Source: Piedmont Natural Gas.

Most businesses get year-round demand for their products, but in the utility industry, there are plenty of companies that do next to no business during certain times of the year. For Piedmont Natural Gas (NYSE:PNY), the summer months are an annual low point for the natural gas utility, as demand for heating products is almost nonexistent. Still, coming into its fiscal third-quarter report, Piedmont investors had hoped that the company would be able to narrow its losses from year-ago levels, and so they were somewhat disappointed when Piedmont ended up suffering a wider loss than it did in last year's third quarter. Let's look more closely at Piedmont Natural Gas and its latest results to see whether a rebound could be in the works.

Piedmont powers down
Piedmont Natural Gas once again saw mixed results during its most recent quarter. Operating revenue inched downward by 4% to $158.3 million, and the fact that Piedmont brought in only about a third of the revenue it did during the fiscal second quarter should tell you just how seasonal the business can be. Despite a big drop in the price of natural gas that helped boost operating income by more than 60%, a huge rise in utility interest charges weighed on Piedmont's profits. At the end of the day, Piedmont Natural Gas lost $8.3 million, producing a net loss of $0.10 per share.

A closer look at how Piedmont did shows some other trends in the business. As we saw last quarter, the plunge in gas prices was huge, with a 21% drop contributing nearly $13 million to Piedmont's operating income. The company also managed to keep maintenance and operational expenses in check, but taxes and interest ended up being the big problem for Piedmont, as the utility's offsetting allowance for borrowed funds using during construction narrowed considerably from the year-ago quarter. In addition, Piedmont pointed to higher rates for contract labor and employee payroll that offset much of the cost savings from bad-debt-related expenses.

Once again, Piedmont said that its efforts to gain favorable rate adjustments helped keep the company strong. In particular, rising margins came from higher rates in North Carolina and Tennessee. In addition, Piedmont kept growing the number of customers it serves in the geographical area it covers, as more people seek to capture the cost benefits of low-priced natural gas compared to traditional alternatives like coal and oil-based products. Even with unusually low numbers of cool days during the period, system throughput jumped by more than 20%.

Can Piedmont heat up?
Looking forward, Piedmont appears to be staying the course. The utility once again said that its earnings for the full 2015 fiscal year would come in between $1.82 and $1.92 per share. Piedmont also continued to pay its regular quarterly dividend of $0.33 per share.

One source of potential good news came from a settlement that the utility reached with North Carolina's regulatory authorities. Piedmont said that last week, it reached agreement with the public staff of the state utility authority to "create regulatory certainty, balance interests of Piedmont shareholders and customers, and recognize ancillary operational benefits of system integrity expenditures." In particular, the deal related to the Integrity Management Rider provisions of the utility's operations would allow for semi-annual rate adjustments, extend the application of a tariff surcharge, and fix percentages for different types of expenditures. Piedmont hopes for the new structure to be in place by November, subject to utility commission approval, and the result could be much more predictable pass-through of expenses to customers in the future.

Piedmont investors didn't seem all that surprised by the gas utility's report, as shares moved downward in line with the overall market. For the most part, Piedmont Natural Gas shareholders want the company to continue producing the impressive dividends that they've come to expect from the utility, and if it can continue to ride the rising tide of demand for natural gas, then seasonal slowdowns like this quarter's results will soon be forgotten.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.