Item 8.01 Other Events.
As previously reported, on March 14, 2022 Corning Natural Gas Holding
Corporation (the "Company") and its subsidiary Corning Natural Gas Corporation
("Corning Gas"), ACP Crotona Corp. and its subsidiary ACP Crotona Merger Sub
Corp., companies affiliated with Argo Infrastructure Partners, LP (collectively,
"Argo"), and the staff of the New York State Public Service Commission (the
"NYPSC") filed a joint proposal with the NYPSC. The joint proposal related to:
(1) Corning Gas' July 16, 2021 rate case (Case 21-G-0394) seeking a three-year
rate plan; and (2) the Company's April 30, 2021 verified joint petition (Case
21-G-0260) seeking approval, pursuant to Section 70 of the New York Public
Service Law, for the proposed merger of ACP Crotona Merger Sub Corp. into the
Company with Company as the surviving corporation and wholly-owned subsidiary of
ACP Crotona Corp. (the "merger"). On June 16, 2022, the NYPSC issued an order
adopting the terms of the joint proposal, establishing the rate plan and
approving the merger (the "order").
The order establishes a three-year rate plan with levelized increases of:
(1) $1.7 million for the year ending June 30, 2023; (2) $1.8 million for the
year ending June 30, 2024; and (3) $1.7 million for the year ending June 30,
2025. The cumulative impact of the rate increases is approximately $5.2 million
compared to the rates that are in effect today. Under the order, Corning Gas'
earned return on equity ("ROE") would be 9.25%. An earnings sharing mechanism
provides for sharing between Corning Gas shareholders and customers of the ROE
above certain levels. Under the earnings sharing mechanism, Corning Gas is
permitted to retain all earnings up to and including a 9.75% ROE level, 50% of
earnings above 9.75% up to and including 10.25%, 25% of earnings above 10.25% up
to and including 10.75%, and 10.0% of earnings above 10.75%. The order also
includes customary operating, customer service, safety, and other metrics that
Corning Gas must meet.
The order also approved the proposed merger with Argo. Pursuant to the order,
among other matters Argo agreed to: (1) maintain the board governance structure
of the Company and Corning Gas, with at least one local independent board
member; (2) keep Corning Gas' headquarters in the company's service area for at
least five years; (3) not pass any costs of the merger through to the customers
of Corning Gas; and (4) maintain a minimum common equity ratio (measured using a
trailing thirteen-month average) of no less than 300 basis points below Corning
Gas' current common equity ratio used to set rates. The Company and Argo plan to
complete the merger on or about July 6, 2022.
This Current Report on Form 8-K provides a summary only of the order. The
Company encourages interested parties to read the full text of the order and
other filings, which are available on the NYPSC's website at www.DPS.NY.gov.
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Safe Harbor Regarding Forward-Looking Statements
The Company is including the following cautionary statement in this release to
make applicable, and to take advantage of, the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, Corning Natural Gas Holding Corporation.
Forward-looking statements are all statements other than statements of
historical fact, including, without limitation, those that are identified by the
use of the words "anticipates," "estimates," "expects" "intends," "plans,"
"predicts," "believes," "may," "will" and similar expressions. Such statements
are inherently subject to a variety of risks and uncertainties that could cause
actual results to differ materially from those expressed. Factors that may
affect forward-looking statements and the Company's business generally include,
but are not limited to the Company's ability to complete the proposed merger;
any event, change or circumstance that might give rise to the termination of the
merger agreement; the effect of the announcement of the proposed transaction on
the Company's relationships with its customers, operating results and business
generally; the risk that the proposed transaction will not be consummated in a
timely manner; the ability of the Company to obtain regulatory approval of the
proposed transaction; the Company's continued ability to make dividend payments;
the Company's ability to implement its business plan, grow earnings and improve
returns on investment; fluctuating energy commodity prices; the possibility that
regulators may not permit the Company to pass through all of its increased costs
to its customers; changes in the utility regulatory environment; wholesale and
retail competition; the Company's ability to satisfy its debt obligations,
including compliance with financial covenants; weather conditions; litigation
risks; and various other matters, many of which are beyond the Company's
control; the risk factors and cautionary statements made in the Company's public
filings with the Securities and Exchange Commission (the "SEC"); and other
factors that the Company is currently unable to identify or quantify, but may
exist in the future. The Company expressly undertakes no obligation to update or
revise any forward-looking statement contained herein to reflect any change in
the Company's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based. Additional
factors that may affect the future results of the Company are set forth in its
filings with the SEC, including its Annual Report on Form 10-K for the fiscal
year ended September 30, 2021 and recent Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed with the SEC, which are available on the SEC's
website at www.SEC.gov. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date thereof.
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