Bob brings over 30 years of industry experience in regulatory matters and corporate finance and has testified in over 300 proceedings as an expert witness.
With that, I'll now move on to slide five, where today, we announced net income of $3.1 million or $0.21 per share for the second quarter of 2020, a decrease of $0.9 million or $0.06 per share compared to 2019.
The company estimates that the ongoing COVID-19 pandemic unfavorably impacted net income by approximately $0.4 million or $0.03 per share.
During the first half of 2020, net income totaled $18.3 million or $1.23 per share.
As a reminder, in the first quarter of 2019, the company recognized a onetime net gain of $9.8 million or $0.66 in earnings per share on the company's divestiture of its nonregulated business subsidiary, Usource.
Adjusting for the divestiture gain, net income was down by $2.4 million or $0.16 per share compared to 2019, reflecting warmer winter weather in 2020.
The year-to-date decrease in earnings is primarily due to the warmer-than-normal winter weather in Q1, which unfavorably affected net income by approximately $3.1 million or $0.20 per share.
And in fact, through the first half of 2020, our capital spending is more than $10 million higher in comparison to the same period in 2019.
In the second quarter of 2020, our gas gross margin was $22.9 million, a decrease of $0.4 million from 2019.
We estimate that the COVID-19 emergency unfavorably impacted gas margin by $0.8 million due to lower commercial and industrial usage.
In addition, the warmer early summer weather impacted gas margin unfavorably by $0.2 million in the quarter.
These decreases were partially offset by $0.6 million due to higher distribution rates and customer growth in 2020 compared to 2019.
Natural gas therm sales decreased 9% in the second quarter of 2020 compared to the same period in 2019.
In total, the company estimates that weather-normalized gas therm sales, excluding decoupled sales, were down 5.6% in the quarter.
Commercial and industrial sales were down 10.7% and residential usage was down 2.1% in the quarter compared to prior year.
On a weather-normalized basis, excluding decoupled sales, the company estimates that C&I sales were down 7.4% and residential sales would have been up 3.2% in the quarter.
For the first six months of 2020, our gas gross margin was $65.3 million, a decrease of $1.5 million from 2019.
The company estimates that year-to-date sales margin was lower by $2.7 million due to warmer weather, partially offset by customer growth.
We also estimate that the COVID-19 emergency unfavorably impacted margin by $0.8 million due to lower C&I usage.
These volume variances were partially offset by higher natural gas distribution rates of $2.0 million in 2020.
Through the first six months of 2020, natural gas therm sales decreased 7.5% compared to 2019.
The company estimates that weather-normalized gas therm sales, excluding decoupled sales, were down 1.2% year-over-year.
Finally, I would note that we are currently serving 1,731 or 2.1% more gas customers than at the same time in 2019, illustrating our growing customer base.
In the second quarter of 2020, our electric gross margin was $22.4 million, which is flat to 2019.
Electric sales margins were higher by $0.4 million in the period due to higher electric distribution rates, customer growth and warmer early summer weather.
The ongoing COVID-19 emergency negatively impacted electric margin by a net $0.4 million due to lower C&I usage of $0.6 million, partially offset by higher residential usage of $0.2 million.
Total electric kilowatt hour sales decreased 2% in the second quarter of 2020 compared to the same period in 2019.
In total, the company estimates that normal electric kilowatt hour sales, excluding decoupled sales, were down 4.9%.
Commercial and industrial sales were down 11% and residential usage was up 12.8% in the quarter.
On a weather-normalized basis, excluding decoupled sales, the company estimates that C&I sales were down 12.2% and residential sales would have been up 6.4% in the quarter.
For the first six months of 2020, our electric gross margin was $45.5 million, which is again flat to 2019.
In the period, electric sales margins were higher than 2019 by $0.8 million due to higher electric distribution rates, customer growth and warmer early summer weather.
However, these positive differences were offset by the impacts of warmer winter weather in the first quarter of $0.4 million, and as I mentioned last slide, the ongoing COVID-19 emergency also negatively impacted margin by $0.4 million.
Through the first six months of 2020, electric kilowatt hour sales decreased 0.5% compared to 2019.
The company estimates that weather normal electric kilowatt sales, excluding decoupled sales, were down 1.1% in the period.
The number of electric customers being served has increased by 755 or 0.7% compared to the prior year.
As Tom mentioned earlier, we have estimated that as a result of the COVID-19 emergency, earnings per share were negatively impacted by $0.03 in the second quarter of 2020.
As we just discussed, the combined impact on gas electric sales margin from the COVID-19 emergency was $1.2 million in the second quarter of 2020.
However, this was somewhat offset by net lower O&M expenses of approximately $0.6 million that the company identified to be related to the COVID-19 emergency.
The lower O&M related to the COVID-19 was due to lower employee benefit costs, primarily lower health insurance claims incurred in the second quarter of $1.0 million, partially offset by net $0.4 million higher other pandemic-related costs related to the purchasing of PPE supplies, facility cleaning, higher bad debt provisions and other expenses.
Overall, O&M was down by $1.3 million in the second quarter of 2020 compared to 2019, and the remaining decrease is primarily due to lower utility operating costs in the period.
I'd like to point out that supply related bad debt, which is historically approximately 45% of all write-off activity, is tracked and recovered in reconciling mechanisms and does not impact the company's earnings.
In the second quarter, the company successfully priced $95 million of long-term debt through the private placement market.
The debt was priced at competitive investment-grade rates, and we anticipate the transaction to close in quarter 3.
With the company's existing credit facility, which has a borrowing limit of $120 million, and the proceeds recently of the recently priced debt, the company has ample liquidity to execute our growth plans.
As discussed, 2020 year-to-date gross margin is lower than 2019 by $1.5 million, largely due to the warmer winter weather.
Core operation and maintenance expenses decreased $1.5 million compared to the same period in 2019.
This decrease is primarily driven by lower employee benefit costs of $1.1 million as well as lower maintenance and storm expenses of $1.0 million, partially offset by higher bad debt expense and higher professional fees of a net $0.6 million.
Depreciation and amortization was higher by $0.8 million, reflecting higher levels of utility plant in service.
Taxes other than income taxes increased by $1.1 million, reflecting higher levels of net plant in service as well as a nonrecurring tax abatement realized in 2019 of $0.6 million.
Other expense increased $0.3 million due to higher retirement benefit costs.
Next, we've isolated the full Usource impact of $10.3 million, which was realized in 2019.
This includes the after-tax gain on the divestiture of $9.8 million, in addition to $0.5 million, which is the net of revenues and expenses realized through Usource operations in 2019.
Lastly, income taxes decreased $0.3 million, reflecting lower pre-tax earnings in the period.
So this bridge analysis shows the net changes to reconcile our 2019 net income of $30.5 million to our 2020 earnings of $18.3 million for the first six months of the year.
We received an order from the Maine PUC, approving an increase to base revenue of $3.6 million.
In Massachusetts, the gas settlement approved has a total distribution revenue increase of $4.6 million, which will be phased in over two years.
We began collecting the majority of this revenue award on March 1, 2020, while $0.9 million of the award will be included in rates starting March 1, 2021.
The gas settlement was lower as a result of $1.8 million lower expenses related to the pass back of excess deferred income taxes, lower depreciation and a removal of retirement costs from base distribution rates.
The Massachusetts electric settlement allows for a distribution increase of $0.9 million to become effective November of 2020.
The electric settlement was lower by $1.1 million as a result of lower expenses related to the pass back of excess deferred income taxes and the removal of retirement costs from base distribution rates.
In 2020, we have been awarded over $7 million of rate relief.
As I mentioned last slide, the Fitchburg rate case awards would have been a combined $2.9 million higher if not for lower depreciation and amortization expenses and the removal of retirement costs from base rates.
Finally, on Slide 18, we provide the last 12 months' actual return on equity in each of our regulatory jurisdictions.
Unitil, on a consolidated basis, earned a total return on equity of 8.4% in the last 12 months.
The company estimates that after weather normalizing the warm winter weather in the first quarter of 2020, the consolidated return on equity would have been 9.3%.

Summary:
With that, I'll now move on to slide five, where today, we announced net income of $3.1 million or $0.21 per share for the second quarter of 2020, a decrease of $0.9 million or $0.06 per share compared to 2019.