Essential Utilities, Inc.

Previous wording

Essential Utilities, Inc. (“we”, “us”, “our” or the “Company”), a Pennsylvania corporation, is the holding company for regulated utilities providing water, wastewater, or natural gas services to an estimated 5.5 million people in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana, Virginia, and Kentucky under the Aqua and Peoples brands. One of our largest operating subsidiaries, Aqua Pennsylvania, Inc. (“Aqua Pennsylvania”), provides water or wastewater services to approximately one-half of the total number of water or wastewater customers we serve, who are located in the suburban areas in counties north and west of the City of Philadelphia and in 27 other counties in Pennsylvania. Our other regulated water or wastewater utility subsidiaries provide similar services in seven additional states. Our Peoples subsidiaries provide natural gas distribution services to customers in western Pennsylvania and Kentucky. Approximately 95% of the total number of natural gas utility customers we serve are in western Pennsylvania. The Company also operates market-based businesses, conducted through its non-regulated subsidiaries, that provide utility service line protection solutions and repair services to households and gas marketing and production activities. Currently, the Company seeks to acquire businesses in the U.S. regulated sector, focusing on water and wastewater utilities and to opportunistically pursue growth ventures in select market-based activities, such as infrastructure opportunities that are supplementary and complementary to our regulated water utility businesses.

Current wording

Essential Utilities, Inc. (“we”, “us”, “our” or the “Company”), a Pennsylvania corporation, is the holding company for regulated utilities providing water, wastewater, or natural gas services to an estimated 5.5 million people in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana, Virginia, and Kentucky under the Aqua and Peoples brands. One of our largest operating subsidiaries, Aqua Pennsylvania, Inc. (“Aqua Pennsylvania”), provides water or wastewater services to approximately one-half of the total number of water or wastewater customers we serve, who are located in the suburban areas in counties north and west of the City of Philadelphia and in 28 other counties in Pennsylvania. Our other regulated water or wastewater utility subsidiaries provide similar services in seven additional states. Our Peoples subsidiaries provide natural gas distribution services to customers in western Pennsylvania and Kentucky. Approximately 95% of the total number of natural gas utility customers we serve are in western Pennsylvania. The Company also operates market-based businesses, conducted through its non-regulated subsidiaries, that provide utility service line protection solutions and repair services to households and gas marketing and production activities. Currently, the Company seeks to acquire businesses in the U.S. regulated sector, focusing on water and wastewater utilities and to opportunistically pursue growth ventures in select market-based activities, such as infrastructure opportunities that are supplementary and complementary to our regulated water utility businesses.

Previous wording

During the first three months of 2025, we implemented, or received approval to implement, base rate increases that result in a $78,820 increase in annual revenues as summarized below.

Current wording

During the first half of 2025, we implemented, or received approval to implement, base rate increases that result in a $86,520 increase in annual revenues as summarized below.

Previous wording

As of March 31, 2025, we have a pending base rate case with the Kentucky Public Service Commission designed to increase rates by $10,910 or 19.0% on an annual basis. The Company anticipates a final order to be issued by June 2025. On April 30, 2025, the Company’s regulated water and wastewater operating subsidiary in North Carolina, Aqua North Carolina, filed an application with the North Carolina Utilities Commission designed to increase rates by $29,857 in the first year of new rates being implemented, then an additional $5,956 and $6,025 in the second and third years, respectively.

Current wording

On April 30, 2025, the Company’s regulated water and wastewater operating subsidiary in North Carolina, Aqua North Carolina, filed an application with the North Carolina Utilities Commission designed to increase rates by $29,857 in the first year of new rates being implemented, then an additional $5,956 and $6,025 in the second and third years, respectively.

Previous wording

In January 2025, the Company acquired Greenville Sanitary Authority’s wastewater utility assets, which serves approximately 2,300 customers in Greenville, Pennsylvania for $18,000. As of March 31, 2025, the Company has six signed purchase agreements for additional water and wastewater systems that are expected to serve approximately 211,000 equivalent retail customers or equivalent dwelling units and total approximately $340,000 in purchase price in three of our existing states. This includes the Company’s agreement to acquire the Delaware County Regional Water Quality Control Authority (DELCORA) for $276,000. DELCORA, a Pennsylvania sewer authority, serves approximately 198,000 equivalent dwelling units in the Philadelphia suburbs. In April 2025, the Company closed on its acquisition of the Village of Midvale’s water system in Ohio, which serves approximately 1,000 customers for $2,950. Refer to Note 3 –Water and Wastewater Acquisitions for further discussion.

Current wording

In January 2025, the Company acquired Greenville Sanitary Authority’s wastewater utility assets, which serves approximately 2,300 customers in Greenville, Pennsylvania for $18,000. In April 2025, the Company closed on its acquisition of the Village of Midvale’s water system in Ohio, which serves approximately 1,000 customers for $2,950. As of June 30, 2025, the Company had five signed purchase agreements for additional water and wastewater systems that are expected to serve approximately 210,000 equivalent retail customers or equivalent dwelling units and total approximately $338,000 in purchase price in two of our existing states. This includes the Company’s agreement to acquire the Delaware County Regional Water Quality Control Authority (DELCORA) for $276,500. DELCORA, a Pennsylvania sewer authority, serves approximately 198,000 equivalent dwelling units in the Philadelphia suburbs. In July 2025, the Company acquired the wastewater utility system of the City of Beaver Falls, Pennsylvania for $37,750. The system serves approximately 3,200 customers in the City of Beaver Falls and also provides bulk transmission and treatment service for approximately 3,800 equivalent dwelling units in seven nearby municipalities. Refer to Note 3 –Water and Wastewater Acquisitions for further discussion.

Previous wording

For the three months ended March 31, 2025, we invested $270,539 to improve our regulated water and natural gas infrastructure system and to enhance customer service. From 2025 through 2029, the Company plans to invest approximately $7,800,000 to improve water and natural gas systems and better serve customers through improved information technology. The capital investments made to rehabilitate and expand the infrastructure of the communities the Company serves are critical to its mission of safely and reliably delivering Earth’s most essential resources.

Current wording

During the six-month period ended June 30, 2025, we invested $612,629 to improve our regulated water and natural gas infrastructure system and to enhance customer service. From 2025 through 2029, the Company plans to invest approximately $7,800,000 to improve water and natural gas systems and better serve customers through improved information technology. The capital investments made to rehabilitate and expand the infrastructure of the communities the Company serves are critical to its mission of safely and reliably delivering Earth’s most essential resources.

Previous wording

Net cash flows from operating activities were $299,517 for the first three months of 2025, compared to $240,713 for the first three months of 2024. Operating cash flow increased by $58,804 primarily due to an increase in operating income in 2025 resulting from additional revenues from regulatory recoveries, and an increase in gas volumes delivered due to colder weather conditions during the first quarter of 2025 as compared to 2024.

Current wording

Net cash flows from operating activities were $571,834 for the first half of 2025, compared to $426,426 for the first half of 2024. Operating cash flow increased by $145,408 primarily due to an increase in operating income in 2025 resulting from additional revenues from regulatory recoveries, and an increase in gas volumes delivered due to colder weather conditions during the first quarter of 2025 as compared to 2024.

Previous wording

During the first three months of 2025, we incurred $270,539 of capital expenditures, obtained $706,906 of proceeds from borrowings and made $550,000 of repayments to our long-term revolving credit facility, obtained proceeds of $1,244 and repaid $1,150 of long-term subsidiary debt, and made short-term debt net repayments of $97,252. The capital expenditures were related to new and replacement water, wastewater, and natural gas mains, improvements to treatment plants, tanks, hydrants, and service lines, well and booster improvements, information technology improvements, and other enhancements and improvements. Net cash flows used in financing activities decreased by $123,633 during the first three months of 2025 as compared to 2024. The decrease is primarily due to higher financing activity cash inflow resulting from the issuance of common stock from the Company’s at-the-market equity sales program(“ATM”)and increase in borrowings from the Company’s revolving credit facility as compared to the prior period.

Current wording

During the first six months of 2025, we incurred $612,629 of capital expenditures, obtained $876,525 of proceeds from borrowings and made $1,290,000 of repayments to our long-term revolving credit facility, obtained net proceeds of $567,400 from our commercial paper program (the “CP Program”), obtained proceeds of $109,200 and repaid $17,301 of long-term subsidiary debt, and made short-term debt net repayments of $168,502. The capital expenditures were related to new and replacement water, wastewater, and natural gas mains, improvements to treatment plants, tanks, hydrants, and service lines, well and booster improvements, information technology improvements, and other enhancements and improvements. Cash inflows from financing activities were higher during the first six months of 2025 compared to 2024, primarily due to the issuance of common stock from the Company’s at-the-market equity sales program (“ATM”) and net increase in borrowings during the period.

Previous wording

On March 19, 2025, the Company established a commercial paper program (the “CP Program”) that allows it to issue, through private placement, short-term, unsecured commercial paper notes (the “CP Notes”) in an aggregate principal amount not to exceed $1,000,000. Maturities of CP Notes may vary, but cannot exceed 364 days from the date of issue. Amounts available under the Program may be borrowed, repaid, and re-borrowed from time to time. The CP Program is reinforced by the Company’s revolving credit facility, as amounts undrawn under the Company’s revolving credit facility are available to repay the CP Notes. Notes issued under the CP Program will rank equally with the Company’s present and future unsecured indebtedness. The Company intends to use the net proceeds from the sale of the CP Notes for general corporate purposes, which may include working capital, capital expenditures, water and wastewater utility acquisitions, and repaying outstanding indebtedness, including under the Company’s revolving credit facility or the revolving credit facilities of its subsidiaries. As of March 31, 2025, no CP Notes were issued and were outstanding under the CP Program.

Current wording

On March 19, 2025, the Company established the CP Program that allows it to issue, through private placement, short-term, unsecured commercial paper notes (the “CP Notes”) in an aggregate principal amount not to exceed $1,000,000. Maturities of CP Notes may vary, but cannot exceed 364 days from the date of issue. Amounts available under the CP Program may be borrowed, repaid, and re-borrowed from time to time. The CP Program is reinforced by the Company’s revolving credit facility, as amounts undrawn under the Company’s revolving credit facility are available to repay the CP Notes. Notes issued under the CP Program rank equally with the Company’s present and future unsecured indebtedness. The Company utilizes the proceeds from the sale of the CP Notes for general corporate purposes, which may include working capital, capital expenditures, water and wastewater utility acquisitions, and repaying outstanding indebtedness, including under the Company’s revolving credit facility or the revolving credit facilities of its subsidiaries. As of June 30, 2025, outstanding borrowings under the Company’s CP Program were $566,543, net of unamortized discount on issuance of $857.

Previous wording

On August 13, 2024, the Company established an ATM, under which we may issueand sell shares of our common stock up to an aggregate offering price of $1,000,000 (“2024 ATM”). During the three months ended March 31, 2025, we issued 1,627,009 shares of common stock for net proceeds of approximately $63,000 under the 2024 ATM. As of March 31, 2025, the 2024 ATM had approximately $900,000 of equity available for issuance. The Company used the net proceeds from the sales of shares through the 2024 ATM for working capital, capital expenditures, water and wastewater utility acquisitions, and repaying a portion of outstanding indebtedness. In April 2025, the Company issued 3,664,762 common shares under the 2024 ATM for a total net proceeds of approximately $145,500.

Current wording

On August 13, 2024, the Company established an ATM, under which we may issueand sell shares of our common stock up to an aggregate offering price of $1,000,000 (“2024 ATM”). During the three months ended June 30, 2025, we issued 3,664,762 shares of common stock for net proceeds of approximately $145,500 under the 2024 ATM. During the six months ended June 30, 2025, we issued 5,291,771 shares of common stock for net proceeds of approximately $208,600 under the 2024 ATM. As of June 30, 2025, the 2024 ATM had approximately $753,000 of equity available for issuance. The Company used the net proceeds from the sales of shares through the 2024 ATM for working capital, capital expenditures, water and wastewater utility acquisitions, and repaying a portion of outstanding indebtedness.

Previous wording

At March 31, 2025, we had $20,784 of cash and cash equivalents compared to $9,156 at December 31, 2024. During the first three months of 2025, we used the proceeds from long-term debt and the proceeds from issuance of common stock, as well as internally generated funds, for capital expenditures, repayment of existing indebtedness, payment of dividends, and general corporate purposes.

Current wording

At June 30, 2025, we had $25,071 of cash and cash equivalents compared to $9,156 at December 31, 2024. During the first six months of 2025, we used the proceeds from long-term debt, the proceeds from the issuance of commercial paper, and the proceeds from issuance of common stock, as well as internally generated funds, for capital expenditures, repayment of existing indebtedness, payment of dividends, and general corporate purposes.

Previous wording

At March 31, 2025 our $1,000,000 unsecured revolving credit facility, which expires in December 2027, had $417,368 available for borrowing. Additionally, at March 31, 2025, we had short-term lines of credit of $400,000, primarily used for working capital, of which $310,711 was available for borrowing. Although we believe we will be able to renew these facilities, there is no assurance that they will be renewed, or what the terms of any such renewal will be.

Current wording

At June 30, 2025, our $1,000,000 unsecured revolving credit facility, which expires in December 2027, had $420,033 available for borrowing (net of $567,400 of capacity designated for outstanding principal borrowings under our commercial paper program and $12,567 letter of credit usage). Additionally, at June 30, 2025, we had short-term lines of credit of $400,000, primarily used for working capital, of which $381,960 was available for borrowing. Although we believe we will be able to renew these facilities, there is no assurance that they will be renewed, or what the terms of any such renewal will be.

Previous wording

Consolidated operating revenues increased by $171,557 or 28.0% as compared to the same period in 2024. Revenues from our Regulated Water, Regulated Natural Gas, and Other segments increased by $20,954, $146,466, and $4,137, respectively. A detailed discussion of the factors contributing to the changes in segment revenue is included below under the section, Segment Results of Operations.

Current wording

Consolidated operating revenues increased by $80,501 or 18.5% as compared to the same period in 2024. Revenues from our Regulated Water, Regulated Natural Gas, and Other segments increased by $29,803, $49,133, and $1,565, respectively. A detailed discussion of the factors contributing to the changes in segment revenue is included below under the section, Segment Results of Operations.

Previous wording

an increase in customer assistance surcharge costs of $8,464 in our Regulated Natural Gas segment, which has an equivalent offsetting amount in revenues;

Current wording

an increase in customer assistance surcharge costs of $786 in our Regulated Natural Gas segment, which has an equivalent offsetting amount in revenues;

Previous wording

an increase in legal expense of $2,138 in our Regulated Natural Gas segment; offset by

Current wording

an increase in legal expense of $802; offset by

Previous wording

Depreciation and amortization expense increased by $9,573 or 10.7% principally due to continued capital expenditures to expand and improve our utility facilities, our acquisitions of new water and wastewater utility systems, and the implementation of new depreciation rates in our Regulated Natural Gas segment.

Current wording

Depreciation and amortization expense increased by $12,873 or 14.2% principally due to continued capital expenditures to expand and improve our utility facilities, our acquisitions of new water and wastewater utility systems, and the implementation of new depreciation rates.

Previous wording

Allowance for funds used during construction (“AFUDC”) increased by $1,151 or by 24.6% primarily due to the increase in the average balance of utility plant construction work in progress, to which AFUDC is applied, in our Regulated Water segment.

Current wording

Allowance for funds used during construction (“AFUDC”) increased by $1,798 or by 34.4% primarily due to the increase in the average balance of utility plant construction work in progress, to which AFUDC is applied, in our Regulated Water segment.

Previous wording

an increase in employee-related costs of $4,882, primarily resulting from annual merit increases, increases in overtime pay due to outages from extreme cold weather conditions during the first quarter of 2025, increases in employee medical costs, and higher performance-based compensation expense compared to prior period;

Current wording

an increase in employee-related costs of $11,012, primarily resulting from annual merit increases, increases in overtime pay due to outages from extreme cold weather conditions during the first quarter of 2025, increases in employee medical costs, and higher performance-based compensation expense compared to prior period;

Previous wording

an insurance recovery of $5,602 for a portion of expenses incurred by the Company associated with remediating an advisory for some of our Illinois water utility customers;

Current wording

an insurance recovery of $5,602 during the first quarter of 2025 for a portion of expenses incurred by the Company associated with remediating an advisory for some of our Illinois water utility customers;

Previous wording

a decrease in bad debt expense of $7,399, of which $5,889 relates to a favorable regulatory asset adjustment in our Regulated Water segment;

Current wording

a decrease in bad debt expense of $5,223, of which $5,889 relates to a favorable regulatory asset adjustment in our Regulated Water segment in the first quarter of 2025;

Previous wording

a decrease in materials and supplies in our Regulated Natural Gas segment of $2,030; and

Current wording

a decrease in materials and supplies in our Regulated Natural Gas segment of $1,561; and

Previous wording

Purchased gas increased by $54,966 or 42.4%. Purchased gas represents the cost of gas sold by the Company, which for the regulated natural gas business has a corresponding offset in revenue. The increase is the result of an increase in the average cost of gas of $27,025 and higher gas usage of $28,327 during the first quarter of 2025, offset by a decrease of $386 from the sale of our interest in three non-utility local microgrid and distributed energy projects in January 2024.

Current wording

Purchased gas increased by $77,973 or 47.7%. Purchased gas represents the cost of gas sold by the Company, which for the regulated natural gas business has a corresponding offset in revenue. The increase is the result of an increase in the average cost of gas of $45,879 and higher gas usage of $32,480 during the first half of 2025, offset by a decrease of $386 from the sale of our interest in three non-utility local microgrid and distributed energy projects in January 2024.

Previous wording

Taxes other than income taxes decreased by $2,145 or 8.6% during the three months ended March 31, 2025 as compared to the prior period largely due to a decrease in our Illinois subsidiary’s invested capital tax and lower sales and use tax and property taxes in our Regulated Natural Gas segment.

Current wording

Taxes other than income taxes decreased by 3,506 or 7.4% during the six months ended June 30, 2025 as compared to the prior period largely due to a decrease in our Illinois subsidiary’s invested capital tax and lower sales and use tax and property taxes in our Regulated Natural Gas segment.

Previous wording

Interest expense, net of interest income, increased by $9,552 or 13.2%. Interest expense, net of interest income, increased by $1,773 in our Regulated Water segment and by $784 in our Regulated Natural Gas segment. Interest expense, net of interest income, in Other relates to our corporate operations, and this increased by $6,995 primarily due to increased borrowings from the Company’s revolving credit facility during the first quarter of 2025 as compared to the prior period.

Current wording

Interest expense, net of interest income, increased by $16,291 or 11.2%. Interest expense, net of interest income, increased by $4,355 in our Regulated Water segment and by $5,748 in our Regulated Natural Gas segment. Interest expense, net of interest income, in Other relates to our corporate operations, and this increased by $6,188 primarily due to increased borrowings from the Company’s revolving credit facility and commercial paper issuances during the first half of 2025 as compared to the prior period.

Previous wording

For the three months ended March 31, 2025 and 2024, gain on sale of other assets totaled $237 and $91,625, respectively. During the first quarter of 2024, the Company completed the sale of its interest in three non-utility local microgrid and distributed energy projects and recognized a gain of $91,236 in its Regulated Natural Gas segment.

Current wording

For the six months ended June 30, 2025 and 2024, gain on sale of other assets totaled $493 and $91,828, respectively. During the first quarter of 2024, the Company completed the sale of its interest in three non-utility local microgrid and distributed energy projects and recognized a gain of $91,236 in its Regulated Natural Gas segment.

Previous wording

Our effective income tax rate was a benefit of 7.8% and 4.2% in the first quarter of 2025 and 2024, respectively. The increase in the income tax benefit is primarily attributed to the release of $22,575 of income tax reserve regulatory liability in the Regulated Water segment based on the rate order received by Aqua Pennsylvania in February 2025, while the remaining portion is refunded to customers through base rates over a two-year period. This is offset by decreases in both the state tax benefit and the amortization of the tax repair surcredit in the Regulated Natural Gas segment based on its rate order received in September 2024.

Current wording

Our effective income tax ratewas a benefit of 4.3% and 2.6% in the first six months of 2025 and 2024, respectively. The increase in income tax benefit during the first six months of 2025 is attributed to the release of $22,575 of income tax reserve regulatory liability in the Regulated Water segment based on the rate order received by Aqua Pennsylvania in February 2025, offset by the decreases in both the state tax benefit and amortization of tax repairs surcredit in the Regulated Natural Gas segment based on a rate order received in September 2024.

Previous wording

Revenues from our Regulated Water segment increased by $20,954 or 7.5% for the first quarter of 2025 as compared to the same period in 2024, mainly due to the following:

Current wording

Revenues from our Regulated Water segment increased by $29,803 or 9.9% for the second quarter of 2025 as compared to the same period in 2024, mainly due to the following:

Previous wording

additional water and wastewater revenues of $1,498 associated with a larger customer base due to utility acquisitions and organic growth; offset by

Current wording

additional water and wastewater revenues of $2,056 associated with a larger customer base due to utility acquisitions and organic growth; offset by

Previous wording

Interest expense, net of interest income, increased by $1,773 or 5.1% for the quarter primarily due to higher push down debt borrowings and operating company debt issuances for the Regulated Water segment.

Current wording

Interest expense, net of interest income, increased by $2,582 or 7.5% for the quarter primarily due to higher push down debt borrowings and operating company debt issuances for the Regulated Water segment.

Previous wording

a decrease in volume consumption of $2,994.

Current wording

a decrease in volume consumption of $5,631.

Previous wording

a decrease in bad debt expense of $6,366, of which $5,889 relates to a favorable regulatory asset adjustment; offset by

Current wording

a decrease in bad debt expense of $6,022, of which $5,889 relates to a favorable regulatory asset adjustment during the first quarter of 2025.

Previous wording

Depreciation and amortization increased by $3,435 or 6.0% primarily due to continued capital investment to expand and improve our utility facilities and our acquisitions of new utility systems.

Current wording

Depreciation and amortization increased by $10,541 or 9.2% primarily due to continued capital investment to expand and improve our utility facilities, a change in depreciation rates, and our acquisitions of new utility systems.

Previous wording

Our effective income tax rate for our Regulated Water Segment was a benefit of 4.4% in the first quarter of 2025, compared to an expense of 24.6% in the first quarter of 2024. The decrease in the effective tax rate is attributed to the release of $22,575 of income tax reserve regulatory liability based on the rate order received by Aqua Pennsylvania in February 2025, while the remaining portion is refunded to customers through base rates over a two-year period.

Current wording

Our effective income tax rate for our Regulated Water Segment was an expense of 6.0% and 18.9% in the first six months of 2025 and 2024, respectively. The decrease in the effective tax rate is largely attributed to the release of $22,575 of income tax reserve regulatory liability based on the rate order received by Aqua Pennsylvania in February 2025.

Previous wording

an increase in purchased gas costs of $51,417; refer to purchased gas costs discussion below for further information;

Current wording

an increase in purchased gas costs of $20,852; refer to purchased gas costs discussion below for further information;

Previous wording

an increase of $44,679 due to higher rates and other surcharges;

Current wording

an increase of $12,885 due to higher rates and other surcharges;

Previous wording

impact of higher volumes delivered of $29,521 due to colder weather conditions during the first quarter of 2025 as compared to 2024;

Current wording

impact of higher volumes delivered of $5,179 due to colder weather conditions during the second quarter of 2025 as compared to 2024;

Previous wording

a weather normalization adjustment of $1,989 in Peoples Pennsylvania, which had the effect of decreasing revenues for the quarter ended March 31, 2025.

Current wording

a weather normalization adjustment of $4,551 in Pennsylvania, which had the effect of increasing revenues for the quarter ended June 30, 2025.

Previous wording

Operations and maintenance expense for the three months ended March 31, 2025 increased by $9,758 or 21.3% primarily due to the following:

Current wording

Operations and maintenance expense for the three months ended June 30, 2025 increased by $77 or 0.2% primarily due to the following:

Previous wording

an increase in labor and employee benefits of $2,702;

Current wording

an increase in labor and employee benefits of $1,801;

Previous wording

Our Regulated Natural Gas segment is affected by the cost of natural gas, which is passed through to customers using a purchased gas adjustment clause and includes commodity price, transportation and storage costs. These costs are reflected in the condensed consolidated statement of operations and comprehensive income as purchased gas expenses. Fluctuations in the cost of purchased gas impact operating revenues on a dollar-for-dollar basis. Purchased gas increased by $51,417 or 41.0% due to an increase in the average cost of gas of $26,868 and higher gas usage of $24,935 due to colder weather conditions during the first quarter of 2025, offset by a decrease of $386 from the sale of our interest in three non-utility local microgrid and distributed energy projects in January 2024. During the quarter ended March 31, 2025, we experienced 2,730 actual heating degree days (HDDs), which was colder by 20% than prior year’s 2,280 HDDs for Pittsburgh, Pennsylvania, which we use as a proxy for our western Pennsylvania service territory. HDDs are used in the natural gas industry to measure the relative coldness of weather and to estimate the demand for natural gas.

Current wording

Our Regulated Natural Gas segment is affected by the cost of natural gas, which is passed through to customers using a purchased gas adjustment clause and includes commodity price, transportation and storage costs. These costs are reflected in the condensed consolidated statement of operations and comprehensive income as purchased gas expenses. Fluctuations in the cost of purchased gas impact operating revenues on a dollar-for-dollar basis. Purchased gas increased by $20,852 or 63.8% due to an increase in the average cost of gas of $18,988 and higher gas usage of $1,864 due to colder weather conditions during the second quarter of 2025. During the quarter ended June 30, 2025, we experienced 514 actual heating degree days (HDDs), which was colder by 53% than prior year’s 336 HDDs for Pittsburgh, Pennsylvania, which we use as a proxy for our western Pennsylvania service territory. HDDs are used in the natural gas industry to measure the relative coldness of weather and to estimate the demand for natural gas.

Previous wording

Depreciation and amortization increased by $5,928 or 18.3% primarily due to continued capital investment, and the implementation of new depreciation rates following a recently completed rate case.

Current wording

Depreciation and amortization increased by $5,667 or 17.4% primarily due to continued capital investment, and the implementation of new depreciation rates following a recently completed rate case.