Atmos Energy 10-K 2024-09-30

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, 2024

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 1-10042

Atmos Energy Corporation

(Exact name of registrant as specified in its charter)

Texas and Virginia 75-1743247

(State or other jurisdiction of (IRS employer

incorporation or organization) identification no.)

1800 Three Lincoln Centre

5430 LBJ Freeway

Dallas, Texas 75240

(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code:

(972) 934-9227

Securities registered pursuant to Section 12(b) of the Act:

Table of each class						Trading Symbol			Name of each exchange on which registered
Common stock			No Par Value			ATO			New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer			☑			Accelerated filer			☐			Non-accelerated filer			☐			Smaller reporting company			☐			Emerging growth company			☐

If an emerging growth company, indicate by check mark if the 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. ¨

Indicate by check mark whether the 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. ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No þ

The aggregate market value of the common voting stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, March 31, 2024, was $17,825,800,856.

As of November 14, 2024, the registrant had 155,399,533 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Definitive Proxy Statement to be filed for the Annual Meeting of Shareholders on February 5, 2025 are incorporated by reference into Part III of this report.

TABLE OF CONTENTS

						Page
Glossary of Key Terms						3
			Part I
Item 1.			Business			4
Item 1A.			Risk Factors			14
Item 1B.			Unresolved Staff Comments			19
Item 1C.			Cybersecurity			19
Item 2.			Properties			21
Item 3.			Legal Proceedings			22
Item 4.			Mine Safety Disclosures			22
			Part II
Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			22
Item 6.			Reserved			24
Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 7A.			Quantitative and Qualitative Disclosures About Market Risk			35
Item 8.			Financial Statements and Supplementary Data			36
Item 9.			Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			86
Item 9A.			Controls and Procedures			86
Item 9B.			Other Information			88
Item 9C.			Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			88
			Part III
Item 10.			Directors, Executive Officers and Corporate Governance			88
Item 11.			Executive Compensation			89
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			89
Item 13.			Certain Relationships and Related Transactions, and Director Independence			89
Item 14.			Principal Accountant Fees and Services			89
			Part IV
Item 15.			Exhibits and Financial Statement Schedules			89
Item 16.			Form 10-K Summary			94

GLOSSARY OF KEY TERMS

AEK			Atmos Energy Kansas Securitization I, LLC
AFUDC			Allowance for funds used during construction
AOCI			Accumulated Other Comprehensive Income
ARM			Annual Rate Mechanism
ATO			Trading symbol for Atmos Energy Corporation common stock on the NYSE
Bcf			Billion cubic feet
COSO			Committee of Sponsoring Organizations of the Treadway Commission
DARR			Dallas Annual Rate Review
EDIT			Excess Deferred Income Taxes
ERISA			Employee Retirement Income Security Act of 1974
FERC			Federal Energy Regulatory Commission
GAAP			Generally Accepted Accounting Principles
GRIP			Gas Reliability Infrastructure Program
GSRS			Gas System Reliability Surcharge
LTIP			1998 Long-Term Incentive Plan
Mcf			Thousand cubic feet
MDWQ			Maximum daily withdrawal quantity
Mid-Tex ATM Cities			Represents a coalition of 47 incorporated cities or approximately 10 percent of the Mid-Tex Division's customers.
Mid-Tex Cities			Represents all incorporated cities other than Dallas and Mid-Tex ATM Cities, or approximately 72 percent of the Mid-Tex Division’s customers.
MMcf			Million cubic feet
Moody’s			Moody’s Investor Service, Inc.
NGPA			Natural Gas Policy Act of 1978
NYSE			New York Stock Exchange
PHMSA			Pipeline and Hazardous Materials Safety Administration
PPA			Pension Protection Act of 2006
PRP			Pipeline Replacement Program
RRC			Railroad Commission of Texas
RRM			Rate Review Mechanism
RSC			Rate Stabilization Clause
S&P			Standard & Poor’s Corporation
SAVE			Steps to Advance Virginia Energy
SEC			United States Securities and Exchange Commission
Securitized Utility Tariff Bonds			Series 2023-A Senior Secured Securitized Utility Tariff Bonds
Securitized Utility Tariff Property			As defined in the financing order issued by the KCC in October 2022
SIP			System Integrity Program
SIR			System Integrity Rider
SOFR			Secured Overnight Financing Rate
SRF			Stable Rate Filing
SSIR			System Safety and Integrity Rider
TCJA			Tax Cuts and Jobs Act of 2017
WNA			Weather Normalization Adjustment

PART I

The terms “we,” “our,” “us,” “Atmos Energy,” and the “Company” refer to Atmos Energy Corporation and its subsidiaries, unless the context suggests otherwise.

Overview and Strategy

Atmos Energy Corporation, headquartered in Dallas, Texas, and incorporated in Texas and Virginia, is the country’s largest natural-gas-only distributor based on number of customers. We safely deliver reliable, efficient, and abundant natural gas through regulated sales and transportation arrangements to over 3.3 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 will be recognized for exceptional customer service, for being a great employer, and for achieving superior financial results.

Our operating strategy is focused on modernizing our business and infrastructure while reducing regulatory lag. This operating strategy supports continued investment in safety, innovation, environmental sustainability, and our communities.

Operating Segments

We manage and review our consolidated operations through the following reportable segments:

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

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

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						1,804,265
Kentucky/Mid-States						Kentucky						220						176,903
						Tennessee												161,193
						Virginia												23,777
Louisiana						Louisiana						270						360,870
West Texas						Amarillo, Lubbock, Midland						80						314,503
Mississippi						Mississippi						110						251,147
Colorado-Kansas						Colorado						170						129,727
						Kansas												139,435

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, 2024, we held 1,026 franchises having terms generally ranging from five to 35 years. A 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 traditional and 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 operating income 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, and marketers. The gas is delivered into our systems by various pipeline companies, withdrawals of gas from proprietary and contracted storage assets, and base load and peaking arrangements, as needed.

Supply arrangements consist of both base load and 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 peaking 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. We select these suppliers based on their ability to reliably deliver gas supply to our designated firm pipeline receipt points at the lowest reasonable cost. Major suppliers during fiscal 2024 were Cima Energy, LP, ConocoPhillips Company, EnLink Gas Marketing LP, Enterprise Navitas Midstream Midland Basin LLC, Hartree Partners, L.P., Sequent Energy Management LLC, Symmetry Energy Solutions, LLC, Targa Gas Marketing LLC, Tenaska Marking Ventures, and Texla Energy Management, Inc.

The combination of base load and peaking 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 5.3 Bcf. The peak-day demand for our distribution operations in fiscal 2024 was on January 15, 2024, when sales to customers reached approximately 4.3 Bcf.

Currently, our distribution divisions utilize 34 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 interrupt or curtail service to certain customers pursuant to contracts and 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. Interruption and curtailment rights provide us the flexibility to meet the human-needs requirements of our customers on a reliable 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 some of our customers.

Pipeline and Storage Segment Overview

Our pipeline and storage segment consists of the regulated 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 facilities 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 December 2023. 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 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.

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 all 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 begin recovering 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, pension costs, and certain safety related expenses, 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 residential and commercial revenues.

• The ability to recover the gas cost portion of bad debts in six states which represents approximately 89 percent of our distribution residential and commercial revenues.

The following tables provides a jurisdictional rate summary for our regulated operations as of September 30, 2024. 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						05/14/2024						$4,773,699						8.49%						40/60			11.45%
Colorado-Kansas						Colorado						05/14/2023						229,565						7.00%						42-45/55-58			9.3% - 9.6%
						Colorado SSIR						01/01/2024						52,820						7.00% / 3.97%						42/58			(4)
						Kansas						05/09/2023						295,070						(4)						(4)			(4)
						Kansas GSRS						11/02/2023						16,546						(4)						(4)			(4)
						Kansas SIP						04/01/2024						19,908						(4)						(4)			(4)
Kentucky/Mid-States						Kentucky						05/20/2022						568,506						6.82%						45/55			9.23%
						Kentucky-PRP						10/01/2023						40,504						6.94%						45/55			9.45%
						Tennessee						06/01/2024						554,053						7.64%						38/62			9.80%
						Virginia						12/01/2023						71,450						7.57%						39/61			9.90%
						Virginia-SAVE						10/01/2023						16,422						7.43%						42/58			9.20%
Louisiana						Louisiana						07/01/2024						1,227,842						7.43%						42/58			9.80%
Mid-Tex						Mid-Tex Cities(5)						10/01/2023						6,070,321(6)						7.35%						42/58			9.80%
						Mid-Tex ATM Cities						06/07/2024						7,009,146(6)						7.97%						40/60			9.80%
						Mid-Tex Environs						06/01/2024						7,009,154(6)						7.97%						40/60			9.80%
						Mid-Tex — Dallas						06/01/2024						6,844,772(6)						7.47%						40/60			9.80%
Mississippi						Mississippi(7)						12/01/2023						591,882						7.82%						39/61			10.34%
						Mississippi - SIR(7)						12/01/2023						472,676						7.82%						39/61			10.34%
West Texas						West Texas Cities(8) (10)						10/01/2023						965,289(9)						7.35%						42/58			9.80%
						West Texas - ALDC						06/07/2024						1,062,054(9)						7.35%						41/59			(4)
						West Texas - Environs						06/01/2024						1,059,604(9)						7.97%						40/60			9.80%
						West Texas - Triangle						06/01/2024						65,124						7.71%						40/60			9.80%

Division						Jurisdiction						Bad Debt Rider**(2)**						Formula Rate						Infrastructure Mechanism			Performance Based Rate Program**(3)**						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						Yes			Yes						October-April
						Virginia						Yes						No						Yes			No						January-December
Louisiana						Louisiana						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						Yes						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 approved regulatory filing for each jurisdiction. These rate bases, rates of return, debt/equity ratios, and returns on equity are not necessarily indicative of current or future rate bases, rates of return or returns on equity.

(2)The bad debt rider allows us to recover from customers the gas cost portion of customer accounts that have been written off.

(3)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.

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

(5)The Mid-Tex Cities approved the Formula Rate Mechanism filing with rates effective October 1, 2024, which included a rate base of $7.1 billion, an authorized return of 7.41%, a debt/equity ratio of 42/58 and an authorized ROE of 9.80%.

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

(7)The Mississippi Public Service Commission approved a settlement at its meeting on November 4, 2024, which included a rate base of $1.2 billion and an authorized return of 7.80%. No debt/equity ratio or an authorized ROE was included in the commissions final order.

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

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

(10)The West Texas Cities approved the Formula Rate Mechanism filing with rates effective October 1, 2024, which included a rate base of $1.1 billion, an authorized return of 7.41%, a debt/equity ratio of 42/58 and an authorized ROE of 9.80%.

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 annual 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. Our ratemaking outcomes include the refund (return) of excess deferred income taxes (EDIT) resulting from previously enacted tax reform legislation and do not reflect the true economic benefit of the outcomes because they do not include the corresponding income tax benefit. The following tables summarize the annualized ratemaking outcomes we implemented in each of the last three fiscal years.

Rate Action						Annual Increase (Decrease) in Operating Income						EDIT Impact						Annual Increase (Decrease) in Operating Income Excluding EDIT
						(In thousands)
2024 Filings:
Annual formula rate mechanisms						$	347,763					$	(31,314)					$	316,449
Rate case filings						29,458						(37,860)						(8,402)
Other ratemaking activity						(971)						—						(971)
Total 2024 Filings						$	376,250					$	(69,174)					$	307,076
2023 Filings:
Annual formula rate mechanisms						$	258,824					$	(1,099)					$	257,725
Rate case filings						2,940						6,791						9,731
Other ratemaking activity						1,320						—						1,320
Total 2023 Filings						$	263,084					$	5,692					$	268,776
2022 Filings:
Annual formula rate mechanisms						$	169,354					$	33,249					$	202,603
Rate case filings						5,938						7,379						13,317
Other ratemaking activity						(370)						—						(370)
Total 2022 Filings						$	174,922					$	40,628					$	215,550

The following ratemaking efforts seeking $218.0 million in annual operating income were initiated during fiscal 2024 but had not been completed or implemented as of September 30, 2024:

Division						Rate Action						Jurisdiction						Operating Income Requested
																		(In thousands)
Colorado-Kansas						Infrastructure Mechanism						Kansas (1)						$	1,998
Kentucky/Mid-States						Infrastructure Mechanism						Virginia (2)						748
Kentucky/Mid-States						Infrastructure Mechanism						Kentucky (3)						3,441
Kentucky/Mid-States						Rate Case						Kentucky						33,654
Mid-Tex						Formula Rate Mechanism						Mid-Tex Cities (4)						133,414
Mississippi						Infrastructure Mechanism						Mississippi (5)						21,830
Mississippi						Formula Rate Mechanism						Mississippi (5)						16,244
West Texas						Formula Rate Mechanism						West Texas Cities (6)						6,709
																		$	218,038

(1) The staff of the Kansas Corporation Commission recommended approval of the GSRS filing on October 17, 2024, subject to commission approval.

(2) On September 4, 2024, the State Corporation Commission of Virginia approved a rate increase of $0.7 million effective October 1, 2024.

(3) On September 27, 2024, the Kentucky Public Service Commission approved a rate increase of $3.4 million effective October 2, 2024, subject to refund.

(4) The Mid-Tex Cities approved a rate increase of $112.1 million. New rates were implemented October 1, 2024.

(5) On November 4, 2024, the Mississippi Public Service Commission (MPSC) approved an increase in operating income of $24.0 million for the SIR filing and an increase in operating income of $3.8 million for the SRF filing.

(6) The West Texas Cities approved a rate increase of $4.4 million. New rates were implemented on October 1, 2024.

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. We currently have specific infrastructure programs in all of our distribution divisions with tariffs in place to permit the investment associated with these programs to have their surcharge rate adjusted annually to recover approved capital costs incurred in a prior test-year period. 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), System Integrity Program (SIP)						—
Kentucky						Pipeline Replacement Program (PRP)						—
Louisiana						(1)						Rate Stabilization Clause (RSC)
Mississippi						System Integrity Rider (SIR)						Stable Rate Filing (SRF)
Tennessee						(1)						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, Louisiana, and Tennessee 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, 2024, 2023, and 2022:

Division						Jurisdiction						Test Year Ended						Increase (Decrease) in Annual Operating Income						EDIT Impact						Increase (Decrease) in Annual Operating Income Excluding EDIT						Effective Date
																								(In thousands)
2024 Filings:
Louisiana						Louisiana						12/2023						$	35,645					$	(11,785)					$	23,860					07/01/2024
Mid-Tex						ATM Cities						12/2023						17,104						—						17,104						06/07/2024
West Texas						Amarillo, Lubbock, Dalhart and Channing						12/2023						7,344						—						7,344						06/07/2024
Kentucky/Mid-States						Tennessee ARM						09/2023						18,570						(4,348)						14,222						06/01/2024
Mid-Tex						DARR						09/2023						37,809						(14,782)						23,027						06/01/2024
West Texas						Triangle						12/2023						1,300						—						1,300						06/01/2024
West Texas						Environs						12/2023						1,379						—						1,379						06/01/2024
Mid-Tex						Environs						12/2023						8,529						—						8,529						06/01/2024
Atmos Pipeline - Texas						Texas						12/2023						82,440						—						82,440						05/14/2024
Colorado-Kansas						Kansas SIP						12/2023						708						—						708						04/01/2024
Colorado-Kansas						Colorado SSIR						12/2024						2,017						—						2,017						01/01/2024
Mississippi						Mississippi - SIR						10/2024						10,969						—						10,969						12/01/2023
Mississippi						Mississippi - SRF						10/2024						11,539						(472)						11,067						12/01/2023
Colorado-Kansas						Kansas GSRS						09/2023						1,752						—						1,752						11/02/2023
Kentucky/Mid-States						Kentucky PRP						09/2024						2,906						—						2,906						10/01/2023
Mid-Tex						Mid-Tex Cities RRM						12/2022						98,585						185						98,770						10/01/2023
West Texas						West Texas Cities RRM						12/2022						8,594						(112)						8,482						10/01/2023
Kentucky/Mid-States						Virginia - SAVE						09/2024						573						—						573						10/01/2023
Total 2024 Filings																		$	347,763					$	(31,314)					$	316,449

2023 Filings:
Louisiana						Louisiana						12/2022						$	14,466					$	17					$	14,483					07/01/2023
Mid-Tex						DARR (1)						09/2022						17,345						51						17,396						06/14/2023
Mid-Tex						ATM Cities						12/2022						12,825						—						12,825						06/09/2023
West Texas						Amarillo, Lubbock, Dalhart and Channing						12/2022						6,938						—						6,938						06/09/2023
West Texas						Triangle						12/2022						717						—						717						06/01/2023
West Texas						Environs						12/2022						1,332						—						1,332						06/01/2023
Mid-Tex						Environs						12/2022						5,983						—						5,983						06/01/2023
Kentucky/Mid-States						Tennessee ARM						09/2022						14						(1,509)						(1,495)						06/01/2023
Atmos Pipeline - Texas						Texas						12/2022						84,931						—						84,931						05/17/2023
Colorado-Kansas						Kansas SIP						12/2022						772						—						772						04/01/2023
Colorado-Kansas						Colorado SSIR						12/2023						1,971						—						1,971						01/01/2023
Mississippi						Mississippi - SIR						10/2023						8,560						—						8,560						11/01/2022
Mississippi						Mississippi - SRF						10/2023						12,188						778						12,966						11/01/2022
Kentucky/Mid-States						Kentucky PRP						09/2023						1,588						—						1,588						10/02/2022
Mid-Tex						Mid-Tex Cities RRM						12/2021						81,402						(395)						81,007						10/01/2022
West Texas						West Texas Cities RRM						12/2021						7,315						(41)						7,274						10/01/2022
Kentucky/Mid-States						Virginia - SAVE						09/2023						477						—						477						10/01/2022
Total 2023 Filings																		$	258,824					$	(1,099)					$	257,725
2022 Filings:
Kentucky/Mid-States						Tennessee ARM						09/2021						$	2,466					$	—					$	2,466					07/01/2022
Louisiana						Louisiana						12/2021						17,650						(10,389)						7,261						07/01/2022
West Texas						Amarillo, Lubbock, Dalhart and Channing						12/2021						6,122						—						6,122						06/11/2022
West Texas						Triangle						12/2021						1,549						—						1,549						06/11/2022
West Texas						Environs						12/2021						1,221						—						1,221						06/11/2022
Mid-Tex						ATM Cities						12/2021						12,815						—						12,815						06/10/2022
Mid-Tex						Environs						12/2021						5,646						—						5,646						06/10/2022
Mid-Tex						DARR (2)						09/2021						13,201						—						13,201						05/25/2022
Atmos Pipeline - Texas						Texas						12/2021						78,750						—						78,750						05/18/2022
Colorado-Kansas						Kansas SIP						12/2021						623						—						623						04/01/2022
Colorado-Kansas						Kansas GSRS						09/2021						1,820						—						1,820						02/01/2022
Colorado-Kansas						Colorado SSIR						12/2022						2,610						—						2,610						01/01/2022
Mid-Tex						Mid-Tex Cities RRM						12/2020						21,673						33,851						55,524						12/01/2021
West Texas						West Texas Cities RRM						12/2020						151						3,347						3,498						12/01/2021
Mississippi						Mississippi - SIR						10/2022						8,354						2,123						10,477						11/01/2021
Mississippi						Mississippi - SRF						10/2022						(5,624)						4,317						(1,307)						11/01/2021
Kentucky/Mid-States						Virginia - SAVE						09/2022						327						—						327						10/01/2021
Total 2022 Filings																		$	169,354					$	33,249					$	202,603

(1) The rate increase for this filing was approved based on the effective date herein; however, the new rates were implemented beginning September 1, 2023.

(2) The rate increase for this filing was approved based on the effective date herein; however, the new rates were implemented beginning September 1, 2022.

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 case activity during the fiscal years ended September 30, 2024, 2023, and 2022:

Division						State						Increase in Annual Operating Income						EDIT Impact						Increase (Decrease) in Annual Operating Income Excluding EDIT						Effective Date
																		(In thousands)
2024 Rate Case Filings:
Atmos Pipeline - Texas						Texas						$	27,024					$	(36,921)					$	(9,897)					12/13/2023
Kentucky/Mid-States						Virginia						2,434						(939)						1,495						12/01/2023
Total 2024 Rate Case Filings												$	29,458					$	(37,860)					$	(8,402)
2023 Rate Case Filings:
Colorado-Kansas						Colorado						$	913					$	(54)					$	859					05/14/2023
Colorado-Kansas						Kansas						2,027						6,845						8,872						05/09/2023
Total 2023 Rate Case Filings												$	2,940					$	6,791					$	9,731
2022 Rate Case Filings:
Kentucky/Mid-States						Kentucky (1)						$	5,938					$	7,379					$	13,317					05/20/2022
Total 2022 Rate Case Filings												$	5,938					$	7,379					$	13,317

(1) The rate case outcome for Kentucky is inclusive of the fiscal 2022 pipeline replacement program.

Other Ratemaking Activity

The following table summarizes other ratemaking activity during the fiscal years ended September 30, 2024, 2023, and 2022:

Division						Jurisdiction						Rate Activity						Increase (Decrease) in Annual Operating Income						Effective Date
																		(In thousands)
2024 Other Rate Activity:
Colorado-Kansas						Kansas						Ad Valorem (1)						$	(971)					02/01/2024
Total 2024 Other Rate Activity																		$	(971)
2023 Other Rate Activity:
Colorado-Kansas						Kansas						Ad Valorem (1)						$	1,320					02/01/2023
Total 2023 Other Rate Activity																		$	1,320
2022 Other Rate Activity:
Colorado-Kansas						Kansas						Ad-Valorem (1)						$	(370)					02/01/2022
Total 2022 Other Rate Activity																		$	(370)

(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. 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 (NGPA), 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 NGPA. 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.

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

The Corporate Responsibility, Sustainability, and Safety Committee of the Board of Directors oversees matters relating to equal employment opportunities, diversity, and inclusion; human workplace rights; employee health and safety; and the Company’s vision, values, and culture. It oversees the Company's policies, practices, and procedures relating to sustainability to support the alignment of the Company's sustainability strategy with the Company's corporate strategy.

Part of our vision is to create a culture that respects and appreciates diversity. For this reason, we strive to have a workforce that reflects the communities we serve. At September 30, 2024, we had 5,260 employees. We monitor our workforce data on a calendar year basis. As of December 31, 2023, the last date for which information is available, 61 percent of our employees worked in field roles and 39 percent worked in support/shared services roles. None of our employees have chosen to work under a collective bargaining agreement.

To recruit and hire individuals with a variety of skills, talents, backgrounds, and experiences, we value and cultivate our strong relationships with various community and diversity outreach sources. We also target jobs fairs including those focused on minority, veteran, and women candidates and partner with local colleges and universities to identify and recruit qualified

applicants in each of the cities and towns we serve. Finally, we believe we offer a competitive benefits program to help retain our employees.

We perform succession planning annually to ensure that we develop and sustain a strong bench of talent capable of performing at the highest levels. Not only is talent identified, but potential paths of development are discussed to ensure that employees have an opportunity to build their skills and are well-prepared for future roles. The strength of our succession planning process is evident through our long history of promoting most of our leaders from within the organization.

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/company/publications-and-sec-filings, 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 2024, John K. Akers, 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, Nominating and Corporate Governance, and Corporate Responsibility, Sustainability, and Safety Committees. All of the foregoing documents are posted on our website at www.atmosenergy.com/company/corporate-responsiblity-reports. We will also provide copies of all corporate governance documents free of charge upon request to Shareholder Relations at the address listed above.