Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2014 |
Accounting Policies [Abstract] | ' |
Use of Estimates, Policy [Policy Text Block] | ' |
Use of Accounting Estimates |
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The preparation of our financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our estimates may involve complex situations requiring a high degree of judgment either in the application and interpretation of existing literature or in the development of estimates that impact our financial statements. The most significant estimates relate to our rate-regulated subsidiaries, uncollectible accounts and other allowances for contingent losses, goodwill and other intangible assets, retirement plan benefit obligations, derivative and hedging activities and provisions for income taxes. We evaluate our estimates on an ongoing basis and our actual results could differ from our estimates. |
Cash and Cash Equivalents, Policy [Policy Text Block] | ' |
Cash and Cash Equivalents |
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Our cash and cash equivalents primarily consist of cash on deposit, money market accounts and certificates of deposit held by domestic subsidiaries with original maturities of three months or less. As of March 31, 2014 and 2013, and December 31, 2013, $75 million, $76 million and $80 million, respectively, of cash and short and long-term investments was held by Tropical Shipping. As of March 31, 2014, in conjunction with negotiating the agreement to sell Tropical Shipping and Seven Seas, we determined that we no longer have the intent to indefinitely reinvest Tropical Shipping’s cash and short and long-term investments offshore. For more information on the sale of Tropical Shipping and Seven Seas, see Income Tax Expense and Goodwill within this note and Note 12. |
Energy Marketing Receivables And Payables [Policy Text Block] | ' |
Energy Marketing Receivables and Payables |
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Our wholesale services segment provides services to retail and wholesale marketers and utility and industrial customers. These customers, also known as counterparties, utilize netting agreements that enable our wholesale services segment to net receivables and payables by counterparty upon settlement. Wholesale services also nets across product lines and against cash collateral, provided the master netting and cash collateral agreements include such provisions. While the amounts due from, or owed to, wholesale services’ counterparties are settled net, they are recorded on a gross basis in our unaudited Condensed Consolidated Statements of Financial Position as energy marketing receivables and energy marketing payables. |
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Our wholesale services segment has trade and credit contracts that contain minimum credit rating requirements. These credit rating requirements typically give counterparties the right to suspend or terminate credit if our credit ratings are downgraded to non-investment grade status. Under such circumstances, wholesale services would need to post collateral to continue transacting business with some of its counterparties. To date, our credit ratings have exceeded the minimum requirements. As of March 31, 2014 and 2013, and December 31, 2013, the collateral that wholesale services would have been required to post if our credit ratings had been downgraded to non-investment grade status would not have had a material impact to our consolidated results of operations, cash flows or financial condition. If such collateral were not posted, wholesale services’ ability to continue transacting business with these counterparties would be negatively impacted. |
Inventory, Policy [Policy Text Block] | ' |
Inventories |
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For our regulated utilities, except Nicor Gas, our natural gas inventories and the inventories we hold for Marketers in Georgia are carried at cost on a WACOG basis. In Georgia’s competitive environment, Marketers sell natural gas to firm end-use customers at market-based prices. Part of the unbundling process, which resulted from deregulation and provides this competitive environment, is the assignment to Marketers of certain pipeline services that Atlanta Gas Light has under contract. On a monthly basis, Atlanta Gas Light assigns the majority of the pipeline storage services that it has under contract to Marketers, along with a corresponding amount of inventory. Atlanta Gas Light also retains and manages a portion of its pipeline storage assets and related natural gas inventories for system balancing and to serve system demand. See Note 10 for information regarding a regulatory filing by Atlanta Gas Light related to natural gas inventory. |
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Nicor Gas’ inventory is carried at cost on a LIFO basis. Inventory decrements occurring during interim periods that are expected to be restored prior to year end are charged to cost of goods sold at the estimated annual replacement cost, and the difference between this cost and the actual liquidated LIFO layer cost is recorded as a temporary LIFO inventory liquidation. Any temporary LIFO liquidation is included as a current liability in our unaudited Condensed Consolidated Statements of Financial Position. Interim inventory decrements that are not expected to be restored prior to year end are charged to cost of goods sold at the actual LIFO cost of the layers liquidated. The inventory decrement as of March 31, 2014 is expected to be restored prior to year end. The inventory decrement as of March 31, 2013 was restored prior to December 31, 2013. |
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Our retail operations, wholesale services and midstream operations segments carry inventory at the lower of cost or market value, where cost is determined on a WACOG basis. For these segments, we evaluate the weighted average cost of their natural gas inventories against market prices to determine whether any declines in market prices below the WACOG are other than temporary. For any declines considered to be other than temporary, we record adjustments to reduce the weighted average cost of the natural gas inventory to market value. For the three months ended March 31, 2014, wholesale services recorded a $2 million LOCOM adjustment to reduce the value of our inventories to market value. We recorded no LOCOM adjustments for the three months ended March 31, 2013. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | ' |
Fair Value Measurements |
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We have financial and nonfinancial assets and liabilities subject to fair value measurement. The financial assets and liabilities measured and carried at fair value include cash and cash equivalents, and derivative assets and liabilities. The carrying values of receivables, short and long-term investments, accounts payable, short-term debt, other current assets and liabilities, and accrued interest approximate fair value. Our nonfinancial assets and liabilities include pension and other retirement benefits, which are presented in Note 4 to our Consolidated Financial Statements and in related notes included in Item 8 of our 2013 Form 10-K. |
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As defined in the authoritative guidance related to fair value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the market approach for recurring fair value measurements to utilize the best available information. Accordingly, we use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We classify fair value balances based on the observance of those inputs in accordance with the fair value hierarchy. |
Derivatives, Policy [Policy Text Block] | ' |
Derivative Instruments |
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The fair value of the natural gas and weather derivative instruments that we use to manage exposures arising from changing natural gas prices and weather risk reflects the estimated amounts that we would receive or pay to terminate or close the contracts at the reporting date, taking into account the current unrealized gains or losses on open contracts. We use external market quotes and indices to value substantially all of our derivative instruments. See Note 4 and Note 5 for additional derivative disclosures. |
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | ' |
Goodwill |
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During the first quarter of 2014, we completed an engineering study at our storage and fuels reporting unit within midstream operations, which indicated a reduced forecast of working gas capacity from what was projected when our 2013 annual goodwill impairment analysis was performed during the fourth quarter of 2013. Given that the 2013 annual goodwill impairment test indicated that the estimated fair value of this reporting unit exceeded its carrying amount by less than 5%, we considered this reduced storage capacity as an indicator of potential impairment and, accordingly, conducted an interim goodwill impairment analysis during the first quarter of 2014. |
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The estimated fair value of this reporting unit was determined utilizing the income approach, which estimated the fair value based upon the present value of estimated future cash flows. The forecasts used in the income approach, which were updated during the first quarter of 2014 to reflect the contracting activity that occurred during the quarter, assume discrete period revenue growth through fiscal 2022 to reflect the recovery of subscription rates, stabilization of earnings and establishment of a reasonable base year that was used to estimate the terminal value. Consistent with our 2013 annual goodwill impairment testing, we assumed a long-term earnings growth rate in the terminal year of 2.5%, which we believe is appropriate given the current economic and industry specific expectations. As of the valuation date, we utilized a discount rate of 7.0%, which we believe is appropriate as it reflects the relative risk and the time value of money, and is consistent with the peer group of this reporting unit as well as the discount rates that were utilized in our 2013 annual goodwill impairment tests. |
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The cash flow forecasts for this reporting unit assumed earnings growth over the next eight years. Should this growth not occur, this reporting unit may fail step one during a future goodwill impairment test. Along with any reductions to our cash flow forecasts, changes in other assumptions used in our impairment analysis may require us to proceed to step two of the goodwill impairment test in a future period. |
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Our interim goodwill impairment test indicated that the estimated fair value of this reporting unit continues to exceed its carrying amount with a cushion of less than 10%. Continued declines in capacity or subscription rates, a sustained period at the current subscription rates or other changes to the assumptions and factors used in this analysis may result in a future failure of step one of the goodwill impairment test. The risk of impairment of the underlying long-lived assets is not estimated to be significant as the assets have long remaining useful lives and authoritative guidance requires such assets to be tested for impairment on the basis of undiscounted cash flows over their remaining useful lives. We will continue to monitor this reporting unit for potential impairment. |
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In April 2014 we entered into a definitive agreement to sell Tropical Shipping and Seven Seas. We have determined, based on the agreed-upon sale price, that $19 million of goodwill attributable to cargo shipping was impaired as of March 31, 2014. Accordingly, this impairment expense was recorded as a separate line item in our unaudited Condensed Consolidated Statements of Income. Changes in the amount of goodwill for the three months ended March 31, 2014 and 2013 are provided in the following table. |
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In millions | | Distribution Operations | | | Retail Operations | | | Wholesale Services | | | Midstream Operations | | | Cargo Shipping | | | Other | | | Consolidated | |
Goodwill - December 31, 2012 | | $ | 1,640 | | | $ | 122 | | | $ | - | | | $ | 14 | | | $ | 61 | | | $ | - | | | $ | 1,837 | |
2013 activity | | | - | | | | 46 | | | | - | | | | - | | | | - | | | | - | | | | 46 | |
Goodwill - March 31, 2013 | | $ | 1,640 | | | $ | 168 | | | $ | - | | | $ | 14 | | | $ | 61 | | | $ | - | | | $ | 1,883 | |
Goodwill - December 31, 2013 | | $ | 1,640 | | | $ | 173 | | | $ | - | | | $ | 14 | | | $ | 61 | | | $ | - | | | $ | 1,888 | |
Cargo shipping impairment | | | - | | | | - | | | | - | | | | - | | | | (19 | ) | | | - | | | | (19 | ) |
Goodwill - March 31, 2014 | | $ | 1,640 | | | $ | 173 | | | $ | - | | | $ | 14 | | | $ | 42 | | | $ | - | | | $ | 1,869 | |
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See Note 2 to our Consolidated Financial Statements included in Item 8 of our 2013 Form 10-K for additional information on impairment of assets. |
Other Income [Policy Text Block] | ' |
Other Income |
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Our other income is detailed in the following table. For more information on our equity investment income, see Note 9. |
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| | Three months ended | | | | | | | | | | | | | | | | | | | | | |
March 31, | | | | | | | | | | | | | | | | | | | | |
In millions | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | |
Equity investment income | | $ | 3 | | | $ | 3 | | | | | | | | | | | | | | | | | | | | | |
AFUDC - equity | | | 1 | | | | 3 | | | | | | | | | | | | | | | | | | | | | |
Other, net | | | (1 | ) | | | (1 | ) | | | | | | | | | | | | | | | | | | | | |
Total other income | | $ | 3 | | | $ | 5 | | | | | | | | | | | | | | | | | | | | | |
Income Tax, Policy [Policy Text Block] | ' |
Income Tax Expense |
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As a result of our agreement to sell Tropical Shipping and Seven Seas, we have determined that the cumulative foreign earnings of cargo shipping will no longer be indefinitely reinvested offshore, and we recognized tax expense of $31 million in the three months ended March 31, 2014 related to the cumulative earnings for which no tax liabilities previously had been recorded. This resulted in an effective tax rate of 45.2% for the three months ended March 31, 2014 compared to 37.9% for the same period last year. As of March 31, 2014, we have $57 million of deferred income tax liabilities on our unaudited Condensed Consolidated Statements of Financial Position related to the cumulative earnings of our foreign subsidiaries that have not been repatriated. |
Earnings Per Share, Policy [Policy Text Block] | ' |
Earnings Per Common Share |
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We compute basic earnings per common share attributable to AGL Resources Inc. common shareholders by dividing our net income attributable to AGL Resources Inc. by the daily weighted average number of common shares outstanding. Diluted earnings per common share attributable to AGL Resources Inc. common shareholders reflect the potential reduction in earnings per common share attributable to AGL Resources Inc. common shareholders that occurs when potentially dilutive common shares are added to common shares outstanding. |
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We derive our potentially dilutive common shares by calculating the number of shares issuable under restricted stock, restricted stock units and stock options. The vesting of certain shares of the restricted stock and restricted stock units depends on the satisfaction of defined performance and/or time based criteria. The future issuance of shares underlying the outstanding stock options depends on whether the market price of the common shares underlying the options exceeds the respective exercise prices of the stock options. |
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The following table shows the calculation of our diluted shares attributable to AGL Resources Inc. common shareholders for the periods presented, if performance units currently earned under the plan ultimately vest and if stock options currently exercisable at prices below the average market prices are exercised. |
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| | Three months ended March 31, | | | | | | | | | | | | | | | | | | | | | |
In millions (except per share amounts) | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to AGL Resources Inc. | | $ | 290 | | | $ | 154 | | | | | | | | | | | | | | | | | | | | | |
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Denominator: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic weighted average number of shares outstanding (1) | | | 118.5 | | | | 117.4 | | | | | | | | | | | | | | | | | | | | | |
Effect of dilutive securities | | | 0.4 | | | | 0.3 | | | | | | | | | | | | | | | | | | | | | |
Diluted weighted average number of shares outstanding | | | 118.9 | | | | 117.7 | | | | | | | | | | | | | | | | | | | | | |
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Earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 2.44 | | | $ | 1.31 | | | | | | | | | | | | | | | | | | | | | |
Diluted | | $ | 2.44 | | | $ | 1.31 | | | | | | | | | | | | | | | | | | | | | |
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-1 | Daily weighted average shares outstanding. | | | | | | | | | | | | | | | | | | | | | | | | | | | |