Ethics is posted on our website, www.SpireEnergy.com, under
Investors/Governance/Governance documents (http://investors.spireenergy.com/governance/governance-
documents); and
• our Audit Committee, our Audit Committee financial experts, and submitting nominations to the Corporate
Governance Committee
is incorporated by reference from the discussion in our 2020 proxy statement under the heading “Governance.”
In addition, our Code of Business Conduct, Corporate Governance Guidelines, and charters for our Audit,
Compensation and Corporate Governance Committees are available under “Governance documents” on our website,
as indicated above, and a copy will be sent to any shareholder upon written request.
Item 11. Executive Compensation
Information about director and executive compensation is incorporated by reference from the discussion in our
2020 proxy statement under the headings “Directors’ compensation” and “Executive compensation.”
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Information about:
• security ownership of certain beneficial owners and management and
• aggregate information regarding the Company’s equity compensation plan
is incorporated by reference from the discussion in our 2020 proxy statement under “Beneficial ownership of Spire
stock.”
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information about:
• our policy and procedures for related party transactions and
•
the independence of our directors
is included in our 2020 proxy statement under “Governance” and is incorporated by reference. There were no
related party transactions in fiscal 2020.
Item 14. Principal Accounting Fees and Services
Information about fees paid to our independent registered public accountant and our policy for pre-approval of
services provided by our independent registered public accountant is incorporated by reference from our 2020
proxy statement under “Fees of independent registered public accountant” and “Governance,” respectively.
139
Item 15. Exhibits, Financial Statement Schedules
(a) (1) Financial Statements
PART IV
See Item 8, Financial Statements and Supplementary Data, filed herewith, for a list of financial statements.
(2) Financial Statement Schedules
Schedules have been omitted because they are not applicable, related significance tests were not met, or the
required data has been included in the financial statements or notes to financial statements.
(3) Exhibits
Exhibit
Number
2.01*
3.01*
3.02*
3.03*
3.04*
3.05*
3.06*
3.07*
Description
Agreement and Plan of Merger and Reorganization; filed as Appendix A to proxy
statement/prospectus contained in the Company’s Registration Statement on Form S-4 filed October
27, 2000, No. 333-48794.
Articles of Incorporation of Spire Inc., as amended, effective as of April 28, 2016; filed as Exhibit 3.1
to the Company’s Current Report on Form 8-K on May 3, 2016.
Amended Bylaws of Spire Inc., effective as of October 21, 2020; filed as Exhibit 3.2 to the Company’s
Current Report on Form 8-K on October 22, 2020.
Spire Missouri Inc.’s Amended Articles of Incorporation, as amended, effective August 30, 2017; filed
as Exhibit 3.1 to Spire Missouri’s Current Report on Form 8-K on September 1, 2017.
Amended Bylaws of Spire Missouri Inc., effective as of March 26, 2020; filed as Exhibit 3.1 to Spire
Missouri’s Current Report on Form 8-K on March 27, 2020.
Articles of Amendment of the Articles of Incorporation of Spire Alabama Inc., dated September 1,
2017; filed as Exhibit 3.3 to Spire Alabama’s Current Report on Form 8-K filed September 1, 2017.
Amended Bylaws of Spire Alabama Inc. effective March 26, 2020; filed as Exhibit 3.2 to Spire
Alabama’s Current Report on Form 8-K on March 27, 2020.
Certificate of Designations with respect to the Series A Preferred Stock, dated May 16, 2019; filed as
Exhibit 3.1 to the Company’s Current Report on Form 8-K on May 21, 2019.
4.01*†3 Mortgage and Deed of Trust, dated as of February 1, 1945, between Laclede Gas Company and
Mississippi Valley Trust Company; filed as Exhibit 7-A to Laclede Gas’ registration statement No. 2-
5586.
4.02*†3
4.03*†3
Fourteenth Supplemental Indenture, dated as of October 26, 1976, between Laclede Gas and
Mercantile Trust Company National Association; filed as Exhibit b-4 to Laclede Gas’ registration
statement No. 2-64857 on June 26, 1979.
Laclede Gas Board of Directors’ Resolution dated August 28, 1986 which generally provides that the
Board may delegate its authority in the adoption of certain employee benefit plan amendments to
certain designated Executive Officers; filed as Exhibit 4.12 to Laclede Gas’ Annual Report on Form 10-
K for the fiscal year ended September 30, 1991.
4.04*†2
Indenture dated as of November 1, 1993, between Alagasco and NationsBank of Georgia, National
Association, Trustee, (“Alagasco 1993 Indenture”); filed as Exhibit 4(k) to Alagasco’s Registration
Statement on Form S-3 (Registration No. 33-70466).
140
Exhibit
Number
4.05*3
4.06*3
4.07*3
4.08*2
4.09*3
4.10*2
4.11*2
4.12*2
4.13*
4.14*3
4.15*3
4.16*
4.17*
4.18*2
4.19*
Description
Twenty-Fifth Supplemental Indenture dated as of September 15, 2000, between Laclede Gas and
State Street Bank and Trust Company of Missouri, as trustee; filed as Exhibit 4.01 to Laclede Gas’
Current Report on Form 8-K on September 29, 2000.
Laclede Gas’ Board of Directors’ Resolutions dated March 27, 2003, updating authority delegated
pursuant to August 28, 1986 Laclede Gas resolutions; filed as Exhibit 4.19(a) to Laclede Gas’ Annual
Report on Form 10-K for the fiscal year ended September 30, 2003.
Twenty-Eighth Supplemental Indenture dated as of April 15, 2004, between Laclede Gas and UMB
Bank & Trust, N.A., as trustee; filed as Exhibit 4.02 to Laclede Gas’ Current Report on Form 8-K on
April 28, 2004.
Officers’ Certificate, dated January 14, 2005, pursuant to Section 301 of the Alagasco 1993 Indenture
setting forth the terms of the 5.20 percent Notes due January 15, 2020; filed as Exhibit 4.4 to
Alagasco’s Current Report on Form 8-K on January 14, 2005.
Twenty-Ninth Supplemental Indenture dated as of June 1, 2006, between Laclede Gas and UMB Bank
and Trust, N.A., as trustee; filed as Exhibit 4.1 to Laclede Gas’ Current Report on Form 8-K on June 9,
2006.
Officers’ Certificate, dated January 16, 2007, pursuant to Section 301 of the Alagasco 1993 Indenture
setting forth the terms of the 5.90 percent Notes due January 15, 2037; filed as Exhibit 4.2 to
Alagasco’s Current Report on Form 8-K on January 16, 2007.
Note Purchase Agreement, dated December 22, 2011, among Alagasco and the Purchasers thereto (the
AIG purchasers) with respect to $25 million 3.86 percent Senior Notes due December 22, 2021; filed
as Exhibit 10.1 to Alagasco’s Current Report on Form 8-K on December 22, 2011.
Note Purchase Agreement, dated December 22, 2011, among Alagasco and the Purchasers thereto (the
Prudential purchasers) with respect to $25 million 3.86 percent Senior Notes due December 22, 2021;
filed as Exhibit 10.2 to Alagasco’s Current Report on Form 8-K on December 22, 2011.
Note Purchase Agreement, dated August 3, 2012, by and among the Company and the Purchasers
listed in Schedule A thereto; filed as Exhibit 10.28 to the Company’s Annual Report on Form 10-K for
the fiscal year ended September 30, 2012.
Thirty-First Supplemental Indenture, dated as of March 15, 2013, between Laclede Gas and UMB
Bank & Trust, N.A., as trustee; filed as Exhibit 4.1 to Laclede Gas’ Form 10-Q for the quarter ended
March 31, 2013.
Thirty-Second Supplemental Indenture, dated as of August 13, 2013, between Laclede Gas and UMB
Bank & Trust, N.A., as trustee; filed as Exhibit 4.1 to Laclede Gas’ Current Report on Form 8-K on
August 13, 2013.
Indenture, dated as of August 19, 2014, between the Company and UMB Bank & Trust, N.A., as
trustee; filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on August 19, 2014.
First Supplemental Indenture, dated as of August 19, 2014, between the Company and UMB Bank &
Trust, N.A., as trustee (including Form of Floating Rate Senior Notes due 2017, Form of 2.55% Senior
Notes due 2019 and Form of 4.70% Senior Notes due 2044); filed as Exhibit 4.2 to the Company’s
Current Report on Form 8-K on August 19, 2014.
Master Note Purchase Agreement, dated as of June 5, 2015, among Alagasco and certain institutional
purchasers; filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2015.
Second Supplemental Indenture, dated as of February 27, 2017, between Spire Inc. and UMB Bank &
Trust, N.A., as Trustee (including Form of 3.543% Senior Notes due 2024); filed as Exhibit 4.2 to the
Company’s Current Report on Form 8-K on February 27, 2017.
141
Exhibit
Number
4.20*
4.21*
4.22*3
4.23*
4.24*
4.25*
4.26*
4.27*
4.28*
4.29*
4.30*
4.31*
Description
Master Note Purchase Agreement dated June 20, 2016, among Spire Inc. and certain institutional
purchasers party thereto; filed as Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2017.
First Supplement to Master Note Purchase Agreement dated as of March 15, 2017, among Spire Inc.
and certain institutional purchasers party thereto; filed as Exhibit 4.3 to the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2017.
Bond Purchase Agreement dated March 20, 2017, among Laclede Gas Company and certain
institutional purchasers party thereto; filed as Exhibit 4.4 to the Laclede Gas’ Quarterly Report on
Form 10-Q for the quarter ended March 31, 2017.
First Supplement to Master Note Purchase Agreement, dated as of December 1, 2017, between Spire
Alabama Inc. and certain institutional investors; filed as Exhibit 4.01 to the Company’s Quarterly
Report on Form 10-Q for the quarter ended December 31, 2017.
Second Supplement to Master Note Purchase Agreement, dated as of January 15, 2019, between Spire
Alabama Inc. and certain institutional investors; filed as Exhibit 4.1 to Spire Alabama’s Current
Report on Form 8-K on January 22, 2019.
Deposit Agreement, dated as of May 21, 2019, among the Company, Computershare Inc. and
Computershare Trust Company, N.A., acting jointly as depositary, and the holders from time to time
of the depositary receipts described therein; filed as Exhibit 4.1 to the Company’s Current Report on
Form 8-K on May 21, 2019.
Form of depositary receipt representing the Depositary Shares; filed as Exhibit A to Exhibit 4.1 to the
Company’s Current Report on Form 8-K on May 21, 2019.
Form of Certificate representing the Series A Preferred Stock; filed as Exhibit A to Exhibit 3.1 to the
Company’s Current Report on Form 8-K on May 21, 2019.
Thirty-Third Supplemental Indenture, dated as of September 15, 2017, between Spire Missouri Inc.
and UMB Bank & Trust, N.A., as trustee, filed as Exhibit 4.28 to Spire Missouri’s Annual Report on
Form 10-K for the fiscal year ended September 30, 2019.
Thirty-Fourth Supplemental Indenture, dated as of November 12, 2019, between Spire Missouri Inc.
and UMB Bank & Trust, N.A., as trustee; filed as Exhibit 4.1 to Spire Missouri’s Quarterly Report on
Form 10-Q for the quarter ended December 31, 2019.
Third Supplement to Master Note Purchase Agreement, dated as of December 2, 2019, between Spire
Alabama Inc. and certain institutional investors; filed as Exhibit 4.1 to Spire Alabama’s Current
Report on Form 8-K on December 4, 2019.
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934;
filed as Exhibit 4.29 to the Company’s Annual Report on Form 10-K for the fiscal year ended
September 30, 2019.
10.01*†3
Form of Indemnification Agreement between Laclede Gas and its Directors and
Officers; filed as Exhibit 10.13 to Laclede Gas’ Annual Report on Form 10-K for the
fiscal year ended September 30, 1990.
10.02*†3 Salient Features of Laclede Gas’ Deferred Income Plan for Directors and Selected
Executives, including amendments adopted by the Board of Directors on July 26, 1990;
filed as Exhibit 10.12 to Laclede Gas’ Annual Report on Form 10-K for the fiscal year
ended September 30, 1991.
10.03*†3 Amendment to Laclede Gas’ Deferred Income Plan for Directors and Selected
Executives, adopted by the Board of Directors on August 27, 1992; filed as Exhibit
10.12a to Laclede Gas’ Annual Report on Form 10-K for the fiscal year ended September
30, 1992.
142
Exhibit
Number
10.04*3
10.05*3
10.06*
10.07*
10.083
10.09*3
10.10*3
10.11*3
10.12*
10.13*
10.14*3
10.15*
10.16*3
10.17*
10.18*
Description
Amendment and Restatement of Retirement Plan for Non-Employee Directors of
Laclede Gas as of November 1, 2002; filed as Exhibit 10.08c to Laclede Gas’ Annual
Report on Form 10-K for the fiscal year ended September 30, 2002.
Amendment to Terms of Retirement Plan for Non-Employee Directors of Laclede Gas
as of October 1, 2004; filed as Exhibit 10.2 to Laclede Gas’ Quarterly Report on Form 10-
Q for the quarter ended June 30, 2004.
Form of Non-Qualified Stock Option Award Agreement with Mandatory Retirement
Provisions; filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on
November 5, 2004.
Form of Non-Qualified Stock Option Award Agreement without Mandatory Retirement
Provisions; filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K on
November 5, 2004.
Automated Meter Reading Services Agreement with Amendment dated as of July 1, 2017, between
Landis+Gyr Technology, Inc., formerly known as Cellnet Technology, Inc., and Laclede Gas Company.
Restated Laclede Gas Supplemental Retirement Benefit Plan, as amended and restated
as of January 1, 2005; filed as Exhibit 10.06 to Laclede Gas’ Quarterly Report on Form
10-Q for the quarter ended December 31, 2008.
Laclede Gas Supplemental Retirement Benefit Plan II, effective as of January 1, 2005;
filed as Exhibit 10.7 to Laclede Gas’ Quarterly Report on Form 10-Q for the quarter
ended December 31, 2008.
Salient Features of Laclede Gas’ Deferred Income Plan II for Directors and Selected
Executives (as amended and restated effective as of January 1, 2005); filed as Exhibit
10.1 to Laclede Gas’ Quarterly Report on Form 10-Q for the quarter ended
December 31, 2008.
Salient Features of the Company’s Deferred Income Plan for Directors and Selected
Executives (effective as of January 1, 2005); filed as Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q for the quarter ended December 31, 2008.
The Company’s Form of Restricted Stock Award Agreement; filed as Exhibit 10.8 to the
Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008.
The Laclede Group Management Continuity Protection Plan, effective as of January 1,
2005; filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended December 31, 2008.
Form of Management Continuity Protection Agreement; filed as Exhibit 10.5a to the
Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008.
The Laclede Group 2011 Management Continuity Protection Plan; filed as Exhibit 10.25
to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30,
2010.
Form of Agreement under the Company’s 2011 Management Continuity Protection
Plan; filed as Exhibit 10.25a to the Company’s Annual Report on Form 10-K for the
fiscal year ended September 30, 2010.
The Company’s Form of Performance Contingent Restricted Stock Unit Award
Agreement; filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for
the quarter ended December 31, 2012.
143
Exhibit
Number
10.19*3
10.20*
10.21*
10.22*1
10.23*1
10.24*2 3
10.25*
10.26*
10.27*
10.28*1
10.29*1
10.30*
10.31*1
10.32*
Description
Laclede Gas Cash Balance Supplemental Retirement Benefit Plan, effective as of
January 1, 2009; filed as Exhibit 10.19 to Laclede Gas’ Annual Report on Form 10-K for
the fiscal year ended September 30, 2012.
Lease Agreement, dated January 21, 2014, between the Company, as Tenant, and Market 700, LLC, as
Landlord; filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on January 27, 2014.
The Company’s Deferred Income Plan for Directors and Selected Executives, as
Amended and Restated as of January 1, 2015; filed as Exhibit 10.1 to the Company’s
Current Report on Form 8-K on November 4, 2014.
The Laclede Group 2015 Equity Incentive Plan; filed as the Appendix to the Company’s
Definitive Proxy Statement on Form DEF 14A on December 19, 2014.
The Laclede Group, Inc. Annual Incentive Plan, as Amended; filed as Appendix to the
Company’s Definitive Proxy Statement on Schedule 14A on December 18, 2015.
Loan Agreement, dated December 14, 2016, by and among Spire Inc., Alabama Gas Corporation,
Laclede Gas Company, and the several banks party thereto, including Wells Fargo Bank, National
Association, as Administrative Agent; JPMorgan Chase Bank, N.A. and U.S. Bank National
Association, as Co-Syndication Agents; Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., and
U.S. Bank National Association, as Joint Lead Arrangers and Joint Bookrunners; and Bank of
America, N.A., Credit Suisse AG, Cayman Islands Branch, Morgan Stanley Bank, N.A., Regions Bank,
Royal Bank of Canada, and TD Bank, N.A., as Documentation Agents; filed as Exhibit 99.1 to the
Company’s Current Report on Form 8-K on December 16, 2016.
Commercial Paper Dealer Agreement, dated December 21, 2016, between Spire Inc. and Wells Fargo
Securities, LLC; filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended December 31, 2016.
Commercial Paper Dealer Agreement, dated December 21, 2016, between Spire Inc. and Credit Suisse
Securities (USA) LLC; filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended December 31, 2016.
Spire Inc. Executive Severance Plan; filed as Exhibit 10.1 to the Company’s Current
Report on Form 8-K on May 2, 2017.
Amendment 1 to The Laclede Group Annual Incentive Plan effective January 1, 2018;
filed as Exhibit 10.53 to the Company’s Annual Report on Form 10-K for the fiscal year
ended September 30, 2017.
Amendment 1 to The Laclede Group 2015 Equity Incentive Plan effective January 1,
2018; filed as Exhibit 10.54 to the Company’s Annual Report on Form 10-K for the fiscal
year ended September 30, 2017.
Amendment 1 to Spire Inc. Executive Severance Plan effective January 1, 2018; filed as
Exhibit 10.55 to the Company’s Annual Report on Form 10-K for the fiscal year ended
September 30, 2017.
Amendment 1 to The Laclede Group 2011 Management Continuity Protection Plan
effective January 18, 2018; filed as Exhibit 10.56 to the Company’s Annual Report on
Form 10-K for the fiscal year ended September 30, 2017.
First Amendment to Loan Agreement, dated as of October 31, 2018, by and among Spire Inc., a
Missouri corporation, Spire Alabama Inc. (formerly Alabama Gas Corporation), an Alabama
corporation, and Spire Missouri Inc. (formerly Laclede Gas Company), a Missouri corporation, the
Banks from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative
Agent for the Banks; filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on November
6, 2018.
144
Exhibit
Number
10.33*
10.34*
10.35*
10.36*
10.37*
21
23.1
23.2
23.3
31.1
31.2
31.3
32.1
32.2
32.3
101
104
Description
Spire Deferred Income Plan, Amended and Restated Effective January 1, 2019; filed as
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2019.
The Company’s Form of Restricted Stock Award Agreement; filed as Exhibit 10.38 to the
Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019.
The Company’s Form of Restricted Stock Unit Award Agreement; filed as Exhibit 10.39
to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30,
2019.
The Company’s Form of Performance Contingent Stock Unit Award Agreement; filed as
Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the fiscal year ended
September 30, 2019.
Loan Agreement, dated March 26, 2020, by and among Spire Inc., as the Borrower, the lenders from
time to time party thereto, as Banks, including U.S. Bank National Association, as the Administrative
Agent, and TD Bank, N.A., as Documentation Agent; filed as Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on March 27, 2020.
Subsidiaries of the Company.
Consent of Independent Registered Public Accounting Firm of the Company.
Consent of Independent Registered Public Accounting Firm of Spire Missouri Inc.
Consent of Independent Registered Public Accounting Firm of Spire Alabama Inc.
Certifications under Rule 13a-14(a) of the CEO and CFO of the Company.
Certifications under Rule 13a-14(a) of the CEO and CFO of Spire Missouri Inc.
Certifications under Rule 13a-14(a) of the CEO and CFO of Spire Alabama Inc.
Section 1350 Certifications under Rule 13a-14(b) of the CEO and CFO of the Company.
Section 1350 Certifications under Rule 13a-14(b) of the CEO and CFO of Spire Missouri Inc.
Section 1350 Certifications under Rule 13a-14(b) of the CEO and CFO of Spire Alabama Inc.
Interactive Data Files including the following information from the Annual Report on Form 10-K for
the fiscal year ended September 30, 2020, formatted in inline extensible business reporting language
(“Inline XBRL”): (i) Cover Page Interactive Data and (ii) the Financial Statements listed on the first
page of Item 8.
Cover Page Interactive Data File (formatted in Inline XBRL and included in the Interactive Data Files
submitted under Exhibit 101).
* Incorporated herein by reference and made a part hereof. Spire Inc. File No. 1-16681. Spire Missouri Inc. File No. 1-1822.
Spire Alabama Inc. File No. 2-38960.
† Paper exhibit.
1 The Laclede Group, Inc. changed its name to Spire Inc. effective April 28, 2016.
2 Alabama Gas Corporation (“Alagasco”) changed its name to Spire Alabama Inc. effective September 1, 2018.
3 Laclede Gas Company changed its name to Spire Missouri Inc. effective August 30, 2018.
Bold items reflect management contracts or compensatory plans or arrangements.
Item 16. Form 10-K Summary
None.
145
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date November 18, 2020
By /s/ Steven P. Rasche
Spire Inc.
Steven P. Rasche
Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date
Signature
Title
November 18, 2020
/s/ Suzanne Sitherwood
Director, President and Chief Executive Officer
Suzanne Sitherwood
(Principal Executive Officer)
November 18, 2020
/s/ Steven P. Rasche
Steven P. Rasche
Executive Vice President and Chief Financial
Officer
(Principal Financial and Accounting Officer)
November 18, 2020
/s/ Edward L. Glotzbach
Chairman of the Board
Edward L. Glotzbach
November 18, 2020
/s/ Mark A. Borer
Director
Mark A. Borer
November 18, 2020
/s/ Maria V. Fogarty
Director
Maria V. Fogarty
November 18, 2020
/s/ Rob L. Jones
Director
Rob L. Jones
November 18, 2020
/s/ Brenda D. Newberry
Director
Brenda D. Newberry
November 18, 2020
/s/ Stephen S. Schwartz
Director
Stephen S. Schwartz
November 18, 2020
/s/ John P. Stupp Jr.
Director
John P. Stupp Jr.
November 18, 2020
/s/ Mary Ann Van Lokeren
Director
Mary Ann Van Lokeren
146
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date November 18, 2020
By /s/ Timothy W. Krick
Spire Missouri Inc.
Timothy W. Krick
Controller and Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date
Signature
Title
November 18, 2020
/s/ Suzanne Sitherwood
Chairman of the Board
Suzanne Sitherwood
November 18, 2020
/s/ Steven L. Lindsey
Director and Chief Executive Officer
Steven L. Lindsey
(Principal Executive Officer)
November 18, 2020
/s/ Adam W. Woodard
Chief Financial Officer and Treasurer
Adam W. Woodard
(Principal Financial Officer)
November 18, 2020
/s/ Timothy W. Krick
Controller and Chief Accounting Officer
Timothy W. Krick
(Principal Accounting Officer)
November 18, 2020
/s/ Scott B. Carter
Director and President
Scott B. Carter
November 18, 2020
/s/ Mark C. Darrell
Director
Mark C. Darrell
November 18, 2020
/s/ Steven P. Rasche
Director
Steven P. Rasche
147
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date November 18, 2020
Spire Alabama Inc.
By /s/ Timothy W. Krick
Timothy W. Krick
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date
Signature
Title
November 18, 2020
/s/ Suzanne Sitherwood
Chairman of the Board
Suzanne Sitherwood
November 18, 2020
/s/ Steven L. Lindsey
Director and Chief Executive Officer
Steven L. Lindsey
(Principal Executive Officer)
November 18, 2020
/s/ Adam W. Woodard
Chief Financial Officer and Treasurer
Adam W. Woodard
(Principal Financial Officer)
November 18, 2020
/s/ Timothy W. Krick
Chief Accounting Officer
Timothy W. Krick
(Principal Accounting Officer)
November 18, 2020
/s/ Scott B. Carter
Director
Scott B. Carter
November 18, 2020
/s/ Mark C. Darrell
Director
Mark C. Darrell
November 18, 2020
/s/ Joseph B. Hampton
Director and President
Joseph B. Hampton
November 18, 2020
/s/ Steven P. Rasche
Director
Steven P. Rasche
148
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Information for
our shareholders
Annual meeting
The annual meeting of shareholders of Spire Inc. will be held
on Thursday, Jan. 28, 2021, at 8:30 a.m. Central Standard Time,
online at www.virtualshareholdermeeting.com/SR2020. The
formal notice of the meeting, proxy statement, form of proxy and
this annual report were made available to shareholders on or
about Dec. 16, 2020. The proxy statement and annual report may
be found on our website by visiting SpireEnergy.com.
Stock and dividends
Spire Inc. common stock is listed on the New York Stock Exchange
(NYSE) under the symbol SR. There were 51,611,789 shares
outstanding as of Sept. 30, 2020. Spire has paid a cash dividend
continuously since 1946. Dividends are typically paid on the
second business day of January, April, July and October. The
current annualized dividend is $2.60 per share, effective with
the quarterly payment on Jan. 5, 2021.
Transfer agent and registrar
Spire’s shareholder records are maintained by its transfer
agent, Computershare Trust Company, N.A. Inquiries relating
to stockholder records, stock transfers, address changes,
dividend payments, lost certificates and other administrative
matters should be addressed to:
Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, KY 40233-5000
800-884-4225
Primary business office
Spire Inc.
700 Market Street
St. Louis, MO 63101
314-342-0500
SpireEnergy.com
Dividend reinvestment and stock purchase plan
Spire’s dividend reinvestment and stock purchase plan
provides common shareholders the opportunity to purchase
additional common stock by automatically reinvesting dividends
or by making additional cash payments. Shareholders who are
interested in obtaining more information, including an
enrollment card, may contact:
Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, KY 40233-5000
800-884-4225
The high and low trading prices and dividends declared on
common stock for the past two years were:
Fiscal 2020
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Fiscal 2019
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
High
$ 87.24
87.96
81.47
68.37
Low
Dividends
declared
$ 74.34
$ 0.6225
57.37
62.05
50.58
0.6225
0.6225
0.6225
Dividends
declared
High
Low
$ 81.13
$ 70.53
$ 0.5925
83.28
87.13
88.10
71.92
80.53
79.21
0.5925
0.5925
0.5925
Inquiries
Copies of Spire’s Forms 10-K, 10-Q and 8-K filed with the Securities
and Exchange Commission, quarterly updates, news releases and
other investor information are available at no charge by visiting
SpireEnergy.com or by contacting Investor Relations:
Scott W. Dudley Jr.
Managing Director, Investor Relations
Scott.Dudley@SpireEnergy.com
314-342-0878
For media inquiries, contact Corporate Communications:
Jessica B. Willingham
Vice President, Chief Communications and Marketing Officer
Jessica.Willingham@SpireEnergy.com
314-342-3300
Spire Inc.
700 Market Street
St. Louis, MO 63101
SpireEnergy.com