Year to Date
September 30

2004

2003

(dollars in thousands)

(unaudited)

Operating Activities

Net income

$

13,279

$

11,477

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

14,944

13,582

Deferred income taxes and investment tax credits – net

3,865

4,157

Allowance for equity funds used during construction

12

(224

)

Regulatory assets deferrals

(1,139

)

(424

)

Regulatory assets amortization

1,046

505

Accrued pension and other postretirement benefit costs

(2,124

)

338

Deferred costs under gas cost recovery mechanism

3,990

(7,279

)

Cost of removal

(1,267

)

—

Changes in current assets and current liabilities:

Accounts and notes receivable

17,364

10,776

Fuel and supplies

(2,853

)

(1,592

)

Prepayments

(148

)

(102

)

Accounts payable

(12,716

)

(10,047

)

Accrued taxes and interest

5,273

2,453

Other assets

409

1,071

Other liabilities

(1,178

)

375

Net cash provided by operating activities

38,757

25,066

Financing Activities

Change in short-term debt, including net affiliate notes

(8,338

)

9,650

Dividends on common stock

—

(6,305

)

Net cash provided by (used in) financing activities

(8,338

)

3,345

Investing Activities

Construction expenditures (less allowance for equity funds used during construction)

(24,619

)

(27,229

)

Net cash used in investing activities

(24,619

)

(27,229

)

Net increase in cash and cash equivalents

5,800

1,182

Cash and cash equivalents at beginning of period

1,899

3,926

Cash and cash equivalents at end of period

$

7,699

$

5,108

Supplemental Disclosure of Cash Flow Information

Cash paid during the period for:

Interest (net of amount capitalized)

$

3,814

$

4,240

Income taxes

$

4

$

3,001