1
| 2005 Analyst Meetings East Coast March 22nd & 23rd |
Good morning!
I am Tom Fisher, Chairman.
With me today is Russ Strobel, President and Chief Executive Officer, Rick Hawley, Chief Financial Officer and Mark Knox, Director of Investor Relations.
2
| Agenda Long-term Objectives Business Overview and Strategies Legal Update Financial and Regulatory Update Wrap-up |
Here is today’s agenda.
I’ll briefly cover our long-term objectives.
Russ will follow with an overview of our businesses, cover our strategies and provide an update on our legal contingencies.
Rick will then follow with a financial update and a brief background on our outstanding regulatory filing.
I’ll then return to wrap things up and take your questions.
3
| Caution Concerning Forward- Looking Statements This speech includes certain forward-looking statements about the operations and earnings expectations of Nicor Inc., its subsidiaries and other affiliates. Although Nicor believes these statements are based on reasonable assumptions, actual results may vary materially from stated expectations. Factors that could cause materially different results can be found in Nicor's most recent periodic report filed with the Securities and Exchange Commission. |
Due to requirements around non-selective disclosure we will address only questions concerning matters that have been previously made public and broadly disseminated.
Please keep this in mind when asking your questions and considering our responses.
4
| Primary Businesses Containerized Shipping Wholesale Energy Services Retail Services Gas Distribution |
For those of you less familiar with us, Nicor is built on the foundation oftwo core businesses - our natural gas distribution segment, Nicor Gas, and our containerized shipping segment, Tropical Shipping.
We also haveother energy-related businesses, which are built on the:
| | | assets, |
| |
| | | expertise, |
| |
| | | customer base, |
| |
| | | reputation, and |
| |
| | | location of Nicor Gas. |
5
| Business Composition (Based on Forward-looking Operating Income) Gas Distribution Shipping Other Energy Ventures |
This slide showsthe basic composition of our company as we expect it to look on a forward looking basis.
Supporting these businesses is a solid financial position, providing us with flexibility to take advantage of new investment opportunities and to consider other alternatives to create greater shareholder value.
6
| Long-Term Objectives Key Strategies Grow earnings over time Maintain high returns on equity Pay a solid dividend Rebuild earnings at Nicor Gas Continue to expand our shipping operations Develop new products and services in our retail energy businesses Optimize our storage and transmission assets Build on our financial strength |
We remain committed to three simple objectives:
| | | grow our earnings over time, |
| |
| | | maintain high returns on equity, and |
| |
| | | pay a solid dividend. |
To achieve these objectives, we are committed to actions that will improve our performance:
| | | Grow our core businesses by rebuilding earnings at Nicor Gas and by continuing to expand our shipping operations, |
| |
| | | Develop new products and services in our retail energy businesses, |
| |
| | | Optimize our storage and transmission assets and |
| |
| | | Maintain our financial strength. |
We are also workingdiligently to completely resolve our remaining regulatory and governmental uncertainties. Russ will discuss our progress in more detail shortly.
7
| Business Strategies Foundation Strong financial position Strategic locations and assets Successful unregulated businesses Experienced and diverse management team Approach Disciplined and systematic Synergies and strategic fit with core businesses |
Our approach to grow our business over the long-term has been and will continue to remain disciplined and systematic. Opportunities we pursue will have a direct synergy and strategic fit with our core businesses.
Looking ahead, I believe we have several factors that will contribute to our long-term success including
| | | a strong financial position, |
| |
| | | strategic locations and assets, |
| |
| | | successful unregulated businesses, and |
| |
| | | an experienced and diverse management team. |
Let me now turn things over to Russ who will discuss our businesses and strategies in more detail; and provide an update on our outstanding legal matters.
8
| Rockford Bloomington Naperville Joliet Chicago Peoria Springfield Nicor Gas Profile Gas distribution 2 million customers Recognized brand Operating efficiency Diverse customer base Premium service territory Significant supply assets Strategic location Solid balance sheet |
Thanks Tom. Let me start with our primary business - Nicor Gas.
| • | Nicor Gas serves over2 million customers in northern Illinois - excluding the city of Chicago. |
| |
| • | It has a recognizedbrand name. |
| |
| • | It has a long history of low base rates. |
| |
| • | It has a reputation for providingsafe, reliable service. |
| |
| • | It is at or near thetop for most efficiency measures in its industry. |
| |
| • | It serves one of thebest markets for natural gas in the nation: |
| | • | with adiverse mix of industries, |
| |
| | • | goodgrowth in customers, and |
| |
| | • | a high demand forspace heating. |
| • | It has significantunderground storage assets - about 140 bcf of owned top storage capacity. |
| |
| • | It is strategically located on the nation’sMidwest natural gas pipeline grid– with access to 8 interstate pipelines. |
| |
| • | And it has anexcellent balance sheet. |
| |
| • | It also provides acatalyst for other revenue generating activities at our other energy-related ventures. |
9
| Business Environment Key Strategies High gas price and volatility Demand erosion Increasing costs of doing business Rebuild earnings with rate relief Mitigate controllable cost increases Customer service Nicor Gas |
Nicor Gas continues tooperate solidly despite a challenging business environment.
Most notably, high and volatile natural gas prices continue to impact our financial results in a number of ways –
| | • | Residential customers are more apt to conserve energy and purchase new energy-efficient heating systems, |
| |
| | • | Demand in certain commercial/industrial sectors diminishes; and |
| |
| | • | Bad debt and other operating costs (e.g. customer response) increase. |
In fact, much of ourindustrial demand erosion appears to be permanent with 2004 normalizedindustrial deliveries, excluding power generation,down about 16% since 1999
Deliveries for electricpower generation have also declined with deliveries in 2004 of around 5 Bcf compared to nearly 40 Bcf 5 years ago.
Nicor Gas’cost of business, notwithstanding the impact of gas prices, have also risen, due in large part to higher depreciation, health care, labor and compliance-related costs.
Meanwhile, our distribution revenues simply have not kept pace.
10
For sometime we have been evaluating the impact of these conditions, recognizing that ourearnings have fallen below our allowed rate of returns.
In an effortto rebuild the earnings at Nicor Gas, last fallwe filed for rate relief with the Illinois Commerce Commission proposing an approximately $83 million revenue increase.
Rick will discuss our filing including the factors leading to our decision in more detail shortly.
Although the key to rebuilding the earnings levels of Nicor Gas will depend largely on reasonable rate relief,continuing to control expenses and improving the overall effectiveness of our operations will also be a focus.
Furthermore,maintaining our pledge to provide quality customer service is also a key element to achieving our business objectives.
These commitments to efficient operations and quality customer service have long been part of our heritage and this tradition still holds true today.
11
| Tropical Shipping Profile Containerized shipping in Caribbean Niche player in the Caribbean High market shares in ports served Excellent reputation Strong margins Experienced management team Headquarters and terminal Ports served |
Our second largest business is Tropical Shipping.
Tropical Shipping is:
aleading carrier of U.S. exports from the East Coast to the Caribbean and Bahamas, and
one of the largest transporters of containerized cargo in its service territory.
It isa niche player with assets and resources customized for its region.
It hasleading market shares in most of the ports it serves.
And one of its competitive advantages is itsreputation for on-time, high-quality service.
Tropical continues to bea very profitable business.
In fact 2004 represented a new high-water mark for Tropical, with $31.6 million in operating income.
Tropical also generatesgood cash flow,
And it hasan experienced and capable management team.
12
| Business Environment Key Strategies Improving economic conditions Favorable tax legislation Increased regulatory and governmental actions Changing competitors and customer base Continue to grow and expand the business Strategic niche acquisitions Improve productivity and service delivery Tropical Shipping |
Growth at Tropical is expected to continue as volumes increase due to improvedtourism, construction and post-hurricane restoration activities.
In addition, the passage ofthe American Jobs Creation Act in 2004 may provide tax benefits beginning this year.
The Act contains an amendment that temporarily establishes favorable tax treatment for companies like Tropical thatrepatriate retained earnings of their foreign affiliates.
Despite these upsides,governmental and regulatory actions could pressure Tropical’s costs and volumes.
Programs relating tohomeland security have increased Tropical’s cost of doing business.
Also, theremoval of textile quotas may shift garment manufacturing from developing countries in the Caribbean Basin to elsewhere in the Far East – potentially impacting our Dominican Republic trade.
New competitors and changes in our customer base may also present challenges.
Worldwide carriers such as UPS and FedEx have seen expansive growth, and the retail trade in the Caribbean region is becoming saturated with large retail chains – placing downward pressure on overall rates.
Over the years, Tropical has grown its business through a combination ofopportunistic expansion and niche acquisitions.
Going forward, the company plans tocontinue with this approach and will further enhance its market position byfocusing on strategies to improve productivity and service delivery.
13
| Other Energy-Related Ventures - Retail Services Rockford Bloomington Naperville Joliet Chicago Peoria Springfield Hawthorn Tradewinds D. M. Dykstra Nicor Services - provider of energy-related products and services service line protection warranty products HVAC and replacement services Nicor Solutions - utility-bill management products |
Let me now turn to our other energy-related ventures. Starting with our retail energy businesses.
Nicor’s retail energy businesses have continued to grow and today have almost500,000 recurring customer contracts – a substantial change from the 27,000 contracts it had when it began in 1998.
Our two main businesses under the retail services platform areNicor Services and Nicor Solutions.
These businesses offer a range of energy-related products and services includingwarranty contracts on residential heating and cooling systems, utility billing protection products, and HVAC services.
Thesebusinesses can be considered “home energy managers”. Driven in large part by new customer contracts and new product offerings, these businesses have steadily increased their contribution to our overall earnings in recent years.
14
| Nicor Transmission System Nicor Storage Fields Interstate Pipelines Nicor Gas Service Area Iowa Wisconsin Illinois Missouri Indiana Kentucky Other Energy-Related Ventures - Wholesale Energy Services Enerchange Wholesale natural gas marketing and trading Hub Administration Balancing, parking and wheeling services Firm off-system supply- related services Manages Nicor Solutions product risks |
We also have supply-related businesses.
Our wholesale energy services platform is focused oncontracting, acquiring and optimizing midstream assets along corridors to Midwest markets andmanaging financial derivatives to support our retail services platform (i.e. Fixed Bill).
Nicor Enerchange engages in thewholesale marketing and trading of natural gas supply-related services to others including intrastate and interstate pipelines, LDC’s, power generators and natural gas marketers and brokers.
Enerchange alsoadministers the marketing of transportation and storage services using underutilized storage assets of our Chicago Hub – a Nicor Gas business that provides interruptible transportation and storage services to interstate pipeline shippers.
Bybundling commodity with natural gas transportation and storage, Enerchange customizes services that providesignificant added value to customers.
15
| Rockford Bloomington Naperville Joliet Chicago Peoria Springfield Other Energy-Related Ventures - Wholesale Energy Services Horizon Pipeline Joint Venture with NGPL 70-mile pipeline with 380 MMcf/day capacity Strategically located Nicor Gas primary subscriber Extension and Expansion potential |
| • | An additional business in the wholesale energy services platform is the Horizon Pipeline. |
| |
| • | Horizon is a50/50 joint venture between Nicor and Natural Gas Pipeline Company of America, a subsidiary of Kinder Morgan. |
| | • | It became operational in the spring of 2002, with |
| |
| | • | an initial equity investment of about $16 million. |
| • | The70-mile pipeline, which has 380 MMcf/day capacity and is nearly fully subscribed, runs between Joliet, Ill., north to a point near the Wisconsin border. |
| |
| • | It isstrategically located within the preferred development corridor of potential future power generators, which provides key competitive advantages over other pipeline alternatives in our territory. |
| |
| • | It is expandable having strategic extension and expansion potential to meet economic growth in the region. |
16
| Retail Services Wholesale Services Results continue to improve Increase market share of existing products and services Develop new products and services Expand into new markets Improve operating efficiencies and effectively manage risks Economic results are solid and results continue to improve Optimizing existing capabilities Acquire, contract or develop new assets and services Expand capabilities and service offerings Other Energy-Related Ventures - Strategies |
Overall, our other energy-related ventures are a key component of our business strategies.
The currentmarket environment for many of our products and services is favorable and our retail energy businesses are expected to be important contributors to our long-term success.
Likewise, theeconomic results at our wholesale energy services businesses remain solid and should also continue to grow over the long-term.
For ourretail services, we will continue developing this segment by:
| | | increasing the market share of existing products and services in Nicor’s existing territory, |
| |
| | | byintroducing new products and services, and |
| |
| | | byevaluating expansion opportunities into areas outside of our existing territories. |
| |
| | | We will also continue to focus onimproving operating efficiencies andeffectively managing risks. |
For ourwholesale energy services, we want tooptimize the use of storage and transmission assets to improve our long-term earnings.
Additional opportunities for growing this business may exist by
| | | acquiring, contracting or developing new assets and services, like the Horizon Pipeline and our Caledonia Storage project, |
| |
| | | partnering with others, and/or |
| |
| | | expanding the geographic reach of our storage and transmission capabilities. |
Let me now provide a brief update on our legal matters.
17
| Legal Update Pending Legal Matters ICC - Performance-based Rate Plan U.S. Attorney SEC Investigation Settled Legal Matters Securities Class Action Shareholder Derivative Action (pending court approval) |
Performance-based rate plan
TheICC PBR hearings remain stayedto allow additional third-party discovery. A status hearing is scheduled for April 19th.
We willcontinue to work cooperatively to resolve the PBR issues as soon as possible, but it isdifficult to predict with any certainty when these issues will be resolved.
U.S. Attorney and SEC Inquiries
The U.S. Attorney’s Office and the SEC are continuing their inquiries.
However, at this time, wecan not commentany further on these pending matters other than we have andwill continue to cooperate.
Shareholder Derivative Lawsuit and Securities Class Action
As you may be aware, earlier this year we reached a tentative settlement of our shareholder derivative suit, subject to final court approval, and last year wesettledour securities class action suit.
The final court hearing for the derivative settlement is scheduled forMarch 29th.
Ournet out of pocket costs, after insurance recoveries, for the derivative action settlement and the securities class action is expected to be about$9 millionpretax.
To summarize,we paid $38.5 million pretax to settle the securities class action suit in 2004 and, upon court approval,we expect to pay an additional $3.5 million to settle the derivative suit.
In addition, upon final court approval, these amounts will be offset in part byD&O insurance proceeds of about $33 million.
Background on all of these matters can be found inour periodic filings with the SEC.
This concludes my remarks, I’ll nowturn things over to Rick for a financial and regulatory update.
18
| Financial Update Twelve-months Ended 2004 EPS Key Variances Agreement to settle securities class actions in 2004 2003 benefited from various significant noteworthy items Improved shipping and other energy-related ventures results in 2004 Lower gas distribution results in 2004 Higher interest expense in 2004 2004 2003 Reported diluted EPS 1.7 2.38 Absent noteworthy items 2.22 2.11 |
Thanks Russ.
Last month we reported year-end 2004 earnings per share of $1.70 compared to $2.38 per share for the same 2003 period. Both years were impacted by noteworthy items. 2004 financial results for the twelve-months-ended period reflected a first-quarter $38.5 million pretax litigation charge ($.52 per share) relating to a settlement of securities class actions. Absent this charge, 2004 results would have been $2.22 per share.
2003 financial results for the twelve-months-ended period included net mercury-related insurance recoveries and gains associated with the wind-down of our retail energy marketing joint venture, Nicor Energy, offset in part by a cumulative effect loss, net of taxes, relating to a required change in accounting method at our wholesale natural gas marketing business. Aggregated, the three items increased 2003 twelve-months ended earnings by approximately $.27 per share. Absent these impacts, 2003 results would have been $2.11 per share.
Higher earnings per share in 2004, absent the noteworthy items in both periods, reflect improved operating results in our shipping business and other energy-related ventures, offset in part by lower results in our gas distribution business and higher interest expense.
19
| Financial Update 2005 Financial Outlook Earnings per share estimate is in the range of $1.90 to $2.10. Excludes impacts from tentative derivative action settlement and related D&O insurance recoveries Assumes, among other things, normal weather and excludes any impacts associated with fair value accounting adjustments at Nicor Enerchange, the ICC's PBR/PGA review or other contingencies, the American Jobs Creation Act of 2004 or rate relief. Compared to 2004, absent noteworthy items, reflects lower gas distribution results, improvement in our shipping business and similar levels of performance in our energy-related businesses. |
Regarding our 2005 outlook, as stated in our fourth quarter earnings release and conference call last month we estimate our 2005 earnings per share to be in the range of $1.90 to $2.10. The estimate does not include the impacts of the tentative shareholder derivative action settlement and related D&O insurance recoveries mentioned by Russ, that, if finalized, would have a positive pretax impact on earnings of approximately $29.5 million (about $.40 per share). The estimate does not reflect the variability in earnings due to fair value accounting adjustments at Enerchange that could occur because of volatility in the natural gas markets.
The estimate also excludes, among other things, any future impacts associated with the Illinois Commerce Commission’s PBR plan/purchased gas adjustment review and other contingencies (including the ongoing SEC inquiry). In addition, the estimate does not include potential benefits, if any, due to the American Jobs Creation Act of 2004, or rate relief, the later of which would impact our fourth quarter. While these items could affect 2005 earnings, they are either still being assessed or are not currently estimable. Our 2005 estimate also assumes normal weather.
Annual earnings guidance for 2005 compared to 2004 adjusted for the class action litigation charge is based on lower operating results at Nicor Gas, due primarily to higher operating and maintenance expenses and depreciation, lower anticipated property sale gains, and higher interest expense, offset in part by improved operating results at Tropical Shipping in 2005. We also estimate that 2005 earnings for our other energy-related businesses will be consistent with levels in 2004.
As a reminder, we will only provide updates to annual earnings guidance as part of our quarterly and annual earnings releases.
20
| Financial Update - Capital Expenditures 2005 2004 Gas 195 175 Tropical 25 9 OEV 5 3 2005 Key Variances Gas distribution - basically flat Shipping - facilities renovations, freight equipment and system upgrades OEV - system upgrades and facilities expansion $187 $225 Est. |
As we indicated in our 2004 10-K, capital spending for 2005 is estimated at $225 million - or about $38 million higher than 2004 levels.
Utility capital spending is forecasted to be around $195 million, up about $20 million due to storage and transmission activities and real estate expenditures.
Shipping capital expenditures are projected to be about $25 million, up about $16 million from the previous year due to facilities additions and the purchase of freight handling equipment. These estimates do not include amounts related to additions to our fleet – as you are aware, management continually evaluates the most cost effective manner in which to meet our capacity needs.
Other energy-related venture expenditures are slightly higher compared to 2004 due to a computer system upgrade and facility expansions in our retail energy businesses.
Let me now spend sometime providing some background on our outstanding rate filing at Nicor Gas.
21
| Rate Filing Filed November 4, 2004 Requested an $83.3 million increase or 16.5% of base rate revenues Reflects the rising cost of providing safe and reliable service First request in nearly 10 years Based on a future test year - 2005 |
As Russ mentioned earlier, last fall Nicor Gas filed with the Illinois Commerce Commission a request proposing a revenue increase of $83.3 million or 16.5% of base rate revenues. Our request, as filed, would add about $26 per year to the annual delivery cost of a typical residential customers bill. When you consider the entire bill, including gas costs and taxes, this translates to about a 2.7% increase.
As we’ve stated before, Nicor Gas is seeking an increase in base rates for bundled gas customers and in gas transportation rates to reflect the increase, over the last decade, in the cost of providing safe and reliable natural gas delivery services to our over 2 million customers.
As a reminder, this is only Nicor Gas’ second such request in 20 years and the first in nearly 10 years. Our proposed rates are based on a projected 2005 test year, which we believe reasonably reflects the conditions and costs of Nicor Gas for the period during which the rates become effective.
22
| Comparison of Annual Natural Gas Delivery Charges to Residential Customers Nicor Gas Consumers MidAm IL Power IL Gas North Shore CIPS CILCO Peoples Atmos AmerenUE Nicor Gas (Proposed) East 175.47 230.9 238.95 271.8 293.59 302.1 303.54 335.02 369.88 377.53 387.17 - 201.46 (Based on Prices Approved by the Illinois Commerce Commission Applied to the typical Nicor Gas Residential Customer Usage) |
Any rate increase approved is estimated to be effective October 2005.
Let me stress, Nicor Gas currently has the lowest residential rates of any major natural gas utility in Illinois and among the lowest of any gas utility in the country and, if our requested increase was granted, Nicor Gas would still have the lowest rates in Illinois.
23
| Rate Filing - History Return on Equity 11.13% 11.37% Return on Rate Base* 9.67% 9.34% Net Rate Base $1,372.8 $1,450.8 Net Operating Income $132.8 $135.5 Capital Structure Equity 58% 56% Preferred 1% - Debt 41% 44% 1996 2005 Order Requested (Dollars in millions) * (WACC) Annual operating and maintenance costs are expected to increase by about $90 million since our 1996 order |
Nicor Gas is requesting an increase in its base rates to recover the rising costs of operating its distribution system and increased capital investment.
Our operating metrics are among the top in the country, but costs have gone up while revenues have not kept pace, resulting in a decline in our earnings and actual return on rate base. Higher operating costs also include pipeline and gas maintenance and new safety requirements under the federal Pipeline Safety Act. Operating costs have also increased because of higher costs for the gas required to provide service to our company’s facilities throughout our region.
Like many other businesses, we also face rising expenses associated with things like employment-related costs such as salaries, benefits and healthcare costs, and technology.
Operating costs have risen due to uncollectible expense incurred when customers do not pay their bills. The costs of uncollectibles has increased significantly since our last rate case due in part to recent surges in natural gas prices nationwide Overall, since 1996 operating costs, excluding depreciation, have increased about $90 million. With our growth in gross plant, depreciation expense has increased from about $112 million to $155 million per year.
Our current capital structure is comparable to that approved in the 1996 rate order.
Nicor Gas has traditionally been a financially strong company. This financial stability has assisted us in maintaining our position as a low cost provider. As Russ mentioned earlier, our request for rate relief is a needed and appropriate step to maintain the favorable financial metrics of our utility for the benefit of our customers, our employees and our investors who provide the capital necessary for our business.
24
| Rate Filing - Key Objectives Captures $78 million in incremental rate base Significant rate base additions since last approved order largely offset by higher depreciation reserve Rate Design Changes Recovery of commodity portion of uncollectibles through PGA Net credit to PGA for Chicago Hub revenues 10-Year weather normalization More accurate indicator for recovering fixed costs |
Turning to our rate base, despite significant increases to our gross plant resulting from capital investments since our last filing, net rate base increases were largely offset by increases in our accumulated depreciation reserve and higher deferred taxes since the 1996 order. Nonetheless, our rate base has increased modestly.
We are also proposing rate design changes, two of the more significant of which relate to uncollectible expenses and Chicago Hub revenue.
We have experienced an increase in uncollectible expenses since our 1995 rate case from about $8 million to over $30 million. Under our current proposal, we are requesting the recovery of the commodity portion of bad debt expense through our PGA clause. This represents about 2/3 of our estimated test year uncollectibles, or about $20 million, which will be shifted from base rates and subject to the annual PGA true-up mechanism. The remaining portion of uncollectibles will continue to be recovered in base rates. This change reduces our base revenue requirement and moderates changes to our various distribution unit charges.
We are also proposing the full crediting of net revenues received from the Chicago Hub to the PGA. For the test year, this is estimated to be about $6.7 million.
25
This brings me back to my original statement regarding the amount of our revenue increase. As filed, the difference between our base rate revenue requirement therein and our forecasted test year base revenues under current rates is $69.6 million or a 13.8% increase. If our rate design changes are not adopted, but the costs are included in cost of service, this difference increases to the $83.3 million we have discussed.
In addition to these rate design changes, we also proposed changing from a 30-year average to a 10-year average for calculating normal weather. This decision was based on a comprehensive evaluation and study of weather normalization and is more reflective of the normal weather patterns in our service territory. As a result, beginning in 2005, Nicor Gas’ normal degree-days would be reduced from about 6,000 to 5,830. Our proposed distribution rates and 2005 forecast reflect this change.
26
| Rate Filing - Estimated Timeline Filing: November 4, 2004 Direct Staff testimony: Commenced on March 1, 2005 Company and intervener hearings: May 19, 2005 Initial briefs: Mid 2005 Administrative Law Judge files order: Fall 2005 Commission Order: October 2005 (normally within 11 months of filing, as required by Illinois State law) |
Looking ahead, by Illinois state law, our commission normally has 11 months from the date of our filing of November 4, 2004 to make their decision and issue an order.
Assuming that the proceedings continue on track the completed and remaining regulatory timeline might look something like this:
| | | Direct Staff testimony – commenced on March 1, 2005 |
| |
| | | Company and intervener hearings – May 19, 2005 |
| |
| | | Initial briefs – Mid 2005 |
| |
| | | Administrative Law Judge files order – Fall 2005 |
| |
| | | Commission order – according to Illinois State law an order is expected within 11 months of filing. |
Many of these dates are estimates, the ICC sets the schedule, but will at least provide a general overview of the process.
That concludes my remarks, let me now turn things over to Tom for a wrap-up.
27
| Key Messages Nicor is financially strong, but we face a significant challenge to earnings Rising costs and high and volatile gas prices combined with declining demand are pressuring our results Strategic locations and assets provide a foundation for revenue opportunities Decisive actions have been taken to rebuild the earnings at our primary business through rate relief Non-utility businesses are performing well and all anticipate earnings growth Experienced leadership team Remain focused on customer satisfaction and good corporate citizenship |
Thanks Rick,
In closing, let me stress that Nicor is a financially strong company, but we face earnings challenges.
Rising operating costs, due in large part to national issues, including health care, labor and compliance-related costs, as well as those impacted by high and volatile natural gas prices, combined with eroding demand is putting significant pressure on our primary business – Nicor Gas.
Despite this environment, we are confident that Nicor is positioned for long-term success.
As I alluded to earlier, our strategic locations and assets provide an excellent foundation for revenue generating activities. We have also taken decisive actions to rebuild the earnings base at Nicor Gas through rate relief. In addition, our non-utility businesses are performing at record levels, and we will continue to grow these businesses prudently.
Our leadership team is experienced and driven by a commitment to provide quality service to our customers, to manage our businesses efficiently and profitably for our investors, and to live by a clear set of values built on teamwork, ethics and personal responsibility.
Finally, we will also continue to be a good corporate citizen, recognizing our responsibility to support activities and actions that contribute to the well-being of our employees, customers, the communities we serve and the environment.
28
| Visit our website: www.nicor.com |
Lastly, I thank you for your interest in our company and will now open the floor for questions.
