1
Distribution Operations
2
Forward-Looking Statements
Statements in this presentation that are not historical facts, including statements regarding our estimates, beliefs, expectations,
intentions, strategies or projections, may be “forward-looking statements” as defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements involve matters that are not historical facts and because these statements involve
anticipated events or conditions, forward-looking statements often include words such as "anticipate," "assume," “believe,” "can,"
"could," "estimate," "expect," "forecast," “future,” “goal,” "indicate," "intend," "may," “outlook,” "plan," “potential,” "predict,"
"project,” "seek," "should," "target," "will," "would," or similar expressions. Our expectations are not guarantees and are based on
currently available competitive, financial and economic data along with our operating plans. While we believe that our
expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and
uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our
expectations. Such events, risks and uncertainties include, but are not limited to, changes in price, supply and demand for natural
gas and related products, impact of changes in state and federal legislation and regulation, actions taken by government
agencies on rates and other matters, concentration of credit risk, utility and energy industry consolidation, costs and timelines of
construction projects may be affected by government and other approvals, development project delays, adequacy of supply of
diversified vendors, unexpected changes in project costs including the cost of funds to finance these projects, impact of
acquisitions and divestitures, direct or indirect effects on AGL Resources' business, financial condition or liquidity resulting from a
change in our credit ratings or the credit ratings of our counterparties or competitors, interest rate fluctuations, financial market
conditions and general economic conditions, uncertainties about environmental issues and the related impact of such issues,
impacts of changes in weather upon the temperature-sensitive portions of the business, impacts of natural disaster such as
hurricanes upon the supply or price of gas, acts of war or terrorism, and other factors which can be found in our filings with the
Securities and Exchange Commission. Forward-looking statements are only as of the date they are made, and we do not
undertake any obligation to update these statements to reflect subsequent changes.
intentions, strategies or projections, may be “forward-looking statements” as defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements involve matters that are not historical facts and because these statements involve
anticipated events or conditions, forward-looking statements often include words such as "anticipate," "assume," “believe,” "can,"
"could," "estimate," "expect," "forecast," “future,” “goal,” "indicate," "intend," "may," “outlook,” "plan," “potential,” "predict,"
"project,” "seek," "should," "target," "will," "would," or similar expressions. Our expectations are not guarantees and are based on
currently available competitive, financial and economic data along with our operating plans. While we believe that our
expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and
uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our
expectations. Such events, risks and uncertainties include, but are not limited to, changes in price, supply and demand for natural
gas and related products, impact of changes in state and federal legislation and regulation, actions taken by government
agencies on rates and other matters, concentration of credit risk, utility and energy industry consolidation, costs and timelines of
construction projects may be affected by government and other approvals, development project delays, adequacy of supply of
diversified vendors, unexpected changes in project costs including the cost of funds to finance these projects, impact of
acquisitions and divestitures, direct or indirect effects on AGL Resources' business, financial condition or liquidity resulting from a
change in our credit ratings or the credit ratings of our counterparties or competitors, interest rate fluctuations, financial market
conditions and general economic conditions, uncertainties about environmental issues and the related impact of such issues,
impacts of changes in weather upon the temperature-sensitive portions of the business, impacts of natural disaster such as
hurricanes upon the supply or price of gas, acts of war or terrorism, and other factors which can be found in our filings with the
Securities and Exchange Commission. Forward-looking statements are only as of the date they are made, and we do not
undertake any obligation to update these statements to reflect subsequent changes.
Management does not affirm or update earnings guidance during private and one-on-one meetings with investors, but only
updates or confirms earnings guidance through public disclosure and filing with the commission. Earnings guidance is only
effective as of the date it is given. The company further disclaims any duty to update its guidance.
updates or confirms earnings guidance through public disclosure and filing with the commission. Earnings guidance is only
effective as of the date it is given. The company further disclaims any duty to update its guidance.
3
Non-GAAP Measures
Company management evaluates segment financial performance based on earnings before interest and taxes (EBIT), which
includes the effects of corporate expense allocations. EBIT is a non-GAAP (accounting principles generally accepted in the
United States of America) financial measure. Items that are not included in EBIT are financing costs, including debt and interest
expense and income taxes. The company evaluates each of these items on a consolidated level and believes EBIT is a useful
measurement of our performance because it provides information that can be used to evaluate the effectiveness of our
businesses from an operational perspective, exclusive of the costs to finance those activities and exclusive of income taxes,
neither of which is directly relevant to the efficiency of those operations.
includes the effects of corporate expense allocations. EBIT is a non-GAAP (accounting principles generally accepted in the
United States of America) financial measure. Items that are not included in EBIT are financing costs, including debt and interest
expense and income taxes. The company evaluates each of these items on a consolidated level and believes EBIT is a useful
measurement of our performance because it provides information that can be used to evaluate the effectiveness of our
businesses from an operational perspective, exclusive of the costs to finance those activities and exclusive of income taxes,
neither of which is directly relevant to the efficiency of those operations.
Operating margin is a non-GAAP measure calculated as revenues minus cost of gas, excluding operation and maintenance
expense, depreciation and amortization, and taxes other than income taxes. These items are included in the company's
calculation of operating income. The company believes operating margin is a better indicator than operating revenues of the
contribution resulting from customer growth, since cost of gas is generally passed directly through to customers.
expense, depreciation and amortization, and taxes other than income taxes. These items are included in the company's
calculation of operating income. The company believes operating margin is a better indicator than operating revenues of the
contribution resulting from customer growth, since cost of gas is generally passed directly through to customers.
We also use EBIT and operating margin internally to measure performance against budget and in reports for management and
the Board of Directors. Projections of forward-looking EBIT and operating margin are used in our internal budgeting process,
and those projections are used in providing forward-looking business segment EBIT and operating margin projections to
investors. We are unable to reconcile our forward-looking EBIT and operating margin business segment guidance to GAAP
earnings per share because we do not predict the future impact of unusual items and mark-to-market gains or losses on energy
contracts. The impact of these items could be material to our operating results reported in accordance with GAAP.
the Board of Directors. Projections of forward-looking EBIT and operating margin are used in our internal budgeting process,
and those projections are used in providing forward-looking business segment EBIT and operating margin projections to
investors. We are unable to reconcile our forward-looking EBIT and operating margin business segment guidance to GAAP
earnings per share because we do not predict the future impact of unusual items and mark-to-market gains or losses on energy
contracts. The impact of these items could be material to our operating results reported in accordance with GAAP.
EBIT and operating margin should not be considered as alternatives to, or more meaningful indicators of, the company's
operating performance than operating income or net income as determined in accordance with GAAP. In addition, the
company's EBIT or operating margin may not be comparable to similarly titled measures of another company.
operating performance than operating income or net income as determined in accordance with GAAP. In addition, the
company's EBIT or operating margin may not be comparable to similarly titled measures of another company.
Reconciliation of non-GAAP financial measures referenced in this presentation are available on the company’s website at
www.aglresources.com under the Investor Relations section.
www.aglresources.com under the Investor Relations section.
4
Utility Operations Overview
• Six utilities in six states
• Total customer base: ~ 2.3 million
• Total rate base: $ 2.3 billion
5
2008 Priorities
• Customer growth and attrition
• Earnings stability and continued cost discipline
• Centralization of functions and extensibility of the
business model
business model
• Rate case strategy
• Growth projects to diversify supply
• Reputation
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7
Continued Focus on Customer Growth
• Economic conditions driving slowdown in new
meter growth
meter growth
• Success in slowing attrition reflects increased
investment in marketing
investment in marketing
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Mezzo, a 20-story tower under
construction in south Buckhead,
will become the first Atlanta condo
tower to have Atlanta Gas Light
meters in each residence.
construction in south Buckhead,
will become the first Atlanta condo
tower to have Atlanta Gas Light
meters in each residence.
Capitalizing on Market Opportunities
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Product Partnerships and Market Development
• Developing messaging and programs to promote environmental sustainability
• Partnering with landfills for gas recovery (Live Oak in Atlanta)
• Seeking service territory expansions where feasible
• New technologies in HVAC equipment
• CHP/Fuel cell
– 14 projects (existing or underway)
• Natural gas vehicles
– Focusing on niches that make sense
• Over-the-road (OTR) fleets, forklifts
• Desiccants - natural gas powered dehumidifiers
– Residential and small commercial pilots underway
• Energy management services and tools
– Area-wide agreements
– Programs and tools for household resource management
– Construction heat
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WNA Helps Protect Operating Margin
% of FY07 Total Margin
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But WNA Is Not Perfect
For extremely warm periods, WNA continues to true-up to normal but it
assumes the starting point is based on customer usage that is greater
than the actual usage, thus creating a gap
assumes the starting point is based on customer usage that is greater
than the actual usage, thus creating a gap
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Business Process Improvements Continue
• Off-shoring
– Majority of call center has been outsourced for one year
– System design and GIS support operational for 18
months
– Outsourced functions of Accounts payable,
procurement and PeopleSoft support completed
procurement and PeopleSoft support completed
• Portions of technology support outsourced 2.5 years
• Savings (off-shoring) recognized to date > $12 million;
annual savings $6.5 million
annual savings $6.5 million
• We will continue to look for ways to optimize the business
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State of Technology - 2005
14
State of Technology - 2008
15
Focus on Safety - Every Day
AGA Lost-Time 3-year Average Rate - 3.6
2007 AGL Resources Lost-Time Rate - 0.6
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Regulatory Timeline
Rates can go into effect
subject to refund 6
months after filing
No set statutory
requirement - expect
about 1 year
No prescribed filing date
No prescribed filing date
Same as VNG, but
6 Month Statutory
Requirement
2/01/10 Expected Filing Date
12/01/09 Test Year
5/01/10 New Rates Effective
11/30/10
8/01/11 New Rates Effective (Subject to
Refund)
8/01/10 Test Year
7/31/11
1/01/08 - -
12/31/09 Rate Freeze Sharing in Effect
11/01/09 Expected Filing Date
4/01/08
3/31/09
Test Year
3/01/09 Expected Filing Date
5/29/10 Expected Filing Date
1/01/11 New Rates Effective
1/01/11 - -
12/31/11 Test Year
1/01/10 New Rates Effective
2009
2008
2010
2011
Atlanta Gas Light
Virginia Natural Gas
Elizabethtown Gas
Chattanooga Gas
Florida City Gas
Elkton Gas
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Optimizing Return on Rate Base
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Regulatory/Legislative Strategy Critical
To Our Success
To Our Success
• Rate cases upcoming in several jurisdictions over the next three years
• Recent regulatory successes
– Approval of Georgia capacity supply plan
– Negotiated purchase of Southern Natural pipeline assets to gain
access to Elba Island LNG supply (FERC approval pending)
access to Elba Island LNG supply (FERC approval pending)
– Extension of asset management agreement in Georgia through 2012
– Extension of asset management agreements in New Jersey and Tennessee
– Approval of commercial WNA in Virginia
– Approval of $27 million acquisition premium for regulatory return
calculations in Florida
– Elkton Gas rate case (pending)
• Recent legislative successes
– Decoupling in Virginia
– AFUDC on large projects in Virginia
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Capital Deployment for Optimal Returns
20
Hampton Roads Crossing Project
• Project construction was part of
VNG rate case settlement
VNG rate case settlement
• Will connect the northern and
southern portions of VNG’s
distribution system and serve
additional utilities
southern portions of VNG’s
distribution system and serve
additional utilities
• Addresses need for supply
diversification for VNG
diversification for VNG
• Scheduled completion in 2009
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Magnolia Project (Elba-to-Atlanta)
• Capacity supply plan included
supply diversity through access
to Elba Island LNG facility
supply diversity through access
to Elba Island LNG facility
• Negotiated agreement with
Southern Natural Gas to obtain
an undivided interest in pipelines
connecting AGL service territory
to Elba
Southern Natural Gas to obtain
an undivided interest in pipelines
connecting AGL service territory
to Elba
• Filed joint application with FERC;
expect approval in 2008
expect approval in 2008
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Positioning for Long-Term Value
Community
Involvement
Relationships
Advocacy
Image
Governmental,
Legislative
Legislative
Chambers, Non
-Profits, United
Way, Etc.
-Profits, United
Way, Etc.
Everybody,
Everywhere
Everywhere
A Culture of Believers
Delivering Excellent
Customer Experience and
Financial Results
Customer Experience and
Financial Results
Public
Powerhouse
Legacy of a
Vibrant
Company
Company