Item 1. Business.

Overview and Strategy

Atmos Energy Corporation, headquartered in Dallas, Texas, and incorporated in Texas and Virginia, is one of the country’s largest natural-gas-only distributors based on number of customers. We deliver safe, clean, reliable, efficient, affordable and abundant natural gas through regulated sales and transportation arrangements to over three million residential, commercial, public authority and industrial customers in eight states located primarily in the South. We also operate one of the largest intrastate pipelines in Texas based on miles of pipe.

Atmos Energy's vision is to be the safest provider of natural gas services. We intend to achieve this vision by:

•	operating our business exceptionally well

•	investing in our people and infrastructure

•	enhancing our culture.

Since 2011, our operating strategy has focused on modernizing our distribution and transmission system to improve safety and reliability. Since that time, our capital expenditures have increased approximately 14% annually. Additionally, during this period, we have added new or modified existing regulatory mechanisms to reduce regulatory lag. Our ability to increase capital spending annually to modernize our system has increased our rate base, which has resulted in rising earnings per share and shareholder value.

Our core values include focusing on our employees and customers while conducting our business with honesty and integrity. We continue to strengthen our culture through ongoing communications with our employees and enhanced employee training.

Operating Segments

As of September 30, 2019, we manage and review our consolidated operations through the following reportable segments, which are discussed in further detail below.

•	The distribution segment is primarily comprised of our regulated natural gas distribution and related sales operations in eight states.

•	The pipeline and storage segment is comprised primarily of the pipeline and storage operations of our Atmos Pipeline-Texas division and our natural gas transmission operations in Louisiana.

Prior to disposition, the natural gas marketing segment, which was comprised of our natural gas marketing business, was also a reportable segment.

Distribution Segment Overview

The following table summarizes key information about our six regulated natural gas distribution divisions, presented in order of total rate base.

Division		Service Areas		Communities Served		Customer Meters
Mid-Tex		Texas, including the Dallas/Fort Worth Metroplex		550		1,722,424
Kentucky/Mid-States		Kentucky		230		183,450
		Tennessee				154,004
		Virginia				24,536
Louisiana		Louisiana		270		365,320
West Texas		Amarillo, Lubbock, Midland		80		316,844
Mississippi		Mississippi		110		266,727
Colorado-Kansas		Colorado		170		121,883
		Kansas				136,647

We operate in our service areas under terms of non-exclusive franchise agreements granted by the various cities and towns that we serve. At September 30, 2019, we held 1,017 franchises having terms generally ranging from five to 35 years. A significant number of our franchises expire each year, which require renewal prior to the end of their terms. Historically, we have successfully renewed these franchises and believe that we will continue to be able to renew our franchises as they expire.

Revenues in this operating segment are established by regulatory authorities in the states in which we operate. These rates are intended to be sufficient to cover the costs of conducting business, including a reasonable return on invested capital. In addition, we transport natural gas for others through our distribution systems.

Rates established by regulatory authorities often include cost adjustment mechanisms for costs that (i) are subject to significant price fluctuations compared to our other costs, (ii) represent a large component of our cost of service and (iii) are generally outside our control.

Purchased gas cost adjustment mechanisms represent a common form of cost adjustment mechanism. Purchased gas cost adjustment mechanisms provide a method of recovering purchased gas costs on an ongoing basis without filing a rate case because they provide a dollar-for-dollar offset to increases or decreases in the cost of natural gas. Therefore, although substantially all of our distribution operating revenues fluctuate with the cost of gas that we purchase, distribution Contribution Margin is generally not affected by fluctuations in the cost of gas.

Additionally, some jurisdictions have performance-based ratemaking adjustments to provide incentives to minimize purchased gas costs through improved storage management and use of financial instruments to reduce volatility in gas costs. Under the performance-based ratemaking adjustments, purchased gas costs savings are shared between the Company and its customers.

Our supply of natural gas is provided by a variety of suppliers, including independent producers, marketers and pipeline companies, withdrawals of gas from proprietary and contracted storage assets and peaking and spot purchase agreements, as needed.

Supply arrangements consist of both base load and swing supply (peaking) quantities and are contracted from our suppliers on a firm basis with various terms at market prices. Base load quantities are those that flow at a constant level throughout the month and swing supply quantities provide the flexibility to change daily quantities to match increases or decreases in requirements related to weather conditions.

Except for local production purchases, we select our natural gas suppliers through a competitive bidding process by periodically requesting proposals from suppliers that have demonstrated that they can provide reliable service. We select these suppliers based on their ability to deliver gas supply to our designated firm pipeline receipt points at the lowest reasonable cost. Major suppliers during fiscal 2019 were Castleton Commodities Merchant Trading L.P., CenterPoint Energy Services, Inc., Concord Energy LLC, ConocoPhillips Company, Devon Gas Services, L.P., Hartree Partners, L.P., Targa Gas Marketing LLC, Tenaska Marketing Ventures & Gas Storage, LLC, Texla Energy Management, Inc. and United Energy Trading, LLC.

The combination of base load, peaking and spot purchase agreements, coupled with the withdrawal of gas held in storage, allows us the flexibility to adjust to changes in weather, which minimizes our need to enter into long-term firm commitments.

We estimate our peak-day availability of natural gas supply to be approximately 4.4 Bcf. The peak-day demand for our distribution operations in fiscal 2019 was on March 4, 2019, when sales to customers reached approximately 3.3 Bcf.

Currently, our distribution divisions utilize 37 pipeline transportation companies, both interstate and intrastate, to transport our natural gas. The pipeline transportation agreements are firm and many of them have “pipeline no-notice” storage service, which provides for daily balancing between system requirements and nominated flowing supplies. These agreements have been negotiated with the shortest term necessary while still maintaining our right of first refusal. The natural gas supply for our Mid-Tex Division is delivered primarily by our APT Division.

To maintain our deliveries to high priority customers, we have the ability, and have exercised our right, to curtail deliveries to certain customers under the terms of interruptible contracts or applicable state regulations or statutes. Our customers’ demand on our system is not necessarily indicative of our ability to meet current or anticipated market demands or immediate delivery requirements because of factors such as the physical limitations of gathering, storage and transmission systems, the duration and severity of cold weather, the availability of gas reserves from our suppliers, the ability to purchase additional supplies on a short-term basis and actions by federal and state regulatory authorities. Curtailment rights provide us the flexibility to meet the human-needs requirements of our customers on a firm basis. Priority allocations imposed by federal and state regulatory agencies, as well as other factors beyond our control, may affect our ability to meet the demands of our customers. We do not anticipate any problems with obtaining additional gas supply as needed for our customers.

Pipeline and Storage Segment Overview

Our pipeline and storage segment consists of the pipeline and storage operations of APT and our natural gas transmission operations in Louisiana. APT is one of the largest intrastate pipeline operations in Texas with a heavy concentration in the established natural gas-producing areas of central, northern and eastern Texas, extending into or near the major producing areas of the Barnett Shale, the Texas Gulf Coast and the Permian Basin of West Texas. Through its system, APT provides transportation and storage services to our Mid-Tex Division, other third party local distribution companies, industrial and electric generation customers, marketers and producers. As part of its pipeline operations, APT owns and operates five underground storage reservoirs in Texas.

Revenues earned from transportation and storage services for APT are subject to traditional ratemaking governed by the RRC. Rates are updated through periodic filings made under Texas’ GRIP. GRIP allows us to include in our rate base annually approved capital costs incurred in the prior calendar year provided that we file a complete rate case at least once every five years; the most recent of which was completed in August 2017. APT’s existing regulatory mechanisms allow certain transportation and storage services to be provided under market-based rates.

Our natural gas transmission operations in Louisiana are comprised of a 21-mile pipeline located in the New Orleans, Louisiana area that is primarily used to aggregate gas supply for our distribution division in Louisiana under a long-term contract and, on a more limited basis, to third parties. The demand fee charged to our Louisiana distribution division for these services is subject to regulatory approval by the Louisiana Public Service Commission. We also manage two asset management plans in Louisiana that serve distribution affiliates of the Company, which have been approved by applicable state regulatory commissions. Generally, these asset management plans require us to share with our distribution customers a significant portion of the cost savings earned from these arrangements.

Natural Gas Marketing Segment Overview

Through December 31, 2016, we were engaged in a nonregulated natural gas marketing business, which was conducted by Atmos Energy Marketing (AEM). AEM’s primary business was to aggregate and purchase gas supply, arrange transportation and storage logistics and ultimately deliver gas to customers at competitive prices. Additionally, AEM utilized proprietary and customer-owned transportation and storage assets to provide various services to its customers as requested.

As more fully described in Note 16, effective January 1, 2017, we sold all of the equity interests of AEM to CenterPoint Energy Services, Inc. (CES), a subsidiary of CenterPoint Energy Inc. As a result of the sale, Atmos Energy fully exited the nonregulated natural gas marketing business. Accordingly, these operations have been reported as discontinued operations.

Ratemaking Activity

Overview

The method of determining regulated rates varies among the states in which our regulated businesses operate. The regulatory authorities have the responsibility of ensuring that utilities in their jurisdictions operate in the best interests of customers while providing utility companies the opportunity to earn a reasonable return on their investment. Generally, each regulatory authority reviews rate requests and establishes a rate structure intended to generate revenue sufficient to cover the costs of conducting business, including a reasonable return on invested capital.

Our rate strategy focuses on reducing or eliminating regulatory lag, obtaining adequate returns and providing stable, predictable margins, which benefit both our customers and the Company. As a result of our ratemaking efforts in recent years, Atmos Energy has:

•	Formula rate mechanisms in place in four states that provide for an annual rate review and adjustment to rates.

•	Infrastructure programs in place in the majority of our states that provide for an annual adjustment to rates for qualifying capital expenditures. Through our annual formula rate mechanisms and infrastructure programs, we have the ability to recover approximately 90 percent of our capital expenditures within six months and substantially all of our capital expenditures within twelve months.

•	Authorization in tariffs, statute or commission rules that allows us to defer certain elements of our cost of service such as depreciation, ad valorem taxes and pension costs, until they are included in rates.

•	WNA mechanisms in seven states that serve to minimize the effects of weather on approximately 97 percent of our distribution Contribution Margin.

•	The ability to recover the gas cost portion of bad debts in five states.

The following table provides a jurisdictional rate summary for our regulated operations as of September 30, 2019. This information is for regulatory purposes only and may not be representative of our actual financial position.

Division		Jurisdiction		Effective Date of Last Rate/GRIP Action		Rate Base (thousands)****(1)		Authorized Rate of Return**(1)**		Authorized Debt/ Equity Ratio**(1)**	Authorized Return on Equity**(1)**
Atmos Pipeline — Texas		Texas		05/07/2019		$2,387,764		8.87%		47/53	11.50%
Colorado-Kansas		Colorado		05/03/2018		134,726		7.55%		44/56	9.45%
		Colorado SSIR		01/01/2019		40,009		7.55%		44/56	9.45%
		Kansas		03/17/2016		200,564		(3)		(3)	(3)
		Kansas GSRS		05/01/2019		26,322		(3)		(3)	(3)
Kentucky/Mid-States		Kentucky		05/08/2019		424,929		7.49%		42/58	9.65%
		Tennessee		06/01/2019		389,061		7.79%		42/58	9.80%
		Virginia		04/01/2019		47,827		7.43%		42/58	9.20%
Louisiana		Trans La		04/01/2019		192,586		7.81%		41/59	9.80%
		LGS		07/01/2019		468,958		7.79%		42/58	9.80%
Mid-Tex		Mid-Tex Cities(8)		10/01/2018		2,587,261(2)		7.87%		42/58	9.80%
		Mid-Tex - ATM Cities		09/26/2019		2,975,975(2)		7.97%		40/60	9.80%
		Mid-Tex - Environs		06/04/2019		2,975,978(2)		7.97%		40/60	9.80%
		Dallas(11)		06/01/2019		2,861,599(2)		7.96%		40/60	9.80%
Mississippi		Mississippi(7)		11/01/2018		415,627		7.81%		45/55	10.24%
		Mississippi - SIR(7)		11/01/2018		126,049		7.81%		45/55	10.24%
West Texas		West Texas Cities(4) (9)		10/01/2018		503,332(10)		7.87%		42/58	9.80%
		West Texas - ALDC		05/01/2019		594,539(10)		8.57%		48/52	10.50%
		West Texas - Environs		06/04/2019		592,919(10)		7.97%		40/60	9.80%

Division		Jurisdiction		Bad Debt Rider**(5)**		Formula Rate		Infrastructure Mechanism	Performance Based Rate Program**(6)**		WNA Period
Atmos Pipeline — Texas		Texas		No		Yes		Yes	N/A		N/A
Colorado-Kansas		Colorado		No		No		Yes	No		N/A
		Kansas		Yes		No		Yes	Yes		October-May
Kentucky/Mid-States		Kentucky		Yes		No		Yes	Yes		November-April
		Tennessee		Yes		Yes		No	Yes		October-April
		Virginia		Yes		No		Yes	No		January-December
Louisiana		Trans La		No		Yes		Yes	No		December-March
		LGS		No		Yes		Yes	No		December-March
Mid-Tex Cities		Texas		Yes		Yes		Yes	No		November-April
Mid-Tex — Dallas		Texas		Yes		Yes		Yes	No		November-April
Mississippi		Mississippi		No		Yes		Yes	No		November-April
West Texas		Texas		Yes		Yes		Yes	No		October-May

(1)	The rate base, authorized rate of return, authorized debt/equity ratio and authorized return on equity presented in this table are those from the most recent regulatory filing for each jurisdiction. These rate bases, rates of return, debt/equity ratio and returns on equity are not necessarily indicative of current or future rate bases, rates of return or returns on equity.

(2)	The Mid-Tex rate base represents a “system-wide,” or 100 percent, of the Mid-Tex Division’s rate base.

(3)	A rate base, rate of return, return on equity or debt/equity ratio was not included in the respective state commission’s final decision.

(4)	The West Texas Cities includes all West Texas Division cities except Amarillo, Channing, Dalhart and Lubbock (ALDC).

(5)	The bad debt rider allows us to recover from ratepayers the gas cost portion of bad debts.

(6)	The performance-based rate program provides incentives to distribution companies to minimize purchased gas costs by allowing the companies and their customers to share the purchased gas costs savings.

(7)	The Mississippi Public Service Commission approved a settlement at its meeting on October 24, 2019, which included a rate base of $634.4 million and an authorized return of 7.81%. New rates were implemented November 1, 2019.

(8)	The Mid-Tex Cities approved the Formula Rate Mechanism filing with rates effective October 1, 2019, which included a rate base of $3,052.6 million, an authorized return of 7.83%, a debt/equity ratio of 42/58 and an authorized ROE of 9.80%.

(9)	The West Texas Cities approved the Formula Rate Mechanism filing with rates effective October 1, 2019, which included a rate base of $591.5 million, an authorized return of 7.83%, a debt/equity ratio of 42/58 and an authorized ROE of 9.80%.

(10)	The West Texas rate base represents a "system-wide," or 100 percent, of the West Texas Division's rate base.

(11)	The Company and the City of Dallas have arrived at a settlement. This settlement has not yet been approved by the Railroad Commission of Texas (RRC). The DARR rates were implemented subject to refund on June 1, 2019.

Although substantial progress has been made in recent years to improve rate design and recovery of investment across our service areas, we are continuing to seek improvements in rate design to address cost variations and pursue tariffs that reduce regulatory lag associated with investments. Further, potential changes in federal energy policy, federal safety regulations and changing economic conditions will necessitate continued vigilance by the Company and our regulators in meeting the challenges presented by these external factors.

Recent Ratemaking Activity

The amounts described in the following sections represent the operating income that was requested or received in each rate filing, which may not necessarily reflect the stated amount referenced in the final order, as certain operating costs may have changed as a result of the commission's or other governmental authority's final ruling. The following table summarizes our ratemaking outcomes for the last three fiscal years. The ratemaking outcomes for fiscal 2019 and 2018 include the effect of tax reform legislation enacted effective January 1, 2018 and do not reflect the true economic benefit of the outcomes because they do not include the corresponding income tax benefit we will receive due to the decrease in our statutory tax rate.

		Annual Increase (Decrease) to Operating Income For the Fiscal Year Ended September 30
Rate Action		2019				2018				2017
		(In thousands)
Annual formula rate mechanisms		$	114,810			$	92,472			$	90,427
Rate case filings		1,656				(12,853		)		12,961
Other ratemaking activity		214				457				784
		$	116,680			$	80,076			$	104,172

Additionally, the following ratemaking efforts seeking $81.2 million in annual operating income were initiated during fiscal 2019 but had not been completed as of September 30, 2019:

Division		Rate Action		Jurisdiction		Operating Income Requested
						(In thousands)
Colorado-Kansas		Rate Case		Kansas		$	3,697
Kentucky/Mid-States		Infrastructure Mechanism		Kentucky (1)		2,912
Kentucky/Mid-States		Formula Rate Mechanism		Tennessee		726
Kentucky/Mid-States		Infrastructure Mechanism		Virginia (2)		85
Mid-Tex		Formula Rate Mechanism		Mid-Tex Cities (3)		47,733
Mississippi		Infrastructure Mechanism		Mississippi (4)		8,569
Mississippi		Formula Rate Mechanism		Mississippi (4)		11,448
West Texas		Formula Rate Mechanism		West Texas Cities (5)		6,226
West Texas		Rate Case		West Texas Triangle		(242		)
						$	81,154

(1)	On September 24, 2019, the Kentucky Public Service Commission approved this filing with rates to be implemented beginning October 1, 2019.

(2)	On September 24, 2019, the State Corporation Commission of Virginia approved a rate increase of $0.1 million effective October 1, 2019.

(3)	The Mid-Tex Cities approved a rate increase of $34.4 million effective October 1, 2019.

(4) The Mississippi Public Service Commission approved an increase in operating income of $7.6 million for the SIR filing and $6.9 million for the SRF filing. New rates were implemented November 1, 2019.

(5)	The West Texas Cities approved a rate increase of $4.9 million effective October 1, 2019.

Our recent ratemaking activity is discussed in greater detail below.

Annual Formula Rate Mechanisms

As an instrument to reduce regulatory lag, formula rate mechanisms allow us to refresh our rates on an annual basis without filing a formal rate case. However, these filings still involve discovery by the appropriate regulatory authorities prior to the final determination of rates under these mechanisms. The following table summarizes our annual formula rate mechanisms by state.

		Annual Formula Rate Mechanisms
State		Infrastructure Programs		Formula Rate Mechanisms
Colorado		System Safety and Integrity Rider (SSIR)		—
Kansas		Gas System Reliability Surcharge (GSRS)		—
Kentucky		Pipeline Replacement Program (PRP)		—
Louisiana		(1)		Rate Stabilization Clause (RSC)
Mississippi		System Integrity Rider (SIR)		Stable Rate Filing (SRF)
Tennessee		—		Annual Rate Mechanism (ARM)
Texas		Gas Reliability Infrastructure Program (GRIP), (1)		Dallas Annual Rate Review (DARR), Rate Review Mechanism (RRM)
Virginia		Steps to Advance Virginia Energy (SAVE)		—

(1)	Infrastructure mechanisms in Texas and Louisiana allow for the deferral of all expenses associated with capital expenditures incurred pursuant to these rules, which primarily consists of interest, depreciation and other taxes (Texas only), until the next rate proceeding (rate case or annual rate filing), at which time investment and costs would be recoverable through base rates.

The following table summarizes our annual formula rate mechanisms with effective dates during the fiscal years ended September 30, 2019, 2018 and 2017:

Division		Jurisdiction		Test Year Ended		Increase (Decrease) in Annual Operating Income				Effective Date
						(In thousands)
2019 Filings:
Mid-Tex		ATM Cities		12/2018		$	6,591			09/26/2019
Louisiana		LGS		12/2018		7,124				07/01/2019
Mid-Tex		Environs		12/2018		2,435				06/04/2019
West Texas		Environs		12/2018		1,005				06/04/2019
Mid-Tex		DARR (1)		09/2018		9,452				06/01/2019
Kentucky/Mid-States		Tennessee ARM		05/2020		2,393				06/01/2019
Atmos Pipeline - Texas		Texas		12/2018		49,225				05/07/2019
West Texas		Amarillo, Lubbock, Dalhart and Channing		12/2018		5,692				05/01/2019
Colorado-Kansas		Kansas GSRS		12/2018		1,562				05/01/2019
Louisiana		Trans La		09/2018		4,719				04/01/2019
Colorado-Kansas		Colorado GIS		12/2019		87				04/01/2019
Colorado-Kansas		Colorado SSIR		12/2019		2,147				01/01/2019
Mississippi		Mississippi - SIR		10/2019		7,135				11/01/2018
Mississippi		Mississippi - SRF		10/2019		(118		)		11/01/2018
Kentucky/Mid-States		Tennessee ARM		05/2019		(5,032		)		10/15/2018
Mid-Tex		Mid-Tex RRM Cities		12/2017		17,633				10/01/2018
West Texas		West Texas Cities RRM		12/2017		2,760				10/01/2018
Total 2019 Filings						$	114,810
2018 Filings:
Louisiana		LGS		12/2017		$	(1,521	)		07/01/2018
West Texas		Amarillo, Lubbock, Dalhart and Channing		12/2017		4,418				06/08/2018
Mid-Tex		Environs		12/2017		1,604				06/05/2018
West Texas		Environs		12/2017		826				06/05/2018
Atmos Pipeline - Texas		Texas		12/2017		42,173				05/22/2018
Louisiana		Trans La		09/2017		(1,913		)		05/01/2018
Colorado-Kansas		Kansas GSRS		09/2018		820				02/27/2018
Mississippi		Mississippi - SIR		10/2018		7,658				01/01/2018
Mississippi		Mississippi - SGR (2)		10/2018		1,245				01/01/2018
Mississippi		Mississippi - SRF (2)		10/2018		—				01/01/2018
Colorado-Kansas		Colorado SSIR		12/2018		2,228				12/20/2017
Atmos Pipeline - Texas		Texas		12/2016		28,988				12/05/2017
Kentucky/Mid-States		Kentucky - PRP		09/2018		5,638				10/27/2017
Kentucky/Mid-States		Virginia - SAVE		09/2017		308				10/01/2017
Total 2018 Filings						$	92,472
2017 Filings:
Louisiana		LGS		12/2016		$	6,237			07/01/2017
Mid-Tex		Mid-Tex DARR		09/2016		9,672				06/01/2017

Mid-Tex		Mid-Tex Cities RRM		12/2016		36,239				06/01/2017
Kentucky/Mid-States		Tennessee ARM		05/2018		6,740				06/01/2017
Mid-Tex		Environs		12/2016		1,568				05/23/2017
West Texas		Environs		12/2016		872				05/23/2017
West Texas		Amarillo, Lubbock, Dalhart and Channing		12/2016		4,682				04/25/2017
Louisiana		Trans La		09/2016		4,392				04/01/2017
West Texas		West Texas Cities RRM		09/2016		4,255				03/15/2017
Colorado-Kansas		Kansas		09/2016		801				02/09/2017
Mississippi		Mississippi - SRF		10/2017		4,390				02/01/2017
Mississippi		Mississippi - SIR		10/2017		3,334				01/01/2017
Mississippi		Mississippi - SGR		10/2017		1,292				01/01/2017
Colorado-Kansas		Colorado - SSIR		12/2017		1,350				01/01/2017
Kentucky/Mid-States		Kentucky - PRP		09/2017		4,981				10/14/2016
Kentucky/Mid-States		Virginia - SAVE		09/2017		(378		)		10/01/2016
Total 2017 Filings						$	90,427

(1)	The Company and the City of Dallas have arrived at a settlement. This settlement has not yet been approved by the RRC. The DARR rates were implemented subject to refund on June 1, 2019.

(2)	Beginning in fiscal 2019, our SGR rate base was combined with our SRF rate base, per Commission order.

Rate Case Filings

A rate case is a formal request from Atmos Energy to a regulatory authority to increase rates that are charged to customers. Rate cases may also be initiated when the regulatory authorities request us to justify our rates. This process is referred to as a “show cause” action. Adequate rates are intended to provide for recovery of the Company’s costs as well as a reasonable rate of return to our shareholders and ensure that we continue to safely deliver reliable, reasonably priced natural gas service to our customers. The following table summarizes our recent rate cases:

Division		State		Increase (Decrease) in Annual Operating Income				Effective Date
				(In thousands)
2019 Rate Case Filings:
Mid-Tex (ATM Cities)		Texas		$	2,113			06/01/2019
Kentucky/Mid-States		Kentucky		3,441				05/08/2019
Kentucky/Mid-States		Virginia		(400		)		04/01/2019
Mid-Tex (Environs)		Texas		(2,674		)		01/01/2019
West Texas (Environs)		Texas		(824		)		01/01/2019
Total 2019 Rate Case Filings				$	1,656
2018 Rate Case Filings:
Colorado-Kansas		Colorado		$	(241	)		05/03/2018
Kentucky/Mid-States		Kentucky		(7,504		)		05/03/2018
Mid-Tex - City of Dallas		Texas		(5,108		)		02/14/2018
Total 2018 Rate Case Filings				$	(12,853	)
2017 Rate Case Filings:
Atmos Pipeline - Texas		Texas		$	12,955			08/01/2017
Kentucky/Mid-States		Virginia		6				12/27/2016
Total 2017 Rate Case Filings				$	12,961

Other Ratemaking Activity

The following table summarizes other ratemaking activity during the fiscal years ended September 30, 2019, 2018 and 2017:

Division		Jurisdiction		Rate Activity		Increase in Annual Operating Income				Effective Date
						(In thousands)
2019 Other Rate Activity:
Colorado-Kansas		Kansas		Ad Valorem (1)		$	214			02/01/2019
Total 2019 Other Rate Activity						$	214
2018 Other Rate Activity:
Colorado-Kansas		Kansas		Ad Valorem(1)		$	457			02/01/2018
Total 2018 Other Rate Activity						$	457
2017 Other Rate Activity:
Colorado-Kansas		Kansas		Ad-Valorem(1)		$	784			02/01/2017
Total 2017 Other Rate Activity						$	784

(1)	The Ad Valorem filing relates to property taxes that are either over or undercollected compared to the amount included in our Kansas service area's base rates.

Other Regulation

We are regulated by various state or local public utility authorities. We are also subject to regulation by the United States Department of Transportation with respect to safety requirements in the operation and maintenance of our transmission and distribution facilities. In addition, our operations are also subject to various state and federal laws regulating environmental matters. From time to time, we receive inquiries regarding various environmental matters. We believe that our properties and operations comply with, and are operated in conformity with, applicable safety and environmental statutes and regulations. There are no administrative or judicial proceedings arising under environmental quality statutes pending or known to be contemplated by governmental agencies which would have a material adverse effect on us or our operations. Our environmental claims have arisen primarily from former manufactured gas plant sites. The Pipeline and Hazardous Materials Safety Administration (PHMSA), within the U.S. Department of Transportation, develops and enforces regulations for the safe, reliable and environmentally sound operation of the pipeline transportation system. The PHMSA pipeline safety statutes provide for states to assume safety authority over intrastate natural transmission and distribution gas pipelines. State pipeline safety programs are responsible for adopting and enforcing the federal and state pipeline safety regulations for intrastate natural gas transmission and distribution pipelines.

The Federal Energy Regulatory Commission (FERC) allows, pursuant to Section 311 of the Natural Gas Policy Act (NGA), gas transportation services through our APT assets “on behalf of” interstate pipelines or local distribution companies served by interstate pipelines, without subjecting these assets to the jurisdiction of the FERC under the NGA. Additionally, the FERC has regulatory authority over the use and release of interstate pipeline and storage capacity. The FERC also has authority to detect and prevent market manipulation and to enforce compliance with FERC’s other rules, policies and orders by companies engaged in the sale, purchase, transportation or storage of natural gas in interstate commerce. We have taken what we believe are the necessary and appropriate steps to comply with these regulations.

The SEC and the Commodities Futures Trading Commission, pursuant to the Dodd–Frank Act, established numerous regulations relating to U.S. financial markets. We enacted procedures and modified existing business practices and contractual arrangements to comply with such regulations. There are, however, some rulemaking proceedings that have not yet been finalized, including those relating to capital and margin rules for (non–cleared) swaps. We do not expect these rules to directly impact our business practices or collateral requirements. However, depending on the substance of these final rules, in addition to certain international regulatory requirements still under development that are similar to Dodd–Frank, our swap counterparties could be subject to additional and potentially significant capitalization requirements. These regulations could motivate counterparties to increase our collateral requirements or cash postings.

Competition

Although our regulated distribution operations are not currently in significant direct competition with any other distributors of natural gas to residential and commercial customers within our service areas, we do compete with other natural gas suppliers and suppliers of alternative fuels for sales to industrial customers. We compete in all aspects of our business with alternative energy sources, including, in particular, electricity. Electric utilities offer electricity as a rival energy source and

compete for the space heating, water heating and cooking markets. Promotional incentives, improved equipment efficiencies and promotional rates all contribute to the acceptability of electrical equipment. The principal means to compete against alternative fuels is lower prices, and natural gas historically has maintained its price advantage in the residential, commercial and industrial markets.

Our pipeline and storage operations have historically faced competition from other existing intrastate pipelines seeking to provide or arrange transportation, storage and other services for customers. In the last few years, several new pipelines have been completed, which has increased the level of competition in this segment of our business.

Employees

At September 30, 2019, we had 4,776 employees, consisting of 4,645 employees in our distribution operations and 131 employees in our pipeline and storage operations.

Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports, and amendments to those reports, and other forms that we file with or furnish to the Securities and Exchange Commission (SEC) at their website, www.sec.gov, are also available free of charge at our website, www.atmosenergy.com, under “Publications and SEC Filings” under the “Investors” tab under "Our Company", as soon as reasonably practicable, after we electronically file these reports with, or furnish these reports to, the SEC. We will also provide copies of these reports free of charge upon request to Shareholder Relations at the address and telephone number appearing below:

Shareholder Relations

Atmos Energy Corporation

P.O. Box 650205

Dallas, Texas 75265-0205

972-855-3729

Corporate Governance

In accordance with and pursuant to relevant related rules and regulations of the SEC as well as corporate governance-related listing standards of the New York Stock Exchange (NYSE), the Board of Directors of the Company has established and periodically updated our Corporate Governance Guidelines and Code of Conduct, which is applicable to all directors, officers and employees of the Company. In addition, in accordance with and pursuant to such NYSE listing standards, our Chief Executive Officer during fiscal 2019, Michael E. Haefner, certified to the New York Stock Exchange that he was not aware of any violations by the Company of NYSE corporate governance listing standards. The Board of Directors also annually reviews and updates, if necessary, the charters for each of its Audit, Human Resources and Nominating and Corporate Governance Committees. All of the foregoing documents are posted on our website, www.atmosenergy.com, under "Governance" under the "Corporate Responsibility" tab under "Our Company". We will also provide copies of all corporate governance documents free of charge upon request to Shareholder Relations at the address listed above.