FORM 10-K
53
MDU RESOURCES G ROUP, INC.
Partially offsetting the increase in earnings were:
· Decreased sales for resale margins due to lower average rates of 15 percent and decreased volumes of 21 percent, largely due
to plant availability
· Higher operation and maintenance expense of $1.7 million (after tax), primarily the result of scheduled maintenance outages at electric
generating stations
Natural Gas Distribution
Years ended December 31,
2007
2006
2005
(Dollars in millions, where applicable)
Operating revenues
$533.0
$352.0
$384.2
Operating expenses:
Purchased natural gas sold
372.2
259.5
315.4
Operation and maintenance
88.5
68.4
46.0
Depreciation, depletion and amortization
19.0
9.8
9.6
Taxes, other than income
20.4
5.6
5.8
500.1
343.3
376.8
Operating income
32.9
8.7
7.4
Earnings
$ 14.0
$
5.7
$
3.5
Volumes (MMdk):
Sales
53.0
34.5
36.2
Transportation
54.7
14.1
14.6
Total throughput
107.7
48.6
50.8
Degree days (% of normal)*
Montana-Dakota
92.9%
86.7%
90.9%
Cascade
101.7%
--
--
Average cost of natural gas, including transportation, per dk**
Montana-Dakota
$ 6.00
$ 7.51
$ 8.71
Cascade
$ 7.75
$
--
$
--
* Degree days are a measure of the daily temperature-related demand for energy for heating.
** Regulated natural gas sales only.
Note: Cascade was acquired on July 2, 2007. For further information, see Item 8 -- Note 2.
2007 compared to 2006 The natural gas distribution business experienced an increase in earnings of $8.3 million (147 percent) compared
to the prior year due to:
· Earnings of $5.8 million, including a third quarter seasonal loss, at Cascade which was acquired on July 2, 2007
· Increased nonregulated energy-related services of $1.3 million (after tax)
· Decreased operation and maintenance expense, excluding Cascade, of $800,000 (after tax), including the absence in 2007 of the 2006
early retirement program costs
· Increased retail sales volumes resulting from 7 percent colder weather than last year
2006 compared to 2005 The natural gas distribution business experienced an increase in earnings of $2.2 million (62 percent) compared
to the prior year due to:
· Increased nonregulated earnings of $1.7 million (after tax) from energy-related services
· Lower income taxes of $900,000
Partially offsetting this increase were higher payroll-related expenses of $900,000 (after tax), largely due to an early retirement program.
The pass-through of lower natural gas prices is reflected in the decrease in both sales revenues and purchased natural gas sold. The
decrease in sales revenues was partially offset by revenues from nonregulated energy-related services. Nonregulated energy-related
services also contributed to the operation and maintenance expense increase.
