Good day, welcome to the Spire third quarter 2018 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Scott Dudley, Managing Director, Investor Relations. Please go ahead.
Good afternoon, welcome to our third quarter earnings call. We issued our earnings news release this morning, you may access it on our website at spireenergy.com under Newsroom. There's also a slide presentation that accompanies our webcast today, you may download it from either the webcast site or from our website under Investors and then Events and Presentations. Presenting on our call today are Suzanne Sitherwood, President and CEO, Steve Rasche, Executive Vice President and CFO. Also in the room with us today are Steve Lindsey, Executive Vice President and Chief Operating Officer of Distribution Operations, Mike Geiselhart, Senior Vice President of Strategy and Corporate Development. Before we begin, let me cover our safe harbor statement and our use of non-GAAP earnings measures. Today's call, including responses to questions, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Although our forward-looking statements are based on reasonable assumptions, there are various uncertainties and risk factors described in our quarterly and annual filings with the SEC that may cause future performance or results to be different than those anticipated. In our comments today, we will be discussing net economic earnings and contribution margin, which are non-GAAP measures used by management when evaluating our performance and results of operations. Explanations and reconciliations of these non-GAAP measures to their GAAP counterparts are contained in our news release. With that, I will turn the call over to Suzanne.
Thank you, Scott, a warm welcome to all who are joining us this afternoon. I am pleased to have yet another opportunity to share with you how we, as Spire, are continuing to live our mission and deliver on our strategic priorities. Spire continues to be transformed by our pursuit of growth through organic initiatives, investing in infrastructure, acquiring and integrating, and innovation and technology. We are moving forward with confidence, as evidenced by our posting of yet another solid quarter. Our results reflect further improvements in our operating performance and building on momentum for the first half of the year. Our third quarter net economic earnings came in at $0.31 per share, in line with our reset expectations for the year. Our gas utility segment turned in another solid performance. Meanwhile, Spire Marketing continued to deliver strong results from favorable market conditions.
Our ability to hit our earnings target reflects execution on our strategic priorities and more specifically, organic growth and investment in infrastructure. At the same time, we continue to advance our non-utility business, including Spire Marketing, Spire Storage, and the Spire STL Pipeline. Based on our year-to-date performance, we reaffirm our fiscal year 2018 earnings guidance range of $3.65 to $3.75 per share and our capital expenditure forecast of $500 million. Let me turn to our gas utility business and provide some highlights and updates. As I already stated, we continue to execute well on our two main strategic growth priorities, investing in infrastructure and pursuing organic growth. As Steve Rasche will cover in more detail, we are on track with our capital spend target, which as you know is primarily focused on infrastructure upgrades for our gas utilities.
Our spending on new business was $59 million year-to-date, and that's up by more than one-third compared to last year. We also continue to see solid results from our organic growth efforts, showing modest customer growth across our utility footprint. We achieved year-over-year growth in new meters for the first nine months of our fiscal year of 5.7%, which is impressive given that we had record growth in this area last year. On our last call, Steve Lindsey described the improvements we've made in our operating performance in the first half of the year. We are continuing to see gains across the board, including in overall system performance and safety. We continue to raise the bar on customer service by leveraging technology and innovation. Inherent in our utility business is ongoing regulatory engagement. I'll turn to that update now.
As most of you know, in Missouri, we have a rider called Infrastructure System Replacement Surcharge, or ISRS, that allows us more timely recovery of our spend on infrastructure upgrades to replace older pipe in our system. We have recently filed a request to recover our infrastructure upgrade spend through June 2018. This spend was not included in rate base in the recent rate cases. We are seeking an annualized revenue increase of $11.9 million for our Missouri utilities. We recently filed in Missouri for new financing authority covering the next three fiscal years. We are seeking authorization to issue $500 million, which we believe is the appropriate amount to meet our needs for 2019 through 2021. With regard to our recently completed Missouri rate cases, we have filed legal appeals on certain cost disallowances after our request for rehearing by the Missouri Public Service Commission was denied.
It is important to gain clarity on these issues for future rate proceedings, and we believe that we have a strong position. Our plan going forward is not predicated on the outcome. In Alabama, the parameters used to set Alabama's rates under the rate stabilization and equalization mechanism, or RSE, are up for review, which periodically occurs. The Alabama Commission has the opportunity, but not the obligation, to adjust the RSE parameters at the end of each term. I'd like to turn to our non-utility businesses. As I noted last quarter, we are taking steps to advance those businesses, Spire Marketing, Spire Storage, and our Spire STL Pipeline. We are positioning Spire Marketing for continued growth and success. Reflecting our efforts to date, Spire Marketing has been able to take advantage of favorable market conditions to deliver strong year-to-date earnings.
As planned, we are transitioning Spire Marketing to Houston with its own office space, and we have brought to the team a seasoned leader who has already grown and strengthened the business. Meanwhile, the team is working to build new customer relationships and expand its geographic reach. We are also hard at work to advance our Spire Storage business. As you know, we acquired a majority interest in a large storage facility in Wyoming last December, and this quarter we acquired a smaller adjacent facility. Efforts are underway to integrate the two facilities while making investments to improve their operations and expand the capacity. We see numerous opportunities for Spire Storage to serve various geographic regions and customer groups, including utilities, power generators, pipelines, and marketers.
With respect to Spire STL Pipeline, we are ready to move forward with our project once we receive a certificate of public convenience and necessity from the FERC. As soon as the FERC concludes its final steps in their administrative review process, we will complete the necessary land acquisitions and other pre-construction activities. I'd like to pass the call to Steve Rasche.
Thanks, Suzanne, and good afternoon, everyone. We posted solid financial results for the third quarter, and let's take a closer look starting here on slide eight. net economic earnings were $15 million, or $0.31 per share, as continuing strong performance in our gas marketing business was offset by lower gas utility earnings and higher corporate costs, as expected. Our per-share results also reflect our successful equity offering in May, which increased our share count by nearly 5%. Looking at the key drivers of our performance, beginning on the next slide. Total operating revenues of $351 million were 8% higher than last year on a combination of higher demand and utility commodity cost.
It's hard to remember as we deal with the record summer heat, April was the coldest in two decades in the continental United States, which helped drive demand at our gas utilities and supported strong market conditions overall. contribution margin was also up by $13 million, or 6%. Looking at the two business units, gas utilities margins were down 2% from last year, reflecting several trends. On the positive side, we saw demand during the quarter due to cooler weather, pushing margins up $3.1 million. We also continue to see modest customer growth. These positive trends were offset by two utility rate changes. In Missouri, we now have a new rate design, effective April 19, that has a higher volumetric component and weather normalization.
This design reduces the risk of recovery, but also pushes more of our margin to the winter heating season and out of the summer quarters, which includes this quarter. While the impact balances out over a 12-month cycle, it will be a headwind in the back half of our fiscal 2018, as we discussed last quarter. The second headwind was a customer rate reduction in Alabama due to tax reform that lowered margins by roughly $2 million. Gas marketing margins were up by $16.1 million, with $13.7 million of that increase due to fair value accounting adjustments. Excluding those adjustments, margins were up by $2.4 million due to improved market conditions and favorable basis differential due in part to cooler weather. That provided the opportunity for increased trading value and storage optimization. Turning to slide 10, let's take a look at expenses.
Utility fuel costs were up nearly $31 million, and taxes other than income were up by $3 million, both reflecting higher demand and volumes. Other operations and maintenance expenses were up about $5 million, with roughly a $4 million increase in pension and amortization costs from the Missouri rate cases, as well as higher demand-driven bad debt expense. Depreciation and amortization was higher, reflecting our ramp-up in capital investment. That includes a little over $19 million of derivative gains that were marked to market. Excluding that fair value adjustment, expenses were relatively flat year-over-year. Finally, interest expense was higher, reflecting the long-term debt issued over the last 12 months at both Spire Missouri and Spire Alabama, as well as higher short-term rates that were offset in part by lower average short-term borrowing levels. This year.
Our year-over-year performance is highlighted here on slide 11, shows our economic earnings up by $32 million or 18%, reflecting the benefits of the return to normal weather and improved market conditions, which benefited our utilities and gas marketing. Other corporate expenses were up by $3 million in higher after-tax interest and other corporate costs. We continue to grow our cash flow and maintain a strong financial position with year-to-date adjusted EBITDA up 6% to $467 million. We also maintain adequate utility liquidity provided by our credit facility and the commercial paper program. Our long-term capitalization improved at 51.5% equity this quarter, up 280 basis points from our fiscal year-end. This is due in part to our successful equity offering that closed on May 10, when we issued 2.3 million shares with net proceeds of $153 million.
I also wanted to take this opportunity to welcome Adam Woodard, who joins us as the treasurer, replacing Lynn Rawlings, who retired in April. We thank Lynn for her years of service and look forward to taking advantage of Adam's extensive public and corporate finance experience in the coming years. Moving to slide 13. Our year-to-date capital spend of $334 million is up 12% from last year, reflecting higher utility infrastructure upgrades of $188 million, up 5% from last year, and higher new business investment and meter sets, as Suzanne mentioned a few minutes ago. Our progress this year reflects our renewed focus on organic growth and infrastructure investment. Our CapEx forecast for fiscal 2018 remains $500 million and includes a small shift in forecasted spending on Spire STL Pipeline between 2018 and 2019, as well as higher utility spend for the balance of this year.
As a reminder, we anticipate over 85% of our capital spend will be recovered with minimal regulatory lag or reflected in earnings. Aside from investing for growth, a portion of our growing cash flow supports our dividend, as shown here on the next slide. Our board just declared a quarterly dividend of 56 and a quarter cents per share, payable on October 2nd. At Spire, we have a long history of rewarding our shareholders with prudent and consistent dividends. In fact, we have paid a dividend each year for the last 73 years and have increased our dividend for the last 15 years running. Let's look at our outlook. We are on track to meet our 2018 earnings guidance of $3.65 to $3.75 per share.
With a reminder that our earnings cadence has changed due to the new Missouri rate design, we expect to increase our fourth quarter loss materially from prior years. In addition, we are confident that we can deliver long-term net economic growth per share of 4%-7%, with a base year of run rate 2018 earnings that removes roughly $0.17 of Spire Marketing performance tied to market conditions that we do not expect to recur next year. Our growth is supported by strong rate base and organic growth across our utilities, as well as growth in our non-utility businesses. Our long-term growth is also supported by our five-year CapEx forecast, as shown here on slide 16. We anticipate total investment of $2.5 billion through 2022, supported by utility upgrade programs of up to 20 years in length with minimal regulatory lag and well-diversified across our entire footprint.
In summary, we continue to grow and invest in our gas utilities with more regulatory certainty and are advancing our non-regulated and non-utility businesses. We strengthened our financial position with a well-timed equity offering, we continue to work to deliver on our long-term growth objectives. With that, let me turn it back to you, Suzanne.
Thank you, Steve. I'm pleased with the momentum of our strong operating and financial performance across all Spire businesses as we have moved forward with confidence. I'm forever grateful for the hard work and dedication of our 3,300 employees who make it happen. Together, we continue to live our mission and deliver on our strategic growth priorities. While we grow our utilities, we're expanding and strengthening our existing non-utility businesses, Spire Marketing and Spire Storage. We're ready to move forward with our pipeline project once we receive approval from the FERC. As always, we continue to bring people and energy together in ways that enrich the lives of those who we serve and add value for our shareholders. Thank you again for joining us today, I look forward to updating you again soon. We're ready to take your questions.
We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Michael Weinstein of Credit Suisse. Please go ahead.
Hi, guys. How are you doing?
Hey.
Morning.
Hey.
Hey, Michael.
Hi.
At this point, it's August 2nd, and we haven't heard from FERC on STL Pipeline, right?
That would be correct, yes.
Okay.
In terms of the approval, yes.
What's the latest that you need to hear from them in order to start construction this year?
There's a series of events- I'll turn it over to Mike, and he can kick through the construction aspect. What's the latest? Right now, the FERC has a formal agenda every month, with the exception of August. They have notational process whereby basically what I call it is sort of non-formal. The commissioners aren't at the bench, if you will, and they decide matters every week. We fall into that category, so we are awaiting a FERC decision. Hopefully that's soon, but if not, and as we've said in our opening remarks, we're prepared to move forward whenever the FERC commission makes that decision. Again, nothing about our long-term plan changes. Mike, if you would sort of kick through how the team has worked through that and how they're thinking about that.
Yes, good afternoon. We've been looking at scenarios for a while as this process has gone on a bit. Now at this point, I think where we are in response to your question is, we will need to see when the certificate is issued. There's a process by which we need to accept that certificate, and then we also need to file a construction plan, and get that approved before we get a notice to proceed and actually begin construction on a project, which we need to enter the right of way for the project. That entire process will certainly take over a month from the time that we receive the certificate. Given the timing and where we are now, we're still involved in evaluating what the right schedule will be moving forward. There's a number of considerations involved in that.
There's certainly the risk and the cost of winter construction is one consideration. Also, all other things being equal, we'd like to get the project and service sooner rather than later. We also want to coordinate with the contract renewal process that we have ongoing with MRT. There's really a number of considerations that we're still juggling. We're going to wait and see when we get the order and then finish off that analysis before we formally revise our schedule and our in-service date. There may be some change in project costs, but at this point, we expect that to be in a pretty narrow range.
The $60 million that's in the 2018 CapEx forecast for pipelines and storage, what does that assume in terms of when you start construction on STL?
Michael, this is Steve. It's our best estimate when we look at a range of outcomes and what we know we need to continue to work on. Yeah, as you can imagine, and Mike mentioned, we have a number of different scenarios. We're obviously very confident in not only getting the certificate but getting started. $60 million is our best estimate. Once we do get the certificate, and as Mike mentioned, we finalize our evaluation of the construction timeline and everything else that's associated with that. To the extent that number needs to be updated, we'll update the market.
Okay, great. Just one last question. Just the fourth quarter loss is a seasonal effect only from the rate case, right? There's no ongoing annual effect.
There's-
Yeah.
I'm not sure I completely understand your question. We have traditionally in past years, if I look at, say, the last three fiscal years of earnings results, I think we've lost about $0.25 a share.
Yeah.
Give or take $0.01 or $0.02. That's kind of the normal cadence. The addition, and we've guided, if you do the math, probably about double that amount, given our results for this quarter. Most of that is due to the change in the rate structure in Missouri.
I see. Basically, you would have an offset in the second or third quarters. Is that fair to say?
In a normal year, we would have an offset in the late first quarter and in the second quarter, and maybe a little bit in the third quarter. In fact, we did see a little bit of that in the month of April, given the cooler weather that we had. It's really concentrated in the winter season, which for us generally begins in November and runs through the early part of March under a normal weather condition.
Got you. Okay. Thank you.
Mm-hmm. Thank you.
The next question comes from Dennis Coleman of Bank of America. Please go ahead.
Yes. Thanks. Good afternoon, everyone.
Good afternoon.
Good afternoon.
If I can pick up on the STL issue again, just a few more details there. There have been some changes at the FERC. I think the commissioner now is retired, and so we're down to four. I could be wrong on that, but I believe it was end of July, his retirement. Any potential impacts there or read-through that you guys are looking at, concerned about maybe is too strong of a word, but any impacts?
Dennis, I think you're referencing Commissioner Powelson, his announced date for departing from the FERC is 15th or 16th.
Oh, okay.
Yeah. He's available to vote between now and then. That's what when I was leaning into the notational schedule that the commission manages from week to week with the staff at the commission. There's opportunity for him to engage in that decision-making until then. There's no sort of public notice, if you will, of those agendas nor those outcome. There's a cadence that we can look at over the years as to how that occurs. They do happen every week. While there's no explicit rulemaking. Historically, the commissioners have not had a formal agenda in August, which is why I put that out there in my earlier response. There is a formal agenda that is posted that the commissioners decide on every month, with the exception of August. Again, it's not written into any of their rulemakings or codified in any kind of way.
It's just been practice, just general practice, if you will, with FERC. That being said, as long as Commissioner Powelson's there's opportunity from decision-making from the full bench of five commissioners. Clearly, those who track the commission have recognized that, I would say, more recent decisions on procedure and administrative process have been voted along party lines. We have now three Republican commissioners and two Democratic commissioners. Post his departure, that leaves four, which if you just look at some of the precedent decisions, one could sort of lean into what has occurred and wonder if it would be a two-to-two vote. In that instance, what would need to happen is President Trump would need to name a replacement, the Senate would need to confirm, and obviously, I can't predict how long that would take.
All that being said, as Mike Geiselhart was speaking to, we've ran all these scenarios, pluses and minuses, and the reality is our business is diverse enough with our non-utility work and our investment in infrastructure and the organic growth that we're experiencing, because we've been working hard at that for the last four years, that nothing about our long-term growth rate changes that Steve and I have talked to you about. It's just a matter of timing, and we're obviously not going to get ahead of the FERC commission.
Right. People are watching the FERC quite closely these days, for sure. Obviously, there's been some action on Enable and some implications there for MLPs. Part of that was you also re-upped on MRT for another year. Was that expected? I don't think STL would've really been done, so I'm guessing maybe that was expected that you would carry that over for another year.
From our gas utility perspective-
Yeah
specifically into the eastern part of our state, the preponderance of the supply is delivered through the MRT system. Yes, we went through an evaluation phase and looked at what was needed for this region, not just today, but prospectively in terms of the amount of growth that we expect on the system and also the way that the region here has sprawled, not unlike other urban centers that have changed over the last 150 years, and came back with the best array that we believe best serves this community on a long-term basis, and which included the Spire STL Pipeline. We, the utility, the gas company, signed those contracts to extend that capacity. I believe, as a result of that, when MRT filed its case, it said that those billing determinants weren't included, but indeed they should have been.
The FERC has now asked MRT to refile its case and update those billing determinants and other factors in the case, including the testimony.
Right.
That is my understanding.
Yep. No, that's my understanding as well. Changing just a little bit, any details you can share about the additional storage in Wyoming and how that furthers your plans there, or what exactly the implications are?
Yeah. I'll flip it to Mike because he's into that information every day because he owns the project. I'll connect it to some of what I've spoken with everyone on the phone about before. When we look at the non-utility work, we're looking at either upstream for storage or pipeline. What that means in terms of serving customers, much like our utility companies are serving customers, this allows us, just like Spire Marketing, to serve customers in a very sophisticated way where there's a need outside the utility company, and storage meets that requirement. Between the five interstate pipelines that are sitting in that region and our desire to serve power generation, utility customers, other pipelines, it's really a sweet spot for us. I'll pass it to Mike and let him give you a little bit more detail.
The field that we acquired is very complementary to the asset that we acquired in December of last year. It has some very nice complementary attributes. It's connected to some of the same pipelines, but we'll be able to be directly interconnected with our existing storage asset and give us a fair degree of flexibility on where to do both injection and withdrawal. It's got some really nice characteristics with regard to the geology and in terms of the operating costs associated with injection and especially with withdrawal. We think it's going to really fundamentally improve the economics of the asset that we bought in December. We think the asset in December would've been great on its own, but it will be even better in combination with this asset over time.
Is it the same kind of size? Any details you can share in terms of what you've added storage-wise?
It's not currently certificated for the same size, but the formation itself, we believe, has comparable size capability over time. There would need to be additional geologic work done, which we're actually in the process of doing, then you'd need to go through a certification process at FERC to get the capacity upsized, if you will, to something more comparable to the Ryckman facility that we acquired in December. Yes, we think it has comparable size capability, as I mentioned earlier, it really has some unique attributes and is really potentially better from an injection and withdrawal standpoint.
That's great. Thanks for that. That's all I have.
Thanks, Dennis.
Thanks, Dennis.
The next question comes from Selman Akyol of Stifel. Please go ahead.
Thank you. Good afternoon.
Hi. Good afternoon.
Going back to, you guys talked about record growth, 5.7% in terms of meter adds. Can you break that out a little bit by geography?
Sure. Good afternoon. This is Steve Lindsey, it's very nice because as we think about our infrastructure spend, it's relatively spread out across our three major utilities on the east side, west side of Missouri and in Alabama. A lot of our new growth is along the same lines. From the new business, CapEx that we talked about, it spread pretty evenly as well as the new meters. Now there's fluctuations depending upon economic development opportunities and things like that. The thing that I do want to note is that the growth that we're talking about this year, and it's year-to-date, is actually coming off of our record year last year, where we had over 10,000, this is on an annual basis, over 10,000 new meters. Again, pretty evenly spread across the three.
We have different fluctuations from quarter to quarter, overall, we're seeing pretty steady growth in all of our jurisdictions.
Okay. I guess what really caught my ear there, it sounds like Missouri is growing faster than it used to?
Definitely. If you look back three or four years ago, at least from a gas customer perspective, we are. I think some of that, and we see a strong surge on the western side of the state. Some of the things we've done is we're expanding into underserved areas. We're making some inroads into the multi-family area that we hadn't seen in the past. We're just working with builders and developers to try to help them as they're thinking about their growth projects. I think if you look relative to just really the last four to five years, we are seeing some changes. We're seeing some downtown redevelopment opportunities and things like that. Again, I think it's not dramatic relative to what we'd like for it to be over the next few years, but it is definitely an uptrend.
Nice.
I want to add to the work that Steve and the team have done there, and I've mentioned to you before things like we've implemented Salesforce.com. We've disaggregated the markets and looked at discrete areas and focused on what the needs of those particular markets, like Steve mentioned, multi-family. We're hydrating our processes. We've got technology in place like builder platform where builders can go to, those kinds of things. While the economy's picking up, we've also, the last four years, worked in a very diligent way to do, no matter what the market conditions are, to do our very best to get meters set and also to retain meters for that matter.
Yeah. One last piece on that is, as you mentioned, Missouri specifically, I do think we're starting to see an emphasis on economic development in general. Rob Dixon and his team have really tried to take a focus on where are we missing some opportunities as a state and what can we do. I think we're seeing some benefits from that as well.
Very nice. Seems like your blocking and tackling is really paying off.
Updated. Yeah.
As we think about your CapEx budget that you have out there, 2020 going through 2022. Pipeline storage seems to fall off pretty dramatically. Should we expect that to have an upward bias as time goes by?
Yeah. Selman, this is Steve, I can answer that. Yeah. Clearly, what we include in our long-term capital forecast are the things that we believe are actionable, that we've talked to the market about. As you know, we have a funnel full of potential opportunities, and as those become more mature, you would expect us to add those to the capital plan. I think we're fairly solid on the utility spend, and you can see if you've been following us over the last number of years, we've even found a way to hit the accelerator a little bit faster across utilities, and that's an area we continue to look at. We have to balance that against the capital needs and the impact on our customers. There's always a chance for us to modify that.
I take on your comment that as we identify new projects or opportunities, that clearly would be an adder to the $2.5 billion that we're currently operating on.
All right. Thank you very much.
Thank you.
Once again, if you have a question, please press star then one on a touch-tone phone. The next question comes from Christopher Turner of J.P. Morgan. Please go ahead.
Good afternoon, guys.
Hey.
Since the year started, you guys have purchased the Wyoming Storage, it looks like added a little bit to that purchase, then had a very successful early part of the year with Spire Marketing, it looks like now you're investing in maybe expanding that business and that potential a bit. Could you speak to that? It does seem to be a bit of a shift from the prior strategy, which was utility-focused for the company.
Yeah, I wouldn't say it's a shift at all. From a Spire Marketing perspective, since Steve and I've been working together for 6 years, we've talked about how important Spire Marketing is to our business, that it was really an outshoot of our gas company business. What I mean by that is providing services, like I mentioned earlier, to more highly sophisticated customers inside our geographic utility region and out. There's a need in the marketplace for those utility-like services. It's a physical transaction. We ran a business case to see if it made sense for us to even grow into other geographic areas. We decided it did make sense because we have the talents, and we've invested in the IT systems to do that. That is what we've done.
Of course, attracting and retaining talent for this business, the best place to be is in Houston. We have enough people and enough critical mass now where it made sense to move it. I just really see it, again, as organic growth around Spire Marketing, not really an expansion. The business model is the same. We're improving the systems. We're bringing in other talent. Mike, it's Mike's day here. Mike also leads Spire Marketing, and he may want to add something that I haven't mentioned, but that's the way that we generally see it.
Yeah. We spent a lot of time putting together a very detailed bottom-up expansion plan for the business, which we had multiple meetings on internally and with our board over the last couple of years and felt very confident that we could geographically extend the current model, which really had been growing pretty nicely, even prior to that. If you go back and look at our volumes, they've grown very consistently and very strongly for probably the last 4-5 years. We're just continuing to build on that. It takes more expertise, more talent to do that. We've generally found it a little challenging to land that talent here in St. Louis, so we just recognized that we really want to kind of continue to move that business forward.
We needed to add several key people, especially on the origination and trading side, and that will be much easier to do that in Houston, and that's actually already bearing fruit and underway.
Yeah. Chris, I would add a couple things. One, you would expect us to want to drive all of our businesses to grow. That's how we're wired. We expect every business that we're investing in to grow. The things you're seeing us do on the storage side and on marketing and also pipeline, are really focused on driving growth, because that's how we create value for our shareholders. Also got to keep it in perspective. The non-utility business was 3% of our business last year from an earnings perspective. It might grow to 10% this year, but that's because Spire Marketing is having one of those home run years, and it's great when the market gives you the opportunity to do that.
The most important fact is we are still predominantly a natural gas utility, even given the outsized performance in Spire Marketing this year, which obviously we don't expect to recur because we can't predict where the market conditions are going to be. We stay focused on what we do best, which is run gas utilities, and then we use our expertise to find other opportunities to create value.
Got it. On the gas storage transaction in and of itself, I think your latest message on that was that you were going to exclude some impact this year, but you expected it, I think, to be modestly accretive beginning next fiscal year. Does that still stand or has that improved now because of this smaller secondary purchase that you made?
Our guidance still stands on what we expect next year. Just to keep it all in perspective, we spent an order of magnitude, $25 million of consideration to invest in the first storage facility. The total all-in price of the second facility was less than half of that, and it was already on our radar screen and was part of our plan as we started down the path because they are literally within three miles of each other. Having those two operate as ultimately one facility has been our plan all along, and it's great that we're able to execute and actually keep moving down the path on the strategy that we outlined ourselves when we announced the first part of that move in our fiscal first quarter.
Great. Thanks, Steve.
Thank you.
The next question comes from Andrew Levy of ExodusPoint. Please go ahead.
Hey, Steve and Suzanne, Scott.
Hey, Andy.
Mike.
Just back to the Spire STL Pipeline. Any idea what seems to be the hold-up on approval?
Simple answer is no. Obviously, FERC has a process. The docket has been closed in terms of any requests from us or any other party for some weeks now. I certainly would not try to second-guess the timing of the FERC. What we do know is there's a lot of precedent for pipeline approvals. I also know we've got our environmental assessments very early and quick, and that's usually the big gating factor. Obviously, the interveners come into the process, and there has to be responses as a part of that process. That has been closed, like I said, for several weeks now. We remain hopeful that we'll get a decision sometime soon and hopefully, like I said, before Commissioner Robert F. Powelson departs.
Okay.
Either way, we're ready. We've done the scenario work, and like I said, it doesn't impact our long-range plan in terms of what we've guided.
Okay. I have a couple more questions just regarding this. Just the first question is basically, what's the premise of replacing the pipe or building the pipe, and leaving the Enable pipe?
The premise, and I'll back up to some of my earlier comments as to how did we get to or why did we decide to build the Spire STL Pipeline. Early on, about five years ago. Boy, time travel. We decided to evaluate the array of assets that are supporting this region. Obviously, with Steve Lindsey's leadership, we have the gas distribution system. How do we get gas into our distribution system? What are those supply basins, and what storage, if any, are we using? What's happened with gas companies over the last 100 years, the pieces have been added onto the system. Our pipelines have been serving these areas. We've had sprawl in the region. Gas loads have shifted and changed, and conservation.
We're operating the way that we receive gas into the distribution systems based on the original header system from decades ago. Aging infrastructure, you're managing systems at lower pressure. With a change in our distribution infrastructure and the other changes in the region over the decade, we've started basically with a blank sheet of paper and said, "How do we want to build an array of assets that brings supply from not only traditional supply basins like East Texas and Gulf of Mexico, but shale gas that's prolific and low cost to our customers?" How do we want to de-risk the region by not bringing gas just from the south in the traditional way it has over the decades, but bring gas into the system in a way that creates more of a hub when we're replacing the header system in the region.
As a part of that evaluation, and with REX Lateral, that's now bi-directional to a node basically north of us, and the supply basin in Ohio and Pennsylvania, again, that's prolific. Not bringing that inexpensive shale gas that's prolific into this region via a REX Lateral, not doing that would not be fulfilling the best cost obligation that we have to our customers. Again, not just for today, but well into the future. We didn't start out, quote, "with the Spire STL Pipeline." We started out with an evaluation of the region and what is available from pipeline infrastructure, supply basins, cost structure, peaking load needs to durational load needs, and so forth. A very comprehensive, really over a couple-year period, building back at a rate that made the most sense for our customers, industrial customers, small businesses, and residential for today and for decades to come.
Because these are long-term investments that need to be made, if made. That's how we came to the conclusion for that pipeline, and then we filed with FERC, and now we're awaiting the FERC approval.
Right. I understand that. That sounds very good. Wasn't there also in the filing, if I'm not mistaken, from what I read, that earthquakes or an earthquake potential plays a role in part of the diversity as well. Is that correct?
Yes. Yes, that's a great point. Yes, it was in the filing. I'm chuckling a little bit because there is what is called the New Madrid fault line, and it basically runs from south of St. Louis north. The interstate pipeline infrastructure runs, let's just say, in the same direction, similar path. I was chuckling a little bit because when I was recruited here, and subsequently when Steve Lindsey was recruited here, nobody told us about the New Madrid fault line during those interviews. Yes, you are correct, and that certainly was part of the evaluation process. The resiliency in the system, building a header system and more of a hub to be able to bring gas in different ways and not be 100%, if you will, tied to that south to north pipeline and along that fault line.
Okay. I'm just curious, are there earthquakes in Missouri, or?
I don't recall the last time we experienced it, but there are people that are monitoring that earthquake path all the time, seismic managing, much like they do in other areas that are susceptible to earthquakes. Obviously we, like other companies, build in resiliency based on that. Other areas, we have hurricanes, there's tornado paths, that's just the, hate to say it, but it's somewhat day-to-day operational for us to understand weather patterns into the region and how we manage these emergencies, conditions.
Okay. I have two more questions, I apologize for so many questions. I guess Senator Durbin sent a letter to the FERC asking what's basically taking so long, if I'm not mistaken. Commissioner McIntyre wrote back. Could you just describe what's been going on with that? I think Commissioner McIntyre brought up things in the letter back to Durbin regarding market demand, cost, and financing and project design. Could you kind of-
Yeah. I'd rather not.
What's going on with that?
I'd rather not second guess the correspondences between senators and commissioners. What I do know is the FERC process, and when the commission issues its order, either in the affirmative or not in the affirmative, there's an order with all the supporting material that we'll need to make a determination. Until then, I guess I will reserve my judgments. I prefer to leave commission orders be at a state level or at a federal level than opining on correspondences and reviews.
Okay. Thank you very much.
Thank you.
Thanks, Andy.
This concludes our question and answer session. I would like to turn the conference back over to Scott Dudley for any closing remarks.
Well, thank you all for joining us. I know it's a busy time with a lot of other earnings. Appreciate your time, and we're around the rest of the day for any follow-ups. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.