Washington Gas Light 8K WGL Holdings, Inc. Reports Second Quarter Fiscal Year 2010 Earnings; Updates Fiscal Year 2010 Guidance | WGLCP 6 May 10

Exhibit 99.1


FOR IMMEDIATE RELEASE	CONTACTS:
May 5, 2010
	News Media
	Ruben Rodriguez	(202) 624-6620

	Financial Community
	Robert Dennis	(202) 624-6129

WGL Holdings, Inc. Reports Second Quarter Fiscal Year 2010 Earnings;
Updates Fiscal Year 2010 Guidance

	•		Second quarter consolidated earnings per share up – $1.56 per share vs. $1.49 per share for the comparative quarter of the prior year

	•		Year-to-date consolidated earnings per share – $2.50 per share vs. $2.58 per share for the comparative year-to-date of the prior year

	•		Second quarter consolidated non-GAAP operating earnings – $1.64 per share vs. $1.65 per share for the comparative quarter of the prior year

	•		Year-to-date consolidated non-GAAP operating earnings – $2.64 per share vs. $2.67 per share for the comparative year-to-date of the prior year

	•		Non-GAAP operating earnings guidance for fiscal year 2010 updated to a range of $2.25 to $2.37 per share; an increase of $0.03 per share

Consolidated Results

WGL Holdings, Inc. (NYSE: WGL), the parent company of Washington Gas Light Company (Washington Gas) and other energy-related subsidiaries, today reported net income determined in accordance with generally accepted accounting principles in the United States of America (GAAP) for the quarter ended March 31, 2010 of $78.7 million, or $1.56 per share, an increase of $3.6 million, or $0.07 per share, over net income of $75.1 million, or $1.49 per share, reported for the quarter ended March 31, 2009.

For the first six months of fiscal year 2010, we reported net income determined in accordance with GAAP of $126.3 million, or $2.50 per share, compared to net income of $129.7 million, or $2.58 per share, reported for the comparative period of fiscal year 2009. Our operations are seasonal and, accordingly, our operating results for the three and six months ended March 31, 2010, are not indicative of the results expected for the 12 months ending September 30, 2010.

“Our second quarter results remain strong for the regulated utility and retail energy-marketing segments demonstrating the strength of our business plans,” said Terry McCallister, Chairman and Chief Executive Officer of WGL Holdings. “Our region continued to provide utility customer growth, while our non-utility operations took important steps on strategic initiatives that will expand their ability to consistently contribute earnings growth.”

Financial performance is evaluated based on non-GAAP operating earnings (loss). Non-GAAP operating earnings (loss) excludes the effects of:(i)unrealized mark-to-market gains (losses) on energy-related derivatives;(ii)certain gains and losses associated with optimizing the utility segment’s system capacity assets and(iii)certain unusual transactions. Refer to “Use of Non-GAAP Operating Earnings (Loss)” and supporting reconciliations attached to this news release for a detailed discussion of management’s use of this non-GAAP financial measure, as well as reconciliations of net income determined in accordance with GAAP to non-GAAP operating earnings (loss) for both our consolidated and segment results.

For the quarter ended March 31, 2010, our non-GAAP operating earnings were $82.7 million, or $1.64 per share, substantially the same as the non-GAAP operating earnings of $82.8 million, or $1.65 per share, for the same quarter of the prior fiscal year. For the six months ended March 31, 2010, our non-GAAP operating earnings were $133.5 million, or $2.64 per share, down slightly from the non-GAAP operating earnings of $134.4 million, or $2.67 per share, for the same period of the prior fiscal year.

Second Quarter Results by Business Segment

Regulated Utility Segment

For the quarter ended March 31, 2010, our regulated utility segment reported net income of $91.0 million, or $1.80 per share, an increase of $15.6 million, or $0.31 per share, over net income of $75.4 million, or $1.49 per share, reported for the second quarter of the prior fiscal year. After adjustments, non-GAAP operating earnings for the regulated utility segment were $80.1 million, or $1.58 per share, for the quarter ended March 31, 2010, an increase of $1.1 million, or $0.01 per share, over non-GAAP operating earnings of $79.0 million, or $1.57 per share, for the same quarter of the prior fiscal year.

For the six months ended March 31, 2010, our regulated utility segment reported net income of $131.7 million, or $2.61 per share, an increase of $2.6 million, or $0.04 per share, over net income of $129.1 million, or $2.57 per share, reported for the six months ended March 31, 2009. After adjustments, non-GAAP operating earnings for the regulated utility segment were $124.0 million, or $2.46 per share, for the six months ended March 31, 2010, compared to non-GAAP operating earnings of $124.4 million, or $2.47 per share, for the same six months of the prior fiscal year.

For both the three and six month comparisons, non-GAAP operating earnings included:(i)an increase in average active customer meters from the prior period;(ii)favorable effects of changes in natural gas consumption patterns;(iii)an improvement reflecting lower regulatory obligations for the Virginia Earnings Sharing Mechanism;(iv)lower costs for weather protection products related to the District of Columbia and(v)lower interest expense related to both lower interest rates and decreased borrowing levels. Offsetting these improvements were:(i)a decrease in the recovery of inventory carrying costs, reflecting lower average storage gas inventory balances;(ii)a decrease in realized margins associated with our asset optimization program and(iii)higher employee benefit expense due to changes in plan asset values and plan valuation assumptions.

Retail Energy-Marketing Segment

For the quarter ended March 31, 2010, the retail energy-marketing segment reported a net loss of $(11.4) million, or $(0.23) per share, compared to a net loss of $(667,000), or $(0.01) per share, reported for the second quarter of the prior fiscal year. Non-GAAP operating earnings for the retail energy-marketing segment were $3.5 million, or $0.07 per share, for the quarter ended March 31, 2010 compared to non-GAAP operating earnings of $3.4 million, or $0.07 per share, for the same quarter of the prior fiscal year. Non-GAAP operating earnings reflect the offsetting effects of higher realized margins from the sale of electricity and higher operating expenses associated with marketing and customer acquisition costs. Electric sales margin improvements primarily reflect higher electric sales associated with customer growth, partially offset by lower unit margins. Natural gas sales volumes were relatively unchanged from the prior period.

For the six months ended March 31, 2010, the retail energy-marketing segment reported a net loss of $(3.9) million, or $(0.08) per share, compared to a net loss of $(217,000) reported for the same period of the prior fiscal year. Non-GAAP operating earnings for the retail energy-marketing segment were $10.9 million, or $0.22 per share, for the six months ended March 31, 2010, an increase of $1.7 million, or $0.03 per share, over non-GAAP operating earnings of $9.2 million, or $0.19 per share, for the same period of the prior fiscal year. The period-over-period non-GAAP operating earnings improvement is primarily attributable to higher natural gas sales margins which were partially offset by higher operating expenses associated with marketing and customer acquisitions costs. Although natural gas sales volumes were slightly lower in the current period, higher unit margins recorded in the first fiscal quarter of 2010 contributed an overall improvement in natural gas margins for the current year. In contrast, electric sales volumes more than doubled for the six months ended March 31, 2010 compared to the prior year, however, lower non-GAAP unit margins offset the effect of this volume increase.

The variance in quarterly non-GAAP operating results for this segment were affected by both the volume of activity and pattern of margin recognition that results from sales under generally fixed-priced contracts with customers that were supplied by contract commitments that reflect the shape of the future commodity market at the time the sales contracts are entered into. Realized margins on natural gas sales also reflect comparative changes in the cost of gas inventories used to meet customer commitments.

Design-Build Energy Systems Segment

For the quarter ended March 31, 2010, the design-build energy systems segment reported a net loss of $(91,000), compared to net income of $1.2 million, or $0.02 per share, reported for the same quarter of the prior fiscal year. For the six months ended March 31, 2010, the design-build energy systems segment reported a net loss of $(303,000), or $(0.01) per share, compared to net income of $2.0 million, or $0.04 per share, reported for the same period of the prior fiscal year. The decrease in earnings for both the three and six month comparisons, are primarily due to delays in the initiation of certain planned project work for government agency customers. Operating expenses were also higher due to increased labor expense associated with expansion plans. There were no non-GAAP adjustments for this segment for either period.

Earnings Outlook

We are providing an updated consolidated earnings estimate for fiscal year 2010 based on non-GAAP operating earnings in a range of $2.25 per share to $2.37 per share, an increase of $0.03 per share in the mid-point of the range. This estimate includes projected fiscal year 2010 non-GAAP operating earnings from our regulated utility segment in a range of $1.86 per share to $1.92 per share, and projected fiscal year 2010 non-GAAP operating earnings from our unregulated business segments in a range of $0.39 per share to $0.45 per share. Refer to the “Reconciliation of GAAP Earnings Guidance to Non-GAAP Earnings Guidance” attached to this news release for a reconciliation of our GAAP earnings per share estimate to our estimate based on non-GAAP operating earnings per share.

We assume no obligation to update this guidance. The absence of any statement by us in the future should not be presumed to represent an affirmation of this earnings guidance. For the assumptions underlying this guidance, please refer to the slides accompanying our webcast that will be posted to the WGL Holdings website,wglholdings.com.

Other Information

We will hold a conference call at 10:30 a.m. Eastern time on May 6, 2010, to discuss our second quarter financial results for fiscal year 2010. The live conference call will be available to the public via a link located on the WGL Holdings website,wglholdings.com. To hear the live webcast, click on the “Webcast” link located on the home page of the referenced site. The webcast and related slides will be archived on the WGL Holdings website through June 5, 2010.

Headquartered in Washington, D.C., WGL Holdings has three operating segments:(i)the regulated utility segment, which primarily consists of Washington Gas, a natural gas utility that serves over one million customers throughout metropolitan Washington, D.C., and the surrounding region;(ii) the retail energy-marketing segment, which consists of Washington Gas Energy Services, Inc., a third-party marketer that competitively sells natural gas and electricity and(iii)the design-build energy systems segment, which consists of Washington Gas Energy Systems, Inc., a provider of design-build energy efficiency solutions to government and commercial clients. Additional information about WGL Holdings is available on our website,wglholdings.com.

Unless otherwise noted, earnings per share amounts are presented on a diluted basis, and are based on weighted average common and common equivalent shares outstanding.

Please see the attached comparative statements for additional information on our operating results. Also attached to this news release are reconciliations of net income determined in accordance with GAAP to non-GAAP operating earnings (loss) for both our consolidated and segment results as well as reconciliations of our GAAP earnings guidance to our non-GAAP earnings guidance.

Forward-Looking Statements

This news release and other statements by us include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the outlook for earnings, revenues and other future financial business performance or strategies and expectations. Forward-looking statements are typically identified by words such as, but not limited to, “estimates,” “expects,” “anticipates,” “intends,” “believes,” “plans,” and similar expressions, or future or conditional verbs such as “will,” “should,” “would,” and “could.” Although we believe such forward-looking statements are based on reasonable assumptions, we cannot give assurance that every objective will be achieved. Forward-looking statements speak only as of today, and we assume no duty to update them. Factors that could cause actual results to differ materially from those expressed or implied include, but are not limited to, general economic conditions and the factors discussed under the “Risk Factors” heading in our most recent annual report on Form 10-K and other documents we have filed with, or furnished to, the U.S. Securities and Exchange Commission.

WGL Holdings, Inc.
Consolidated Statements of Income
(Unaudited)



	Three Months Ended						Six Months Ended
	March 31,						March 31,
(In thousands, except per share data)	2010			2009			2010			2009

OPERATING REVENUES
Utility	$	611,625		$	642,397		$	1,002,157		$	1,164,878
Non-utility		445,013			398,491			781,904			702,098

Total Operating Revenues		1,056,638			1,040,888			1,784,061			1,866,976


OPERATING EXPENSES
Utility cost of gas		318,922			375,143			516,199			681,927
Non-utility cost of energy-related sales		451,783			387,074			764,988			679,312
Operation and maintenance		78,272			78,439			151,788			148,773
Depreciation and amortization		24,235			24,245			48,398			48,326
General taxes and other assessments		43,007			41,255			74,427			71,682

Total Operating Expenses		916,219			906,156			1,555,800			1,630,020


OPERATING INCOME		140,419			134,732			228,261			236,956
Other Income—Net		495			760			864			777
Interest Expense
Interest on long-term debt		10,008			10,520			19,903			20,472
AFUDC and other, net		194			955			56			3,182

Total Interest Expense		10,202			11,475			19,959			23,654

INCOME BEFORE INCOME TAXES		130,712			124,017			209,166			214,079
INCOME TAX EXPENSE		51,676			48,617			82,159			83,724

NET INCOME BEFORE PREFERRED STOCK DIVIDENDS		79,036			75,400			127,007			130,355
Dividends on Washington Gas preferred stock		330			330			660			660


NET INCOME APPLICABLE TO COMMON STOCK	$	78,706		$	75,070		$	126,347		$	129,695


AVERAGE COMMON SHARES OUTSTANDING
Basic		50,366			50,130			50,305			50,071
Diluted		50,572			50,420			50,502			50,309


EARNINGS PER AVERAGE COMMON SHARE
Basic	$	1.56		$	1.50		$	2.51		$	2.59
Diluted	$	1.56		$	1.49		$	2.50		$	2.58



Net Income (Loss) Applicable To Common Stock—By Segment ($000):

Regulated utility	$	91,006		$	75,375		$	131,702		$	129,092

Non-utility operations:
Retail energy-marketing		(11,437	)		(667	)		(3,930	)		(217	)
Design-build energy systems		(91	)		1,201			(303	)		2,033
Other activities		(772	)		(839	)		(1,122	)		(1,213	)

Total non-utility		(12,300	)		(305	)		(5,355	)		603

NET INCOME APPLICABLE TO COMMON STOCK	$	78,706		$	75,070		$	126,347		$	129,695

WGL Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)



	March 31,			September 30,
(In thousands)	2010			2009

ASSETS
Property, Plant and Equipment
At original cost	$	3,296,753		$	3,242,413
Accumulated depreciation and amortization		(1,000,356	)		(973,272	)

Net property, plant and equipment		2,296,397			2,269,141


Current Assets
Cash and cash equivalents		123,454			7,845
Accounts receivable, net		512,805			308,915
Storage gas—at cost (first-in, first-out)		80,160			237,681
Other		157,790			129,073

Total current assets		874,209			683,514

Deferred Charges and Other Assets		449,266			397,235

Total Assets	$	3,619,872		$	3,349,890


CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders’ equity	$	1,196,121		$	1,097,698
Washington Gas Light Company preferred stock		28,173			28,173
Long-term debt		591,596			561,830

Total capitalization		1,815,890			1,687,701


Current Liabilities
Notes payable and current maturities of long-term debt		212,549			266,443
Accounts payable and other accrued liabilities		233,205			213,529
Other		244,580			154,644

Total current liabilities		690,334			634,616

Deferred Credits		1,113,648			1,027,573

Total Capitalization and Liabilities	$	3,619,872		$	3,349,890

WGL Holdings, Inc.
Consolidated Financial and Operating Statistics
(Unaudited)

FINANCIAL STATISTICS



	Twelve Months Ended
	March 31,
	2010			2009


Closing Market Price—end of period	$	34.65		$	32.80
52-Week Market Price Range	$	35.02-$28.59		$	37.08-$22.40
Price Earnings Ratio		14.9			13.9
Annualized Dividends Per Share	$	1.51		$	1.47
Dividend Yield		4.4	%		4.5	%
Return on Average Common Equity		10.0	%		10.6	%
Total Interest Coverage(times)		5.6			5.0
Book Value Per Share—end of period	$	23.65		$	22.88
Common Shares Outstanding—end of period(thousands)		50,570			50,141

UTILITY GAS STATISTICS



	Three Months Ended				Six Months Ended				Twelve Months Ended
	March 31,				March 31,				March 31,
(In thousands)	2010		2009		2010		2009		2010		2009


Operating Revenues
Gas Sold and Delivered
Residential — Firm	$	430,570	$	450,141	$	694,461	$	807,655	$	874,061	$	1,039,424
Commercial and Industrial — Firm		93,723		112,566		150,131		209,810		203,633		292,601
Commercial and Industrial — Interruptible		1,522		1,156		2,920		2,815		4,132		6,235
Electric Generation		275		275		550		550		1,100		1,099

		526,090		564,138		848,062		1,020,830		1,082,926		1,339,359

Gas Delivered for Others
Firm		66,904		56,843		113,949		96,956		161,991		139,764
Interruptible		17,357		16,650		29,691		29,973		47,417		47,359
Electric Generation		53		107		101		182		276		392

		84,314		73,600		143,741		127,111		209,684		187,515

		610,404		637,738		991,803		1,147,941		1,292,610		1,526,874
Other		1,221		4,659		10,354		16,937		25,758		41,106

Total	$	611,625	$	642,397	$	1,002,157	$	1,164,878	$	1,318,368	$	1,567,980



	Three Months Ended						Six Months Ended						Twelve Months Ended
	March 31,						March 31,						March 31,
(In thousands of therms)	2010			2009			2010			2009			2010			2009


Gas Sales and Deliveries
Gas Sold and Delivered
Residential — Firm		352,690			351,057			569,441			579,215			680,212			693,403
Commercial and Industrial — Firm		84,019			93,259			137,216			160,509			179,746			210,605
Commercial and Industrial — Interruptible		1,416			974			2,867			2,192			4,052			4,676

		438,125			445,290			709,524			741,916			864,010			908,684

Gas Delivered for Others
Firm		211,568			199,954			370,468			347,661			484,858			462,837
Interruptible		97,875			95,018			175,422			173,517			275,725			269,479
Electric Generation		12,418			22,857			23,550			46,320			79,989			103,466

		321,861			317,829			569,440			567,498			840,572			835,782

Total		759,986			763,119			1,278,964			1,309,414			1,704,582			1,744,466


WASHINGTON GAS ENERGY SERVICES

Natural Gas Sales
Therm Sales(thousands of therms)		265,962			272,687			442,937			462,228			608,137			646,417

Number of Customers(end of period)		159,700			141,500			159,700			141,500			159,700			141,500

Electricity Sales
Electricity Sales(thousands of kWhs)		2,134,831			1,037,602			4,008,214			1,882,913			7,394,582			3,719,459

Number of Accounts(end of period)		130,100			70,600			130,100			70,600			130,100			70,600


UTILITY GAS PURCHASED EXPENSE (excluding asset optimization)		77.27¢			85.21¢			74.58¢			93.89¢			74.51¢			98.62 ¢


HEATING DEGREE DAYS

Actual		2,177			2,333			3,608			3,860			3,959			4,133
Normal		2,104			2,111			3,451			3,457			3,767			3,774
Percent Colder (Warmer) than Normal		3.5	%		10.5	%		4.5	%		11.7	%		5.1	%		9.5	%


Average Active Customer Meters		1,078,358			1,070,724			1,073,732			1,064,801			1,070,924			1,061,000

WGL HOLDINGS, INC.
USE OF NON-GAAP OPERATING EARNINGS (LOSS)
(Unaudited)

The attached reconciliations are provided to clearly identify adjustments made to net income calculated in accordance with generally accepted accounting principles in the United States of America (GAAP) to derive non-GAAP operating earnings (loss). Management believes non-GAAP operating earnings (loss) provides a more meaningful representation of our earnings from ongoing operations by adjusting for the effects of:(i)unrealized mark-to-market gains and losses from energy-related derivatives;(ii)certain gains and losses associated with optimizing the utility segment’s capacity assets and(iii)certain unusual transactions. This presentation facilitates analysis by providing a consistent and comparable measure to help management, investors and analysts better understand and evaluate our operating results and performance trends, and assist in analyzing period-to-period comparisons. Additionally, we use this non-GAAP measure to report to the board of directors and to evaluate management’s performance.

The economic substance underlying our adjustments to calculate non-GAAP operating earnings (loss) is as follows:

	•		We exclude unrealized mark-to-market adjustments for our energy-related derivatives to provide a more transparent and accurate view of the ongoing financial results of our operations. For our regulated utility segment, we use derivatives to substantially lock-in a future profit. This profit does not change even though the unrealized fair value of the underlying derivatives may change period-to-period, until settlement. For our retail energy-marketing segment, we use derivatives to lock-in a price for energy supplies to match future retail sales commitments. These derivatives are subject to mark-to-market treatment, while most of the corresponding retail sales contracts are not. With the exception of certain transactions related to the optimization of system capacity assets, as discussed below, when these derivatives settle the economic impact is reflected in our non-GAAP operating results, as we are only removing the interim unrealized mark-to-market amounts that are ultimately reversed when the derivatives are settled.

	•		We adjust for certain gains and losses associated with the optimization of the regulated utility segment’s capacity assets. Transactions to optimize our system storage capacity assets are structured to lock-in a profit that is recognized, for regulatory purposes, as the natural gas is delivered to end-use customers. These transactions may result in gains and losses that consist of:(i)the settlement of physical and financial derivatives related to the management of our storage inventory and(ii)lower-of-cost or market adjustments from the difference between the cost of physical inventory compared to the amount realized through rates when the inventory is ultimately delivered to customers. In our GAAP results, due to timing differences between when the physical and financial transactions settle, and when the natural gas is sold to the end-use customer, gains and losses associated with our storage optimization strategy may be spread across different reporting periods. For purposes of calculating non-GAAP operating earnings (loss), gains and losses associated with these transactions are included in the reporting period when the gas is delivered to the end-use customer and the ultimate profit is realized for regulatory purposes. In addition, losses incurred to terminate long-term contracts affecting transportation capacity optimization margins of future periods are matched with those future margins for regulatory sharing purposes. For purposes of calculating non-GAAP operating earnings (loss), these losses are included in the reporting period when the transportation capacity optimization margins earned as a result of the termination are realized and shared with customers. These adjustments reflect a better matching between the economic costs and benefits of the overall optimization strategy.

			We also exclude valuation adjustments to the carrying value of non-system natural gas storage inventory. This inventory is held solely to support asset optimization transactions. Valuation adjustments to reflect lower-of-cost or market under current accounting standards may not be representative of the margins that will be realized and shared with our utility ratepayers. Non-GAAP earnings reflect actual margins realized based on the unadjusted historical cost in storage when inventory is withdrawn and sold.

	•		We exclude certain unusual transactions that may be the result of regulatory or legal decisions, or items that we may deem outside of the ordinary course of business.

There are limits in using non-GAAP operating earnings (loss) to analyze our results, as they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. In addition, using non-GAAP operating earnings (loss) per share to analyze our earnings may have limited value as it excludes certain items that may have a material impact on our reported financial results. We compensate for these limitations by providing investors with the attached reconciliations to net income, the most directly comparable GAAP financial measure.

WGL HOLDINGS, INC. (Consolidating by Segment)
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP OPERATING EARNINGS (LOSS)
(Unaudited)


Quarter Ended March 31, 2010
							Design-Build
	Regulated			Retail Energy-			Energy			Other
(In thousands, except per share data)	Utility			Marketing			Systems			Activities*			Consolidated

GAAP net income (loss)	$	91,006		$	(11,437	)	$	(91	)	$	(772	)	$	78,706
Adjusted for (items shown after-tax):
Unrealized mark-to-market loss (gain) on energy-related derivatives(a)		(9,760	)		14,907			—			—			5,147
Storage optimization program(b)		871			—			—			—			871
Amortization of derivative contract termination(c)		(579	)		—			—			—			(579	)
Weather derivative products(d)		(1,424	)		—			—			—			(1,424	)

Non-GAAP operating earnings (loss)	$	80,114		$	3,470		$	(91	)	$	(772	)	$	82,721

GAAP diluted earnings (loss) per average common share (50,572 shares)	$	1.80		$	(0.23	)	$	—		$	(0.01	)	$	1.56
Per share effect of non-GAAP adjustments		(0.22	)		0.30			—			—			0.08

Non-GAAP operating earnings (loss) per share	$	1.58		$	0.07		$	—		$	(0.01	)	$	1.64


Quarter Ended March 31, 2009
						Design-Build
	Regulated		Retail Energy-			Energy		Other
(In thousands, except per share data)	Utility		Marketing			Systems		Activities*			Consolidated

GAAP net income (loss)	$	75,375	$	(667	)	$	1,201	$	(839	)	$	75,070
Adjusted for (item shown after-tax):
Unrealized mark-to-market loss on energy-related derivatives (a)		1,105		5,302			—		—			6,407
Storage optimization program (b)		2,538		—			—		—			2,538
Reversal of prior period electric costs (d)		—		(1,229	)		—		—			(1,229	)

Non-GAAP operating earnings (loss)	$	79,018	$	3,406		$	1,201	$	(839	)	$	82,786

GAAP diluted earnings (loss) per average common share (50,420 shares)	$	1.49	$	(0.01	)	$	0.02	$	(0.01	)	$	1.49
Per share effect of non-GAAP adjustments		0.08		0.08			—		—			0.16

Non-GAAP operating earnings (loss) per share	$	1.57	$	0.07		$	0.02	$	(0.01	)	$	1.65


Six Months Ended March 31, 2010
							Design-Build
	Regulated			Retail Energy-			Energy			Other
(In thousands, except per share data)	Utility			Marketing			Systems			Activities*			Consolidated

GAAP net income (loss)	$	131,702		$	(3,930	)	$	(303	)	$	(1,122	)	$	126,347
Adjusted for (items shown after-tax):
Unrealized mark-to-market loss (gain) on energy-related derivatives(a)		(7,351	)		14,869			—			—			7,518
Storage optimization program(b)		1,256			—			—			—			1,256
Amortization of derivative contract termination(c)		(964	)		—			—			—			(964	)
Weather derivative products(d)		(638	)		—			—			—			(638	)

Non-GAAP operating earnings (loss)	$	124,005		$	10,939		$	(303	)	$	(1,122	)	$	133,519

GAAP diluted earnings (loss) per average common share (50,502 shares)	$	2.61		$	(0.08	)	$	(0.01	)	$	(0.02	)	$	2.50
Per share effect of non-GAAP adjustments		(0.15	)		0.30			—			(0.01	)		0.14

Non-GAAP operating earnings (loss) per share	$	2.46		$	0.22		$	(0.01	)	$	(0.03	)	$	2.64


Six Months Ended March 31, 2009
							Design-Build
	Regulated			Retail Energy-			Energy		Other
(In thousands, except per share data)	Utility			Marketing			Systems		Activities*			Consolidated

GAAP net income (loss)	$	129,092		$	(217	)	$	2,033	$	(1,213	)	$	129,695
Adjusted for (items shown after-tax):
Unrealized mark-to-market loss (gain) on energy-related derivatives(a)		(5,188	)		10,635			—		—			5,447
Storage optimization program(b)		3,305			—			—		—			3,305
Reversal of reserve for natural gas costs(c)		(2,781	)		—			—		—			(2,781	)
Reversal of prior period electric costs(d)		—			(1,229	)		—		—			(1,229	)

Non-GAAP operating earnings (loss)	$	124,428		$	9,189		$	2,033	$	(1,213	)	$	134,437

GAAP diluted earnings (loss) per average common share (50,309 shares)	$	2.57		$	—		$	0.04	$	(0.03	)	$	2.58
Per share effect of non-GAAP adjustments		(0.10	)		0.19			—		—			0.09

Non-GAAP operating earnings (loss) per share	$	2.47		$	0.19		$	0.04	$	(0.03	)	$	2.67

* Per share amounts for “Other Activities” may include adjustments for rounding

(Footnote references are described on the following page)

WGL HOLDINGS, INC. (Consolidated by Quarter)
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP OPERATING EARNINGS
(Unaudited)


Fiscal Year 2010
	Quarterly Period Ended(f)
(In thousands, except per share data)	Dec. 31			Mar. 31			Jun. 30	Sept. 30	Year-To-Date

GAAP net income	$	47,641		$	78,706				$	126,347
Adjusted for (items shown after-tax):
Unrealized mark-to-market loss on energy-related derivatives(a)		2,371			5,147					7,518
Storage optimization program(b)		385			871					1,256
Amortization of derivative contract termination(c)		(385	)		(579	)				(964	)
Weather derivative products(d)		786			(1,424	)				(638	)

Non-GAAP operating earnings	$	50,798		$	82,721				$	133,519

Diluted average common shares outstanding		50,429			50,572					50,502

GAAP diluted earnings per average common share	$	0.94		$	1.56				$	2.50
Per share effect of non-GAAP adjustments		0.07			0.08					0.14

Non-GAAP operating earnings per share	$	1.01		$	1.64				$	2.64


Fiscal Year 2009
	Quarterly Period Ended(f)
(In thousands, except per share data)	Dec. 31			Mar. 31			Jun. 30	Sept. 30	Year-To-Date

GAAP net income	$	54,625		$	75,070				$	129,695
Adjusted for (items shown after-tax):
Unrealized mark-to-market loss (gain) on energy-related derivatives(a)		(960	)		6,407					5,447
Storage optimization program(b)		767			2,538					3,305
Reversal of reserve for natural gas costs(c)		(2,781	)		—					(2,781	)
Reversal of prior period electric costs(d)		—			(1,229	)				(1,229	)

Non-GAAP operating earnings	$	51,651		$	82,786				$	134,437

Diluted average common shares outstanding		50,208			50,420					50,309

GAAP diluted earnings per average common share	$	1.09		$	1.49				$	2.58
Per share effect of non-GAAP adjustments		(0.06	)		0.16					0.09

Non-GAAP operating earnings per share	$	1.03		$	1.65				$	2.67


Footnotes:

(a)		Represents the change in the unrealized mark-to-market positions of our energy-related derivatives that were recorded to income during the period. For the regulated utility segment, the relevant customer sharing percentage for realized asset optimization margins as approved by the regulators is used to allocate our unrealized mark-to-market gains and losses between regulatory assets/liabilities and earnings. All unrealized mark-to-market gains and losses for the retail energy-marketing segment are recorded directly to income.

(b)		Adjustments to shift the timing of storage optimization margins from the periods recognized for GAAP purposes to the periods in which such margins are recognized for regulatory sharing purposes. In addition, lower-of-cost-or-market adjustments related to system and non-system storage optimization are eliminated for non-GAAP reporting, since the margins will be recognized for regulatory purposes when the withdrawals are made at the unadjusted historical cost of storage inventory.

(c)		During the fourth quarter of fiscal year 2009, Washington Gas terminated a long-term energy-related derivative contract related to its transportation capacity optimization and recognized an associated loss of $3.9 million for GAAP purposes. For non-GAAP purposes, this loss is being recognized in this period and in future periods to be matched against the margins earned as a result of the termination, consistent with the regulatory sharing treatment.

(d)		During the fourth quarter of fiscal year 2009, Washington Gas received a premium payment of $2.1 million for an HDD derivative contract written to manage its exposure to variations from normal weather in the District of Columbia during fiscal year 2010. Written weather derivatives are recorded at fair value rather than being valued based on actual variations from normal weather. Thus, any portion of recorded fair value that is not directly offset by an increase/decrease in revenue due to weather is excluded for non-GAAP purposes.

(e)		In the quarter ended December 31, 2008, Washington Gas recorded a $4.6 million reversal of a reserve for disallowed gas costs in Maryland and recorded income of $4.6 million due to a February 5, 2009 Order issued by the Public Service Commission of Maryland (PSC of MD). This Order resolved a contingency related to a proposed order issued by a Hearing Examiner of the PSC of MD in fiscal year 2006.

(f)		Quarterly earnings per share may not sum to year-to-date or annual earnings per share as quarterly calculations are based on weighted average common and common equivalent shares outstanding, which may vary for each of those periods.

WGL HOLDINGS, INC.
RECONCILIATION OF GAAP EARNINGS GUIDANCE TO
NON-GAAP EARNINGS GUIDANCE
FISCAL YEAR ENDING SEPTEMBER 30, 2010


Consolidated
	Low			High

GAAP Earnings Per Share Guidance Range	$	2.29		$	2.41
Adjusted for:
Unrealized mark-to-market gain on energy-related derivatives(a)		(0.07	)		(0.07	)
Storage optimization program		0.01			0.01
Amortization of derivative contract termination(b)		(0.02	)		(0.02	)
Partial settlement of the Supplemental Employee Retirement Program(c)		0.04			0.04

Non-GAAP Operating Earnings Per Share Guidance Range	$	2.25		$	2.37


Regulated Utility Segment
	Low			High

GAAP Earnings Per Share Guidance Range	$	1.96		$	2.02
Adjusted for:
Unrealized mark-to-market gain on energy-related derivatives(a)		(0.13	)		(0.13	)
Storage optimization program		0.01			0.01
Amortization of derivative contract termination(b)		(0.02	)		(0.02	)
Partial settlement of the Supplemental Employee Retirement Program(c)		0.04			0.04

Non-GAAP Operating Earnings Per Share Guidance Range	$	1.86		$	1.92


Unregulated Business Segments
	Low		High

GAAP Earnings Per Share Guidance Range	$	0.33	$	0.39
Adjusted for:
Unrealized mark-to-market loss on energy-related derivatives(a)		0.06		0.06

Non-GAAP Operating Earnings Per Share Guidance Range	$	0.39	$	0.45


Footnotes:

(a)		Represents the estimated reversal of certain of our existing unrealized mark-to-market positions related to our energy derivatives that will be recorded to income during fiscal year 2010. For the regulated utility segment, to the extent that our unrealized mark-to-market gains and losses are not shared with customers, these amounts are recorded directly to income. All unrealized mark-to-market gains and losses for the retail energy-marketing segment are recorded directly to income.

(b)		During the fourth quarter of fiscal year 2009, Washington Gas terminated a long-term energy-related derivative contract related to its transportation capacity optimization and recognized an associated loss of $3.9 million for GAAP purposes. For non-GAAP purposes, this loss is being recognized in this period and in future periods to be matched against the margins earned as a result of the termination, consistent with the regulatory sharing treatment.

(c)		Represents the partial settlement of the Supplemental Employee Retirement Program due to lump sum distributions to certain retired employees that are scheduled in 2010.

Washington Gas Light (WGLCP) 8-KWGL Holdings, Inc. Reports Second Quarter Fiscal Year 2010 Earnings; Updates Fiscal Year 2010 Guidance